Unaudited Interim Results

Baring Emerging Europe PLC 04 May 2006 BARING EMERGING EUROPE PLC ---------------------------------------------------------------------------- Unaudited Interim Report for the six months ended 31st March, 2006 INCOME STATEMENT Six months ended 31st March, 2006 Revenue Capital Total £000 £000 £000 ------------------------------------------------------------------------------ Gains on investments - 56,041 56,041 Gains on foreign exchange - 109 109 Income 566 - 566 Investment management fee (1,258) (561) (1,819) Other expenses (601) - (601) ----------------------------------- -------- -------- -------- Net return before interest payable and taxation (1,293) 55,589 54,296 Interest payable (2) - (2) ----------------------------------- -------- -------- -------- Net return before taxation (1,295) 55,589 54,294 Taxation (21) - (21) ----------------------------------- -------- -------- -------- Return attributable to ordinary shareholders (1,316) 55,589 54,273 -------- -------- -------- Total Return per ordinary share 125.45p -------- INCOME STATEMENT Restated Six months ended 31st March, 2005 Revenue Capital Total £000 £000 £000 Gains on investments - 30,056 30,056 Gains on foreign exchange - 23 23 Income 229 - 229 Investment management fee (718) (455) (1,173) Other expenses (394) - (394) ----------------------------------- -------- -------- -------- Net return before interest payable and taxation (883) 29,624 28,741 Interest payable (15) - (15) ----------------------------------- -------- -------- -------- Net return before taxation (898) 29,624 28,726 Taxation (18) - (18) ----------------------------------- -------- -------- -------- Return attributable to ordinary shareholders (916) 29,624 28,708 -------- -------- -------- Total Return per ordinary share 66.36p -------- INCOME STATEMENT Restated Year ended 30th September, 2005 Revenue Capital Total £000 £000 £000 ------------------------------------------------------------------------------ Gains on investments - 110,690 110,690 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 taxation 1,493 110,181 111,674 Interest payable (23) - (23) ----------------------------------- -------- -------- -------- Net return before taxation 1,470 110,181 111,651 Taxation (572) - (572) ----------------------------------- -------- -------- -------- Return attributable to ordinary shareholders 898 110,181 111,079 -------- -------- -------- Total Return per ordinary share 255.97p -------- BALANCE SHEET Restated Restated 30th 31st March, 31st March, September, 2006 2005 2005 £000 £000 £000 Fixed assets Investments at fair value through the income statements 305,360 170,622 253,549 Current assets +-------+ +-------+ +-------+ Debtors | 1,082| | 1,824| | 656| Cash at bank and in hand | 6,072| | -| | 3,444| +-------+ +-------+ +-------+ 7,154 1,824 4,100 ----------------------------------- -------- -------- -------- Creditors: Amounts falling due within one year (4,357) (945) (3,777) ----------------------------------- -------- -------- -------- Net current assets 2,797 879 323 ----------------------------------- -------- -------- -------- Net assets 308,157 171,501 253,872 Capital and reserves Called-up share capital 4,436 4,436 4,436 Share premium account 1,411 1,411 1,411 Special Reserve 79,917 79,917 79,917 Redemption reserve 352 352 352 Capital reserve-realised 75,284 31,421 41,794 Capital reserve-unrealised 150,878 57,932 128,116 Revenue reserve (583) (430) 1,384 Own shares held (3,538) (3,538) (3,538) ----------------------------------- -------- -------- -------- Total equity shareholders' funds 308,157 171,501 253,872 -------- -------- -------- Net asset value per share 712.34p 396.44p 586.85p -------- -------- -------- CASHFLOW STATEMENT Six months Six months Year to to ended 31st March, 31st March, September, 2006 2005 2005 £000 £000 £000 Operating activities Investment income received 705 703 4,174 Deposit interest received 14 - 5 Investment management fees paid (1,845) (700) (1,622) Other cash payments (676) (378) (955) ----------------------------------- -------- -------- -------- Net cash (outflow)/inflow from (1,802) (375) 1,602 operating activities Servicing of finance Interest paid (2) (15) (23) Taxation Overseas tax paid (21) (18) (572) Financial investment +--------+ +--------+ +--------+ Purchases of investments |(68,958)| |(36,331)| |(75,649)| Sales of investments | 73,951 | | 40,732 | | 82,035 | ----------------------------------- +--------+ +--------+ +--------+ Net cash inflow from financial 4,993 4,401 6,386 investments Equity dividends paid (649) (865) (865) ----------------------------------- -------- -------- -------- Net cash inflow before financing 2,519 3,128 6,528 Financing +-------+ +--------+ +--------+ Buyback of ordinary shares | -| | (3,538)| | (3,538)| +-------+ +--------+ +--------+ Net cash outflow from financing - (3,538) (3,538) ----------------------------------- -------- -------- -------- Increase/(decrease) in cash 2,519 (410) 2,990 -------- -------- -------- NOTES 1. Accounting polices These financial statements 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 regarding the Financial Statements of Investment Trust Companies ('SORP'). The Company has adopted FRS 25 'Financial Instruments: Disclosure and Presentation', FRS 26 'Financial Instruments: Measurement' and FRS 21 'Events after the Balance Sheet Date' in these financial statements. The detailed disclosures required by FRS 25 will be presented in the Company's annual report for the year ending 30th September 2006. The significant accounting impact on these interim financial statements is set out below: • Listed investments are now valued at fair value deemed to be their bid market prices whereas in prior periods they had been valued at middle market prices. The effect of this change is to decrease the value of listed investments as previously reported at 30th September 2005 by £666,000 and by £443,000 at 31st March 2005. • Dividends on the Company's Ordinary shares will not be recognised in the financial statements until they have been declared whereas in prior periods they were recognised in the period to which they relate. As a result the Balance Sheet 'Creditors: amounts falling due within one year' as at 30th September 2005 has been restated by reducing it by £649,000. The revenue reserve at 30th September 2005 has been increased by a similar amount. With the exception of the changes stated above, the accounting polices in the 2005 financial statements remain unchanged. 2. Dividend No dividend is payable in respect of the six months ended 31st March, 2006. Consideration will be given to an annual dividend in respect of the year ended 30th September, 2006 at a Board meeting to be held in November 2006. An announcement will be made shortly after that meeting. 3. Comparative information The figures and financial information for the period ended 30th September, 2005 are an extract from the latest published accounts and do not constitute statutory accounts. Full accounts for that year 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. The accounts for the six months ended 31st March, 2006, and for the period ended 31st March, 2005 have been neither audited nor reviewed by the auditors. 4. Posting of Interim Report The Interim Report will be posted to shareholders on or around 19th May, 2006. 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. CHAIRMAN'S STATEMENT The first six months of the current financial year have been very satisfactory for your Company. Regional markets performed well and your Company's benchmark appreciated by 19.3%. The Investment Manager was able to outperform the benchmark so that the net asset value rose by 21.3%. However the discount of the share price to net asset value widened to 7% with the result that the share price increase was limited to 14.4%. The average discount over the period was 4.2% which is an encouraging improvement on previous periods. On 26th April 2006 we announced that Stuart Richards, the Company's portfolio manager, will be leaving Baring Asset Management ('BAM') in October 2006. The Board is reviewing with BAM the management arrangements for the Company, and will make a further announcement in due course. Stuart Richards will continue to manage the portfolio during his notice period. As envisaged in my Chairman's statement for the annual report Prince Abbas Hilmi retired from the Board at the Company's Annual General Meeting on 26th January 2006 and Josephine Dixon took over as Chairman of the audit committee from John Cousins. UK GAAP is converging with International Financial Reporting Standards and note 1 to the interim financial statements sets out the main changes resulting from the adoption of FRS 25 'Financial Instruments: Disclosure and Presentation', FRS 26 Financial Instruments: Measurement' and FRS 21 'Events after the Balance Sheet Date'. The Board continues to share the Investment Manager's enthusiasm for the region's long-term prospects. Iain Saunders Chairman 4th May, 2006 155 Bishopsgate, London, EC2M 3XY 020 7628 6000 This information is provided by RNS The company news service from the London Stock Exchange

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