Egypt Trust
THE EGYPT TRUST
Soci�t� d'Investissement � Capital Fixe
Luxembourg
R.C. no. B 55.584
Audited Annual Report
March 31st, 2008
Table of Contents
Organisation of the Fund
General Information
Chairman's Statement
Manager's Review
Independent Auditors' Report
Statement of Net Assets
Shareholders' Equity
Statement of Operations
Statement of Changes in Net Assets
Statistical Information about the Fund
Statement of Changes in Shares Outstanding
Statement of Investments and Other Net Assets
Currency, Geographical and Industrial Classification of the Fund
Notes to the Financial Statements
Organisation of the Fund
Chairman
ALEXANDER E. ZAGOREOS 129 West 12th Street
U.S.A.-New York, NY 10011
Directors
MICHAEL BECKETT * Northcroft Dulwich Commons
U.K.-London SE21 7EW
MOHAMED HASSANEIN * NATIONAL BANK OF EGYPT
NBE Tower
1187 Corniche El-Nile
Boulak
EGYPT, Cairo
SHAKER ALBERT KHAYATT * KHAYATT & COMPANY INC.
50 Broad Street, Suite 1609
U.S.A.-New York, NY 10004
MOHAMED KAMAL EL-DIN BARAKAT * 151 Mohamed Farid Street
EGYPT, Cairo
MICHAEL TAIT * OXFORD AND EDINBURGH CONSULTANTS
Chairman of the Audit Committee 8 Chalcot Crescent
U.K.-London NW1 8YD
Advisory Board HERBERT GULLQUIST
Registered Office KREDIETRUST LUXEMBOURG S.A.
11 rue Aldringen
L-1118 Luxembourg
Manager Lazard Asset Management LLC
30 Rockefeller Plaza
U.S.A.-New York, NY 10112
Investment Adviser National Bank of Egypt
NBE Tower
1187 Corniche El-Nile
Boulak
EGYPT, Cairo
Custodian and Paying Agent KBL European Private Bankers S.A.
(formerly KREDIETBANK S.A. Luxembourgeoise)
43 boulevard Royal
L-2955 Luxembourg
Domiciliary, Registrar, Transfer KREDIETRUST LUXEMBOURG S.A.
and Administrative Agent 11 rue Aldringen
L-2960 Luxembourg
Independent Auditor ERNST & YOUNG S.A.
Soci�t� anonyme
7 Parc d'Activit� Syrdall
L-5365 Munsbach
* Member of the Audit 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 interim 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 objective of the Corporation is to achieve medium to long-term
capital growth through investment principally in the equities of companies
listed on the Egyptian Stock Exchange.
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 Articles of Incorporation 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 is expressed in US Dollars and is published on a weekly
basis in the "Financial Times".
8. The Shares of the Fund are listed on the London Stock Exchange.
Chairman's Statement
Dear Shareholders,
I am pleased to report another year of outperformance by the Egypt Trust.
Performance for the year ending March 31, 2008 was 59.34% vs. our benchmark the
IFC Investable index return of 58.72%. The year was one of the most volatile
periods on the Cairo and Alexandria Stock Exchanges. Early in the fiscal year
the market was by our estimation quite overvalued. When the market declined
sharply it got quite cheap and gave us a good buying opportunity. We view the
volatility a sign that the market is becoming more efficient but like so many
other emerging markets subject to wide swings in value.
We still believe that Egypt offers a proper emerging markets growth story;
Structural reforms underway, GDP growth at 7% and appears to be sustainable,
gradual withdrawal of the government from economic activity and focusing on
effective regulation. The long-term challenge for the government is still to
increase employment and to increase the living standards of Egypt's poor.
On the capital markets side, efforts to develop the market further are evident
with increasing focus on disclosure, and corporate governance. New financial
instruments like short selling and a derivatives market are being developed and
should increase the efficiency of the market when they are introduced.
In terms of valuation, the market appears to be reasonably valued within a
regional and global context. The economic growth story remains good.
I would like to thank our manager, Mostafa Hassan and the Lazard Asset
Management team for their hard work and success in managing this fund, as well
as my fellow board members for their dedication.
Alexander Zagoreos
May 29th, 2008
Manager's Review
Responsibility Statement
We, the Directors of The Egypt Trust, confirm to the best of our knowledge that:
a) the condensed set of 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;
b) the Annual Report includes a fair review of the information required by the
Disclosure and Transparency Rules 4.2.7R; and
c) the Annual Report includes a fair review of the information required by the
Disclosure and Transparency Rules 4.2.8R.
By order of the Board
Alexander Zagoreos
Chairman
May 29th, 2008
Investment Policy:
-- Investment strategy and asset allocation
-- The fund's investment objective is to achieve medium to long term
capital growth by investing primarily in equity securities of
Egyptian companies listed on the Cairo and Alexandria Stock
Exchanges, aiming to capitalize on low valuations. The fund may also
invest up to 10 per cent. of the fund's net asset value in unlisted
securities where the investment manager perceives a reasonable
prospect of listing for those securities in the short term.
-- The fund has the ability to invest in issuers outside Egypt which
derive significant revenues from operations or investments in Egypt.
-- The fund may invest in debt instruments, such as bonds, bills,
notes, certificates of deposit and other debt-related instruments
issued by Egyptian private and public sector issuers.
-- The fund uses a bottom-up, fundamental company analysis to identify
companies that have strong earnings-generation ability but are
inexpensively priced.
-- Risk Diversification:
-- The Fund seeks to minimize risk by diversifying its portfolio across
a range of companies and sectors.
-- The liquidity of the Egyptian market is fairly limited compared to
developed markets. As a result, the fund aims to keep 90 per cent.
of its net assets in highly liquid securities. The remaining 10 per
cent. provides the flexibility to invest in attractively priced
securities with low liquidity or in pre-IPO companies.
-- The fund seeks to invest in undervalued assets trading at tangible,
absolute and relative discounts. Such discounts could limit the
portfolio's downside risk, and add more value during rising markets.
-- The fund continuously monitors 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.
-- Exposure Limits:
-- No more than 10 per cent. of the fund's net assets shall be invested
in the securities of any one company or group or in debt instruments
at the time the investment is made.
-- No more than 25 per cent, of the fund's net assets may be invested
in a single sector at the time the investment is made.
-- Gearing:
-- The fund manager is not allowed to use gearing.
Performance Overview:
Q1 Q2 Q3 Q4 Year
------------------------------ ---------- ------------ ------------ ------------ -------------
Egypt Trust: NAV $ 33.36 37.22 44.91 47.34
------------------------------ ---------- ------------ ------------ ------------ -------------
Egypt Trust: Return (Net) 12.29% 11.57% 20.66% 5.41% 59.34%
------------------------------ ---------- ------------ ------------ ------------ -------------
IFC Investable: Value 290.10 321.80 392.50 417.60
------------------------------ ---------- ------------ ------------ ------------ -------------
IFC Investable: Return 10.26% 10.93% 21.97% 6.39% 58.72%
------------------------------ ---------- ------------ ------------ ------------ -------------
Source: KBL, Reuters
The Egyptian market continued its strong performance in the 12 months to March
2008 as the index gained 58.72% to new highs. The strong performance resulted
from of strong positive sentiment regarding Egypt's economic performance that
recorded real GDP growth of 7%. Corporate Earnings were strong with the majority
of companies meeting or exceeding EPS forecasts.
The strong performance was broad-based with both large caps and small caps
recording strong gains. 2007 also witnessed a strong return of local retail
investors into the market which contributed significantly to the increase in
average daily trading value to around $250 million up from around $180 million
in the previous year.
For the whole 12 months, the Egypt Trust outperformed the index by 62 basis
points (on NAV basis and net of all fees). The year was evenly split as the
trust outperformed in the first half of the year while underperforming the last
six months. This was caused mainly by our decision later in 2007 to shift the
portfolio to a more defensive stance as we believed the market was moving on
momentum and liquidity more than fundamentals as the market was not as
inexpensively priced as regional and global markets.. We chose to stick to our
disciplined strategy and be defensive.
Portfolio Overview (as of March 31st 2008):
Top 10 Holdings Portfolio (%)
------------------------------ -------------
Orascom Telecom Holding 8.36%
------------------------------ -------------
Telecom Egypt 7.24%
------------------------------ -------------
National Soci�t� G�n�rale Bank 5.67%
------------------------------ -------------
Commercial Intl Bank 5.66%
------------------------------ -------------
Egyptian Intl Pharm Industr Co 5.53%
------------------------------ -------------
Egyptian Financial & Indust Co 5.25%
------------------------------ -------------
Orascom Hotels and Dev 4.77%
------------------------------ -------------
Heliopolis Housing & Dev 4.59%
------------------------------ -------------
Alexandria Mineral Oils Co 4.34%
------------------------------ -------------
EFG-Hermes 4.02%
------------------------------ -------------
TOTAL 55.43%
------------------------------ -------------
Portfolio
Sector Allocation (%)
------------------------- ----------
Financials 16.11%
------------------------- ----------
Telecom 18.78%
------------------------- ----------
Real Estate &
Construction 18.19%
------------------------- ----------
Petrochemicals 7.86%
------------------------- ----------
Consumer Staples 6.31%
------------------------- ----------
Pharmaceuticals 6.02%
------------------------- ----------
Building Materials 8.05%
------------------------- ----------
Chemicals 5.25%
------------------------- ----------
Other 13.43%
------------------------- ----------
TOTAL 100%
------------------------- ----------
The Egypt Trust portfolio has witnessed some changes as we reduced the weights
of financials and telecoms in favor of real estate and petrochemicals mainly.
The following chart shows the sector allocation on March 31st 2008 compared to
March 31st 2007.
(Graphic Omitted)
On March 31st, 2008 No single issue was in breach of the 10% single issuer limit
and no sector was in breach of the 25% sector limit.
Net Cash and equivalent as of end of the year amounted to around 10% of NAV up
from 5.5% a year earlier as we positioned the portfolio more defensively.
The Economy:
Egypt's GDP growth continued to grow in 2007 recording a 7.1% real growth rate
for the FY 06/07. This was mainly caused by a 24% increase in investment
spending and 6% increase in domestic demand both figures significantly above
their recent averages of 5.9% and 3.8%.
(Graphic Omitted)
Growth in domestic demand came mainly from the private sector as public demand
witnessed only a marginal increase of 0.2%. Private demand now constitutes
around 70% of total demand.
As a byproduct of the strong economic growth, the trade deficit widened further
to $15.8 billion while current account remained positive for the year, it
continues to show deficit over the last 3 quarters of the year.
Strong inflows have enabled the Central Bank to accumulate record reserves in
excess of $32 billion (around 10 months of imports).
We still view the main risks to Egypt's growth story are the still large budget
deficit and inflation:
The globally rising food prices continue to be a major distortion to many
emerging markets where poverty level remains high and people (and people
spending as well) are very sensitive to food prices. The World Bank and IMF have
pointed that the current high prices are likely to remain for a while as crop
shortages will continue in the foreseeable future.
In Egypt, food prices was the main culprit behind a 14.4% y-o-y increase in the
CPI as of March 2008.This is not to ignore the effect of strong domestic demand
and high liquidity in the marketplace are having on the inflation.
Unfortunately, we do not see a near term cooling in inflation.
In response to the inflation figures, the Central Bank of Egypt has raised its
key policy interest rate by around 75 bps in the year to March 2008 to
9.5%-11.5% (borrowing-lending). We still do not believe that this response will
be effective since Egypt lacks the mechanism which will cause this rate increase
to transfer to the real economy. Moreover, it is more important in our view to
control the excessive liquidity in the market.
Inflation - especially food prices inflation - spelled more bad news for the
budget deficit as this means further burden on the budget to cover subsidies
(currently around 1/3 of the budget is directed to subsidies). The restructuring
of the subsidies system to more targeted subsidies has been much talked about in
Egypt with no or little action in that direction. At the time of the writing of
this report, Egypt raised energy prices and taxes on tobacco as well as removing
tax shelter on treasury bills and bonds in an attempt to reduce the deficit.
While a justifiable move in principle, we find two problems with it:
-- The move is inflationary in nature
-- The move appear to be an knee-jerk reaction to the situation rather than
a comprehensive plan that spells the move from subsidy for all to
targeted subsidies system.
Outlook
As we mentioned earlier in the report, we are positioning the portfolio
defensively as we believe stock prices are high at the moment. Egypt is trading
at a premium to GEMs and even to some regional markets.
While we continue to believe that Egypt's macro picture remains sustainable
despite the concerns we pointed to, during the short-term we expect an increase
in volatility in the market
We will continue to adopt our strategy of targeting inexpensive stocks and being
proactive instead of being reactive to the market in order to continue to be
able to deliver the superior risk-adjusted returns to our shareholders.
Luxembourg, May 29th, 2008 Lazard Asset Management
Note: The information in this report represents historical data and is not an
indication of future results.
Independent Auditors' Report
To the Shareholders of THE EGYPT TRUST
Luxembourg
We have audited the accompanying financial statements of THE EGYPT TRUST, which
comprise the statement of net assets and the statement of investments and other
net assets as at March 31st, 2008 and the statement of operations, the
Shareholder's Equity and the statement of changes in net assets for the year
then ended, and a summary of significant accounting policies and other
explanatory notes to the financial statements.
Board of Directors of the SICAF responsibility for the financial statements
The Board of Directors of the SICAF is responsible for the preparation and fair
presentation of these financial statements in accordance with Luxembourg legal
and regulatory requirements relating to the preparation of the financial
statements. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Responsibility of the "R�viseur d'Entreprises"
Our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit in accordance with International Standards
on Auditing as adopted by the "Institut des R�viseurs d'Entreprises". Those
standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the judgement of the "R�viseur d'Entreprises", including the
assessment of the risks of material misstatement of the financial statements,
whether due to fraud or error. In making those risk assessments, the "R�viseur
d'Entreprises" considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control.
An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the Board of
Directors of the SICAF, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the
financial position of THE EGYPT TRUST as of March 31st, 2008, and of the results
of its operations and changes in its net assets for the year then ended in
accordance with Luxembourg legal and regulatory requirements relating to the
preparation and presentation of the financial statements.
Other matter
Supplementary information included in the annual report has been reviewed in the
context of our mandate but has not been subject to specific audit procedures
carried out in accordance with the standards described above. Consequently, we
express no opinion on such information. However, we have no observation to make
concerning such information in the context of the financial statements taken as
a whole.
ERNST & YOUNG S.A.
Soci�t� Anonyme
R�viseur d'Entreprises
Christophe WINTGENS
May 29th, 2008
Statement of Net Assets
(in USD)
March 31st, March 31st,
2008 2007
--------------- ----------------
ASSETS
-------------------------------------
Securities' portfolio at market value 102,505,292 69,610,477
Cash at bank 15,027,075 4,632,269
Receivable on sales of securities 127,586 390,997
Income receivable on portfolio 2,789,887 70,222
Interest receivable on bank accounts 8,771 6,205
Other receivables - 253,633
Prepaid expenses 1,456 1,215
--------------- ----------------
Total assets 120,460,067 74,965,018
--------------- ----------------
LIABILITIES
-------------------------------------
Bank liabilities 997,400 77,292
Payable on purchases of securities - 671,252
Payable on treasury transactions 2,614,750 -
Payable on repurchases of Shares 363,585 250,453
Interest payable on bank accounts - 351
Expenses payable 326,271 235,902
Other liabilities 712,780 -
--------------- ----------------
Total liabilities 5,014,786 1,235,250
--------------- ----------------
NET ASSETS at the End of the Year 115,445,281 73,729,768
=============== ================
Number of Shares outstanding 2,438,782 2,477,917
Net Asset Value per Share 47.34 29.75
Shareholders' Equity represented by
(in USD)
March 31st, March 31st,
2008 2007
--------------- -----------------
Capital: 8,513,347 Shares at USD 2.00 17,026,694 17,026,694
Share Premium 73,633,306 73,633,306
Legal Reserve 1,702,669 1,702,669
Profit brought forward 33,192,485 23,295,229
--------------- -----------------
Total Capital and Reserves 125,555,154 115,657,898
Cost of 1,663,837 Shares held in Treasury -15,939,917 -15,939,917
Repurchase of 4,410,728 Shares at the request of
Shareholders -60,919,585 -59,305,657
Net realised gain for the year 28,361,159 11,439,681
Unrealised appreciation on securities 38,388,470 23,420,189
Dividend - -1,542,426
--------------- -----------------
Total Shareholders' Equity 115,445,281 73,729,768
=============== =================
Statement of Operations
(in USD)
Year Ended Year Ended
March 31st, 2008 March 31st, 2007
------------------- -------------------
INCOME
---------------------------------------------------------------
Dividends, net 5,184,258 1,327,169
Interest on bank accounts 303,880 250,440
Received commissions 80,805 236,817
Other income 4,246 -
------------------- -------------------
Total income 5,573,189 1,814,426
------------------- -------------------
EXPENSES
---------------------------------------------------------------
Management fees 956,468 676,096
Advisory fees 239,117 165,866
Custodian fees 33,248 24,874
Bank and financial services 205,513 248,435
Central administration costs 70,317 61,821
Audit and supervisory fees 45,834 44,919
Printing and publication expenses 146,498 35,127
Subscription duty ("taxe d'abonnement") 49,837 34,284
Interest paid 3,133 16,461
Directors' fees and expenses 212,022 204,476
Other expenses 92,356 113,584
------------------- -------------------
Total expenses 2,054,343 1,625,943
------------------- -------------------
NET INVESTMENT INCOME 3,518,846 188,483
=================== ===================
NET REALISED GAIN / LOSS
---------------------------------------------------------------
- on sale of securities (-1 year) 23,346,605 9,203,286
- on sale of securities (+1 year) 1,608,502 2,148,826
- on foreign exchange -112,794 -100,914
------------------- -------------------
REALISED GAIN 28,361,159 11,439,681
CHANGE IN NET UNREALISED APPRECIATION/DEPRECIATION
---------------------------------------------------------------
- on securities 14,968,281 -300,602
------------------- -------------------
INCREASE IN NET ASSETS AS A RESULT OF OPERATIONS 43,329,440 11,139,079
=================== ===================
Repurchase of Shares at the request of Shareholders -1,613,927 -4,734,859
Dividend paid - -1,542,426
------------------- -------------------
TOTAL CHANGE IN NET ASSETS 41,715,513 4,861,794
NET ASSETS AT THE BEGINNING OF THE YEAR 73,729,768 68,867,974
------------------- -------------------
NET ASSETS AT THE END OF THE YEAR 115,445,281 73,729,768
=================== ===================
Statement of Changes in Net Assets
(in USD)
Year Ended Year Ended
March 31st, March 31st,
2008 2007
------------- -------------
Net Assets at the Beginning of the Year 73,729,768 68,867,974
Net investment income 3,518,846 188,483
Net realised loss on foreign exchange -112,794 -100,914
Net realised gain on sale of securities (-1 year) 23,346,605 9,203,286
Net realised gain on sale of securities (+1 year) 1,608,502 2,148,826
------------- -------------
Net realised gain for the Year 28,361,159 11,439,681
Repurchase of Shares at the request of Shareholders -1,613,927 -4,734,859
Change in unrealised appreciation/depreciation on
securities 14,968,281 -300,602
Dividend paid - -1,542,426
------------- -------------
Net Assets at the End of the Year 115,445,281 73,729,768
============= =============
Statistical Information about the Fund
(in USD)
March 31st, 2008 March 31st, 2007 March 31st, 2006
----------------------- ----------------------- -----------------------
Net Assets 115,445,281 73,729,768 68,867,974
Net Asset Value per Share 47.34 29.75 25.95
Statement of Changes in Shares Outstanding
For the Year ended March 31st, 2008
Number of Shares Outstanding at the Beginning of the Year 2,477,917
Number of Shares repurchased held in Treasury -
Number of Shares repurchased at the request of Shareholders -39,135
------------
Number of Shares Outstanding at the End of the Year 2,438,782
------------
Statement of Investments and Other Net Assets
March 31st, 2008
(in USD)
Currency Number 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 1,328,649 6,531,272 5.66
EGP 200,000 Credit Agricole Egypt 610,904 876,979 0.76
EGP 800,000 National Soci�t� G�n�rale Bank Reg 798,922 6,543,018 5.67
------------- ------------- --------
2,738,475 13,951,269 12.09
Capital goods
EGP 50,000 El Sewedy Cables Hg Co 1,084,923 1,322,535 1.15
EGP 50,000 Orascom Construction Industrie Reg 1,494,327 3,770,660 3.27
------------- ------------- --------
2,579,250 5,093,195 4.42
Consumer durables and apparel
EGP 250,000 Olympic Group Fin Inv Co SAE 1,982,841 3,505,713 3.04
EGP 350,000 Oriental Weavers Co 4,429,122 3,777,360 3.27
------------- ------------- --------
6,411,963 7,283,073 6.31
Diversified financial services
EGP 450,000 EFG-Hermes 3,478,310 4,636,076 4.02
Energy
EGP 350,000 Alexandria Mineral Oils Co 5,001,061 5,011,426 4.34
Hotels, restaurants and leisure
EGP 345,000 Orascom Hotels and Dev Reg 950,132 5,505,942 4.77
EGP 1,000,000 Talaat Moustafa Group Holding 2,152,913 2,125,453 1.84
------------- ------------- --------
3,103,045 7,631,395 6.61
Investment companies
USD 750,000 Al Arafa Inv & Consulting 1,062,788 1,237,500 1.07
Materials
EGP 125,000 Egyptian Financial & Indust Co Reg 1,348,015 6,059,515 5.25
EGP 1,500 El Ezz Aldekhela Steel Alex Co 394,094 410,273 0.35
EGP 150,000 El Ezz Steel Rebars SAE 1,491,661 2,501,812 2.17
EGP 200,000 Paint and Chemical Ind 1,282,264 2,775,937 2.40
EGP 1,000,000 Sidi Kerir Petrochemicals 3,557,373 4,060,019 3.52
EGP 150,000 Suez Cement Co 1,549,490 1,566,558 1.36
EGP 75,000 Torah Portland Cement Co 1,863,449 2,035,837 1.76
------------- ------------- --------
11,486,346 19,409,951 16.81
Pharmaceuticals and biotechnology
EGP 1,000,000 Egyptian Intl Pharm Industr Co 3,045,769 6,385,536 5.53
EGP 33,897 Memphis Pharmaceutic Chem Ind 526,830 559,947 0.48
------------- ------------- --------
3,572,599 6,945,483 6.01
Real estate
EGP 50,000 Heliopolis Housing & Dev SA 4,277,567 5,297,940 4.59
EGP 100,000 Sixth of Octob Dev & Inv Co SA 2,920,550 4,291,837 3.72
------------- ------------- --------
7,198,117 9,589,777 8.31
Telecommunication services
EGP 100,000 Egyptian Co for Mobile Com 2,588,203 3,672,739 3.18
EGP 700,000 Orascom Telecom Holding 8,233,073 9,668,242 8.37
EGP 2,250,000 Telecom Egypt 6,663,592 8,375,166 7.25
------------- ------------- --------
17,484,868 21,716,147 18.80
------------- ------------- --------
TOTAL INVESTMENTS IN SECURITIES 64,116,822 102,505,292 88.79
CASH AT BANKS 15,027,075 13.02
BANK LIABILITIES -997,400 -0.86
OTHER NET ASSETS/(LIABILITIES) -1,089,686 -0.95
------------- --------
TOTAL NET ASSETS 115,445,281 100.00
============= ========
Currency, Geographical and Industrial Classification of the Fund
(March 31st 2008)
(in percentage of net assets)
Currency Classification
Egyptian Pound 87.72 %
US Dollar 1.07 %
---------
TOTAL INVESTMENTS IN SECURITIES 88.79 %
US Dollar 13.02 %
---------
TOTAL CASH AT BANKS 13.02 %
Egyptian Pound -0.64 %
US Dollar -0.22 %
---------
BANK LIABILITIES -0.86 %
OTHER ASSETS AND LIABILITIES -0.95 %
---------
TOTAL NET ASSETS 100.00 %
=========
Geographical Classification
Egypt 88.79 %
---------
TOTAL INVESTMENTS IN SECURITIES 88.79 %
---------
OTHER ASSETS AND LIABILITIES 11.21 %
---------
TOTAL NET ASSETS 100.00 %
=========
Industrial Classification
Telecommunication services 18.80 %
Materials 16.81 %
Banks 12.09 %
Real estate 8.31 %
Hotels, restaurants and leisure 6.61 %
Consumer durables and apparel 6.31 %
Pharmaceuticals and biotechnology 6.01 %
Capital goods 4.42 %
Energy 4.34 %
Diversified financial services 4.02 %
Investment companies 1.07 %
---------
TOTAL INVESTMENTS IN SECURITIES 88.79 %
---------
OTHER ASSETS AND LIABILITIES 11.21 %
---------
TOTAL NET ASSETS 100.00 %
=========
Notes to the Financial Statements
March 31st, 2008
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 "soci�t� d'investissement � capital
fixe" under the amended law of December 20th, 2002 (the "2002 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 2002 Law.
The Fund was incorporated in Luxembourg on July 23rd, 1996 for an indefinite
period.
The Fund's Articles have been published in the "M�morial, Recueil des Soci�t�s
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 objective is to achieve medium to long-term capital growth
through investment principally in the equities of companies listed on the
Egyptian Stock Exchange.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a) Presentation of Accounts
The financial statements are presented in conformity with Luxembourg legal and
regulatory requirement relating to investment funds. The Fund keeps its books
and records in USD.
b) Valuation
1) The Net Asset Value per Share (the "NAV") 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 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 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, 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 US
dollars will be translated into US dollars 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 0.1835452
1 EUR Euro 1.5848000
c) Income Recognition
Interest is recorded on an accrual basis, net of any withholding taxes in the
relevant country. 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.
e) Payable on treasury transactions
The heading "Payable on treasury transactions" relates to foreign currency
operations and foreign forward exchange contracts transactions not yet recorded
in "Cash at banks".
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 2002 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 purchase Shares at the request of Shareholders.
The maximum price at which Shares can be repurchased will be the NAV. 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 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 during the year ended March 31st, 2008.
At the date of the report, 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 of the applicable Valuation
Date, reduced by a redemption fee of up to 5% for the benefit of the Corporation
to cover dealing charges. Such redemption fee amounts to USD 80,805 as of March
31st, 2008 and is registered under the caption "received commissions" in the
statement of operations in the report. 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 each.
On December 12th, 1997, a capital increase of 8,490,847 Shares has been
registered with a par value of USD 2 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.
According to the Fund's Annual General Meeting Minutes on August 21st, 2007 no
dividend has been distributed.
NOTE 8 - RECEIVABLE ON SALES OF SECURITIES AND PAYABLE ON PURCHASES OF
SECURITIES
Amounts under the caption "Receivable on sales of securities" relate to sales of
securities, which have been partially delivered by the Fund, or with delayed
delivery, as at the date of the report. Amounts under the caption "Payable on
purchases of securities" relate to purchases of securities which have been
partially received by the Fund, or with delayed reception, as at the date of the
report.
NOTE 9 - CUSTODIAN FEES
The Custodian will receive, 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 10 - DIRECTORS FEES
Each of the Directors shall be paid a fee at such a rate (if any) 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 11 - BENEFICIAL AND NON-BENEFICIAL INTEREST OF DIRECTORS IN THE SHARE
CAPITAL
As of March 31st, 2008 the beneficial and non-beneficial interests of the
Directors in the Share capital are the following:
Alexander E. Zagoreos 2,500 Shares
NOTE 12 - 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 13 - SUBSTANTIAL SHAREHOLDING
All issued Shares of the Fund are on deposit with a registered clearinghouse
and, accordingly, the Directors are not in a position to state the exact size of
any Share holdings in the Fund.
NOTE 14 - 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 15 - ADDENDUM TO THE PLACING MEMORANDUM
The Board has 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.
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