Final Results

BARING EMERGING EUROPE PLC Preliminary unaudited announcement in respect of the year ended 30th September 2005 STATEMENT OF TOTAL RETURN Year ended 30th September, 2005 Revenue Capital Total £000 £000 £000 Gains on investments - 111,356 111,356 Gains on foreign exchange - 169 169 Income 4,102 - 4,102 Investment management fee (1,593) (678) (2,271) Other expenses (1,016) - (1,016) Net return before interest payable and 1,493 110,847 112,340 taxation Interest payable (23) - (23) Net return before taxation 1,470 110,847 112,317 Taxation (572) - (572) Return attributable to ordinary shareholders 898 110,847 111,745 Dividend* (627) - (627) Transfers to reserves 271 110,847 111,118 Revenue Capital Total Return per ordinary share 2.07p 255.43p 257.50p Dividend per ordinary share 1.50p - p 1.50p * See note 5 Preliminary unaudited announcement (continued) STATEMENT OF TOTAL RETURN Year ended 30th September, 2004 Revenue Capital Total £000 £000 £000 Gains on investments - 30,116 30,116 Losses on foreign exchange - (333) (333) Income 3,434 - 3,434 Investment management fee (1,171) (116) (1,287) Other expenses (693) - (693) Net return before interest payable and 1,570 29,667 31,237 taxation Interest payable (18) - (18) Net return before taxation 1,552 29,667 31,219 Taxation (467) - (467) Return attributable to ordinary shareholders 1,085 29,667 30,752 Dividend* (887) - (887) Transfers to reserves 198 29,667 29,865 Revenue Capital Total Return per ordinary share 2.45p 66.88p 69.33p Dividend per ordinary share 2.00p - p 2.00p Preliminary unaudited announcement (continued) BALANCE SHEET 30th 30th September, September, 2005 2004 £000 £000 Fixed assets Investments 254,214 146,674 Current assets Debtors 656 1,745 Cash at bank and in hand 3,444 285 4,100 2,030 Creditors: Amounts falling due within one year (4,425) (2,395) Net current liabilities (325) (365) Net assets 253,889 146,309 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 41,794 29,904 Capital reserve-unrealised 128,782 29,825 Revenue reserve 735 464 Own shares held (3,538) - Total equity shareholders' funds 253,889 146,309 Net asset value per share 586.89p 329.82p Preliminary unaudited announcement (continued) CASHFLOW STATEMENT Year ended Year ended 30th 30th September, September, 2005 2004 £000 £000 Operating activities Investment income received 4,174 3,917 Deposit interest received 5 22 Investment management fees paid (1,622) (1,050) Other cash payments (955) (1,195) Net cash inflow from operating activities 1,602 1,694 Servicing of finance Interest paid (23) (18) Taxation Overseas tax paid (572) (467) Financial investment Purchases of investments (75,649) (133,816) Sales of investments 82,035 135,427 Net cash inflow from financial investments 6,386 1,611 Equity dividends paid (865) (488) Net cash inflow before financing 6,528 2,332 Financing Buyback of ordinary shares (3,538) - Net cash outflow from financing (3,538) - Increase in cash 2,990 2,332 Preliminary unaudited announcement (continued) NOTES 1. Current year's information The abridged figures for 2005 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 30th September, 2004 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 19th December, 2005. 4. Annual General Meeting The Annual General Meeting will be held at 155 Bishopsgate, London EC2 on Thursday 26th January, 2006 at 2.30pm. 5. Dividend Subject to the approval of the Annual General Meeting, the annual dividend will be paid on 17th February, 2006 to members on the register at the close of business on 20th January, 2006. The shares will be marked ex-dividend on 18th January, 2006. Preliminary unaudited announcement (continued) CHAIRMAN'S STATEMENT Company Performance The year to 30th September 2005 was a very good one for your Company. Regional markets performed excellently and your Company's benchmark appreciated by 74.7%. The Investment Manager was able to outperform the benchmark so that the net asset value rose by 78.0%. Towards the end of the period increased interest in the shares caused the discount to fall to 0.02% having started the year at 9.2%. Together these effects resulted in an impressive 95.9% rise in the share price and contributed to the Company winning the coveted Bloomberg Money award for the Best Global Investment Trust in 2005. The dividend income from the underlying portfolio grew modestly but the investment management and custodian fees, both of which are based on the net assets of the Company, rose considerably faster so that the income available for distribution fell from 2.45p per share in the year to 30th September 2004 to 2.07p per share out of which the Directors are recommending a dividend of 1.5p per share. Discount Management The Board believes that shareholders' interests are best served by containing the volatility of the discount. Over the last three years the Board has been willing to repurchase shares whenever the discount exceeded 10% and a further 1.1m shares were bought into treasury during the financial year with the last purchase being in January 2005. In recent months there has been an encouraging amount of interest from retail investors and the discount has narrowed materially. Hopefully this enthusiasm will be sustained and the shares will establish a trading range around net asset value. Should a premium emerge the Board's intention will be to provide the market with additional shares, initially using those currently held in treasury, so as to discourage too high a premium from developing. From 1st October 2005 the Company has been publishing its net asset value on a daily basis, as opposed to its previous practice of weekly, so as to keep the market better informed about the true level of the discount. Investment Manager The sale of the investment management business of Baring Asset Management to Massachusetts Mutual Life Insurance Company and its financial services business to Northern Trust was completed smoothly without any disruption in the personnel involved with the Company's affairs. The Board will continue to pay particular scrutiny to the communications between its various service providers until it is confident that the new arrangements are fully bedded in. Bid Price Valuations Among the various accounting changes which the Company will need to implement from 1 October 2005 is the requirement to value listed investments at bid price as opposed to mid-market price. This will not have a material affect on the Company's valuations. By way of illustration, applying a bid price approach to the portfolio as of 30th September 2005 would have reduced the net asset value by 1.54p per shares to 585.35p. Preliminary unaudited announcement (continued) CHAIRMAN'S STATEMENT CONTINUED Benchmark The primary objective of the Company as set by the Board is to outperform the competition. It is therefore sensible to ensure that the Company's benchmark remains close to the average asset allocation of competitors' portfolios. A review of the current benchmark is presently being undertaken by the investment manager with a view to implementing any appropriate changes during 2006. Board Prince Abbas Hilmi has indicated his intention to step down from the Board with effect from the forthcoming AGM. I would like to thank him for his many years of service to the Company and its predecessor. An investment of £100 at the original launch would have grown to £884 at 30 September 2005 (on a share price total return basis)so he will be leaving the Company with the feeling of a job well done. The Nomination Committee will not be seeking to replace him, as it believes the remaining Directors have sufficient breadth of experience to manage the Company's affairs effectively. In addition, with effect from the AGM, Jo Dixon will take over from John Cousins as the Chairman of the Audit Committee. John has diligently chaired the Committee since it was established and considers that it is now appropriate to hand over the responsibility to a newer member of the Board. Annual General Meeting The Annual General Meeting is being held on Thursday, 26th January 2006 at 155 Bishopsgate, London EC2 commencing at 2.30pm. The formal business will be followed 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 any member of the Board. Outlook Despite the exceptionally high returns during the year under review we continue to see value in the region and remain excited by the longer term opportunities as the markets develop and broaden. Iain Saunders Chairman 1st December, 2005 155 Bishopsgate, London, EC2M 3XY 020 7628 6000

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