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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Egypt Trust | LSE:EGP | London | Ordinary Share | LU0068111326 | SHS USD2 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 23.125 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jun 2019 to Jun 2024
TIDMEGP
THE EGYPT TRUST
Société d'Investissement à Capital FixeLuxembourgR.C.S. Luxembourg B 55 584
Unaudited Half-Yearly ReportSeptember 30th, 2011
Table of Contents
Organisation of the Fund2
General Information4
Responsibility Statement5
Investment Policy6
Manager's Review7
Principal Risks and Uncertainties9
Statement of Net Assets10
Shareholders' Equity10
Statement of Operations11
Statement of Changes in Net Assets12
Statistical Information about the Fund12
Statement of Changes in Shares Outstanding12
Statement of Investments and Other Net Assets13
Currency, Geographical and Industrial Classification of the Fund15
Notes to the Financial Statements17
Organisation of the Fund
Hot Features
Premium
Chairman
ALEXANDER E. ZAGOREOS Jermain Hill Lane
Eagle Bridge, NY 12057, U.S.A.
Directors
MOHAMED KAMAL EL-DIN 151 Mohamed Farid Street
BARAKAT *
Cairo, EGYPT
MICHAEL BECKETT *+ Northcroft Dulwich Common
London SE21 7EW, U.K.
ADEL HOSNI HUSSEIN NATIONAL BANK OF EGYPT
HASSAN HOSNI+
Chairman of the Nomination Committee NBE Tower
1187 Corniche El Nil
Boulak
Cairo, EGYPT
SHAKER ALBERT KHAYATT & COMPANY INC.
KHAYATT *
50 Broad Street, Suite 1609
New York, NY 10004, U.S.A.
MICHAEL TAIT * OXFORD AND EDINBURGH CONSULTANTS
Chairman of the Audit Committee 8 Chalcot Crescent
London NW1 8YD, U.K.
Registered Office 11, rue Aldringen
L-1118 Luxembourg
Manager LAZARD ASSET MANAGEMENT LLC
30 Rockefeller Plaza
New York, NY 10112, U.S.A.
Investment Adviser NATIONAL BANK OF EGYPT
NBE Tower
1187 Corniche El Nil
Boulak
Cairo, EGYPT
Custodian and KBL EUROPEAN PRIVATE BANKERS S.A.
Paying Agent
43, boulevard Royal
L-2955 Luxembourg
Domiciliary, KREDIETRUST LUXEMBOURG S.A.
Registrar,
Transfer
and Administrative Agent 11, rue Aldringen
L-2960 Luxembourg
Cabinet de révision DELOITTE S.A.
agréé
560, rue de Neudorf
L-2220 Luxembourg
Financial Adviser WESTHOUSE SECURITIES LIMITED
and Broker
One Angel Court
London EC2R 7HJ, U.K.
* Member of the Audit Committee
+ Member of the Nomination Committee
General Information
1. Shareholders will be sent audited annual accounts relating to THE EGYPT TRUST (the "Fund" or the "Corporation"), which will include a report by the Manager, made up to the last day of March in each year. Shareholders will also be sent an unaudited half-yearly report covering the six-month period ending September 30th in each year.
2. The Annual General Meeting of Shareholders is held in Luxembourg each year at 4 p.m. on the third Tuesday of August in each year (or, if such day is not a business day in Luxembourg, on the next following business day). Notices convening each annual general meeting, including agenda, time and place, and details of attendance, quorum and majority requirements under Luxembourg law, will be sent to the registered addresses of Shareholders together with the annual report and accounts not less than 21 days before the date of such meeting.
3. The investment policy of the Corporation is to achieve medium to long-term capital growth through investments principally in equity securities of Egyptian companies listed on the Egyptian Stock Exchanges as well as other exchanges.
4. The Corporation intends to distribute annually to Shareholders substantially all of its income (including dividends and interest) available for distribution after deducting fees and expenses.
5. Dividends will only be paid to the extent that they are covered by income received from underlying investments, shares of profits of associated companies being unavailable for this purpose unless and until distributed to the Corporation. The Fund's Articles of Incorporation (the "Articles") provide that dividends shall not be paid out of surpluses arising upon the realisation of investments.
6. A dividend declared but not claimed by a Shareholder after twelve years from the declaration thereof shall lapse and revert to the Corporation.
7. The Net Asset Value (the "NAV") per Share is expressed in US Dollars ("USD") and is published on a weekly basis in the "Financial Times".
8. The Shares of the Fund are listed on the Official List of the UK Listing Authority and the Luxembourg Stock Exchange and traded on the London Stock Exchange and the Luxembourg Stock Exchange.
Responsibility Statement
We, the Directors of The Egypt Trust, confirm to the best of our knowledge that:
a) the financial statements which have been prepared in accordance with the applicable set of accounting standards (being the legal and regulatory requirements in Luxembourg relating to investment funds) give a true and fair view of the assets, liabilities, financial position and profit or loss of the Fund as at September 30th, 2011 and for the financial period then ended; and
b) the Manager's Review includes a fair review of the development and performance of the business and the position of the Fund together with a description of the principal risks and uncertainties that it faces; and
c) the financial statements include a fair review of any related party transactions that have materially affected the financial position or the performance of the Fund and any changes to the related party transactions described in the Annual Report that could have a material effect on the financial position or performance of the Fund.
By order of the Board
Alexander E. Zagoreos
Chairman
Luxembourg, November 2011
Investment Policy
-- Asset Allocation:
The Fund invests primarily in equity securities of Egyptian
companies listed on the Egyptian Stock Exchange (formerly Cairo
and Alexandria Stock Exchanges) as well as other exchanges.
We use a bottom-up, fundamental company analysis to identify
companies that have strong earnings-generation ability but are
inexpensively priced.
We continuously monitor potential and existing holdings in the
Fund, in addition to the overall macro-economic environment in
Egypt. The asset allocation and security selection changes
accordingly.
-- Risk Diversification:
The Fund runs a concentrated portfolio, subject to exposure limits
detailed below, but in the meanwhile aims to provide broad
exposure to the market through holding a diversified portfolio.
The liquidity of the Egyptian market is limited compared to
developed markets. When making an investment decision, liquidity
concerns weigh in. We aim to keep 90% of the Fund's NAV in highly
liquid securities and cash. The remaining 10% would provide the
flexibility to invest in attractively priced securities with low
liquidity, or in pre-IPO companies.
We seek to invest in undervalued assets trading at a discount
(absolute and/or relative). Such discounts could limit the
portfolio's downside risk, and add more value during rising
markets.
-- Exposure Limits:
Maximum weighting in any single security should not exceed 10% of
NAV - passive breaches should be brought back in line with the
policy in a manner consistent with the best interests of the
Shareholders, and
Maximum weighting in any single sector should not exceed 25% of
NAV. The Fund treats Real Estate & Property Development as a
separate sector and not part of Financials.
Gearing: The Fund's Manager is not allowed to use gearing.
Manager's Review
Portfolio Performance & Market Overview
(Price Only - Q ending Q ending 6 Months to 1 Year to
Net of Fees) September June 30th, September 30th, September 30th,
30th, 2011 2011 2011
2011
Egypt Trust -14.58% -3.22% -17.33% -29.95%
Fund NAV
S&P IFC Egypt -17.23% -8.48% -24.24% -38.76%
Investable
USD*
MSCI Egypt -20.71% -3.18% -23.20% -38.56%
The performance of the Egyptian exchange during the first half of the Fund's fiscal year remains a reflection of the events of the January 25th, 2011 revolution and the complete lack of visibility that followed. During the six months ended September 30th, 2011, the S&P IFC Egypt Investable Index in USD lost 24.24% bringing the performance since January 1st, 2011 to -42.36%. By comparison, the Fund lost 17.33% and 35.44% in the six months and since the beginning of the year respectively.
Portfolio Structure
The Fund's portfolio remains fairly concentrated with the top 10 holdings representing 48.72% of NAV. Stock selection is subject to our disciplined fundamental approach and the top 10 holdings represent our highest convictions at the report date. Details of the top 10 holdings can be found in the table below.
Top 10 Holdings Portfolio (%) Orascom Telecom Holding 8.17% Telecom Egypt 6.15% Egyptian Intl Pharma Industries Co 4.98% EFG-Hermes Holding 4.52% Orascom Construction Industries 4.42% National Société Générale Bank 4.32% Arafa Holding 4.28% Talaat Moustafa Group Holding 4.22% Egypt Co. For Mobile Telecom ( MOBINIL) 3.85% Commercial International Bank Egypt 3.81% TOTAL 48.72%
Currently, no stocks exceed the 10% single issuer limit.
Real estate took the worst hit following the revolution and the ousting of the former president Hosni Mubarak as many major shareholders in real estate development companies were connected to the regime and parts of their land bank are currently being disputed in courts. While financials weighting remained largely stable, we increased exposure to telecoms as we saw better value in the sector.
Sector Allocation September 30th, 2010 September 30th, 2011 Financial 21.33 % 19.71 % Telecom 13.59 % 18.17 % Real Estate 14.37 % 10.06 % Material 15.04 % 10.11 % Industrial 7.62 % 8.66 % Petrochemicals 7.46 % 7.28 % Healthcare 6.76 % 4.99 % Consumer 8.12 % 9.45 % Energy 0.00 % 0.56 % Net Current Assets 5.71 % 11.01 % TOTAL 100.00 % 100.00 %
Economic Overview & Outlook
As expected, the Egyptian economy suffered in the first nine months of 2011; after shrinking by 4.2% in Q1 2011, GDP in real terms started to grow again but our forecast for the full year 2011 remains around 1%.
The mix of near zero visibility and the interim government's reluctance/inability to adopt a structural reform program meant that private investment took a tumble while FDI nearly dried up. In addition, the government has shown a tendency to adopt popular measures even if they make little or no economic sense. The net effect is widening budget deficit, balance of payment and current account deficits along with fast disappearing international reserves.
We are unable to provide what we believe would be a fairly realistic outlook as we believe the current government's hands are tied to take any serious steps towards reform or kick starting the economy in general.
What Egypt needs is to get out of the political limbo as soon as possible. We view the parliamentary elections - currently scheduled to start at the end of November - as the first step towards putting Egypt on the right track. If that goes well, we will have better visibility and be able to have a more realistic outlook.
Subsequent Events
Demonstrations erupted again on November 19th, 2011 calling for the Supreme Council for Armed Forces to step down. There are doubts that parliamentary elections scheduled for
November 28th, 2011 would go through despite assurances by the army that it will. The market reacted very negatively dropping around 12% in the 3 days to November 22nd, 2011 which is about the same decline since September 30th, 2011.
Luxembourg November 2011 Lazard Asset Management
Note: The information in this report represents historical data and is not an indication of future results.
Principal Risks and Uncertainties
The success of the Fund may be affected by general economic and market conditions, such as widening discounts, interest rate changes, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities that the Fund invests in. The Manager actively monitors these factors and, to the degree possible, attempts to mitigate their negative impact on the Fund.
The Fund invests in securities issued primarily by companies located in Egypt. The Egyptian securities markets can be extremely volatile. The Fund's performance will be influenced by political, social and economic factors affecting companies in Egypt. As an emerging market country, Egypt can generally have an economic structure that is less diverse and mature, and a political system that is less stable than those of developed countries. Further, a fund, such as the Fund, that invests substantially all of its assets in securities of issuers in one country may experience significantly greater volatility than a fund that invests in a more geographically diverse portfolio.
The accompanying notes are an integral part of these financial statements.
Statement of Net Assets(in USD)
September 30th, 2011 March 31st, 2011
ASSETS
Securities' portfolio 35,910,688 42,422,274
at market value
Cash at banks 5,908,800 8,520,220
Receivable on sales - 2,364,027
of securities
Income receivable 53,891 -
on portfolio
Interest receivable 413 42
on bank accounts
Prepaid expenses 3,039 1,053
Total assets 41,876,831 53,307,616
LIABILITIES
Bank liabilities 1,435,775 1,492,744
Payable on purchases - 547,256
of securities
Payable on treasury - 2,313,554
transactions
Payable on repurchases - 36,753
of Shares
Expenses payable 88,244 240,333
Total liabilities 1,524,019 4,630,640
Net Assets at the End 40,352,812 48,676,976
of the Period/Year
Number of Shares outstanding 1,823,125 1,825,006
Net Asset Value per Share 22.13 26.67
Shareholders' Equity(in USD)
September 30th, 2011 March 31st, 2011
Capital: 8,513,347 17,026,694 17,026,694
Shares at USD 2.00
Share Premium 73,633,306 73,633,306
Legal Reserve 1,702,669 1,702,669
Profit brought forward 69,479,916 64,952,884
Cost of 1,663,837 Shares -15,939,917 -15,939,917
held in treasury
Repurchase of 5,026,385 -80,568,717 -80,515,842
Shares at the request
of Shareholders
Total Capital and Reserves 65,333,951 60,859,794
Net realised gain/loss -922,584 4,527,032
for the period/year
Unrealised depreciation -24,058,555 -16,709,850
on securities
Total Shareholders' Equity 40,352,812 48,676,976
Statement of Operations(in USD)
From April 1st, 2011 From April 1st, 2010 to
to September 30th, 2011 September 30th, 2010
INCOME
Dividends, net 1,647,939 2,118,280
Interest on bank 4,970 2,773
accounts
Received commissions 2,652 19,049
Total income 1,655,561 2,140,102
EXPENSES
Management fees 237,213 317,567
Advisory fees 59,303 79,392
Custodian fees 10,563 12,037
Bank and financial 86,675 72,662
services
Central administration 38,165 32,670
costs
Audit and supervisory 22,905 24,803
fees
Printing and 31,639 29,082
publication
expenses
Subscription 11,449 15,760
duty ("taxe
d'abonnement")
Interest paid 423 26
Directors' fees 10,315 43,933
and expenses
Other expenses 72,181 26,073
Total expenses 580,831 654,005
NET INVESTMENT INCOME 1,074,730 1,486,097
NET REALISED GAIN/LOSS
- on sale of securities -589,296 791,251
(-1 year)
- on sale of securities -1,344,179 918,408
(+1 year)
- on foreign exchange -63,839 -17,505
REALISED GAIN/LOSS -922,584 3,178,251
CHANGE IN NET
UNREALISED
DEPRECIATION
- on securities -7,348,705 -4,991,235
DECREASE IN NET -8,271,289 -1,812,984
ASSETS AS
A RESULT OF OPERATIONS
Statement of Changes in Net Assets(in USD)
From April 1st, 2011 From April 1st, 2010 to
to September 30th, 2011 September 30th, 2010
Net Assets at the 48,676,976 66,288,686
Beginning
of the Period
Net investment income 1,074,730 1,486,097
Net realised gain/loss -589,296 791,251
on sale
of securities (-1 year)
Net realised gain/loss -1,344,179 918,408
on sale
of securities (+1 year)
Net realised loss on -63,839 -17,505
foreign exchange
Net realised gain/loss -922,584 3,178,251
for the period
Repurchases of -52,875 -379,869
Shares at the
request of Shareholders
Change in unrealised -7,348,705 -4,991,235
depreciation
on securities
Net Assets at the End 40,352,812 64,095,833
of the Period
Statistical Information about the Fund(in USD)
September 30th, 2011 March 31st, 2011 March 31st, 2010
Net Assets 40,352,812 48,676,976 66,288,686
Net Asset Value 22.13 26.67 32.47
per Share
Statement of Changes in Shares OutstandingFor the period ended September 30th, 2011
Number of Shares Outstanding at the Beginning of the Period 1,825,006 Number of Shares repurchased held in treasury - Number of Shares repurchased at the request of Shareholders 1,881 Number of Shares Outstanding at the End of the Period 1,823,125
Statement of Investments and Other Net AssetsSeptember 30th, 2011(in USD)
Currency Number / nominal value Description Cost Market value % of total net assets
Investments in securities
Transferable securities admitted to an official stock exchange listing
Shares
Banks
EGP 400,000 Commercial Intl Bank Ltd 1,759,884 1,536,901 3.81
EGP 1,000,000 Credit Agricole Egypt 1,839,015 1,329,366 3.29
EGP 450,000 National Société Générale Bank Reg 711,956 1,743,347 4.32
4,310,855 4,609,614 11.42
Capital goods
EGP 195,000 El Sewedy Elec Co 1,888,062 721,780 1.79
EGP 50,000 Orascom Construction Industrie 1,653,019 1,784,670 4.42
3,541,081 2,506,450 6.21
Consumer durables and apparel
EGP 250,000 Oriental Weavers Co 1,866,000 1,257,282 3.12
Diversified financial services
EGP 2,000,000 Citadel Capital Co 2,765,506 1,203,638 2.98
EGP 650,000 EFG-Hermes 4,436,871 1,824,064 4.52
7,202,377 3,027,702 7.50
Energy
EGP 150,000 Alexandria Mineral Oils Co 2,055,709 1,422,992 3.53
USD 120,000 Maridive & Oil Serv 344,160 225,600 0.56
2,399,869 1,648,592 4.09
Food and beverage
EGP 1,000,000 Juhayna Food Industries 900,342 772,809 1.91
Hotels, restaurants and leisure
EGP 2,750,000 Talaat Moustafa Group Holding 3,733,064 1,701,102 4.22
Insurance
EGP 375,000 Delta Insurance 875,830 314,949 0.78
Investment companies
USD 3,600,000 Al Arafa Inv & Consulting 2,453,085 1,728,000 4.28
Materials
GBP 500,000 Centamin Egypt Ltd 851,744 744,182 1.84
EGP 715,000 Egyptian Fin & Industrial Co Reg 1,957,052 1,172,239 2.90
EGP 1,000,000 Ezz Steel 2,664,960 989,062 2.45
EGP 150,000 Paint and Chemical Ind 987,795 959,809 2.38
EGP 750,000 Sidi Kerir Petrochemicals 2,762,250 1,516,282 3.76
EGP 100,000 Suez Cement Co 877,607 466,200 1.16
EGP 125,000 Tourah Cement Co 1,311,897 737,396 1.83
11,413,305 6,585,170 16.32
Pharmaceuticals and biotechnology
EGP 375,000 Egyptian Intl Pharm Industr Co 1,460,955 2,011,651 4.98
Real estate
EGP 250,000 Heliopolis Housing & Dev SA 3,547,581 549,013 1.36
EGP 78,462 Medinet Nasr Housing 398,152 150,078 0.37
EGP 125,000 Namaa Dév Real Estate InvestCo 292,053 278,278 0.69
EGP 3,500,000 Palm Hills Devlopments SAE 2,894,429 733,414 1.82
EGP 297,725 Sixth of Octob Dev & Inv Co SA 2,271,111 648,330 1.61
9,403,326 2,359,113 5.85
Retailing
EGP 100,000 B-Tech 61,514 54,985 0.14
Telecommunication services
EGP 100,000 Egyptian Co for Mobile Com 2,248,761 1,554,000 3.85
EGP 1,000,000 Orascom Telecom Holding 676,871 556,557 1.38
USD 1,000,000 Orascom Telecom Holding spons GDR Reg repr 5 Shares Reg-S 3,951,475 2,740,000 6.79
EGP 1,000,000 Telecom Egypt 3,470,533 2,482,712 6.15
10,347,640 7,333,269 18.17
Total investments in securities 59,969,243 35,910,688 88.99
Cash at banks 5,908,800 14.64
Bank liabilities -1,435,775 -3.56
Other net assets and liabilities -30,901 -0.07
Total net assets 40,352,812 100.00
Currency, Geographical and Industrial Classification of the FundSeptember 30th, 2011(in percentage of net assets)
Currency Classification
Egyptian Pound 75.52 % US Dollar 11.63 % Pound Sterling 1.84 % Total investments in securities 88.99 % US Dollar 14.64 % Total cash at banks 14.64 % Egyptian Pound -0.01 % US Dollar -3.55 % Total bank liabilities -3.56 % Other net assets and liabilities -0.07 % Total net assets 100.00 %
Geographical Classification
Egypt 87.15 % Australia 1.84 % Total investments in securities 88.99 % Cash at banks 14.64 % Bank liabilities -3.56 % Other net assets and liabilities -0.07 % Total net assets 100.00 %
Industrial Classification
Telecommunication services 18.17 % Materials 16.32 % Banks 11.42 % Diversified financial services 7.50 % Capital goods 6.21 % Real estate 5.85 % Pharmaceuticals and biotechnology 4.98 % Investment companies 4.28 % Hotels, restaurants and leisure 4.22 % Energy 4.09 % Consumer durables and apparel 3.12 % Food and beverage 1.91 % Insurance 0.78 % Retailing 0.14 % Total investments in securities 88.99 % Cash at banks 14.64 % Bank liabilities -3.56 % Other net assets and liabilities -0.07 % Total net assets 100.00 %
Notes to the Financial StatementsSeptember 30th, 2011
NOTE 1 - GENERAL
THE EGYPT TRUST (the "Fund" or the "Corporation") is a closed-end investment corporation incorporated as an investment corporation under the laws of the Grand Duchy of Luxembourg and qualifies as a "société d'investissement à capital fixe" under the law of December 17th, 2010
(the "2010 Law") regarding undertakings for collective investments and the law of August 10th, 1915, as amended regarding commercial companies. The Fund is governed by Part II of the Luxembourg 2010 Law.
The Fund was incorporated in Luxembourg on July 23rd, 1996 for an indefinite period.
The Articles have been published in the "Mémorial, Recueil des Sociétés et Associations" and they have been filed with the Registrar of the Luxembourg District Court, where copies thereof may be obtained. In addition, a legal notice concerning the issue of the Shares is on file with the Registrar of the Luxembourg District Court.
The Fund's investment policy is to achieve medium to long-term capital growth through investments principally in equity securities of Egyptian companies listed on the Egyptian Stock Exchange as well as other exchanges.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a)Presentation of Accounts
The financial statements are presented in conformity with Luxembourg legal and regulatory requirements relating to investment funds. The Fund keeps its books and records in USD.
b)Valuation
1) The NAV per Share is calculated in accordance with Article 22 of the Fund's Articles on each Valuation Date (as defined in the Articles). "Valuation Date" means the date fixed by the Board of Directors (the "Board") for the valuation of the Shares being Friday of each week (or, if that day is not a business day in Luxembourg, on the next business day).
The NAV per Share is determined by dividing the Net Assets of the Fund, being the value of its assets less liabilities, by the number of Shares then outstanding.
2) In calculating the NAV per Share, income and expenses are treated as accruing from day to day and the Fund's Articles provide, inter alias, that:
(i) unquoted investments will initially be valued at cost price, which will include any expenses relating to their acquisition;
(ii) a revaluation of unquoted investments to a value in excess of or below cost may be made where, in the opinion of the Board, or in the opinion of the Fund's Manager (where the Board has delegated its powers), it is justified. Factors affecting such revaluations may include: the prices at which further issues of capital or dealings between third parties take place, the market value of comparable companies (making appropriate adjustments for such factors as limitation of marketability) or the price at which any agreement has been entered into, or is reasonably contemplated, for the sale of the investments;
(iii) securities which are listed on an official stock exchange or traded on any other regulated market will be valued at the last available price on the principal market on which such securities are traded, or by a pricing service approved by the Board;
(iv) assets or liabilities expressed in terms of currencies other than USD will be translated into USD at the prevailing market rate for such currencies at the Valuation Date.
3) First-in first-out method: Purchases of securities are recorded at cost. Realized gains and losses on securities sold are computed on the first-in first-out basis.
4) The value of cash in hand or on deposit, bills and notes payable on presentation, accounts due, prepaid expenses and dividends and interest declared and fallen due but not yet received consists of the nominal value of such assets, except, however, in the event that it seems improbable that such value can be realized, in which event the value is determined by deducting a sum which the Board considers appropriate to reflect the realizable value of such assets.
5) Foreign currencies monetary assets and liabilities denominated in foreign currencies in the Statement of Net Assets are translated into USD at the exchange rates ruling at the date of the report. Transactions in foreign currencies are recorded in USD based on the exchange rates in effect at the date of transactions. The following significant exchange rates have been applied for the conversion as at the date of the report:
USD
1 EGP Egyptian Pound 0.1676376
1 EUR Euro 1.3648000
1 GBP Pound Sterling 1.5683500
c)Income Recognition
Interest income is recorded on an accrual basis and dividend income is recorded on the ex-date, net of any withholding taxes in the relevant country.
d)Net Realised Gain/Loss
The net realised gain/loss on sale of securities is split between two accounts depending on the fact that the securities have been owned during more than one year or not.
NOTE 3 - MANAGEMENT AND ADVISORY FEES
The Fund pays Lazard Asset Management LLC, the Manager, annual management fees of 1.00%, of the value of the gross assets of the Corporation, payable monthly in arrears and to National Bank of Egypt, the Investment Adviser, 0.25%, per annum, of the value of the gross assets of the Corporation, payable monthly in arrears.
NOTE 4 - TAXES
As a Luxembourg investment company, under present laws the Fund is not subject to income taxes in Luxembourg. Taxes may be withheld at the source on dividends and interest received on investment securities.
According to the Luxembourg 2010 Law, the Fund is subject to Luxembourg subscription duty ("taxe d'abonnement") at the rate of 0.05% per annum of its Net Assets, such tax being payable quarterly on the basis of the Total Net Assets of the Fund at the end of the relevant quarter.
NOTE 5 - REPURCHASES OF SHARES HELD IN TREASURY
The Fund is not obliged to repurchase Shares at the request of Shareholders.
The maximum price at which Shares can be repurchased will be the NAV per Share. Under Luxembourg law, repurchases may only be made to the extent that the Corporation has distributable reserves available for the purpose, being Share premium or accumulated reserves.
Any Shares so repurchased will be held in treasury or will be cancelled by way of reduction of issued capital. The Shares held in treasury may be resold at any time, at the discretion of the Board, if a premium to the NAV per Share may be obtained. Details of such repurchases and sales will be communicated to all Shareholders as well as to the London and the Luxembourg Stock Exchanges and to the Egyptian Stock Exchange if the Shares are listed there.
The Fund did not repurchase any Shares held in treasury during the period ended
September 30th, 2011 and at this date, a total of 1,663,837 Shares are held in treasury for an amount of USD 15,939,917.
NOTE 6 - REPURCHASES AT THE REQUEST OF SHAREHOLDERS
Following to the Extraordinary General Meeting on November 17th, 2003 and to the circular resolution on December 24th, 2003, Shareholders may request the Corporation from December 29th, 2003 to redeem all or part of their Shares quarterly at a redemption price equal to the NAV per Share of the applicable Valuation Date, reduced by a redemption fee of up to 5% for the benefit of the Corporation to cover dealing charges. As of September 30th, 2011, such redemption fee amounts to USD 2,652 and is registered under the caption "received commissions" in the Statement of Operations. The Corporation shall redeem such Shares within the sole limitations set forth by law, the Fund's Articles and the prospectus and subject to any event giving rise to suspension as referred in the prospectus.
If the total value of requests for redemption of Shares received on any specific redemption date exceeds 10% of the Total Net Asset Values of Shares in issue, the redemption requests will be reduced pro rata to the holdings of the Shareholders who applied for redemption.
NOTE 7 - CAPITAL
The authorized Share capital of the Corporation on incorporation of the Fund was USD 40,000,000 divided into 20,000,000 Shares with a par value of USD 2.00 each.
On December 12th, 1997, a capital increase of 8,490,847 Shares was registered with a par value of USD 2.00 each.
The Fund is required by Luxembourg law to transfer at least 5% of its yearly net profits to a non-distributable legal reserve until such reserve amounts to 10% of the Fund's nominal Share capital. This reserve is not available for dividend distribution.
Following the Fund's Annual General Meeting Minutes on August 16th, 2011, no dividend has been distributed.
NOTE 8 - CUSTODIAN FEES
The Custodian receives, under the terms of the Custodian Agreement, fees for its services at rates to be agreed from time to time between the Fund and the Custodian in accordance with Luxembourg practice.
NOTE 9 - DIRECTORS FEES
Each of the Directors shall be paid a fee at such a rate as the Board shall determine provided that the aggregate of such fees shall not exceed USD 200,000 per annum or such higher amount as may from time to time be decided by resolution of the Corporation.
The Directors shall also be entitled to reimbursement of all travelling, hotel and other expenses properly incurred by them in attending and returning from meetings or otherwise in connection with the business of the Corporation.
NOTE 10 - BENEFICIAL AND NON-BENEFICIAL INTEREST OF DIRECTORS IN THE SHARE CAPITAL
As of September 30th, 2011, the beneficial and non-beneficial interests of the Directors in the Share capital are the following:
Alexander E. Zagoreos 2,500 Shares
NOTE 11 - DIRECTORS' INTEREST IN SIGNIFICANT CONTRACTS
Alexander E. Zagoreos was a Managing Director of Lazard Asset Management LLC through December 31st, 2005 and became a Limited Managing Director effective January 1st, 2006. He became a Senior Advisor on January 1st, 2008.
NOTE 12 - CHANGES OF THE INVESTMENT PORTFOLIO
The changes of the investment portfolio referring to the period of the report are available free of charge at the registered office of the Fund.
NOTE 13 - ADDENDUM TO THE PLACING MEMORANDUM
The Board resolved to amend the prospectus with a consolidated addendum to the prospectus dated August 2nd, 1996. The prospectus may not be distributed without the consolidated addendum dated December 2003.
NOTE 14 - SUBSTANTIAL SHAREHOLDINGS AND SUBSEQUENT EVENT
On June 7th, 2010, the Fund announced that it had become aware that, as a result of the quarterly share redemptions offered by the Fund, two of its shareholders, National Bank of Egypt and Banque Misr (the "Major Shareholders") hold 1,501,315 ordinary shares and 391,384 ordinary shares, respectively, in the capital of the Fund, representing a combined holding of 92.7% of the Fund's issued share capital. Listing Rule 6.1.19 states that at least 25% of a listed company's issued share capital must be held in public hands and that shares held by any person or persons in the same group or persons acting in concert who have an interest in 5% or more of the shares are not deemed to be in public hands. In accordance with Listing Rule 9.2.16, the Fund has informed the UK Listing Authority ("UKLA") that, given the size of the combined shareholdings of the Major Shareholders, the Fund is currently not able to comply with the shares in public hands requirement and it remains in consultation with the UKLA regarding this issue. The Board confirmed to the market that it would be considering all possible and appropriate options for redressing the Fund's current free float position.
Since that time, the Fund has examined a number of different options to restore its free float position above the 25% requirement. Unfortunately, this time coincided with a period of significant turbulence in both Egyptian and global markets.
As of September 30th, 2011, the Board was aware of the following interests in the Shares of the Fund:
Ordinary Shares Percentage of
Issued Capital
National Bank of Egypt 1,299,703 71.29%
Banque Misr 391,384 21.47%
On July 19th, 2011, the Fund announced that the Board had received indications from the Major Shareholders that they wished to seek an exit for their respective investments in the Fund. The Board confirmed that it is therefore seeking to formulate proposals, which may include a liquidation of the Fund, to be put to Shareholders at the earliest opportunity and that a further announcement will be made in due course.
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