qatar investment fund plc consolidated annual report year ... · pdf fileqatar investment fund...

Qatar Investment Fund plc

Consolidated Annual Report

Year ended 30 June 2013

QATAR INVESTMENT FUND PLC Annual Report 30 June 2013

CONTENTS

Page

Management and Administration 1 - 2

Chairman’s Statement 3 - 4

Business Review 5 - 6

Report of the Investment Manager and the Investment Adviser 7 – 14

Investment Policy 15 -17

Report of the Directors 18 – 20

Corporate Governance Report 21 -26

Board of Directors 27

Statement of Directors’ Responsibilities 28

Audit Committee Report 29

Management Engagement Committee Report 30

Directors’ Remuneration Report 31 – 32

Report of the Independent Auditors 33 – 34

Consolidated Financial Statements:

- Consolidated Income Statement 35

- Consolidated Statement of Comprehensive Income 36

- Company Income Statement 37

- Company Statement of Comprehensive Income 38

- Consolidated Balance Sheet 39

- Company Balance Sheet 40

- Consolidated Statement of Changes in Equity 41

- Company Statement of Changes in Equity 42

- Consolidated Statement of Cash Flows 43

- Company Statement of Cash Flows 44


CONTENTS continued

- Notes to the Consolidated Financial Statements 45 – 62

Notice of AGM 63 – 65

Form of Proxy 66 – 67


1

Management and Administration

Directors N Wilson (Non-executive Chairman) *

P Macdonald (Non-executive Director)*

L O’Brien (Non-executive Director)

N Benedict (Non-executive Director) *

all of the registered office below

* independent

Registered Office Millennium House

46 Athol Street

Douglas

Isle of Man

IM1 1JB

Investment Manager Epicure Managers Qatar Limited

Trinity Chambers

Road Town

Tortola

British Virgin Islands

Investment Adviser Qatar Insurance Company S.A.Q.

PO Box 666

Tamin Street

West Bay

Doha

Qatar

Broker Panmure Gordon (UK) Limited

One New Change

London

EC4M 9AF

Custodian HSBC Bank Middle East Limited

Qatar Branch

HSBC Security Services

PO Box No. 57

Doha

Qatar


2

Management and Administration continued

Administrator Galileo Fund Services Limited

Millennium House

46 Athol Street

Douglas

Isle of Man

IM1 1JB

Auditors KPMG Audit LLC

Heritage Court

41 Athol Street

Douglas

Isle of Man

IM99 1HN

Registrar Capita Registrars (Isle of Man) Limited

Third Floor

Exchange House

54-62 Athol Street

Douglas

Isle of Man

IM1 1JD


3

Chairman’s Statement

On behalf of your Board, I am pleased to present your Company’s sixth Annual Report and Financial Statements for the year

to 30 June 2013.

During the twelve months, your Company’s Net Asset Value per share (“NAV”) rose by 14.85% to US$1.16, which compares

with a rise of 14.18% in the Qatari stockmarket (Qatar Exchange Index) and a 0.32% rise in the MSCI Emerging Markets

Index. Following a slight narrowing of the discount at which the shares trade to NAV, the shares rose from US$0.88 to

US$1.02, a rise of 15.9%, and shareholders additionally received a dividend of 3.0c per share paid on 30 January 2013,

making a total return of 19.3%.

Results

Results for the period under review showed a profit of $31.6m generated from fair value adjustments, realised gains and

dividend income. This is equivalent to basic earnings per share of 16.15 cents.

The Company’s Ongoing Charges (formerly Total Expense Ratio) fell below 2% to 1.93% fulfilling the aim of my late

predecessor, David von Simson, as set out in last year’s Chairman’s Statement. The cost reduction was achieved through

renegotiations with several service providers and across the board cuts in other expenses over the second six months of the

year. Ongoing Charges should fall further when the revised agreement with the Investment Manager takes effect and as a

full year’s benefits of the above cuts is felt.

Managing the Discount between the share price and NAV

Discount management is a priority for the Board and as part of this we continued to make use of the authority granted by

shareholders to buy back the Company’s shares. During the period a total of 7,534,651 shares were bought back to be held

in Treasury. 7,681,193 shares were cancelled during the year as they had been held for over a year. It is your Board’s

intention to ask shareholders to renew the buyback authority. In addition to the share buybacks, the Board works with our

Investment Manager and Company Broker as well as the financial press in order to maintain institutional and private investor

awareness of both Qatar and demand for the Company’s shares.

Proposed Tender Offer

The circular sent to shareholders about last December’s 20% tender offer also set out that, subject to shareholder approval

and the Isle of Man’s laws on distributable profits, there would be further tender offers in the fourth quarters of 2013 and

2014 on similar terms for up to 10% of the Company’s issued share capital at those times (excluding treasury shares) in the

event that the average discount to NAV per Share at which the Shares trade in the twelve month periods to 3 December

2013 and 3 December 2014 exceed 10 per cent. If the discount test is triggered, Shareholders will at that point be sent a

separate circular explaining the process and seeking shareholder approval.

Proposed Dividend

We aim to pay dividends from income received from companies in which the fund 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 3.2 cents per ordinary share (2012 – 3.0c 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 in January 2014. Further details on the ex-date, record date and payment date will be made in due

course.


4

Chairman’s Statement continued

Post balance sheet events

There have been no post balance sheet events.

Outlook, risks and uncertainties

Economic growth in Qatar continues to be robust with the IMF forecasting growth of 5.2% in the current year with

government and private investment showing particular strength. According to some sources, non-hydrocarbon GDP now

accounts for over 50% of the economy. Qatar’s state budget for the financial year 2013/2014 shows political commitment to

accelerate and complete planned infrastructure projects before the World Cup in 2022. Improving demographics and a

strengthening consumer sentiment also contribute towards a positive outlook for the Company’s shares.

MSCI’s reclassification of Qatar from frontier market to emerging market with effect from May 2014 is a highly significant

development and is expected to attract capital inflows to the Qatar Exchange of over US$400 million, a positive driver for

share prices. The combination of strong economic growth, low company valuations and high earnings visibility makes

investment in Qatar an attractive proposition.

Whether classified as an emerging market or a frontier market, Qatar is moving ahead on all fronts of importance to investors

in a developing economy. Government is running a budget surplus and investing heavily in infrastructure, while encouraging

the private sector and succeeding in diversifying the economy away from oil and gas. The smooth political leadership

transition in July further bolstered confidence in the country and reduced uncertainty over succession planning.

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 listed on the

Qatar Exchange and elsewhere in the GCC region. The Company offers international investors one of the few practical ways

to get investment exposure to Qatar’s vigorous economy.

I look forward to welcoming shareholders to our sixth Annual General Meeting on 4 November 2013, which will be held at

11.00 am, at the Company’s registered office, Millennium House, 46 Athol Street, Douglas, Isle of Man.

Nicholas Wilson

Chairman 10 September 2013


5

Business Review

The following review is designed to provide information primarily about the Company’s business and results for the year

ended 30 June 2013. It should be read in conjunction with the Report of the Investment Manager and the Investment Adviser

on pages 7 to 14 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 sectoral

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 15 to 17.

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 or 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 57 to 62.


6

Business Review continued

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 21 to 26.

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 57 to 62.


7

Report of the Investment Manager and Investment Adviser

Regional Equity Market Overview

Stable oil prices and expansive economic and monetary policies helped all Gulf Co-operation Council (GCC)

stockmarkets make progress in the 12 months ended June 2013.

Indices 30-Jun-12 30-Jun-13 Change

Qatar (DSM) 8,123 9,276 14.2%

Saudi (TASI) 6,709 7,497 11.7%

Dubai (DFMGI) 1,452 2,223 53.1%

Abu Dhabi (ADI) 2,448 3,551 45.1%

Kuwait (KWSE) 5,789 7,773 34.3%

Oman (MSI) 5,690 6,338 11.4%

Bahrain (BAX) 1,127 1,188 5.4%

Source: Bloomberg

The GCC index (Bloomberg GCC200) gained 13.7% in the period. Despite geopolitical issues, GCC companies

continued paying dividends. The Qatar stock exchange rose 14.2% over the twelve months with momentum increasing

during the last two quarters (Jan-June 2013) as infrastructure tenders increased and sentiment was boosted by the

MSCI upgrade.

The Dubai and Abu Dhabi stockmarkets led the advance in the GCC region, with gains of 53.1% and 45.1%

respectively, helped by recovery in the real estate sector and improved corporate profitability. Furthermore, the UAE as

a regional safe haven saw inflows from MENA countries experiencing unrest. Saudi Arabia rose 11.7%, weighed down

by concerns that global oil production may exceed global demand and put pressure on the world’s largest oil exporter.

Despite this, the economy grew. Oman and Kuwait markets rose 11.4% and 34.3% respectively, while Bahrain

advanced 5.4%. Kuwait’s market rise was buoyed by the recent political stability. Weaker performance in Bahrain arose

from simmering political issues and lack of liquidity.

Countries in the GCC region, in order to diversify their economies, continued to invest in non-hydrocarbon sectors.

According to the Kuwait Financial Centre, in the first half of 2013, contracts worth US$39 billion were awarded in the

construction and transportation sectors alone in the GCC. The report also showed that US$1.35 trillion of contracts are

expected to be awarded in the GCC in 2013, ahead of US$730 billion in 2012. Middle East Economic Digest (MEED)

expects Saudi Arabia to lead the region and award projects worth US$600 billion in 2013, with UAE and Kuwait

awarding US$350 billion and US$150 billion, respectively, while Qatar, Bahrain and Oman combined should award

projects worth US$250 billion this year.

There has also been more IPO activity. The Saudi Arabia stockmarket had four IPOs in the first six months of 2013,

raising over US$379 million. In Qatar, two companies have announced their IPOs with timing to be decided.

The Investment Adviser expects the Qatar economy to make progress in the coming quarters. Stock market

performance will be significantly influenced by project awards and the positive effect these have on the profitability of

Qatari companies, especially in the banking, construction and industrial sectors. A healthy flow of dividend payouts and

growing demand from foreign investors are expected to be the near term catalysts for further progress by the Qatar

stockmarket.


8

Report of the Investment Manager and Investment Adviser continued

Regional Equity Market Overview continued

Indices 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13

Qatar (DSM) -7.6% 4.8% -1.8% 2.6% 8.1%

Saudi (TASI) -15.9% 3.9% -0.6% 4.8% 5.2%

Dubai (DFMGI) -11.9% 8.7% 2.8% 12.7% 21.5%

Abu Dhabi (ADI) -4.1% 6.4% 1.0% 15.0% 17.4%

Kuwait (KWSE) -6.1% 3.3% -0.8% 13.3% 15.6%

Oman (MSI) 0.0% -2.7% 4.1% 4.0% 5.8%

Bahrain (BAX) -2.2% -3.5% -2.0% 2.4% 8.8%

Source: Bloomberg, QIC

Qatar Economic Update

As expected, economic growth slowed recently compared to growth over the last decade, which was fuelled by

investment in oil and gas production. Growth in the future should largely come from the non-oil sectors: construction,

consumer durables and banking as the government continues its US$150 billion infrastructure development program

ahead of 2022 and seeks to diversify the economy. According to the IMF, Qatar’s real GDP is estimated to grow 5.2% in

2013 and 5.0% in 2014.

Qatar’s nominal GDP grew 6.1% in the first quarter of 2013 compared to Q1 2012; when compared to Q4 2012, growth

was 2.4%. Non-hydrocarbon sectors continued to drive the growth with a 13.1% increase in Q1 2013, while the

hydrocarbon sector reported only a 1.5% increase.

Qatar’s population continues to grow, rising 9.3% to 1.96 million at the end of May 2013. Population increases and

rising income levels benefit consumer and services companies.

Qatar State Budget 2013-2014

Qatar’s budget for 2013-2014 shows a strong commitment to speed up and complete planned infrastructure projects

before the FIFA World Cup tournament in 2022, with an 18% increase in government spending to QAR210.6 billion. The

US$150 billion infrastructure investment includes a rail system, a new airport, a seaport and new roads in addition to the

infrastructure for the 2022 FIFA World Cup. The budget assumes a conservative oil price estimate at US$65 per barrel,

unchanged from the previous budget, substantially lower than current Brent Crude oil price of around US$100 per

barrel, translating into budgeted revenue of QAR218.1 billion (at US$65 a barrel), up 6.0% from the earlier budget.

Much of the increase is expected from increased tax take, as many companies' tax holidays are expected to end in

2013. The state budget estimates a surplus of QAR7.4 billion, down from a surplus of QAR27.7 billion estimated in the

budget of 2012-2013.

Recent Developments

Inclusion of the Qatar market in the MSCI Emerging Market index

Index provider MSCI has promoted Qatar, and the UAE, from ‘Frontier Market’ to ‘Emerging Market’ status, effective

from May 2014. This is the result of Qatar’s strong economic, regulatory and financial progress in recent years, and

continuing efforts to address the low foreign ownership limits on many Qatari companies. Regulators in Qatar have

encouraged companies to increase their limits.

As companies change their foreign ownership limits more shares will be available to foreign investors. Doha Bank

recently raised its foreign ownership limit to 25%, while the Commercial Bank of Qatar and Qatar Islamic Bank have

applied for an increase. This trend and the promotion to emerging market status should encourage inward capital flows


9


Recent Developments continued

Inclusion of the Qatar market in the MSCI Emerging Market index continued

(HSBC forecast additional investment inflows of US$430 million), improve liquidity and increase accessibility of Qatar

and UAE to more investors across the world. The MSCI change is effective from May 2014, when the UAE and Qatar

markets are expected to represent 0.40% and 0.45%, respectively, of the MSCI Emerging Markets Index.

Foreign fund inflows in the MENA region

In May, the MENA region experienced foreign funds inflows of QAR2.4 billion (US$655 million), according to Deutsche

Bank. Of this, Qatar attracted fund inflows of QAR477 million (US$131 million). For Qatar, this encouraging trend is the

opposite of the approximately US$1.3 billion of foreign fund outflows in 2011-2012.

Infrastructure projects gathering momentum

In the GCC region, contracts worth US$15.9 billion were awarded between April and June 2013 compared to US$13.4

billion in the first quarter of 2013.

Recent months have seen an uptick. In June Qatar Railways Company awarded four contracts worth in total QAR30

billion (US$8.2 billion) as part of phase 1 of the Doha Metro. Phase 1 includes construction of four rail lines and an

underground railway in the centre of Doha. Qatar Rail also recently released further tenders for additional elevated

sections of rail line. Furthermore, Qatar’s Public Works Authority (Ashghal) recently awarded new contracts worth

QAR7.2 billion (US$2 billion) for the construction of 24 roads across Doha.

It was recently announced that Qatar’s countrywide highway project, including 900 kilometres of roads with multiple

lanes and 240 intersections, is expected to be completed by Q4 2017. The total cost is estimated at QAR45 billion

(US$12.4 billion). Ashghal is expected to complete road construction work in Qatar's East Industrial Area within months

at an estimated cost of QAR226 million (US$62.1 million), according to reports. The ongoing construction of part of the

Dukhan highway is estimated to cost QAR1.4 billion (US$0.38 billion) and is expected to be completed by the end of

2013.

According to the National Bank of Kuwait (NBK), during the first half of 2013, Qatar awarded thirty five contracts worth

US$27.5 billion, an increase of nearly 30% from the value of contracts awarded in the whole of 2012. With this project

momentum, NBK estimates that additional contracts worth US$29 billion should be awarded during the second half of

2013.

Credit growth accelerates

Credit growth in Qatar and adjacent markets remains strong. Total credit extended by Qatari banks continued to

accelerate, rising 18.0% in June 2013 compared to June 2012. Total credit extended by Qatari banks has grown 6.6%

year to date. Public sector credit jumped by 4.4% year to date (June 2013). The private sector reported growth of 9.0%

during the same period.

Banks in Qatar have been experiencing a strong growth environment underpinned by infrastructure investment and non-

oil sector growth.


10


Political changes in Qatar

On 25 June 2013, the Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, handed over power to his 33 year old son,

Sheikh Tamim bin Hamad Al Thani. Sheikh Hamad introduced political and economic liberalization and is credited with

Qatar’s emergence as a major player in regional diplomacy.

In his first speech to the nation as the new Emir, Sheikh Tamim underscored the importance of continuity, raising

expectations that the progressive policies laid out by his father would continue.

Valuations

Market Market Cap. P/E (x) P/B (x) Dividend Yield (%)

US$ Mn 2013E 2014E 2013E 2013E

Saudi Arabia 411,758 12.9x 10.7x 1.8x 3.6%

UAE 150,215 11.5x 9.9x 1.1x 4.1%

Qatar 114,538 10.5x 10.3x 1.5x 5.7%

Kuwait 109,477 14.7x 12.0x 1.6x 3.3%

Oman 17,701 10.8x 9.6x 1.3x 5.1%

Bahrain 17,466 10.6x 9.3x 1.2x 4.9%

Egypt 25,045 11.5x 9.2x 1.2x 4.5%

Jordan 23,634 10.4x 10.5x 1.5x 4.0%

Overall MENA 869,834 12.2x 10.4x 1.5x 4.4%

Source: Bloomberg Finance LP, Deutsche Bank (prices as at 30th July 2013)

The Qatar market offers an attractive combination of appealing valuations, high dividend yields, and strong prospects

for profit growth. The Qatar market is trading at 2013 price to earnings (P/E) of 10.5x, cheaper relative to its peers such

as Saudi Arabia (12.9x), Kuwait (14.7x) and UAE (11.5x). The attractive valuation of the Qatar market are well

supported by a significant dividend yield estimated at 5.7% for 2013, the highest dividend yield in the GCC.


11


Corporate Profitability

Sector Net Profit (QAR '000)* LTM 6/30/2012 LTM 6/30/2013 Change

Banks & Financial Services 16,071,869 16,925,545 5.3%

Insurance 895,891 1,734,140 93.6%

Services & Consumer Goods 1,591,848 1,584,067 -0.5%

Industry 11,002,254 12,827,973 16.6%

Real Estate 2,317,739 2,289,503 -1.2%

Telecoms 1,942,600 2,955,704 52.2%

Transportation 1,637,545 1,808,780 10.5%

Total 35,459,746 40,125,712 13.2%

*Net profit calculation excluded onetime fair value gain of QAR3,057.2 million reported by United Development Co.

Source: Qatar Exchange

During the 12 months to June 2013, the profits of companies listed on the QE grew well. Results were driven by

continuing efforts by the government to accelerate construction and infrastructure development and measures taken to

counter the effect of the global financial crisis.

The 42 listed companies on the QE posted an overall net profit of QAR40.1 billion (US$11 billion) for the year ended

June 2013, representing a 13.2% increase over the QAR35.5 billion (US$9.7 billion) profits for the year ended June

2012. Profits surged in the insurance (earnings up 93.6%) and telecom (+52.2%) sectors, and good progress was made

in the industrial (+16.6%) and transportation (+10.5%) sectors. Earnings in the real estate sector and services and

consumer goods sector were flat. Heavyweight companies such as Qatar National Bank and Industries Qatar reported

profit increases of 10.5% and 15.1% respectively.

Going forward, the Investment Adviser does not expect negative surprises in corporate profitability, as project tendering

gathers momentum, benefiting particularly domestic banks, consumer, real estate and construction sector companies.

Net profit growth of the Company’s top 5 holdings (in QAR ‘000)

Company Name LTM 6/30/2012 LTM 6/30/2013 Change %

Qatar National Bank 8,108,972 8,959,940 10.5%

Industries Qatar 7,796,471 8,974,027 15.1%

Masraf Al Rayan 1,442,078 1,599,814 10.9%

Commercial Bank of Qatar 1,945,298 2,019,282 3.8%

Barwa Real Estate 1,257,412 776,625 -38.2%

Source: Qatar Exchange

Company Update

In the second quarter of 2013 the QIF NAV rose 8.5% to US$1.1672 (28 March 2013: US$1.0758). As at 27 June 2013,

the QIF share price was trading at a 12.6% discount to NAV.

At the date of these financial statements the QIF NAV was US$1.1610.


12


Industry Allocation

The banking sector (including financial services) remains the most attractive sector in the view of the Investment

Adviser, with a 50.3% weighting in the fund. Qatar National Bank is the Company’s largest holding (19.3% of NAV).

The second largest weighting in the Company’s portfolio, at 18.4%, is the industrial sector; particularly Industries Qatar

(12.4% of NAV); followed by the real estate sector at 9.7% and then the telecoms sector which increased to 5.1%

weighting at the end of Q2 2013 from 4.9% in Q1.

The real estate sector weighting has been reduced from 10.0% in Q1 to 9.7% at the end of Q2 2013. Similarly the

transportation sector decreased to 4.5% at the end of Q2 2013.

The allocation to the insurance sector rose to 3.7%, while the Company added two more sectors: engineering &

construction services (1.0% of NAV) and energy (0.1% of NAV) during the quarter.

Source: Qatar Insurance Company (30th Jun 2013)

Portfolio Breakdown Top 5 Holdings

Company Name Sector % Share of NAV

Qatar National Bank Banks & Financial Services 19.3%

Industries Qatar Industrial 12.4%

Masraf Al Rayan Banks & Financial Services 9.9%

Commercial Bank of Qatar Banks & Financial Services 8.1%

Barwa Real Estate Real Estate 6.7%

Source: Bloomberg, Qatar Insurance Company

As at 30 June 2013, the top five investments of the company constituted 56.4% of NAV, down from 58.9% as at 30 June

2012. The top 10 holdings represent 79.3% of the company’s NAV.


13


Country Allocation

At the end of the second quarter QIF had 29 holdings: 18 in Qatar, 7 in UAE, 3 in Oman and one in Kuwait. Cash was

3.2% of NAV (Q1 2013: 2.7%).

Qatar continues to be the Investment Adviser’s favourite market in the GCC region largely due to growth impetus from

the Qatar government’s significant infrastructure development plan and Qatar’s relatively stable political environment.

Source: Qatar Insurance Company (30th Jun 2013)

Qatar National Bank (19.3% 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 part 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 supporting QNB, thus enhancing its economic importance. The largest shareholder in QNB is the

Qatar Investment Authority (QIA), with a 50% equity stake. QNB is the largest bank in Qatar with total assets of

QAR431 billion (US$118.4 billion) as at 30 June 2013. For H1 2013, QNB reported a 15.1% rise in net profit to QAR4.7

billion (US$1.3 billion). QNB is well positioned to reap the benefits of the rapid expansion of the domestic economy. The

Bank recently increased its presence to 26 countries, through its subsidiaries and associate companies. The Bank

operates a large product distribution network in Qatar and overseas consisting of 570 locations and 1200 ATMs.

Industries Qatar (12.4% 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 100%

owned Qatar Steel Co. and fuel additives via 50% owned Qatar Fuel Additives Co. Qatar Steel commenced work on its

EF5 project consisting of a QAR 1.2 billion green field steel melt shop built adjacent to its main facility in Mesaieed

Industrial City, Qatar, in Q2 2010. The facility has a capacity of 1.1 million MT / PA of billets and is expected to be

commercially launched by the end of Q3 2013. For the first 6 months of 2013, IQ reported a 13.2% increase in net profit

to QAR4.6 billion (US$1.26 billion).


14


Masraf Al Rayan (9.9% 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.

Presently MARK has a total of 11 branches in strategic locations around Qatar, and a total of 33 ATMs. MARK offers

Islamic commercial and investment banking services. It benefits from key positives such as its healthy balance sheet,

government backing, strong capitalization and low gearing. For the first 6 months of 2013, MARK reported a 13.2%

increase in net profit to QAR0.8 billion (US$0.2 billion).

Commercial Bank of Qatar (8.1% of NAV)

Commercial Bank of Qatar (CBQ) was incorporated in 1975 as a full service commercial bank, offering a broad range of

corporate, retail and investment banking products and services. CBQ is the second-largest commercial bank in Qatar

with total assets of QAR85.4 billion (US$23.5 billion) as at 30 June 2013. CBQ offers retail, corporate and investment

banking products in Qatar and through its associates also in the UAE, Turkey and Oman. CBQ’s capitalisation is strong

with a Tier 1 ratio of 15.4% as at 31 December 2012. The non-performing loan ratio stood at 3.49% as at 30 June 2013,

significantly higher than 1.09% as at 31 December 2012, mainly due to a newly provisioned domestic real estate loan.

For the first 6 months of 2013, CBQ reported a 0.7% increase in net profit to QAR1.0 billion (US$0.3 billion).

Barwa Real Estate (6.7% of NAV)

Barwa Real Estate Company (BRE) is one of the major real estate developers in Qatar. BRE generates its revenue from

sales of developed land, semi developed land, residential units, commercial units and office space. The company

primarily operates in Qatar, but it is also expanding its footprint in other regional countries. Through its non-controlled

subsidiary Barwa Bank, the company has extended its portfolio of businesses into the financial markets. BRE was

created by the government-owned Qatari Diar Real Estate Investment Company in 2004 to concentrate on building

medium-sized residential and tourism developments locally and abroad. BRE underwent an IPO on the Doha Securities

Market in 2006 that raised US$330 million for 55% of the company’s equity. Although the group’s main activities remain

in Qatar, BRE has a wide array of investments and operations in 13 other countries regionally and internationally. At

Cityscape Qatar, BRE recently announced launch of new projects including its new pedestrianised Oryx Island planned

to be built on reclaimed land off Doha's coastline. For the first 6 months of 2013, BRE reported a 66.5% decline in net

profit to QAR0.2 billion (US$0.05 billion), largely due to a fall in revenues, following delays in closing certain deals which

were announced earlier this year.

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

10 September 2013 10 September 2013


15

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).


16

Investment Policy continued

Investing Restrictions

The investing restrictions for the Company are as follows:

(i) Foreign Ownership Restrictions

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 that 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 2012 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.


17

Investment Policy continued

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.


18

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

2013.

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 15 to 17.

Results and Dividends

The results of the Company for the period and its financial position at the period end are set out on pages 35 to 44 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.

Subject to shareholder approval, the Directors intend to declare a dividend as detailed in the Chairman’s Statement. For

the year ended 30 June 2012, the Directors declared a dividend of US$5,416,506 which was approved by Shareholders

and paid by the Company in January 2013.

Directors

Details of Board members at the date of this report, together with their biographical details, are set out on page 27.

Director independence and Directors’ and other interests have been detailed in the Directors’ Remuneration Report on

pages 31 and 32.

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

derivative instruments.

There were no borrowings during the year.

Donations

The Company has not made any political or charitable donations during the year (2012: 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.


19

Report of the Directors continued

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 was appointed as auditor by the Directors. It 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 4 November 2013 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 for the share buy-back scheme.

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 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.

At the Company’s Annual General Meeting on 14th November 2012, the resolution for the Company to cease to

continue in existence was defeated with 98.4% of the votes cast being against discontinuation.

At the Extraordinary General Meeting held on the same day, shareholders approved a resolution authorising the

Company to make market purchases under the 20% tender offer announced on 17 October 2012. This was conditional

upon the defeat of the discontinuation resolution and resulted in 41,552,272 shares being tendered and repurchased by

the Company and cancelled; this equating to 18.7% of the shares in issue as at 17 October 2012 (excluding treasury

shares) and 93.54% of the shares available under the Tender Offer. On 7 December 2012, the Board announced that

the Tender Price was US$1.0219 per share.

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

At 2 July 2013 the Company had been notified of the following holdings in its share capital.

Ordinary Shares

Name Number %

City of London Investment Management Company 50,880,794 28.85

Qatar Insurance Company 31,393,020 17.80

Qatar Holding LLC 20,000,000 11.34

Henderson Global Investors 12,336,273 6.99

Advance Frontier Markets Fund Limited 8,601,381 4.88


20

Report of the Directors continued

The above percentages are calculated by applying the shareholdings as notified to the Company to the issued ordinary

share capital as at 2 July 2013.

On behalf of the Board

Nicholas Wilson

Chairman

10 September 2013


21

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 UK Corporate Governance Code

In June 2010, the Financial Reporting Council issued the UK Corporate Governance Code (the ‘‘Corporate Governance

Code’’) to replace the Combined Code on Corporate Governance. The Corporate Governance Code applies to all

companies with a premium listing of equity shares with accounting periods beginning on or after 29 June 2010

regardless of whether they are incorporated in the UK or elsewhere. Accordingly, the Company is required for this

annual report to comply with the Corporate Governance Code or explain its reasons for not doing so. The Corporate

Governance Code is available from the website of the UK Financial Reporting Council: www.frc.org.uk.

The Company is committed to high standards of corporate governance. The Board has put in place a framework for

corporate governance, which it believes is suitable for an investment company and which will enable the Company to

comply with the Corporate Governance Code.

As an overseas company with a Premium Listing of equity shares, the Company complies fully with the Corporate

Governance Code from admission to the Official List of the UK Listing Authority on 13 May 2011, except that the

Corporate Governance Code includes provisions relating to the role of the chief executive, executive directors'

remuneration and the need for an internal audit function. The Board considers that these issues are not relevant to the

position of the Company, being an externally managed investment company. The Company has therefore not reported

further in respect of these provisions. In accordance with Rule 15.6.6 of the Listing Rules (applicable to closed-ended

investment funds) the Company is not required to report on compliance with Principles D.1 and D.2 (including the

related Code Provisions) of the Corporate Governance Code relating to remuneration of directors.

The Board is mindful of best practice as set out in the corporate governance guidelines issued by the City of London

Investment Group plc, which has over time become and remains today our largest shareholder.

The Company complies with a code of securities dealings in relation to the Ordinary Shares and warrants which is

consistent with, and no less onerous than, the Model Code.

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.


22

Corporate Governance Report continued

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:

• 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 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.


23


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

• Nominations 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


24


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 Remunerations 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 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 Nominations Committee

The Company has established a Nominations Committee which shall be made up of at least two members and which

shall comprise all independent directors. The Nominations Committee comprises Nicholas Wilson (Chairman), Neil

Benedict and Paul Macdonald. The Nominations 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 Nominations 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 Nominations 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 Nominations 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 Nominations 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.


25


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 Committee

Nomination Committee

Management Engagement Committee

Total number of meetings in year

12 6 1 2 4

Meetings Attended (entitled to attend)

David von Simson (Chairman- deceased 11 November 2012)

5 (7) 0(0)* 0 (0)* 1 (2) 1 (1)

Nicholas Wilson^ (Chairman – wef 12 December 2012 and Chairman of Nomination Committee)

9 (12) 6 (6) 1 (1) 2 (2) 4 (4)

Neil Benedict^ (Chairman of Remuneration Committee and Chairman of Management Engagement Committee)

11 (12) 6 (6) 1 (1) 2 (2) 4 (4)

Leonard O’Brien

11 (12) 0 (0)* 0 (0)* 0 (0)* 0 (0)*

Paul Macdonald^ (Chairman of Audit Committee)

11 (12) 6 (6) 1 (1) 0 (0)* 4 (4)

*Not a member of the committee.

^Nicholas Wilson was appointed Chairman of the Nomination Committee on 19 November 2012, Neil Benedict was

appointed Chairman of the Remuneration and Management Engagement Committees on 19 November 2012 and Paul

Macdonald was appointed Chairman of the Audit Committee on 19 November 2012.

In addition, the Annual General Meeting was held on 14 November 2012.

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.


26


Internal Control continued

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 2013 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 28.

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.


Nicholas Wilson

Chairman

10 September 2013


27

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 is 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, 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 three 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.


28

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.

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; 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.


Nicholas Wilson

Chairman

10 September 2013


29

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 14 November 2012. 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 2013.

Paul Macdonald

Chairman of the Audit Committee 10 September 2013


30

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 2013


31

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 24.

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 £200,000 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.

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.

David von Simson was non-executive chairman of the company until his sudden death on 11 November 2012.

In the year under review the Directors’ fees were paid at the following annual rates: the Chairman £47,500 plus £10,000

with respect to the work involved in the share buy-back programme, the Chairman of the Audit Committee £32,500, the

other Directors £30,000.

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 2013 30 June 2012 £ £

David von Simson (Chairman - Deceased) 16,386 60,000

Nicholas Wilson (Chairman) 51,997 42,500

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) 31,576 30,000

159,959 192,500

US$ charge reflected in the financial statements 250,589 304,616

Expenses totalling US$129,098 (2012: US$103,259) were incurred by the Directors and reimbursed during the year.


32

Directors’ Remuneration Report continued

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 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 2013 30 June 2012

Director Shares Warrants Shares Warrants

David von Simson - - 225,000 -

Leonard O’Brien 28,985 - 16,700 250,000

Nicholas Wilson 53,524 - - -

For and on behalf of the Board

Neil Benedict

Chairman of the Remuneration Committee

10 September 2013


33

Report of the Independent Auditors, KPMG Audit LLC, to the shareholders of Qatar Investment Fund plc

We have audited the financial statements of Qatar Investment Fund plc for the year ended 30 June 2013 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 Cash Flows and the Consolidated and Parent Company Statements of Changes in

Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable

law and International Financial Reporting Standards (IFRSs).

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.

Respective responsibilities of Directors and Auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 28, 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 (APB’s) Ethical Standards for

Auditors.

Scope of the audit of the financial statements

An audit 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 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.

Opinion on the financial statements

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 2013 and of the

Group and Parent Company’s profit for the year then ended;

• have been properly prepared in accordance with IFRSs; and

• have been properly prepared in accordance with the provisions of Companies Acts 1931 to 2004.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 require us 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

• 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.


34

Report of the Independent Auditors, KPMG Audit LLC, to the shareholders of Qatar Investment Fund plc continued

Under the Listing Rules we are required to review:

• the directors’ statement in respect of going concern; and

• the parts of the Corporate Governance Statement relating to the Group’s compliance with provisions c.1.1, c.2.1,

c.3.1 and c.3.7; and

• the disclosures specified by chapter 9, section 8, paragraph 11 of the Listing Rules as applicable to the Group.

Simon Nicholas, Responsible Individual

For and on behalf of KPMG Audit LLC

Chartered Accountants

Heritage Court

41 Athol Street

Douglas

Isle of Man IM99 1HN

10 September 2013


35

Consolidated Income Statement

Note Year ended 30 June 2013 Year ended 30 June 2012

US$’000 US$'000

Income

Interest income on cash balances - 1

Dividend income on quoted equity

Investments

9,658 11,030

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

11,447 8,809

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

14,537 (14,009)

Commission rebate income on quoted equity investments

7 166 157

Total net income 35,808 5,988

Expenses

Investment Manager's fees 8 2,621 3,013

Performance fees 8 - -

Audit fees 27 28

Other expenses 8 1,293 2,272

Total operating expenses 3,941 5,313

Profit before tax 31,867 675

Income tax expense 14 - -

Retained profit for the year 31,867 675

Basic earnings per share (cents) 12 16.15 0.29

Diluted earnings per share (cents) 12 16.15 0.29

The Directors consider that all results derive from continuing activities.

The accompanying notes form an integral part of these consolidated financial statements


36

Consolidated Statement of Comprehensive Income

Year ended 30 June 2013 Year ended 30 June 2012

US$'000 US$'000

Profit for the year 31,867 675

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss:

Currency translation differences 20 (104)

Total items that are or may be reclassified subsequently to profit or loss

20 (104)

Other comprehensive income/(expense) for the year (net of tax) 20 (104)

Total comprehensive profit for the year 31,887 571



37

Company Income Statement


US$’000 US$'000

Income

Net change in investment in and amounts due from subsidiary

26,541 (5,405)

Interest income on cash balances - 1

Intercompany loan interest 6,423 7,489

Total net income 32,954 2,085

Expenses

Audit fees 27 28

Other expenses 8 1,040 1,481

Total operating expenses 1,067 1,509

Profit before tax 31,887 576

Income tax expense - -

Retained profit for the year 31,887 576


38

Company Statement of Comprehensive Income

Year ended 30 June 2013 Year ended 30 June 2012

US$'000 US$'000

Profit for the year 31,887 576


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 31,887 576


39

Consolidated Balance Sheet

Note At 30 June 2013 At 30 June 2012

US$’000 US$'000

Financial assets at fair value through profit or loss

6 197,676 222,856

Due from broker - 74

Other receivables and prepayments 44 50

Cash and cash equivalents 9 8,257 6,129

Total current assets 205,977 229,109

Issued share capital 10 1,839 2,330

Retained earnings 202,223 224,738

Other reserves 11 545 706

Total equity 204,607 227,774

Current liabilities

Other creditors and accrued expenses 13 1,370 1,335

Total liabilities 1,370 1,335

Total equity & liabilities 205,977 229,109

The financial statements were approved by the Directors on 10 September 2013 and signed on their behalf by:

Paul Macdonald Leonard O’Brien

Director Director



40

Company Balance Sheet

Note At 30 June 2013 At 30 June 2012

US$’000 US$'000

Due from subsidiary 6 203,247 223,994

Other receivables and prepayments 740 583

Cash and cash equivalents 9 783 3,333

Total current assets 204,770 227,910

Issued share capital 10 1,839 2,330

Reserves 202,768 225,444

Total equity 204,607 227,774

Other creditors and accrued expenses 13 163 136

Total liabilities 163 136

Total equity & liabilities 204,770 227,910

The financial statements were approved by the Directors on 10 September 2013 and signed on their behalf by:

Paul Macdonald Leonard O’Brien

Director Director



41

Consolidated Statement of Changes in Equity

Share Capital

Distributable Reserves

Retained Earnings

Other reserves (note 11)

Total

US$'000 US$'000 US$'000 US$'000 US$'000

Balance at 01 July 2011 2,335 238,592 (1,357) 805 240,375

Total comprehensive income for the year

Profit for the year - - 675 - 675


Foreign exchange translation differences

- - - (104) (104)

Total other comprehensive income

- - - (104) (104)


- - 675 (104) 571

Contributions by and distributions to owners

Dividends paid - - (6,275) - (6,275)

Shares repurchased to be held in treasury

- (6,897) - - (6,897)

Shares in treasury cancelled (5) - - 5 -

Total contributions by and distributions to owners

(5) (6,897) (6,275) 5 (13,172)

Balance at 30 June 2012 2,330 231,695 (6,957) 706 227,774

Share Capital

Distributable Reserves

Retained Earnings

Other reserves

Total

US$'000 US$’000 US$'000 US$'000 US$'000

Balance at 01 July 2012 2,330 231,695 (6,957) 706 227,774


Profit for the year - - 31,867 - 31,867


Foreign exchange translation differences

- - - 20 20

Total other comprehensive income

- - - 20 20


- - 31,867 20 31,887


Dividends paid - - (5,417) - (5,417)

Expiration of option deed - - 672 (672) -


- (6,867) - - (6,867)

Shares subject to tender offer (415) (42,461) - 415 (42,461)

Tender offer expenses - (309) - - (309)

Shares in treasury cancelled (76) - - 76 -


(491) (49,637) (4,745) (181) (55,054)

Balance at 30 June 2013 1,839 182,058 20,165 545 204,607



42

Company Statement of Changes in Equity

Share Capital Reserves

Total

US$'000 US$'000 US$'000

Balance at 01 July 2011 2,335 238,040 240,375


Profit for the year - 576 576


- 576 576


Dividends paid - (6,275) (6,275)


- (6,897) (6,897)

Shares in treasury cancelled (5) - (5)


(5) (13,172) (13,177)

Balance at 30 June 2012 2,330 225,444 227,774

Share Capital Reserves

Total

US$'000 US$'000 US$'000

Balance at 01 July 2012 2,330 225,444 227,774


Profit for the year - 31,887 31,887


- 31,887 31,887


Dividends paid - (5,417) (5,417)


- (6,867) (6,867)

Shares subject to tender offer (415) (42,046) (42,461)

Tender offer expenses - (309) (309)

Shares in treasury cancelled (76) 76 -


(491) (54,563) (55,054)

Balance at 30 June 2013 1,839 202,768 204,607


43

Consolidated Statement of Cash Flows


US$’000 US$'000

Cash flows from operating activities

Purchase of investments (57,725) (53,930)

Proceeds from sale of investments 109,114 66,225

Interest received - 1

Dividends received 9,658 11,030

Operating expenses paid (4,019) (5,409)

Commission rebate 166 157

Net cash generated from operating activities

57,194 18,074

Financing activities

Dividends paid (5,417) (6,275)

Cash used in tender offer (42,461) -

Tender offer expenses (309) -

Cash used in share repurchases (6,867) (6,897)

Net cash used in financing activities (55,054) (13,172)

Net increase in cash and cash equivalents 2,140 4,902

Effects of exchange rate changes on cash and cash equivalents

(12) 28

Cash and cash equivalents at beginning of the year

6,129 1,199

Cash and cash equivalents at end of the year

9 8,257 6,129



44

Company Statement of Cash Flows


US$’000 US$'000

Cash flows from operating activities

Interest received - 1

Due from subsidiary 53,561 -

Operating expenses paid (1,045) (1,658)

Net cash generated from/(used in) operating activities

52,516 (1,657)

Financing activities

Dividends paid (5,417) (6,275)

Cash used in tender offer (42,461) -

Tender offer expenses (309) -

Cash used in share repurchases (6,867) (6,897)

Net cash used in financing activities (55,054) (13,172)

Net increase in cash and cash equivalents (2,538) 2,692

Effects of exchange rate changes on cash and cash equivalents

(12) (7)

Cash and cash equivalents at beginning of the year

3,333 648

Cash and cash equivalents at end of the year

783 3,333


45

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 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.

In the year ended 30 June 2013, the Company purchased 7,534,651 of its ordinary shares for a total value of

US$6,867,087 to be held in treasury. 7,681,193 shares had been repurchased in the year ended 30 June 2012 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 7 December 2012 the Company completed a tender offer at a price of US$1.0219 per share. Under the offer

41,552,272 shares were cancelled with US$42,462,267 being paid to participating shareholders.

The shareholders approved a dividend of 3.0 cents per share on 14 November 2012; this was paid to shareholders on

30 January 2013.

The Company’s agents and the Investment Manager perform all significant functions. Accordingly, the Company itself

has no employees.

Duration


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 Limited British Virgin Islands 100%

Epicure Qatar Opportunities Holdings Limited is a wholly owned subsidiary of the Company, and was incorporated in

the British Virgin Islands on 4 July 2007 under the provisions of the Companies Act 2001, as a limited liability company

with registered number 1415393.


46

Notes to the Consolidated Financial Statements continued

3 Significant Accounting Policies

The consolidated financial statements of the Company for the year ended 30 June 2013 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 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

Subsidiaries are those enterprises controlled by the Company. Control exists where the Company has the power,

directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its

activities. The financial statements of the subsidiaries are included in the consolidated financial statements from the

date that control effectively commences until the date that control effectively ceases.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are

eliminated 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 arising from changes in the fair value of the financial assets and liabilities 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 revenue 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.


47


3 Significant Accounting Policies continued

3.5 Interest income and dividend income

Interest income is recognised on a time-proportionate basis using the effective interest rate method. Dividend income is

recognised when the right to receive payment is established.

3.6 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 (to be updated)

IASB (International Accounting Standards Board) and IFRIC (International Financial Reporting Interpretations

Committee) have issued the following standards and interpretations with an effective date after the date of these

financial statements:

New/Revised International Financial Reporting Standards (IAS/IFRS) Effective date

(accounting periods

commencing on or after)

IFRS 9 Financial Instruments (2009)

IFRS 9 introduces new requirements for classifying and measuring financial assets.

*

IFRS 10 Consolidated Financial Statements Requires a parent to present consolidated financial statements as those of a single economic entity

1 January 2013

IFRS 11 Joint Arrangements

Replaces IAS 31 Interests in Joint Ventures.

1 January 2013

IFRS 12 Disclosure of Interests in Other Entities Requires the extensive disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, interests in other entities and the effects of those interests on its financial position, financial performance and cash flows.

1 January 2013

IFRS 13 Fair Value Measurement

Replaces the guidance on fair value measurement in existing IFRS accounting literature with

a single standard.

1 January 2013

IAS 19 Employee Benefits (2011) An amended version of IAS 19 Employee Benefits.

1 January 2013

IAS 27 Separate Financial Statements (2011)

Amended version of IAS 27 which now only deals with the requirements for separate

financial statements.

1 January 2013

IAS 28 Investments in Associates and Joint Ventures(2011)

This Standard supersedes IAS 28 Investments in Associates 1 January 2013

*Effective date deferred pending finalisation of the impairment and classification and measurement requirements.


48


3 Significant Accounting Policies continued

3.9 Future changes in accounting policies continued

The Directors do not expect the adoption of the standards and interpretations to have a material impact on the Group’s

financial statements in the period of initial application.

4 Net Asset Value per Share

The net asset value per share as at 30 June 2013 is US$1.1610 per share (30 June 2012: US$1.0109) based on

176,228,350 (30 June 2012: 225,315,273) ordinary shares in issue as at that date.

5 Fair Value Hierarchy

IFRS 7 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 Company’s investments are classed as level 1 investments.


49


6 Investments and amount due from subsidiary

Group

30 June 2013: Financial assets at fair value through profit or loss; all quoted equity securities except Bank Muscat 4.5%

20/03/2013 which is a convertible bond: Security name Number US$'000

Dana Gas Company (DANA UH) 1,000,000 147

Drake and Scull International (DSI UH) 3,250,000 800

Dubai Islamic Bank (DIB UH) 850,000 708

Emaar Properties Company (EMAAR UH) 1,450,000 2,033

Emirates National Bank of Dubai (ENBD UH) 813,500 1,007

First Gulf Bank (FGB UH) 331,000 1,433

Union National Bank (UNB UH) 406,250 513

Kuwait Food Company (FOOD KW) 216,000 1,604

Bank Muscat (BKMB OM) 959,388 1,428

Bank Muscat 4.5% 20/03/2016 1,925,514 524

Dhofar International Development and Investment (DIDI OM)

361,000 474

Galfar Engineering (GECS OM) 1,309,501 1,211

Al Meera Consumer Goods (MERS QD) 71,985 2,686

Barwa Real Estate (BRES QD) 1,890,486 13,774

Commercial Bank of Qatar (CBQK QD) 874,796 16,636

Doha Bank (DHBK QD) 699,050 8,997

Gulf International Services (GISS QD) 68,595 769

Industries Qatar (IQCD QD) 589,257 25,485

Masraf Al Rayan (MARK QD) 2,687,733 20,320

Mazaya Real Estate Development (MRDS QD) 215,210 664

National Leasing (NLCS QD) 258,343 2,626

Qatar Electricity and Water (QEWS QD) 265,754 11,552

Qatar Gas Transport (QGTS QD) 158,562 794

Qatar Insurance (QATI QD) 515,635 8,575

Qatar Islamic Bank (QIBK QD) 354,077 6,616

Qatar Meat and Livestock (QMLS QD) 244,176 4,221

Qatar National Bank (QNBK QD) 920,881 39,725

Qatar Navigation (QNNS QD) 431,467 8,431

Qatar Telecom (QTEL QD) 317,768 10,473

Qatar United Development Company (UDCD QD) 546,645 3,450

197,676


50


6 Investments and amount due from subsidiary continued

Group

30 June 2012: Financial assets at fair value through profit or loss; all quoted equity securities: Security name Number US$'000

Oman Qatari Telecommunication Company (NWRS QD)

918,048 1,198

Al Khaleej Bank (KCBK QD) 567,768 2,573

Barwa Real Estate (BRES QD) 2,019,213 14,681

Commercial Bank of Qatar (CBQK QD) 1,275,677 23,940

Doha Bank (DHBK QD) 1,203,916 17,836

Gulf International Services (GISS QD) 269,001 1,886

Gulf Warehousing 77,500 859

Industries Qatar (IQCD QD) 836,712 28,695

Masraf Al Rayan (MARK QD) 2,865,701 21,150

Mazaya Real Estate Development (MRDS QD) 1,012,816 3,473

Medicare Group (MCGS QD) 5,000 52

National Leasing (NLCS QD) 490,700 5,331

Qatar Electricity and Water (QEWS QD) 312,563 11,362

Qatar Gas Transport (QGTS QD) 298,562 1,272

Qatar Insurance (QATI QD) 429,600 8,357

Qatar International Islamic Bank (QIIK QD) 63,500 842

Qatar Islamic Bank (QIBK QD) 800,816 16,698

Qatar Meat and Livestock Company (QMLS QD) 74,173 900

Qatar National Bank (QNBK QD) 1,202,104 43,304

Qatar Navigation (QNNS QD) 575,977 9,276

Qatar Telecom (QTEL QD) 301,954 8,574

Qatar United Development Company (UDCD QD) 123,517 597

222,856

Company

30 June 2013 30 June 2012

US$’000 US$'000

Investment in subsidiary - -

Amount due from subsidiary 203,247 223,994

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 60% (changed to 50% from 21 April 2013) brokerage commission rebates for all

trades done through its Qatar brokers. This arrangement is set to continue. For the year ended 30 June 2013 the Group

received US$165,586 (2012: US$156,995).


51


8 Charges and Fees Group 30 June

2013

Company 30 June 2013

Group 30 June 2012

Company30 June 2012

US$’000 US$'000 US$'000 US$'000

Investment Manager’s fees (see below)

2,621 - 3,013 -

Performance fees (see below) - - - -

Administrator and Registrar’s fees (see below)

319 281 382 340

Custodian fees (see below) 188 9 432 135

Directors’ fees and expenses 380 380 408 408

Directors’ insurance cover 44 44 55 55

Broker fees 83 83 113 113

Other 279 243 *882 430

Other expenses 1,293 1,040 2,272 1,481

*Included in other expenses in the prior year are additional costs of US$378k for changing custodian.

Investment Manager’s fees

Annual fees

The Investment Manager is entitled to an annual management fee of 1.25% of the Net Asset Value of the Group,

calculated monthly and payable quarterly in arrears.

Annual management fees for the year ended 30 June 2013 amounted to US$2,621,380 (30 June 2012: US$3,012,615)

and the amount accrued but not paid at the year-end was US$642,428 (30 June 2012: US$754,745).

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.

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


52


8 Charges and Fees continued

Investment Manager’s fees continued

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 2013 amounted to US$nil (30 June 2012:

US$nil).

The Investment Manager is responsible for the payment of all fees to the Investment Adviser.

The current Investment Management Agreement is subject to termination on 31 October 2013 with an agreement in

principle for a revised agreement from 1 November 2013. The revised agreement will see 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. There will be no changes in the performance fee arrangements or any other material

terms as exist currently.


53



Investment Manager’s fees continued

Investment Management Agreement definitions

Adjusted Net Asset

Value per Ordinary

Share

at a particular time, the total of A minus B plus C where:

(i) A is the Net Asset Value per Ordinary 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 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

(iii) C 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 Period each period in respect of which the Company produces 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

Period

any Performance Period in 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.

Shortfall Return the amount by which the Target Net Asset Value per Ordinary Share exceeds the Adjusted Net

Asset Value per Ordinary Share in respect of a Performance Period.

Under the terms of an option agreement dated 25 July 2007 the Investment Manager was granted an option to acquire

1,713,550 shares at an option price of US$1.00 per share. The Investment Manager Option Deed provided for the

transfer of the options by the Investment Manager to the Distribution Adviser and the Placing Agent. This transfer has

now taken place.

The option could have been exercised by the Distribution Adviser and the Placing Agent in whole or in part at any time

before the fifth anniversary of admission to trading on AIM, this deadline has now passed and the option value of

US$672,300 has been transferred to retained reserves.

Administrator and Registrar fees

The Administrator was entitled to receive a fee of 15 basis points per annum of the net asset value of the Company

between US$0 and US$100 million, 12.5 basis points of the net asset value of the Company between US$100 and

US$200 million and 10 basis points of the net asset value of the Company in excess of US$200 million, subject to a

minimum monthly fee of US$15,000, payable quarterly in arrears. The Administrator had also received an inception fee

on a time and charges basis subject to a minimum fee of US$20,000.

With effect from 1 January 2013, Administration fees shall be charged based on the net asset value of the Company as

of each Valuation Day in accordance with the schedule below and subject to a minimum monthly fee of US$15,000.

$0 to $100 million 12.5 basis points per annum

Above $100 million 10 basis points per annum

The Administrator assists in the preparation of the financial statements of the Company and provides general secretarial

services.


54



Administrator and Registrar fees continued

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 £12,000 per annum subject to the number of CREST settled transactions undertaken.

Administration fees paid for the year ending 30 June 2013 amounted to US$286,115 and US$33,247 for additional

services (30 June 2012: US$343,796 and US$37,816 respectively).

Custodian fees

The Custodian is entitled to receive fees of US$7,200 per annum and US$25 per processed transaction from Qatar

Investment Fund PLC.

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 (GCCC 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 2013 amounted to US$188,351 (30 June 2012:

US$431,976) and the amount accrued but not paid at the year-end was US$20,080 (30 June 2012: US$18,692).

9 Cash and Cash Equivalents Group

30 June 2013 Company

30 June 2013 Group

30 June 2012 Company

30 June 2012 US$’000 US$’000 US$'000 US$'000

Bank balances 8,257 783 6,129 3,333

Cash and cash equivalents 8,257 783 6,129 3,333


55


10 Share Capital

30 June 2013 30 June 2012

US$’000 US$’000

Authorised 500,000,000 Ordinary shares of US$0.01 each 5,000,000 5,000,000

Allotted, Called-up and Fully-Paid:

176,228,350 (2012: 225,315,273) Ordinary shares of US$0.01 each

in issue, with full voting rights 1,763 2,253

7,534,651 (2012: 7,681,193) Ordinary shares of US$0.01 each held

in Treasury 76 77

1,839 2,330

During the year to 30 June 2013 the Company repurchased 7,534,651 (2012: 7,681,193) Ordinary shares, to be held in

treasury, at a cost of US$6,867,087 (2012: US$6,895,889) and cancelled 7,681,193 (2012: 464,696) 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 7 December 2012 the Company completed a tender offer at a price of US$1.0219 per share. Under the offer

41,552,272 shares were cancelled.

Capital management

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

Reserves

Retained

Earnings

Foreign

Currency

Translation

reserve

Capital

Redemption

Reserve

*Other

Reserves

30 June

2013

Total

US$'000 US$’000 US$'000 US$'000 US$'000 US$'000

Balance at 1 July 2012 231,695 (6,957) (111) 145 672 225,444

Dividends paid - (5,417) - - (5.417)

Expiration of option

deed

- 672 - - (672) -

Shares subject to

tender offer

(42,461) - - 415 - (42,046)

Tender expenses (309) - - - - (309)

Foreign exchange

translation differences

- - 20 - - 20

Retained earnings - 31,867 - - - 31,867

Shares in treasury

cancelled

- - - 76 - 76

Share buy-backs (6,867) - - - - (6,867)

Balance at 30 June

2013

182,058 20,165 (91) 636 - 202,768

*Other reserves figure is comprised of share issue expenses relating to the issue of share options.


56


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 2013 30 June 2012

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

31,867 675

Weighted average number of ordinary shares in issue (thousands)

197,359 231,099

Basic and diluted earnings per share (cents per share) 16.15 0.29

13 Trade and other payables

Group 30 June 2013 30 June 2012 US$’000 US$'000

Due to broker 512 386

Management fee payable 642 755

Administration fee payable 63 87

Accruals and sundry creditors 153 107

1,370 1,335

Company 30 June 2013 30 June 2012 US$’000 US$'000

Administration fee payable 57 80

Accruals and sundry creditors 106 56

163 136

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 £250 per annum.

The Company became registered for VAT from 1 February 2011.


57


14 Taxation continued

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 the United Arab Emirates and Kuwait.

At 30 June 2013, if the market value of the investment portfolio had increased/decreased by 5.5% with all other

variables held constant, this would have increased/decreased net assets attributable to shareholders by approximately

US$10.8 million (30 June 2012 : 1.5% : US$3.3 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 currency giving rise to this risk is primarily US Dollars.

The Group’s policy is not to enter into any currency hedging transactions.


58


15 Financial instruments continued

Foreign exchange risk continued

At the reporting date the Group had the following exposure:

Currency 30 June 2013 30 June 2012

% %

British Pound (0.02) 0.01

Omani Rial 1.92 0.79

US Dollar 0.07 1.11

Qatari Riyal 91.45 98.09

Kuwaiti Dinar 0.97 -

UAE Dirham 5.61 -

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 2013 Monetary Assets Monetary Liabilities Net Exposure

US$’000 US$’000 US$’000

British Pound 15 (55) (40)

Omani Rial 3,969 (31) 3,938

US Dollar 921 (772) 149

Qatari Riyal 187,632 (512) 187,120

Kuwaiti Dinar 1,971 - 1,971

UAE Dirham 11,469 - 11,469

205,977 (1,370) 204,607

30 June 2012 Monetary Assets Monetary Liabilities Net Exposure

US$’000 US$’000 US$’000

British Pound 26 - 26

Omani Rial 1,825 (31) 1,794

US Dollar 3,438 (918) 2,520

Qatari Riyal 223,820 (386) 223,434

Kuwaiti Dinar - - -

UAE Dirham - - -

229,109 (1,335) 227,774

Foreign currency sensitivity risk – presentational currency

At 30 June 2013 had the US Dollar weakened/strengthened by 1% (2012 : 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 2013 US$’000

British Pound -

Omani Rial (39)

Qatari Riyal 1,871

Kuwaiti Dinar 20

UAE Dirham 115

Effect on net assets 1,967


59



Foreign exchange risk continued

30 June 2012 US$’000 British Pound - Omani Rial 17 Qatari Riyal 2,234 Kuwaiti Dinar - UAE Dirham -

Effect on net assets 2,251

Foreign currency sensitivity risk – functional currency

As 92% of net assets are denominated in QAR and QAR is the functional currency there is no significant functional

currency risk.

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 2013 30 June 2012

US$’000 US$’000

Financial assets at fair value through profit or loss 197,676 222,856

Cash and cash equivalents 8,257 6,129

Other receivables 44 124

205,977 229,109

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.


60



Liquidity risk continued

The residual undiscounted contractual maturities of financial liabilities are in the table below:

30 June 2013

Less than

1 month

1-3

months

3 months to

1 year

1-5 years Over 5

years

No stated

maturity

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Financial liabilities

Other creditors and accrued

expenses

1,370 - - - - -

1,370 - - - - -

30 June 2012

Less than

1 month

1-3

months

3 months to

1 year

1-5 years Over 5

years

No stated

maturity

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Financial liabilities

Other creditors and accrued

expenses

1,335 - - - - -

1,335 - - - - -


61



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 2013 Less than

1month

1-3 months 3 months

to 1 year

1-5 years Over 5

years

Non-

interest

bearing

Total

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

- - - - - 197,676 197,676

Other receivables and

prepayments

- - - - - 44 44

Cash 8,257 - - - - - 8,257

Total financial assets 8,257 - - - - 197,720 205,977

Financial Liabilities

Other creditors and

accrued expenses

- - - - - (1,370) (1,370)

Total financial

liabilities

- - - - - (1,370) (1,370)

Total interest rate

sensitivity gap

8,257

30 June 2012 Less than

1month

1-3 months 3 months

to 1 year

1-5 years Over 5

years

Non-

interest

bearing

Total

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

- - - - - 222,856 222,856

Other receivables and

prepayments

- - - - - 124 124

Cash 6,129 - - - - - 6,129

Total financial assets 6,129 - - - - 222,980 229,109

Financial Liabilities

Other creditors and

accrued expenses

- - - - - (1,335) (1,335)

Total financial

liabilities

- - - - - (1,335) (1,335)

Total interest rate

sensitivity gap

6,129 - - - - - -


62



Interest rate risk continued

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.

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

17 Post Balance Sheet Events

There have been no post balance sheet events.

63

QATAR INVESTMENT FUND PLC (Incorporated in the Isle of Man)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE is hereby given that the Annual General Meeting of the above named Company will be held at the

offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB,

British Isles on Monday 4 November 2013 at 11.00 a.m. to transact the following business:

ORDINARY BUSINESS – ORDINARY RESOLUTIONS

1. That the Report of the Investment Manager and Investment Adviser, Report of the Directors, Directors’

Remuneration Report, Auditors' Report and the Audited Consolidated Financial Statements of the

Company for the year end to 30 June 2013 be approved.

2. That a final dividend of 3.2 cents per ordinary share (as recommended by the Board of Directors) be

declared payable with respect to the year ended 30 June 2013.

3. That KPMG Audit LLC Isle of Man, who has indicated their willingness to continue in office, be re-

appointed as auditors of the Company for the year ending 30 June 2014.

4. That Mr Leonard O’Brien who retires in accordance with the Articles of Association be re-elected a

director of the Company.

SPECIAL BUSINESS – ORDINARY RESOLUTIONS

5. That the Company generally and unconditionally be authorised to make market purchases of ordinary

shares of US$0.01 each provided that:

(a) the maximum aggregate number of ordinary shares that may be purchased is 26,145,597

(being the equivalent of 14.99% of the Company’s issued share capital at the date of this notice);

(b) the minimum price (excluding expenses) which may be paid for each ordinary share is US$0.01

being the nominal value per ordinary share;

(c) the maximum price (excluding expenses) which may be paid for each ordinary share is the

higher of: (i) 105 per cent of the average market value of an ordinary share in the Company for the

five business days prior to the day the purchase is made; and (ii) the value of an ordinary share

calculated on the basis of the higher of the price quoted for (I) the last independent trade of and (II)

the highest current independent bid for, any number of the Company's ordinary shares on the

trading venue where the purchase is carried out; and

(d) the authority conferred by this resolution shall expire on 23 December 2014 or, if earlier, at the

conclusion of the Company's next annual general meeting save that the Company may, before the

expiry of the authority granted by this resolution, enter into a contract to purchase ordinary shares

which will or may be executed wholly or partly after the expiry of such authority.

All Shares purchased pursuant to the above authority shall be either: (i) held, sold, transferred or

otherwise dealt with as treasury shares; or (ii) cancelled immediately upon completion of the purchase.

64

SPECIAL RESOLUTION

6. That the rights of holders of equity securities in the Company to receive a pre-emptive offer of equity

securities pursuant to Article 5A.2 of the Company Articles of Association be excluded with respect to

17,442,026 Ordinary shares, this exclusion to expire immediately prior to the annual general meeting of

the Company to be held in 2014.

By Order of the Board Ian Dungate Assistant Secretary Date: 10 September 2013 Registered Office Millennium House 46 Athol Street Douglas Isle of Man IM1 1JB British Isles

Notes:

1. A member of the Company entitled to attend, speak and vote at the meeting convened by the notice set

out above (the "Annual General Meeting") is entitled to appoint a proxy to exercise all or any of his

rights to attend, speak and vote at the meeting in his place. A proxy may demand, or join in demanding,

a poll. A proxy need not be a member of the Company.

2. An instrument for the purposes of appointing a proxy is enclosed (the "Form of Proxy"). To be valid, the

Form of Proxy and the power of attorney or other authority (if any) under which it is signed, or a

notarially certified copy of such power or authority, must be received at Galileo Fund Services Limited,

Millennium House, 46 Athol Street Douglas, Isle of Man, IM1 1JB by 11:00 a.m. on 2 November 2013 or

not later than 48 hours before the time appointed for holding the meeting or adjourned meeting at which

the person named in the instrument proposes to vote or, in the case of a poll, before the time appointed

for taking the poll and, in default, the instrument shall not be treated as valid.

3. A member may appoint more than one proxy in relation to the Annual General Meeting provided that

each proxy is appointed to exercise the rights attached to a different share or shares held by him. To

appoint more than one proxy you may photocopy the enclosed Form of Proxy. Please indicate the proxy

holder's name and the number of shares in relation to which they are authorised to act as your proxy

(which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the

proxy instruction is one of multiple instructions being given. All forms must be signed and should be

returned together in the same envelope. A failure to specify the number of shares to which each proxy

appointment relates or specifying a number in excess of those held by you may result in the

appointment being invalid.

4. In the case of a member which is a company, the Form of Proxy must be executed under the member's

common seal (or in any other manner permitted by law and having the same effect as if executed under

seal) or under the hand of a duly authorised officer, attorney or other person.

65

5. Completion of the Form of Proxy appointing a proxy does not preclude a member from subsequently

attending and voting at the meeting in person if he so wishes.

6. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will

be accepted to the exclusion of the votes of the other joint holders and, for this purpose, seniority will be

determined by the order in which the names stand in the register of members in respect of the joint

holding.

7. Pursuant to Regulation 22 of the Uncertificated Securities Regulations 2005 (Isle of Man), the Company

specifies that only those members entered on the register of members of the Company as at 11:00 a.m.

on 2 November 2013 (or, if the meeting is adjourned, 48 hours before the time fixed for the adjourned

meeting) shall be entitled to attend and vote at the meeting in respect of the number of Shares

registered in their name at that time. Changes to entries on the register of members after 11:30 a.m. on

2 November 2013 (or, if the meeting is adjourned, on the register of members 48 hours before the time

fixed for the adjourned meeting) shall be disregarded in determining the rights of any person to attend or

vote at the meeting.

8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy

appointment service may do so by using the procedures described in the CREST manual. CREST

personal members or other CREST sponsored members, and those CREST members who have

appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who

will be able to take the appropriate action on their behalf.

9. In order for a proxy appointment or instruction made using the CREST service to be valid, the

appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in

accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information

required for such instruction, as described in the CREST manual (available via

www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a

proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be

valid, be transmitted so as to be received by the issuer's agent (ID RA10) by 10:30 a.m. on 2 November.

For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp

applied to the message by the CREST application host) from which the issuer's agent is able to retrieve

the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of

instructions to proxies appointed through CREST should be communicated to the appointee through

other means.

10. CREST members and, where applicable, their CREST sponsors, or voting service providers should note

that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any

particular message. Normal system timings and limitations will, therefore, apply in relation to the input of

CREST proxy instructions. It is the responsibility of the CREST member concerned to take (or, if the

CREST member is a CREST personal member, or sponsored member, or has appointed a voting

service provider, to procure that his CREST sponsor or voting service providers) take(s)) such action as

shall be necessary to ensure that a message is transmitted by means of the CREST system by any

particular time. In this connection, CREST members and, where applicable, their CREST sponsors or

voting system providers are referred, in particular, to those sections of the CREST manual concerning

practical limitations of the CREST system and timings. The Company may treat as invalid a CREST

proxy instruction in the circumstances set out in Regulation 18(4)(a) of the Uncertificated Securities

Regulations 2005 (Isle of Man).

66

QATAR INVESTMENT FUND PLC (Incorporated in the Isle of Man)

FORM OF PROXY

To be used for the Annual General Meeting of the above named company to be held at the offices of Galileo Fund

Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, British Isles on Monday 4

November 2013 at 11.00 a.m. to transact the following business:

I/We___________________________________________________________________________________________

____

of ________________________________________________________________________________¹ being member(s) of the

above-named Company, hereby appoint the Chairman of the Meeting or ² __________________________________________

of ________________________________________________________________________________or Ian Dungate or

failing him, David Parnell as my/our proxy to vote on my/our behalf at the Annual General Meeting of the Company to be held on

Monday 4 November 2013 and at any adjournment thereof.

I/We direct my/our proxy to vote in respect of the Resolutions to be proposed at such Annual General Meeting in the

following manner ³:-

ORDINARY BUSINESS- ORDINARY RESOLUTIONS FOR AGAINST ABSTAIN

1 THAT the Report of the Investment Manager and Investment Adviser, Report of the Directors, Directors’ Remuneration Report, Auditors' Report and the Audited Consolidated Financial Statements of the Company for the year ended 30 June 2013 be approved.

2 THAT a final dividend of 3.2 cents per ordinary share be declared payable with respect to the year ended 30 June 2013.

3 THAT KPMG Audit LLC, Isle of Man be re-appointed as auditors of the Company for the year ending 30 June 2014.

4 THAT Mr Leonard O’Brien who retires in accordance with the Articles of Association be re-elected a director of the Company.

SPECIAL BUSINESS- ORDINARY RESOLUTIONS

5 That the Company generally and unconditionally be authorised to make market purchases of ordinary shares of US$0.01 each provided that: (a) the maximum aggregate number of ordinary shares that may be purchased is 26,145,597 (being the equivalent of 14.99% of the Company’s issued share capital at the date of this notice); (b) the minimum price (excluding expenses) which may be paid for each ordinary share is US$0.01 being the nominal value per ordinary share; (c) the maximum price (excluding expenses) which may be paid for each ordinary share is the higher of: (i) 105 per cent of the average market value of an ordinary share in the Company for the five business days prior to the day the purchase is made; and (ii) the value of an ordinary share calculated on the basis of the higher of the price quoted for (I) the last independent trade of and (II) the highest current independent bid for, any number of the Company's ordinary shares on the trading venue where the purchase is carried out; and (d) the authority conferred by this resolution shall expire on 23 December 2014 or, if earlier, at the conclusion of the Company's next annual general meeting save that the Company may, before the expiry of the authority granted by this

67

resolution, enter into a contract to purchase ordinary shares which will or may be executed wholly or partly after the expiry of such authority. All Shares purchased pursuant to the above authority shall be either: (i) held, sold, transferred or otherwise dealt with as treasury shares; or (ii) cancelled immediately upon completion of the purchase.

SPECIAL RESOLUTION

6 THAT the rights of holders of equity securities in the Company to receive a pre-emptive offer of equity securities pursuant to Article 5A.2 of the Company Articles of Association shall be and is hereby excluded in respect of 17,442,026 Ordinary shares, this exclusion to expire immediately prior to the annual general meeting of the Company to be held in 2014.

Dated: 2013 Signature_________________________________ NOTES: 1 Full name(s) and address(es) to be inserted in BLOCK CAPITALS. The name of all joint holders should be stated.

2 If you wish to appoint a person other than the Chairman of the Meeting as your proxy please delete the words "the Chairman of the Meeting" and print the name and address of the person you wish to appoint in the space provided.

3 Please indicate with a "X" in the appropriate space beside the resolution how you wish your proxy to vote on your behalf on

a poll. Except as otherwise instructed, your proxy will exercise his discretion as to how he votes or whether he abstains from voting.

4 This form of proxy must be signed by the member or his attorney duly authorised in writing, or if the appointer is a corporation the form of proxy must be executed under the hand of an officer of the corporation duly authorised on their behalf.

5 A member entitled to attend and vote is entitled to appoint one or more parties to attend and, on a poll, to vote instead of him. A proxy need not also be a member. In the case of joint holders, if more than one such joint holder is present, only the person whose name stands first in the Register of Members in respect of the relevant joint holding will be entitled to vote, whether in person or by proxy

6 This form of proxy should be completed and lodged at the Company's registered office C/o Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, British Isles (Attn: Ian Dungate) Fax: 44 1624 692601 no later than forty-eight hours before the date appointed for holding the meeting together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority.

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