Final Results

BARING EMERGING EUROPE PLC Preliminary unaudited announcement in respect of the year ended 30 September 2007 INCOME STATEMENT Year ended 30 September 2007 Revenue Capital Total £000 £000 £000 Gains on investments held at fair value through profit or loss - 104,815 104,815 Income 5,220 - 5,220 Investment management fee (3,222 ) - (3,222 ) Other expenses (1,246 ) - (1,246 ) Return before finance charges and taxation 752 104,815 105,567 Finance charges (10 ) - (10 ) Return before taxation 742 104,815 105,557 Taxation (524 ) - (524 ) Return attributable to ordinary shareholders 218 104,815 105,033 Total Return per ordinary share 245.80 p Dividend per ordinary share 0.50 p INCOME STATEMENT Year ended 30 September 2006 Revenue Capital Total £000 £000 £000 Gains on investments held at fair value through profit of loss - 37,493 37,493 Income 5,838 - 5,838 Investment management fee (2,661 ) 21 (2,640 ) Other expenses (1,142 ) - (1,142 ) Return before finance charges and taxation 2,035 37,514 39,549 Finance charges (5 ) - (5 ) Return before taxation 2,030 37,514 39,544 Taxation (731 ) - (731 ) Return attributable to ordinary shareholders 1,299 37,514 38,813 Total Return per ordinary share 89.45 p Dividend per ordinary share 2.70 p BALANCE SHEET 30 September 30 September 2007 2006 £000 £000 Fixed assets Investments at fair value through 370,406 285,415 profit or loss Current assets Debtors 7,741 1,901 Cash at bank and in hand 13,549 5,326 21,290 7,227 Creditors: Amounts falling due within one year (9,508 ) (606 ) Net current assets 11,782 6,621 Net assets 382,188 292,036 Capital and reserves Called-up share capital 4,436 4,436 Share premium account 1,411 1,411 Special Reserve 79,917 79,917 Redemption reserve 352 352 Capital reserve-realised 157,723 84,187 Capital reserve-unrealised 154,516 123,237 Revenue reserve 1,084 2,034 Own shares held (17,251 ) (3,538 ) Total equity shareholders' funds 382,188 292,036 Net asset value per share 921.43 p 675.07 p RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS For the year ended 30 September 2007 Called-up Share Capital Capital Own share premium Special Redemption reserve reserve Revenue shares capital account reserve reserve realised unrealised reserve held Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Beginning of year 4,436 1,411 79,917 352 84,187 123,237 2,034 (3,538)292,036 Net gain on realisation of investments - - - - 73,536 - - - 73,536 Unrealised appreciation on investments - - - - - 31,279 - - 1,279 Net revenue for the year - - - - - - 218 - 218 Buy back of own shares held in treasury - - - - - - - (13,713)(13,713) Dividends paid - - - - - - (1,168) - (1,168) Balance at 30 September 2007 4,436 1,411 79,917 352 157,723 154,516 1,084 (17,251)382,188 For the year ended 30 September 2006 Called-up Share Capital Capital Own share premium Special Redemption reserve reserve Revenue shares capital account reserve reserve realised unrealised reserve held Total £000 £000 £000 £000 £000 £000 £000 £000 £000 Beginning of year 4,436 1,411 79,917 352 41,794 128,116 1,384 (3,538) 253,872 Net gain on realisation of investments - - - - 42,372 - - - 42,372 Unrealised depreciation on investments - - - - - (4,879) - - (4,879) Capital management charges - - - - 21 - - - 21 Net revenue for the year - - - - - - 1,299 - 1,299 Dividends paid - - - - - - (649) - (649) Balance at 30 September 2006 4,436 1,411 79,917 352 84,187 123,237 2,034 (3,538) 292,036 CASHFLOW STATEMENT Year Year ended ended 30 September 30 September 2007 2006 £000 £000 Operating activities Income received from investments 5,541 4,848 Interest received 108 53 Investment management fees paid (3,169 ) (3,288 ) Other cash payments (1,237 ) (1,045 ) Net cash inflow from operating activities 1,243 568 Servicing of finance Interest paid (10 ) (5 ) Taxation Overseas tax paid (524 ) (731 ) Capital expenditure and financial investment Purchases of investments (178,857 ) (101,037 ) Sales of investments 201,252 103,736 Net cash inflow from capital expenditure and financial investment 22,395 2,699 Equity dividends paid (1,168 ) (649 ) Net cash inflow before financing 21,936 1,882 Financing Buyback of ordinary shares (13,713 ) - Net cash outflow from financing (13,713 ) - Increase in cash 8,223 1,882 NOTES 1. Current year's information These accounts are prepared under the historical cost convention as modified by the revaluation of fixed asset investments and in accordance with applicable accounting standards and with the Statement of Recommended Practice 2003 (revised 2005) regarding the Financial Statements of Investment Trust Companies ("SORP"). The abridged figures for 2007 are an extract from the latest financial statements and do not constitute statutory financial statements. The financial statements have not yet been delivered to the Registrar of Companies, nor have the Auditors yet reported on them. 2. Comparative information The figures and financial information for the year ended 30 September 2006 are an extract from the latest published accounts and do not constitute statutory accounts. Full accounts for that period have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under section 237 of the Companies Act 1985. 3. Posting of Annual Report The Annual Report will be posted to shareholders on or around 12 December 2007. It will not be advertised in newspapers, but copies will be available from that date at the Company's Registered Office at 155 Bishopsgate, London, EC2M 3XY. 4. Annual General Meeting The Annual General Meeting will be held at 155 Bishopsgate, London EC2 on Tuesday, 15 January 2008 at 2.30pm. 5. Dividend Subject to the approval of the Annual General Meeting, the annual dividend of 0.5p per share will be paid on 6 February 2008 to members on the register at the close of business on 11 January 2008. The shares will be marked ex-dividend on 9 January 2008. 6. Return per Ordinary Share The return per ordinary share is based on the weighted average of 42,732,444 ordinary shares in issue during the year (2006: 43,395,523 shares). 7. Ordinary Shares in Issue At 30 September 2007 there were 41,477,707 ordinary shares in issue which excludes 2,882,199 ordinary shares held in treasury. CHAIRMAN'S STATEMENT Company Performance The year to 30 September 2007 was another good year for your Company with the share price rising by 38.1%. The performance of the net asset value (NAV) relative to the blended benchmark (see below) was less satisfactory at 36.5% versus 42.2%. The Company's NAV has now increased every year since the launch of the Company on 17 December 2002 and from that date has increased by 475.9%. The main components of the Company's total expenditure are proportionate to the capital value of the portfolio. During the year this increased significantly while the dividend income from the underlying investments actually fell modestly. As a result the income available for distribution declined from 3.00p per share for the year to 30th September 2006 to 0.51p per share for the current year out of which the Directors are recommending a dividend of 0.5p per share. Discount Management The Board believes that shareholders' interests are best served by containing the volatility of the discount and the Board has been willing to repurchase shares when the discount persistently exceeds the target set by the Board. At the year-end the discount was 9.3% and for the year as a whole it averaged 9.8%. During the year ended 30 September 2007 1,782,199 shares were repurchased at a cost of £13.7 million. Subsequent to the year-end a further 805,539 shares have been repurchased. The Board prefers to have the flexibility to hold any shares repurchased in Treasury so that they can be reissued at a later date. The Board understands the concerns about a dilution of NAV by issuing shares at a discount. Therefore at the AGM the Board will again be putting forward resolutions to repurchase shares for cancellation or to be held in Treasury but to be reissued only at NAV or above. The Board hopes that shareholders will support these resolutions. Investment Manager Mr Martin Majdaniuk joined Baring Asset Management's Emerging European Equities team in January 2007 and assumed full responsibility for the Company's portfolio in May 2007. The Board looks forward to continue to work with him. Benchmark As I reported in my statement with the interim report we have carried out a review of the Company's investment benchmark and have now agreed with Baring Asset Management that the MSCI EM Europe 10/40 Index should be adopted with effect from 1 April 2007. This benchmark is considered to be more suitable for the investment mandate and should allow for more effective performance comparison against the peer group. The previous benchmark was affected by concentration issues which made it difficult for the investment manager to reflect his market views in the portfolio weightings. For this reason we have agreed that the cumulative performance should be set at zero in calculating any performance fee from 1 April 2007 onwards. Prior to 1 April 2007 the Company's benchmark was the FTSE Custom All World Emerging Europe Index with Russia weighted at 70% and Turkey at 30% of actual market weightings. For reporting purposes for the year to 30 September 2007 the benchmark is a combination of the two indices which we refer to as the "blended benchmark". Investment Policy The United Kingdom Listing Authority (UKLA) now requires investment companies to publish a detailed investment policy containing information about the policies relating to asset allocation, risk diversification and gearing. The Company's investment policy was contained in the prospectus issued for the launch of the Company in 2002 and we have not sought to change this policy. The Company's detailed investment policy can be found in the Report of the Directors. Annual General Meeting The next Annual General Meeting will be held on Tuesday 15 January 2008 at 155 Bishopsgate, London EC2M 3XY commencing at 2.30pm. The formal business will be preceded by a presentation from the Investment Manager, after which there will be an opportunity for shareholders to raise any specific issues with the Investment Manager or with any member of the Board. Outlook Despite the continued high returns during the year under review we share the confidence expressed by the Investment Manager in its report about the Company's prospects. Iain Saunders Chairman 29 November 2007 For enquiries please contact: Brian Corris at Baring Asset Management Limited on 020 7628 6000

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