Half-yearly Report

BARING EMERGING EUROPE PLC Preliminary unaudited announcement in respect of the six Months ended 31 March 2007 INCOME STATEMENT Six months ended 31 March 2007 Revenue Capital Total £000 £000 £000 Gains on investments - 66,599 66,599 Income 813 - 813 Investment management fee (1,566 ) - (1,566 ) Other expenses (667 ) - (667 ) Net return before interest payable and taxation (1,420 ) 66,599 65,179 Finance costs (5 ) - (5 ) Net return before taxation (1,425 ) 66,599 65,174 Taxation (75 ) - (75 ) Return attributable to ordinary shareholders (1,500 ) 66,599 65,099 Total Return per ordinary share (pence) 150.49 p INCOME STATEMENT Six months ended 31 March 2006 Revenue Capital Total £000 £000 £000 Gains on investments - 56,150 56,150 Income 566 - 566 Investment management fee (1,258 ) (561 ) (1,819 ) Other expenses (601 ) - (601 ) Return before interest payable and taxation (1,293 ) 55,589 54,296 Finance costs (2 ) - (2 ) Return on ordinary activities before taxation (1,295 ) 55,589 54,294 Taxation on ordinary activities (21 ) - (21 ) Return on ordinary activities after taxation (1,316 ) 55,589 54,273 Total Return per ordinary share (pence) 125.45 p INCOME STATEMENT Year ended 30 September 2006 Revenue Capital Total £000 £000 £000 Gains on investments - 37,493 37,493 Income 5,838 - 5,838 Investment management fee (2,661 ) 21 (2,640 ) Other expenses (1,142 ) - (1,142 ) Net return before interest payable and taxation 2,035 37,514 39,549 Finance costs (5 ) - (5 ) Net 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 (pence) 89.72 p Dividend per ordinary share (pence) 2.70 p BALANCE SHEET 31 March 31 March 30 September 2007 2006 2006 £000 £000 £000 Non current assets Investments at fair value through the profit or loss 349,417 305,360 285,415 Current assets Debtors 3,690 1,082 1,901 Cash at bank and in hand 4,752 6,072 5,326 8,442 7,154 7,227 Creditors: Amounts falling due within one year (2,753 ) (4,357 ) (606 ) Net current assets 5,689 2,797 6,621 Net assets 355,106 308,157 292,036 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 111,122 75,284 84,187 Capital reserve-unrealised 162,901 150,878 123,237 Revenue reserve (634 ) (583 ) 2,034 Own shares held (4,399 ) (3,538 ) (3,538 ) Total shareholders' funds 355,106 308,157 292,036 Net asset value per ordinary share 823.15p 712.34p 675.07p RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS For the six months ended 31 March 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 Balance at 30 September 2006 4,436 1,411 79,917 352 84,187 123,237 2,034 (3,538) 292,036 Net gain on realisation of - - - - 26,935 - - - 26,935 investments Unrealised movement on investments - - - - - 39,664 - - 39,664 Buy back of own shares held in treasury - - - - - - - (861) (861) Net revenue retained for - - - - - - (1,500) - (1,500) the year Dividends - - - - - - (1,168) - (1,168) paid Balance at 31 March 2007 4,436 1,411 79,917 352 111,122 162,901 (634) (4,399) 355,106 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 - - - - 42,372 - - - 42,372 investments Unrealised appreciation on investments (restated) - - - - - (4,879) - - (4,879) Capital management Charges - - - - 21 - - - 21 Net revenue retained for the year - - - - - - 1,299 - 1,299 Dividends - - - - - - (649) - (649) paid Balance at 30 September 2006 4,436 1,411 79,917 352 84,187 123,237 2,034 (3,538) 292,036 CASHFLOW STATEMENT Six Six months months Year ended ended ended 31 March 31 March 30 September 2007 2006 2006 £000 £000 £000 Operating activities Income received from investment 1,586 705 4,848 Interest received 68 14 53 Investment management fees paid (1,277 ) (1,845 ) (3,288 ) Other cash payments (722 ) (676 ) (1,045 ) Net cash inflow/(outflow) from operating activities (345 ) (1,802 ) 568 Servicing of finance Interest paid (5 ) (2 ) (5 ) Taxation Overseas tax paid (75 ) (21 ) (731 ) Financial investment Purchases of investments (83,516 ) (68,958 ) (101,037 ) Sales of investments 84,535 73,951 103,736 Net cash inflow from financial investments 1,019 4,993 2,699 Equity dividends paid (1,168 ) (649 ) (649 ) Net cash (outflow)/inflow before financing (574 ) 2,519 1,882 Financing Buyback of ordinary shares - - - Net cash outflow from financing - - - (Decrease)/increase in cash (574 ) 2,519 1,882 NOTES 1. Accounting Policies These financial statements have been prepared in accordance with applicable accounting standards and with the AIC's Statement of Recommended Practice "Financial Statements of Investment Trust Companies" ("SORP") issued in January 2003, revised in December 2005 and in accordance with the Companies Act, 1985. 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 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. Share Capital As at 31 March 2007 there were 44,359,906 ordinary shares of 10p each in issue which includes 1,220,000 ordinary shares held in treasury and treated as not being in issue when calculating the net asset value per share. Shares held in treasury are non-voting and not eligible for receipt of dividends. During the period 120,000 ordinary shares were bought back to be held in treasury at a cost of £861,600. 4. Dividend No dividend is payable in respect of the six months to 31 March 2007. Consideration will be given to an annual dividend in respect of the year ended 30 September 2007 at a Board meeting to be held in November. An announcement will be made shortly after that meeting. 5. Posting of Annual Report The Interim Report will be posted to shareholders on or around 17 May 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. CHAIRMAN'S STATEMENT The first six months of the current financial year have been very satisfactory for your Company with the share price increasing by 21.3% and the net asset value by 21.9%. All the regional markets performed well during the period. As I reported in my statement for the 2006 annual report, Baring Asset Management appointed Mr Martin Majdaniuk as investment manager within its Emerging European Equities team. Mr Majdaniuk is expected to assume full responsibility for the Company's portfolio in the near future and the Board looks forward to working with him. Following a review of the Company's investment benchmark we are considering with Baring Asset Management about changing to the MSCI EM Europe 10/40 Index 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 current benchmark suffers from concentration issues which make it difficult for the investment manager to reflect his market views in the portfolio weightings. For this reason we are also considering setting the cumulative performance at zero in calculating any performance fee from 1 April 2007 onwards. During the six months under review the MSCI EM Europe 10/40 Index increased by 21.1%. The Company has recently bought back 405,000 of its ordinary shares to be held in treasury at an average discount of 10.4%. This is in line with the Board's policy to constrain the volatility of the discount. The Board shares the Investment Manager's view that the long term case for Emerging Europe remains positive. Iain Saunders Chairman 30 April 2007 For enquiries please contact: Ronald Watt at Baring Asset Management Limited on 020 7628 6000

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