Financial Report English




QR. 31247



AUDITORS' REPORT



To The Shareholders
Doha Insurance Company - Q.S.C.
Doha – Qatar



We have audited the accompanying balance sheet of Doha Insurance Company - Q.S.C., as of 31 December 2003 and the related statements of income, changes in shareholders' equity and cash flows for the year then ended . These financial statements are the responsibility of the company's management. 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. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Doha Insurance Company - Q.S.C., as of 31 December 2003 , and the results of its operations, changes in its shareholders' equity and its cash flows for the year then ended in accordance with International Financial Reporting Standards.


Furthermore, in our opinion the financial statements provide the information required by the Qatar Commercial Companies' Law No. 5 of 2002 and the Company's Articles of Association. We are also of the opinion that proper books of account were maintained by the Company and the contents of the directors' report are in agreement with the Company's financial statements. To the best of our knowledge and belief and according to the information given to us, no contraventions of the Law or the Company's Articles of Association, were committed during the year which would materially affect the Company's activities or its financial position.


		For Deloitte & Touche



Doha – Qatar		Toufic A. El Khatib
January 21, 2004		License No. 137

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
BALANCE SHEET
31 December 2003

		*2003*	*2002*
	Note	QR	QR

ASSETS

Cash and bank balances	3	42,358,563	58,249,125
Investments	4	104,807,778	85,784,376
Accounts receivable		7,084,966	5,047,949
Reinsurance balances receivable		2,894,997	1,934,175
Investment properties	5	30,360,786	--
Property and equipment	6	8,986,483	10,048,969
Other assets	7	1,666,110	1,381,043

TOTAL ASSETS		198,159,683	162,445,637

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Insurance reserves	8	13,376,687	8,796,620
Bank term loan	9	7,555,900	--
Accounts payable		258,021	1,557,539
Reinsurance balances payable		3,986,488	2,172,753
Other liabilities and provisions	10	3,404,197	1,168,678

TOTAL LIABILITIES		28,581,293	13,695,590

SHAREHOLDERS' EQUITY
Share capital	1	127,240,000	127,240,000
Legal reserve	11	3,152,571	1,722,946
Proposed cash dividend	12	10,179,200	6,362,000
Fair value reserve		19,248,962	5,754,867
Retained earnings		9,757,657	7,670,234

TOTAL SHAREHOLDERS' EQUITY		169,578,390	148,750,047

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		198,159,683	162,445,637



These financial statements were authorized for issue by the Board of Directors on January 21, 2004 .




Sheikh Nawaf Bin Nasser Bin Khaled Al-Thani		Bassam Hussein
Chairman		General Manager

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
STATEMENT OF INCOME
Year ended 31 December 2003

		*2003*	*2002*
	Note	QR	QR

INCOME

Net insurance revenue	14	5,865,238	3,849,708
Investment income		5,855,350	3,803,573
Interest income		1,248,628	1,745,882
Income from sale of investments		8,912,997	5,358,977
Income from investment properties		1,449,700	--
Other income		53,379	93,853

Total income		23,385,292	14,851,993

EXPENSES

Salaries and other staff costs		(4,826,899	(4,390,002)
Depreciation of investment properties	5	(534,573	--
Depreciation of property and equipment	6	(1,311,916)	(1,273,089)
General and administrative expenses		(2,415,656)	(2,182,515)

Total expenses		(9,089,044)	(7,845,606)

NET INCOME FOR THE YEAR		14,296,248	7,006,387



Earnings Per Share		1.124	0.551
		---------------------	-------------------

Weighted Average Number of Shares		12,724,000	12,724,000
		============	===========

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
STATEMENT OF CASH FLOWS
Year ended 31 December 2003

		*2003*	*2002*
	Note	QR	QR

OPERATING ACTIVITIES

Net income for the year		14,296,248	7,006,387
Adjustments for:
Depreciation of property and equipment		1,311,916	1,273,089
Depreciation of investment properties		534,573	--
Net movement in insurance reserves		4,580,067	4,861,790
Provision for employees' terminal benefits		155,070	136,426

Operating Income Before Changes in Operating Assets
and Liabilities		20,877,874	13,277,692
Accounts receivable		(2,037,017)	124,166
Reinsurance balances receivable		(960,822)	(445,038)
Other assets		(285,067)	(635,301)
Accounts payable		(1,299,518)	1,394,333
Reinsurance balances payable		1,813,735	(829,417)
Other liabilities and provisions		1,487,358	(173,132)
Employees' terminal benefits paid		(6,909)	(16,156)

Net cash from operating activities		19,589,634	12,697,147


INVESTING ACTIVITIES
Net cash movement in investments		(5,529,307)	(46,983,688)
Purchase of property and equipment		(249,430)	(72,136)
Purchase of investment properties		(30,895,359)	--
Net cash used in investing activities		(36,674,096)	(47,055,824)


FINANCING ACTIVITIES
Bank term loan received		7,555,900	--
Dividends paid		(6,362,000)	--

Net Cash from Financing Activities		1,193,900	--

Net Decrease in Cash and Cash Equivalent		(15,890,562)	(34,358,677)

Cash and cash equivalents at the beginning of the year		58,249,125	92,607,802

Cash and Cash Equivalents at the End of the Year		42,358,563	58,249,125
		===========	===========

Doha Insurance Company - Q. S. C.
___________________________________________________________________________________________________


STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Year Ended 31 December 2003


					Proposed
		Share	Legal	Fair Value	cash	Retained
		Capital	reserve	reserve	dividend	earnings	Total
	Note	QR	QR	QR	QR	QR	QR

Balance as on January 1, 2002		127,240,000	858,498	4,576,019	--	7,726,486	140,401,003
Additional transfer to legal reserve		--	163,809	--	--	--	163,809
Net income for the year		--	--	--	--	7,006,387	7,006,387
Transfer to legal reserve		--	700,639	--	--	(700,639)	--
Net movement in cumulative changes in fair value		--	--	1,178,848	--	--	1,178,848
Proposed cash dividends		--	--	--	6,362,000	(6,362,000)	--
		--------------	-------------	-------------	--------------	---------------	--------------

Balance as on December 31, 2002		127,240,000	1,722,946	5,754,867	6,362,000	7,670,234	148,750,047
Cash dividends for 2002 paid		--	--	--	(6,362,000)	--	(6,362,000)
Net income for the year		--	--	--	--	14,296,248	14,296,248
Transfer to legal reserve		--	1,429,625	--	--	(1,429,625)	--
Net movement in cumulative changes in fair value		--	--	13,494,095	--	--	13,494,095
Proposed cash dividends	12	--	--	--	10,179,200	(10,179,200)	--
Directors' remuneration	13	--	--	--	--	(600,000)	(600,000)
		--------------	-------------	-------------	--------------	---------------	--------------

Balance as of December 31, 2003		127,240,000	3,152,571	19,248,962	10,179,200	9,757,657	169,578,390
		=========	========	=======	========	=========	========

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

1. ACTIVITIES

Doha Insurance Company is a public shareholding company governed by the Amiri Decree No. 3 of 1999 promulgated on October 2, 1999 and is incorporated following the general assembly meeting held on July 4, 2000 , the first day of operation for the Company.

The Company's issued and fully paid capital is stated at QR. 127,240,000 divided into 12,724,000 shares of QR. 10 each.

The Company is engaged in the business of insurance and reinsurance.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation:

The financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS).

b) Accounting convention

The financial statements are prepared under the historical cost basis except for the

measurement at fair value of available for sale investments.

c) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents consist of cash on hand,

bank balances and short term deposits with banks maturing within 3 months.

d) Investments

Major investment categories include marketable equity securities, bonds and funds.

All investments are initially recognised at cost, being the fair value of the consideration given

including acquisition charges associated with the investment.

The accounting policies for investments are as follows:

(i) Available for sale

After initial recognition, investments which are classified “available for sale” are remeasured at

fair value. The unrealised gains and losses on remeasurement to fair value are reported as a

separate component of equity until the investment is sold, collected or otherwise disposed of,

or the investment is determined to be impaired, at which time the cumulative gain or loss

previously reported in equity is included in the statement of income for the year.

(ii) Held to maturity investment

Held to maturity investment are measured at amortized cost less provision for

impairment in value.

(iii) Fair values

Fair values of investments quoted on recognised stock exchanges are determined by reference

to their bid prices at the close of business at the balance sheet date.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

e) Accounts receivable and reinsurance balances receivable

Accounts receivable and reinsurance balances receivable are stated net of provision for doubtful

debts.

f) Property and equipment and investment properties

Property and equipment and investment properties are stated at cost less accumulated

depreciation. Depreciation is provided on a straight line basis on all property and equipment

and investment properties, other than freehold land which is determined to have an indefinite

life. The rates of depreciation are based upon the following estimated useful lives:

• Investment properties - 20 years

• Building - 10 years

• Furniture, fixtures and equipment - 3 to 5 years

• Motor vehicles - 5 years

g) Impairment

An assessment is made at each balance sheet date to determine whether there is objective

evidence that an asset or group of assets may be impaired. If such evidence exists, the

estimated recoverable amount of that asset is determined and an impairment loss is recognized

for the difference between the recoverable amount and the carrying amount. Impairment

losses are recognized in the statement of income.

h) Premium income

Premium income represents total amounts invoiced during the year. Where the company

carries no financial exposure to insurance risk, i.e. the full amount is re-insured, the

premium received is netted off against the premium paid, and the net amount is reported

as income.

i) Reserve for unexpired risks

The reserve for unexpired risk represents the estimated portion of net premium income

after deduction of the reinsurance share which relates to periods of insurance subsequent

to the balance sheet date. The reserve is calculated at 40 percent of the net premium for all

insurance classes except for marine insurance which is calculated at 25 percent.

j) Commission earned and paid

Commissions earned and paid are recognized at the time policies are written.

k) Provision for outstanding claims

Provision for outstanding claims is recognized at the date the claims are known and covers

the liability for loss and loss adjustment expenses based on loss reports from independent

adjusters and management best estimate. The method for making such estimates and for

establishing the resulting liability are continually reviewed.

l) Technical reserve

This reserve is established to meet claims incurred but not reported at the balance sheet

date based on management estimates and prior experience.

m) Interest income

Interest income is recognised on a time apportionment basis taking account of the principal

invested and the interest rate applicable.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

n) Dividend income

Dividend income is recognised when received.

o) Foreign currencies

Foreign currency transactions are recorded in Qatari Riyals at the rates of exchange prevailing

at the date of each transaction. Monetary assets and liabilities denominated in foreign

currencies are translated to Qatari Riyals at the rate of exchange prevailing at the year end. The

resultant exchange differences are included in the statement of income.

p) Employee's terminal benefits

Provision is made for amounts payable in respect of employee terminal benefits based on

Qatar Labour Law and is calculated using the employee's salary and period of service at the

balance sheet date.

3 CASH AND BANK BALANCES

	2003	2002
	QR	QR

Cash on hand	85,587	144,561
Current accounts with banks	16,986,600	6,969,861
Term deposits with banks	25,286,376	51,134,703

Total	42,358,563	58,249,125
	========	========

4 INVESTMENTS

The carrying amounts of investments at 31 December were as follows:

	2003	2002
	QR	QR

Held to maturity investments:
Qatari Government bills in US Dollar with fixed interest rate	12,002,755	20,163,858
Ras Laffan bills in US Dollar with fixed interest rate	30,133,082	30,380,559

Total	42,135,837	50,544,417

Available for sale investments:
Quoted shares	59,850,941	35,239,959
Unquoted funds	2,821,000	--

Total	62,671,941	35,239,959

Total investments	104,807,778	85,784,376
	=========	========

The market value of held to maturity investments amounted to QR. 50,291,260 as of December 31, 2003 (2002: QR 54,343,193). The Ras Laffan bills in US Dollar are held by the bank as security against term loans provided to the Company (Refer Note 9).

5 INVESTMENT PROPERTIES

	2003	2002
	QR	QR

At cost	30,895,359	--
Less: Accumulated depreciation	(534,573)	--
	-------------------	---------------------

Net carrying value	30,360,786	--
	===========	============

The fair value of investment properties is determined on the basis of management's estimates of the market value, which in the opinion of the management approximates the carrying amount.

Doha Insurance Company - Q. S. C.

_____________________________________________________________________________________________________________

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

6 PROPERTY AND EQUIPMENT

Wooden

Fixture and

Motor

Office

Land

Buildings

furniture

Computers

vehicles

Equipment

Total

QR.

Cost:

1 January 2003

2,350,000

7,288,262

73,495

1,417,856

937,893

263,966

111,953

12,443,425

Additions

23,106

22,508

200,910

2,906

249,430

-------------

---------------

-------------

---------------

31 December 2003

2,350,000

7,288,262

73,495

1,440,962

960,401

464,876

114,859

12,692,855

Depreciation:

1 January 2003

1,452,089

9,903

505,299

290,141

105,225

31,799

2,394,456

Charge for the year

728,826

7,350

285,704

188,681

78,609

22,746

1,311,916

-------------

---------------

-------------

---------------

31 December 2003

2,180,915

17,253

791,003

478,822

183,834

54,545

3,706,372

-------------

---------------

-------------

---------------

Net book values:

31 December 2003

2,350,000

5,107,347

56,242

649,959

481,579

281,042

60,314

8,986,483

=========

========

=======

========

31 December 2002

2,350,000

5,836,173

63,592

912,557

647,752

158,741

80,154

10,048,969

========

=========

========

=========

• The value of the land was estimated by the Company's management.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

7. OTHER ASSETS

	2003	2002
	QR	QR

Accrued interest	867,038	791,587
Prepaid expenses	275,205	295,302
Refundable deposits and other debit balances	523,867	294,154

Total	1,666,110	1,381,043
	=======	=======

8 INSURANCE RESERVES

	2003	2002
	QR	QR

Reserve for unexpired risks	8,438,690	5,839,352
Reserve for outstanding claims	3,121,891	1,700,311
Technical reserve	1,816,106	1,256,957

Total	13,376,687	8,796,620
	========	=======

9 BANK TERM LOAN

	2003	2002
	QR	QR

Bank term loan – current portion	1,566,060	--
Bank term loan – non-current portion	5,989,840	--
	-----------------	---------------------

Total	7,555,900	--
	=========	============

The above loan of US $ 2,060,000 is repayable in 5 years in half yearly installments of US $ 215,000 each. The loan carry interest at six months Libor plus 1% p.a. (Refer Note 4).

10 OTHER LIABILITIES AND PROVISIONS

	2003	2002
	QR	QR

Accrued salaries and expenses	143,021	153,662
Provision for leave pay and air tickets	325,505	279,718
Provision for employees terminal benefits	405,038	256,877
Provision for employees' bonus	442,710	441,210
Dividend payable	746,828	--
Advance income from properties	532,500	--
Directors' remuneration	600,000	--
Other credit balances	208,595	37,211
	-----------------	---------------------

Total	3,404,197	1,168,678
	=========	============

11 LEGAL RESERVE

As per the Company's Articles of Association and the provision of Qatar Commercial Companies' Law No. 5 of 2002, an amount equivalent to 10% of the net income for the year is transferred annually to the legal reserve until it equals 50% of the capital. This reserve is not available for distribution except in circumstances stipulated in the companies' Law.

12 PROPOSED DIVIDEND

The Board of Directors decided in its meeting held on January 21, 2004 to propose to the forthcoming General Assembly to approve the distribution of cash dividend for the year 2003 at 8% of share capital.

Doha Insurance Company - Q. S. C.


13 DIRECTORS' REMUNERATION

The Board of directors proposed the distribution of QR. 600 thousands as a remuneration to board members for the year 2003.

14 NET INSURANCE REVENUE
	Marine and Aviation		Motor		Fire and general		Total
	2003	2002	2003	2002	2003	2002	2003	2002
	QR.	QR.	QR.	QR.	QR.	QR.	QR.	QR.



Premium	3,190,087	1,501,918	15,286,278	8,812,894	25,484,420	23,949,911	43,960,785	34,264,723

Less : Reinsurers' share	(3,028,774)	(1,049,218)	(660,245)	(711,537)	(22,110,717)	(19,934,399)	(25,799,736)	(21,695,154)

Net premium	161,313	452,700	14,626,033	8,101,357	3,373,703	4,015,512	18,161,049	12,569,569

Reinsurance commissions – net	491,665	249,393	(217,267)	(84,467)	2,688,877	2,042,702	2,963,275	2,207,628

Total revenues	652,978	702,093	14,408,766	8,016,890	6,062,580	6,058,214	21,124,324	14,777,197

Movements in insurance reserves	(70,910)	(89,436)	(4,476,083)	(2,769,764)	(806,792)	(2,002,590)	(5,353,785)	(4,861,790)

Claims:
Claims paid	(348,285)	(370,046)	(8,984,722)	(4,972,737)	(8,539,214)	(7,750,694)	(17,872,221)	(13,093,477)
Less : Reinsurers' share	311,836	244,182	17,634	247,419	7,637,450	6,536,177	7,966,920	7,027,778

Net claims	(36,449)	(125,864)	(8,967,088)	(4,725,318)	(901,764)	(1,214,517)	(9,905,301)	(6,065,699)

Net insurance revenue	545,619	486,793	965,595	521,808	4,354,024	2,841,107	5,865,238	3,849,708
	========	========	=========	========	=========	=========	=========	=========

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

15 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income for the year by the adjusted weighted average number of ordinary shares outstanding during the year as follows:

	2003	2002
	QR	QR

Net income for the year	14,296,248	7,006,387

Adjusted weighted average number of shares	12,724,000	12,724,000

Total	1.124	0.551

16 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

	2003	2002
	QR	QR

Bank guarantees	468,964	293,999

17 SEGMENT INFORMATION

Primary Segment information

For management purposes, the company is organised into three business segments, marine, motor and fire & general. These segments are the basis on which the company reports its primary segment information. Other operations of the company comprise investment and cash management for the company's own account. There are no transactions between segments.

The data with respect to segment information is as disclosed in Note 14 to the financial statements.

Secondary segment information

The company operates in the State of Qatar only.

18 INTEREST RATE RISK

The Company's interest rate risk based on contractual arrangements at December 31, 2003 was as follows:

	Up to 6	6 Months	1 to 5	Over 5		Effective
	Months	To 1 Year	Years	Years	Total	Interest Rate%

Bank balances	42,358,563	--	--	--	42,358,563	2.75
Bonds	--	--	--	42,135,837	42,135,837	8.40
	-------------	-----------	-------------	-------------	--------------

Total	42,358,563	--	--	42,135,837	84,494,400

19 RELATED PARTY TRANSACTIONS

These represent transactions with related parties, i.e. shareholders and directors of the Company and companies in which they are principal owners. Pricing policies and terms of these transactions are approved by the Company's management and are negotiated under normal commercial terms.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

20 FINANCIL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments consist of financial assets and financial liabilities

The financial assets of the Company include cash and bank balances, accounts receivable

and investments.

The financial liabilities of the Company include bank term loan, provisions and payables.

Accounting policies for financial assets and liabilities are set our in Note 2.

a) Currency risk

Currency risk is the risk that the value of financial instrument will fluctuate due

to changes in foreign rates. The Company has deposits and investments in Qatari Riyals

and United States Dollars. The Qatari Riyals is effectively pegged to the United States

Dollar thus minimizing the currency rate risks.

b) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an

obligation and cause the other party to incur a financial loss. Balances with banks

represent term deposits, current and savings accounts placed with banks of repute. Credit

risk on receivable is limited as these are shown after reviewing their recoverability.

Management seeks to minimized credit risk with respect to insurance and reinsurance

companies by only ceding business to companies with good credit ratings.

c) Liquidity risk

Liquidity risk also referred to as funding risk, is the risk that an enterprise will encounter

difficulty in raising funds to meet commitments associated with financial instruments.

Liquidity risk may result from an inability to sell a financial assets quickly at close to its

fair value. Liquidity requirements are monitored on a periodical basis and the management

ensures that sufficient funds are available to meet any future commitments.

d) Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged or a liability settled

between knowledgeable, willing parties in an arm's length transaction. Differences can

therefore arise between the book values under the historical cost method and fair value

estimates. The fair values of the Company's cash, receivables, payables and investments

held to maturity are not materially different from their carrying values. Available-for-sale

investments are stated at their fair value as disclosed in Not 4 to the financial statements.

e.) Interest rate risk

The company invests in securities and has deposits that are subject to interest rate risk.

Interest rate risk to the company is the risk of changes in market interest rates reducing the

overall return on its interest bearing securities. The company limits interest rate risk by

monitoring changes in interest rates in the currencies in which its cash and investments

are denominated.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2003

f) Reinsurance risk

The company, in the normal course of business, enters into re-insurance arrangements with

other parties in order to minimise financial exposure arising from large claims.

The company evaluates the financial condition of its reinsurers and monitors concentrations

credit risk arising from similar geographic regions, activities or economic characteristics

of the reinsurers.

g) Market Risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of

changes in market prices, whether those changes are caused by factors specific to the

individual security, or its issuer, or factors affecting all securities traded in the market.

The Company limits market risk by maintaining a diversified portfolio and by continous

monitoring of developments in international and local equity and bond markets. In addition,

the Company actively monitors the key factors that affect stock and bond market

movements, including analysis of the operational and financial performance of investees.

21 COMPARATIVE AMOUNTS

Certain of prior year amounts have been reclassified in order to conform with current year’s

presentation.