Half-yearly Report
BARING EMERGING EUROPE PLC
Preliminary unaudited announcement
in respect of the six months ended 31 March 2008
INCOME STATEMENT
(Unaudited)
Six months ended 31 March
2008
Revenue Capital Total
£000 £000 £000
Gains on investments held at fair value through
profit or loss
- 10,151 10,151
Income 2,150 - 2,150
Investment management fee and performance fee (1,607) (1,544) (3,151)
Other expenses (628) - (628)
Net return before finance charges and taxation (85) 8,607 8,522
Finance charges (4) - (4)
Return on ordinary activities before taxation
(89) 8,607 8,518
Taxation (151) - (151)
Return attributable to ordinary shareholders (240) 8,607 8,367
Total
Return per ordinary share (pence) 20.51 p
INCOME STATEMENT
(Unaudited)
Six months ended 31 March
2007
Revenue Capital Total
£000 £000 £000
Gains on investments held at fair value through
profit or loss
- 66,599 66,599
Income 813 - 813
Investment management fee (1,566) - (1,566)
Other expenses (667) - (667)
Net return before finance charges
and taxation (1,420) 66,599 65,179
Finance charges (5) - (5)
Return on ordinary activities 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
(Audited)
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)
Net return before finance charges and taxation 752 104,815 105,567
Finance charges (10) - (10)
Return on ordinary activities 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 (pence) 245.80 p
Dividend per ordinary share (pence) 0.50 p
BALANCE SHEET
(Unaudited) (Unaudited) (Audited)
31 March 31 March 30 September
2008 2007 2007
£000 £000 £000
Non current assets
Investments at fair value through the
profit or loss 377,640 349,417 370,406
Current assets
Debtors 1,183 3,690 7,741
Cash at bank and in hand 11,358 4,752 13,549
12,541 8,442 21,290
Creditors: Amounts falling due within
one year (7,014) (2,753) (9,508)
Net current assets 5,527 5,689 11,782
Net assets 383,167 355,106 382,188
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 179,766 111,122 157,723
Capital reserve - unrealised 141,080 162,901 154,516
Revenue reserve 641 (634) 1,084
Own shares held (24,436) (4,399) (17,251)
Total shareholders' funds 383,167 355,106 382,188
Net asset value per ordinary share 942.09p 823.15p 921.43p
RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
For the six months ended 31 March 2008 (Unaudited)
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
2007 4,436 1,411 79,917 352 157,723 154,516 1,084 (17,251) 382,188
Net gain on
realisation
of investments - - - - 22,043 - - - 22,043
Unrealised
movement on
investments - - - - - (13,436) - - (13,436)
Net revenue
retained
for the year - - - - - - (240) - (240)
Buy back of
own shares
held in
treasury - - - - - - - (7,185) (7,185)
Dividends
paid - - - - - - (203) - (203)
Balance at
31 March
2008 4,436 1,411 79,917 352 179,766 141,080 641 (24,436) 383,167
For the six months ended 31 March 2007 (Unaudited)
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 investments - - - - 26,935 - - - 26,935
Unrealised
movement on
investments - - - - - 39,664 - - 39,664
Buy back of
own shares
held in
treasury - - - - - - - (861) (861)
Net revenue
retained
for
the year - - - - - - (1,500) - (1,500)
Dividends
paid - - - - - - (1,168) - (1,168)
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 2007 (Audited)
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
(restated) - - - - - 31,279 - - 31,279
Net revenue
retained 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
CASHFLOW STATEMENT
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 March 30
31 March September
2008 2007 2007
£000 £000 £000
Operating activities
Income received from investment 2,858 1,586 5,541
Interest received 269 68 108
Investment management fees paid (1,636) (1,277) (3,169)
Other cash payments (607) (722) (1,237)
Net cash inflow/(outflow) from
operating activities 884 (345) 1,243
Servicing of finance
Interest paid (4) (5) (10)
Taxation
Overseas tax paid (151) (75) (524)
Financial investment
Purchases of investments (103,893) (83,516) (178,857)
Sales of investments 108,361 84,535 201,252
Net cash inflow from financial
investments
4,468 1,019 22,395
Equity dividends paid (203) (1,168) (1,168)
Net cash inflow/(outflow) before
financing 4,994 (574) 21,936
Financing
Buyback of ordinary shares (7,185) - (13,713)
Net cash outflow from financing (7,185) - (13,713)
(Decrease)/increase in cash (2,191) (574) 8,223
NOTES
1. Accounting Policies
These financial statements are prepared under the historical cost convention as
modified by the revaluation of fixed asset investments and in accordance with
applicable United Kingdom accounting standards and with the Statement of
Recommended Practice 2003 (revised 2005) regarding the Financial Statements of
Investment Trust Companies. The accounting policies applied to these interim
accounts are consistent with those applied in the accounts for the year ended
30 September 2007.
2. Comparative Information
The figures and financial information for the year ended 30 September 2007 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.
The accounts for the six months ended 31 March 2008 and for the six months
ended 31 March 2007 have been neither audited nor reviewed by the auditors.
3. Share Capital
As at 31 March 2008 there were 44,359,906 ordinary shares of 10p each in issue
(30 September 2007: 44,359,906 and 31 March 2007: 44,359,966) which includes
3,687,738 ordinary shares held in treasury (30 September 2007: 2,882,199 and 31
March 2007: 1,220,000) 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 805,539 ordinary shares
were bought back to be held in treasury at a cost of £7.2 million.
4. Dividend
No dividend is payable in respect of the six months to 31 March 2008.
Consideration will be given to an annual dividend in respect of the year ended
30 September 2008 at a Board meeting to be held in November. An announcement
will be made shortly after that meeting.
5. Taxation
The taxation charge of £151,000 (30 September 2007: £524,000 and 31 March 2007:
£75,000) relates to irrecoverable overseas taxation.
6. Reconciliation of total return on ordinary activities before finance costs
and taxation to net cash inflow/(outflow) from operating activities
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
31 March 31 March 30
2008 2007 September
2007
£000 £000 £000
Net revenue before
interest payable and
taxation (85) (1,420) 752
Increase in accrued
income 977 841 429
Increase/(decrease) in
sundry creditors 1,490 128 (12)
Decrease in debtors 46 106 74
Management fee
capitalised (1,544) - -
Net cash inflow/
(outflow) from
operating activities 884 (345) 1,243
7. Investment Management Fee
The investment management fee for the six months to 31 March 2008, which
includes a provision for the performance fee for the year ending 30 September
2008, comprises:
£000
Basic fee (charged to revenue) 1,607
Performance bonus (charged to capital):
Provision for the year ending 30 September 2008 1,544
Total 3,151
8. Posting of Interim Report
The Interim Report will be posted to shareholders on or around 16 May 2008. 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
Performance
In the context of the difficult market conditions the first six months of the
current financial year were very satisfactory for your Company with the share
price increasing by 2.7% and the net asset value by 2.2%. During the period the
benchmark (MSCI EM Europe 10/40 Index) fell by 3.0%. The out-performance was
driven both by strong stock selection and good asset allocation.
Share Capital
At the Annual General Meeting held on 15 January 2008 shareholders renewed the
Board's power to buy back up to 14.99% of the issued share capital (6,096,757
shares) for cancellation or to be held in treasury. During the six months under
review the Company bought back 805,539 of its ordinary shares at an average
discount of 9.3% to be held in treasury. This is in line with the Board's
policy to constrain the volatility of the discount, which averaged 8.5% during
the period. Since 31 March 2008 a further 135,000 shares have been bought back
at an average discount of 9.9%. At 31 March 2008 the Company's issued share
capital consisted of 40,672,168 ordinary shares (excluding 3,687,738 ordinary
shares held in treasury).
Gearing
During the period the Company renewed its US$10 million unsecured loan and
overdraft facility with State Street Bank and Trust Company until 24 March
2009. This facility is used principally to cover timing differences on
portfolio transactions. Negotiations for a short term gearing facility for up
to US$60 million are continuing.
Annual Dividend
At the Annual General Meeting held on 15 January 2008 shareholders approved the
payment of an annual dividend of 0.5p per share on 6 February 2008 to members
on the register at the close of business on 11 January 2008.
VAT on Management Fees
The Board is in discussions with the Investment Manager about the recovery of
VAT on past management fees but a number of procedural matters need first to be
resolved. Therefore no amount is, as yet, being recognised in the asset value.
Outlook
The Board shares the Investment Manager's view that the long term case for
Emerging Europe remains positive.
Iain Saunders
Chairman
1 May 2008
For enquiries please contact:
Brian Corris at Baring Asset Management Limited on 020 7628 6000
Monday, 20th May 2024
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