BARING EMERGING EUROPE PLC: Annual Financial Report

Baring Emerging Europe PLC 
Annual Report & Audited Financial Statements 
for the year ended 30 September 2010 
Contents 
Directors and officers                  2                                       
                                                                           
Financial highlights                    3                                       
                                                                           
Performance                             3                                       
                                                                           
Discount                                3                                       
                                                                           
Investment objective                    3                                       
                                                                           
The Investment Manager                  3                                       
                                                                           
Financial calendar                      4                                       
                                                                           
Special considerations and risk factors 4                                       
                                                                           
Chairman's statement                    5                                       
                                                                           
Report of the Investment Manager:       7                                       
                                                                           
Review                                  7                                       
                                                                           
Equity portfolio                        9                                       
                                                                           
Classification of assets                11                                      
                                                                           
Report of the Directors                 12                                      
                                                                           
Directors' Remuneration Report          25                                      
                                                                           
Statement of Directors'                 26                                     
responsibilities in respect of the                                             
annual report                                                                   
                                                                           
and financial statements                                                        
                                                                           
Independent Auditors' Report            27                                      
                                                                           
Income statement                        29                                      
                                                                           
Balance sheet                           30                                      
                                                                           
Reconciliation of movement in           31                                     
shareholders' funds                                                             
                                                                           
Cashflow statement                      32                                      
                                                                           
Notes to the accounts                   33                                      
                                                                           
Notice of Annual General Meeting        46                                      
                                                                           
Notes to the Notice of Annual General   48                                     
Meeting                                                                         
                                                                           
ISA & Savings Scheme                    50                                      
Directors and officers 
Directors 
Steven Bates, Chairman 
John Cousins 
Josephine Dixon 
Saul Estrin 
Jonathan Woollett 
Ivo Coulson (appointed 29 September 2010) 
Iain Saunders (retired 19 January 2010) 
Secretary 
M. J. Nokes, F.C.A. 
Registered office 
155 Bishopsgate 
London EC2M 3XY 
Company number 
4560726 
Investment Manager 
Baring Asset Management Limited 
155 Bishopsgate 
London EC2M 3XY 
Telephone: 020 7628 6000 
Facsimile: 020 7638 7928 
Auditor 
KPMG Audit Plc 
15 Canada Square 
London E14 5GL 
Custodian 
State Street Bank & Trust Company Limited 
20 Churchill Place 
Canary Wharf 
London E14 5HJ 
Administrator 
Northern Trust Global Services Limited 
50 Bank Street 
Canary Wharf 
London E14 5NT 
Telephone: 0207 982 2000 
Registrars and transfer office 
Capita Registrars 
Northern House 
Woodsome Park 
Fenay Bridge 
Huddersfield HD8 0GA 
Telephone: 0871 664 0300(calls cost 10 pence per minute plus network extras) 
Overseas: +44 208 639 3399 
Email: shareholder.services@capitaregistrars.com 
Website 
www.bee-plc.com 
Financial highlights 
                                            2010                      2009 
                                                                          
Net asset value per                          912.60p                   770.57p
ordinary share ("NAV")                                                         
                                                                          
Earnings per ordinary                          2.91p                     8.99p
share                                                                          
                                                                          
Dividends per ordinary                         2.90p                     8.50p
share                                                                          
                                                                          
Share price                                  818.00p                   701.00p 
                                                                          
Total expense ratio                            1.23%                    1.36%*
("TER") (based on average                                                     
monthly NAV)                                                                   
*Excluding performance fees and the effect of VAT recovered (as per page 14). 
Performance (total return basis) 
                                               Year ended 30 September 2010 
                                                                           
Net asset value per ordinary share#                                      +19.6% 
                                                                           
Share price#                                                             +16.7% 
                                                                           
Benchmark*                                                               +22.6% 
*The benchmark is the MSCI EM Europe 10/40 Index. 
#Source: AIC 
Discount (at 30 September)                      2010                       2009 
Discount to net asset                           10.4%                      9.0%
value per share                                                                 
Investment objective 
The investment objective is to achieve long-term capital growth, principally
through investment in securities listed on or traded on an Emerging European
securities market or in securities of companies listed or traded elsewhere,
whose revenues and/or profits are, or are expected to be, derived from
activities in Emerging Europe. 
The Investment Manager 
The Investment Manager is Baring Asset Management Limited which is authorised
and regulated by the Financial Services Authority. 
Financial calendar 
Annual general meeting for 2010                                 18 January 2011 
                                                                           
Announcement of interim results                                             May 
                                                                           
Announcement of ?nal results                                           December 
                                                                           
Interim report posted                                                       May 
                                                                           
Annual report posted                                                   December 
The Company's share price is published in the Financial Times. 
Special considerations and risk factors 
Shareholders should be aware that the value of the Company's Shares and the
income from them may fluctuate. In addition, there is no guarantee that the
market prices of shares in investment trusts will fully reflect their
underlying Net Asset Value. 
The risks inherent in investment by the Company in Emerging Europe are of a
nature and degree not typically encountered in investing in securities of
companies listed on the major securities markets. Such risks are both political
and economic and in addition to the normal risks inherent in any equity
investment. 
Investment in the Company should be regarded as long-term in nature. There can
be no guarantee that the Company's investment objectives will be achieved. 
Chairman's statement 
Dear Shareholder, 
Investment Returns 
This is my first annual statement to you as Chairman of your Company, and in
these volatile times it is a relief to be able to report good news in the way
of returns. From the end of the last fiscal year to the end of this, the NAV
per share rose by 19.6%, on a total return basis. Despite the trauma of 2008,
your Company has navigated the treacherous investment waters fairly well, and
the two year NAV per share total return, which includes the impact of the
financial crisis, was +32.6%. The less encouraging news in these numbers is
that the portfolio has this year lagged its benchmark by 3.0% and the
Investment Manager explains the reasons for this in his report on page 7. The
Board also pays careful attention to how the portfolio performs against its
peer group, and here the manager has done well. The Company sits in the upper
half of its peer universe. Over the long term, the record of your Company
remains exceptional against its peer group, with the NAV per share increasing
by 61.6% (on a total return basis) during the five years ended 30 September
2010. The benchmark rose during the same period by 63.6% providing a more
difficult comparison. 
Review of the Year 
The pattern of return over the fiscal year 2010 was very volatile. The first
half of the year (to the end of March) saw a large rise of 22.8% in the share
price. This was followed by a rather precipitous decline during May and June
during which the share price fell by some 18% from its peak, before rallying
strongly during September. Unfortunately, the monetary policies we see around
the world are unlikely to reduce this volatility. Markets remain skittish about
the current policy mix and confidence waxes and wanes with every economic
announcement. While the region in which your Company invests has economic
dynamics which are to some degree different from what we see in the developed
world, it is still affected by these issues. 
Of course, your Investment Manager spends plenty of time worrying about these
global trends, but is rightly more concerned about what is happening in the
region, both economically and in the companies themselves. You can read about
his specific thinking in the Investment Manager's report which follows. 
Board Responsibility 
The Board of an investment trust has many statutory responsibilities and these
have had a tendency to expand over time. In addition to making sure that we
meet these requirements, it is important therefore that we have enough time and
resources to focus on the issues which we think are most important to you as
shareholders. As this is my first report, I thought I would try and set out
briefly the four most important: 
1. Investment returns This may appear self evident, but a full understanding of
performance includes an analysis of how returns have been generated. Is the
return a matter of luck or are there clear elements of repeatable skill
involved Have the returns been produced with disregard to risk Does the
investment manager have adequate resources to fulfil its functions As to the
performance itself, the Board is very interested in the suitability of the
benchmark and the ability of the Investment Manager to outperform both this and
the peer group, particularly over the long term. 
2. Discount management An investment trust has many advantages over other
investment vehicles, but in your Board's view, a failure to manage discount
effectively could undo most of these. For many years now, your Company has had
a clear policy of containing the volatility of the discount and stands ready to
purchase shares in the market when the discount persistently exceeds the target
the Board has set. During the current fiscal year, the discount has averaged
9.6% and we have bought back 2,166,599 shares. 
3. Governance This is a broad topic which covers everything from shareholder
voting policies to ensuring that the Board is functioning effectively. Further,
the nature of an investment trust like BEE means that the Company maintains
contractual arrangements with a number of suppliers (the most significant of
which is the Investment Manager). The failure of a supplier is the largest
non-investment risk that your Company runs and so the monitoring and management
of these suppliers is critical to the success of BEE. 
4. Shareholder Communication There are a number of formal communications each
year, such as this, but this is your Company, and we encourage all shareholders
to let us know of any specific issues of concern at any point. 
Directorate 
John Cousins has decided not to put himself forward for re-election at the AGM
this January, and will retire. John has been on the Board of BEE and its
predecessor company since launch in 1994, and has made an invaluable
contribution to the effective supervision of the business. Current convention
holds that after 9 years' service a director loses some energy and independent
perspective. In John's case this is not true; even after 16 years in the
saddle, he remains not only energetic and independent, but also very
experienced. This is a combination which will be hard to replace and we all
wish to thank John for his contribution and wish him well in the future. 
With this prospect in mind, on 29 September, we appointed Ivo Coulson to the
Board. Ivo is the head of portfolio management of Stanhope Investments, a large
family office group. He brings a wide breadth of investment management
experience together with a background as an investment trust specialist at UBS.
He will submit himself to formal election at the AGM, and I hope that all
shareholders will support his election. 
Dividend 
As explained in previous years, the portfolio is not managed with a view to
generating a particular level of income. Dividends payable are therefore
dependent on the level of net income in any given year. This year, the flow of
dividend income from the portfolio companies has been £5,429,000 which is
slightly lower than last year. The decline reflects changes in the composition
of the portfolio and timing differences. On the cost side, the management fee
has increased, reflecting the higher portfolio value and other expenses have
also increased slightly. Last year shareholders also benefited from a recovery
of VAT on past management fees. These factors mean that the funds available for
distribution as dividends have fallen sharply. As a result, the Board is
recommending a dividend of 2.90p out of income available for distribution of
2.91p. 
AGM 
The next Annual General Meeting will be held on Tuesday, 18 January 2011 at 155
Bishopsgate London EC2M 3XY starting at 2.30 pm. 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 
The global environment remains very unclear. Further rounds of monetary
stimulus through quantitative easing have reduced the cost of money
artificially and sharpened investor risk appetite, pushing up equity markets.
Behind the appearance of normality this implies, investors continue to fret
about both governments and consumers struggling with mountains of debt.
Consumers have begun to pay this down, but for the most part governments have
not. The path to a normalisation of monetary conditions will have to wait, it
seems, until economic activity is more stable than it is today. 
In Emerging Europe, this storm sometimes sounds distant because the underlying
fundamentals of most of the economies in BEE's region are better than in the
developed world in particular as far as debt ratios are concerned; sometimes,
though, it sounds near, particularly when investors run for cover and discover
that equity markets behave alike whatever those underlying fundamentals. 
This is the tension in Emerging European investment. From time to time, the
region will suffer collateral damage from the much larger drama evolving
elsewhere. As a Company, though, we are well positioned to take advantage of
the considerable opportunities in front of us, and this is where the focus
lies. 
Steven Bates 
Chairman 
1 December 2010 
Report of the Investment Manager 
for the year ended 30 September 2010 
How we manage the Company 
At Baring Asset Management, we believe that a sound research process is the
starting point of any successful investment approach. In our view, it is most
effective to analyse both companies and countries, with the goal of investing
in the most attractive companies in the most attractive countries. 
Our research focuses on growth at a reasonable price, on sensitivity to
currency movements, and to other external factors; on the soundness or
otherwise of government policy (in the case of a country), or business plan (in
the case of a company); and last but not least, on the level of valuation. This
research gives rise to an assessment of the fundamental drivers of return, and
to this we add a subjective judgement as to the level of return we expect from
each asset in which we might invest. We also check that these rankings are
consistent with the broader thematic developments we expect as a firm. These
rankings then allow us to construct a disciplined and relatively concentrated
portfolio of our most attractive candidates. 
Performance 
The Company's NAV performed very strongly over the first half year of the
review period and then experienced considerable volatility for the rest of the
year. Still, this year's NAV growth of 19.6% has been the best of the last 4
years' returns. 
Baring Emerging Europe PLC underperformed its benchmark over the period but
scored well versus the competition, ending the 12 months to September 30th in
the second quartile of the peer group of Emerging European equity funds. 
The main reason for the underperformance was stock selection in Russia which is
by far the largest component of the benchmark. Exposure to other markets was
either neutral or contributed positively to performance over the period. Within
Russia, the portfolio was negatively impacted by overweight positions relative
to the benchmark index in oil company Rosneft and mobile telecoms operator
VimpelCom. The Russian government's decision to abolish tax breaks for an
eastern Siberian oil field hit Rosneft particularly hard, while VimpelCom's
plan to acquire Italian and Asian mobile telecoms assets from the Sawiris
family was interpreted as negative by the market. 
Emerging European markets continued to perform well overall, led by Turkey,
Poland and Russia, which benefited from positive macroeconomic developments and
ongoing earnings upgrades. It was encouraging to see that these markets were
little affected by debt repayment issues in Greece and Dubai. We believe this
distinction was driven by their solid macroeconomic fundamentals and sound
fiscal and monetary policy. 
Yet, it was not all plain sailing in Emerging Europe. Volatility undoubtedly
increased when the sovereign rating of Greece was reduced to the lowest
possible investment grade. Failure to rein in public spending contributed to a
significant deterioration of the country's debt profile. As belts were
tightened by governments across Europe, markets worried about a "double dip
scenario" in Europe despite a German-led bailout programme of over Euro 100
billion. In our region, Hungary was most affected by these debt worries. 
Global leading indicators deteriorated during the course of this year, a
development that we believe is perfectly consistent for this stage of the
economic cycle and should not be interpreted as negatively as it has been by
the markets. A similar pattern was also visible across Emerging European
economic data. In most cases, however, industrial production held up
surprisingly well, driven by good export performance. 
It is important to note that Emerging European markets continued to outperform
developed markets over the period. We believe that this should be interpreted
as a vote of confidence for the asset class. This outperformance was delivered
against a backdrop of US dollar strength and market volatility - conditions
which have historically led to underperformance by emerging markets, but not so
this year. 
Strategy 
In the future, we expect exports to begin to decline in importance to the
Emerging European economies. Instead, we think that the relatively favourable
fiscal situation will allow economic performance in the region to be largely
driven by domestic dynamics. Poland and Turkey should score very well in that
regard while Russia's expansionary fiscal policy prepares the ground for a
significant acceleration of domestic economic activity. The fact that these
countries boast low debt levels on corporate, household and sovereign balance
sheets should provide further support for markets. 
The investment strategy we are pursuing in Baring Emerging Europe PLC is to
participate in these favourable trends, by building investment exposure in the
best positioned areas. In particular, financial companies and consumer-related
industries such as retailing, consumer goods, transport, infrastructure
development, residential development and telecommunications should benefit
most. 
Encouragingly, Emerging European markets offer exposure to fundamental growth
trends at attractive valuations, a fact that should continue to generate
Foreign Direct Investment and portfolio inflows, and support governments' plans
to continue their privatisation strategies. Poland laid the groundwork here by
delivering in 2009 the most successful record of initial public offerings
across the whole of Europe. We plan to participate in selected new offerings,
but will review each on a case by case basis, paying close attention to
minority shareholder rights as well as growth prospects and valuations. 
Russia is a case in point, where better performance might have been expected
from the market over the past year. However, proposed legislation to impose
additional tax bills on the energy sector - the largest in the market -
unnerved investors. The government gave the impression that it was more
concerned about funding huge increases in government workers' wages, general
social spending and pensions than in encouraging investment in the energy
sector. These policies turned last year's budgetary surplus into a deficit that
now needs funding. While this approach will support domestic economic
development, it weakens the government's hand when trying to attract foreign
investors to take part in privatisations. 
Although this set of circumstances provides investment opportunity, the
potential for an increase in equity offering also has to be considered a risk
across most countries. This may lead to some correction in the equity markets,
but we would expect such an event to be treated as a buying opportunity by
long-term investors. In the meantime, we believe the region remains very
attractively priced, and the market is fully aware of the potential issuance.
Political risk is a further factor to be aware of, particularly in Turkey and
Russia, where elections are scheduled for 2011. 
Outlook 
In conclusion, we believe that the investment case for the region remains
compelling. While consumers in the West are over-burdened with debt, the
situation across most of our investment universe is completely different.
Consumers in Central and Eastern Europe carry a fraction of the level of debt
of their western counterparts. In Russia, the temporary halt in the growth of
the middle class is now behind us and we expect to see rapid growth here over
the medium-term as wage growth returns. We would also highlight the resilience
of domestic consumption elsewhere in the region, particularly Poland, as being
noteworthy and encouraging for investors. 
Equity portfolio 
The Company's equity portfolio at 30 September 2010, is set out in the
following table: 


               Holding          Primary country  Market value £     % of equity
                                of listing                  000       portfolio


                                                                           
1              Sberbank         Russia                   32,715           10.66 
                                                                           
2              Gazprom          Russia                   22,825            7.43 
                                                                           
3              Rosneft          Russia                   20,446            6.66 
                                                                           
4              Garanti Bank     Turkey                   19,620            6.39 
                                                                           
5              PKO BP           Poland                   17,304            5.64 
                                                                           
6              Norilsk Nickel   Russia                   17,044            5.55 
                                                                           
7              Mobile           Russia                   15,097            4.92 
           Telesystems                                                      
                                                                           
8              OTP Bank         Hungary                  14,428            4.70 
                                                                           
9              Turkiye Halk     Turkey                   13,795            4.49 
           Bankasi                                                          
                                                                           
10             LUKOIL Holdings  Russia                   13,378            4.36 
                                                                           
11             VimpelCom        Russia                   12,831            4.18 
                                                                           
12             CEZ              Czech Republic           11,519            3.75 
                                                                           
13             Eurocash         Poland                    9,450            3.08 
                                                                           
14             Novolipetsk      Russia                    6,750            2.20 
           Steel                                                            
                                                                           
15             Evraz            Russia                    6,191            2.02 
                                                                           
16             Kazakhmys        United Kingdom            5,755            1.87 
                                                                           
17             Mechel           Russia                    5,282            1.72 
                                                                           
18             Turkcell         Turkey                    5,160            1.68 
           Iletisim                                                         
                                                                           
19             Rushydro         Russia                    4,179            1.36 
                                                                           
20             LSR              Russia                    4,131            1.35 
                                                                           
21             Globe Trade      Poland                    4,042            1.32 
           Centre                                                           
                                                                           
22             Oriflame         Sweden                    4,006            1.30 
           Cosmetics                                                        
                                                                           
23             Anadolu Hayat    Turkey                    3,958            1.29 
           Emek                                                             
                                                                           
24             Pharmstandard    Russia                    3,507            1.14 
                                                                           
25             Wimm-Bill-Dann   Russia                    3,367            1.10 
           Foods                                                            
                                                                           
26             Turkiye Vakiflar Turkey                    3,162            1.03 
                                                                           
27             Pipe             Russia                    2,807            0.91 


               Metallurgical                                                   
               (TMK)                                                           


                                                                           
28             Turkiye Petrol   Turkey                    2,618            0.85 
                                                                           
29             Enka Insaat      Turkey                    2,462            0.80 
                                                                           
30             Dogus Otomotiv   Turkey                    2,461            0.80 
           Ser                                                              
                                                                           
31             Banvit Bandirma  Turkey                    2,346            0.76 
           Vit                                                              
                                                                           
32             Petropavlovsk    United Kingdom            1,874            0.61 
                                                                           
33             Yapi Ve Kredi    Turkey                    1,857            0.61 
           Bank                                                             
                                                                           
34             Eurasia Drilling Russia                    1,731            0.56 
                                                                           
35             Global Trans     Russia                    1,566            0.51 
                                                                           
36             Protek           Russia                    1,320            0.43 
                                                                           
37             Eurasian Natural United Kingdom            1,296            0.42 
           Resources                                                        
                                                                           
38             Raven Russia     United Kingdom            1,050            0.34 
                                                                           
39             AO Tatneft       Russia                      983            0.32 
                                                                           
40             Ferrexpo         United Kingdom              941            0.31 
                                                                           
41             Pinar Sut        Turkey                      933            0.31 
           Mamulleri                                                        
                                                                           
42             Holding Co       Russia                      843            0.27 


               Sibcem                                                          
                                                                               
               Total                                    307,030          100.00
               investments                                                     

Company weighting versus benchmark by country of operation at 30 September 2010
                                             Company                  Benchmark


                                                                           
Czech Republic                                  3.7%                       4.1% 
                                                                           
Hungary                                         4.6%                       4.6% 
                                                                           
Poland                                          9.8%                      16.6% 
                                                                           
Russia                                         56.3%                      55.4% 
                                                                           
Turkey                                         18.5%                      19.3% 
                                                                           
Other                                           4.7%                          - 
                                                                           
Cash                                            2.4%                          - 
                                                                            


                                              100.0%                     100.0%

Source: Barings, MSCI

Classification of assets

The Company's Portfolio as per MSCI at 30 September 2010 was:

Percentage classification of assets based on valuation
                  Russia Hungary Poland    Czech Turkey     Other     Net Total Total
                                        Republic        Countries Current  2010  2009
                                                                   Assets            


                                                                                 
Consumer               -       -    3.0        -    0.8       1.3       -   5.1   1.8
Discretionary                                                                         
                                                                                 
Consumer Staples     1.1       -      -        -    1.0         -       -   2.1   2.2 
                                                                                 
Energy              19.7       -      -        -    0.8         -       -  20.5  29.2 
                                                                                 
Financials          10.4     4.6    6.8        -   13.5       0.3       -  35.6  29.1 
                                                                                 
Healthcare           1.6       -      -        -      -         -       -   1.6   2.0 
                                                                                 
Industrials          0.5       -      -        -    0.8         -       -   1.3   2.8 
                                                                                 
Materials           12.8       -      -        -      -       3.1       -  15.9  11.9 
                                                                                 
Telecommunication    8.9       -      -        -    1.6         -       -  10.5   9.7
Services                                                                              
                                                                                 
Utilities            1.3       -      -      3.7      -         -       -   5.0   7.1 
                                                                                 
Total equity        56.3     4.6    9.8      3.7   18.5       4.7       -  97.6  95.8
investment                                                                            
                                                                                 
Net current            -       -      -        -      -         -     2.4   2.4   4.2
assets                                                                                
                                                                                 
Total 2010          56.3     4.6    9.8      3.7   18.5       4.7     2.4 100.0     - 
                                                                                 
Total 2009          54.8     5.2    8.7      8.1   15.1       3.9     4.2     - 100.0 
Baring Asset Management Limited 
22 November 2010 
Report of the Directors (incorporating the business review) 
The Directors submit to the shareholders their business review, report and the
audited financial statements of the Company for the year ended 30 September
2010. 
1. Business review 
Business and tax status 
The Company carries on business as an investment trust and as such it has
received specific approval from the Inland Revenue under the provisions
contained in Section 842 of the Income and Corporation Taxes Act 1988 (replaced
by Section 1158 of the Corporation Tax Act 2010 for accounting periods ending
on or after 1 April 2010) for the year ended 30 September 2009. In the opinion
of the Directors the Company has subsequently directed its affairs so as to
enable it to continue to seek such approval under Section 1158 of the
Corporation Tax Act 2010. 
The Company is an investment company as defined in Section 833 of the Companies
Act 2006. The Company is not a close company for taxation purposes. 
The Company is managed by external parties in respect of investment management,
custodial services and the day-to-day accounting and company secretarial
requirements. Investment management services are provided by Baring Asset
Management Limited ("Barings") and details of the agreement with Barings are
given in note 3 to the accounts. The Custodian is State Street Bank & Trust
Company Limited. Secretarial services are provided by Northern Trust Global
Services Limited. The Company has no employees. The Directors are all
non-executive. 
Investment objective 
The investment objective is to achieve long-term capital growth, principally
through investment in securities listed on or traded on an Emerging European
securities market or in securities of companies listed or traded elsewhere,
whose revenues and/or profits are, or are expected to be, derived from
activities in Emerging Europe. 
Investment policy 
The policy of the Directors is that, in normal market conditions, the portfolio
of the Company should consist primarily of diversified securities listed or
traded on Emerging European securities markets (including over the counter
markets, which, in the Company's case, would include the Russian Trading
System). Equity securities for this purpose include equity-related instruments
such as preference shares, convertible securities, options, warrants and other
rights to subscribe for or acquire, or relating to, equity securities. The
Company may also invest in debt instruments such as bonds, bills, notes,
certificates of deposit and other debt instruments issued by private and public
sector entities in Emerging Europe. 
In addition, Emerging European exposure may be obtained by indirect means.
Investments may, for example, be made in securities of companies listed on
securities markets outside Emerging Europe that derive, or are expected by the
Directors to derive, the majority of their revenues and/or profits and/or
growth from activities in Emerging Europe. 
The Company may also invest in other funds in order to gain exposure to
Emerging Europe where, for example, such funds afford one of the few
practicable means of access to a particular market, or where such a fund
represents an attractive investment in its own right. The Company will not
invest more than 15% of its gross assets in other UK listed investment
companies (including investment trusts). 
The Company may from time to time invest in unquoted securities, but the amount
of such investment is not expected to be material. Furthermore the Board has
agreed that the maximum exposure to unquoted securities should be restricted to
5% of the Company's net assets. 
For the purposes of this investment policy the Board has defined Emerging
Europe as the successor countries of the former Soviet Union, Poland, Hungary,
the Czech Republic, Slovakia, Turkey, the States of former Yugoslavia, Romania,
Bulgaria and Albania. There is no restriction on the proportion that may be
invested in these countries. 
In addition the Board has agreed that up to 2% of the total assets may be
invested in other countries provided that any investments made are companies
listed on a regulated stock exchange. 
In order to comply with the provisions contained in Section 842 of the Income
and Corporation Taxes Act 1988 (replaced by Section 1158 of the Corporation Tax
Act 2010 for accounting periods ending on or after 1 April 2010) no investment
in a company should represent more than 15% by value of the Company's total
portfolio except for subsequent market movements in the value of that
investment. Furthermore the Board has agreed that the maximum value of any one
investment should not exceed 12% of the Company's total portfolio save with the
prior written consent of the Board. Where excess occurs due to market movement
the manager will notify the Board of this and will reduce the holding to below
12% within six months. 
In addition to the above restriction on investment in a single Company the
Board seeks to achieve a spread of risk in the portfolio through monitoring the
country and sector weightings of the portfolio. There will be a minimum of 30
stocks in the portfolio. 
The Company's Articles provide that the Company may borrow an amount equal to
its share capital and reserves. At 30 September 2010, the only loan facility in
place was a US$10 million unsecured loan and overdraft facility with State
Street Bank and Trust Company Limited which is used principally to cover timing
differences on portfolio transactions. In order to provide a mechanism to gear
the portfolio the Board has authorised the investment manager to invest in long
only derivatives in Polish, Russian and Turkish index futures where feasible.
The Investment Manager has discretion to operate with an overall exposure of
the portfolio to the market of between 90% and 110%, to include the effect of
any derivative positions, beta adjusted if appropriate and any collateral which
may be required. 
Dividends 
The Board does not seek to target any particular level of dividend, and intends
rather to distribute by way of dividend most of the net earnings available for
this purpose. The Board recommends an annual dividend of 2.90p per share
compared with 8.50p for the previous period. Subject to the approval of the
Annual General Meeting, the recommended annual dividend will be paid on 2
February 2011 to members on the register at the close of business on 7 January
2011. The shares will be marked ex-dividend on 5 January 2011. 
Discount 
The Directors have adopted a firm policy with regard to the market rating of
the Company's shares. At all times the Board will seek to limit the discount to
NAV at which the Company's shares trade to a level significantly lower than the
12% trigger level referred to in the next paragraph, using as necessary the
Company's share repurchase authority. During the year ended 30 September 2010,
2,166,599 shares were repurchased at a cost of £17,486,000 (2,782,796 shares
were repurchased during the year ended 30 September 2009 at a cost of £
12,383,000). Any shares repurchased will either be held in treasury and may be
issued at a later date at or above net asset value, or cancelled. 
If the average closing mid-market price at which the Company's shares trade in
the market in the period of ninety days prior to the publication of the
Company's results each year represents a discount to NAV which exceeds 12%, the
Company will offer to repurchase, by way of tender available to all
shareholders, up to 15% of the outstanding issued share capital at 95% of NAV
(after taking account of any expenses including the costs of selling
investments in order to fund the repurchase). 
Performance 
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objectives of which the most
important are as follows: 
• Performance against the peer group 
The Board monitors performance relative to a broad range of competitor funds,
as defined by the Morningstar Emerging Europe Universe. In the year ended 30
September 2010 the Company was ranked 37th out of 102 funds in this universe.
Over three years to 30 September 2010 it was ranked 11th out of 96 funds and
over five years it was ranked 8th out of 83 funds. 
• Performance against the benchmark index 
A chart of NAV performance versus benchmark for the five years ended 30
September 2010 (total return) is set out in the Directors' Remuneration Report
on page 25. 
• Discount to NAV 
In the year ended 30 September 2010 the shares traded at an average discount of
9.6%. 
• Total Expense Ratio ("TER") 
The TER is an expression of the Company's management fees and other operating
expenses as a percentage of average net assets over the year. The TER for the
year ended 30 September 2010 was 1.23% (2009: 1.36%) excluding performance fee
and the effect of VAT recovered. No performance fee is payable in respect of
the year ended 30 September 2010 (2009: £1,012,000 was paid). The Board reviews
each year an analysis of the Company's TER and a comparison with its peers. 
Principal risks 
The key risks to the Company fall broadly under the following categories: 
• Investment and strategy 
The Board regularly reviews the investment mandate and long-term investment
strategy in relation to the market and economic conditions. The Board also
regularly monitors the Company's investment performance against the benchmark
and the peer group and its compliance with the investment guidelines. 
• Accounting, legal and regulatory 
In order to qualify as an investment trust, the Company must comply with the
provisions contained in Section 842 of the Income and Corporation Taxes Act
1988 ("Section 842") (replaced by Section 1158 of the Corporation Tax Act
2010). A breach of Section 842 in an accounting period could lead to the
Company being subject to corporation tax on gains realised in that accounting
period. Section 842 qualification criteria are continually monitored by Baring
Asset Management Limited and the results reported to the Board at its regular
meetings. The Company must also comply with the Companies Act and the UKLA
Listing Rules. The Board relies on the services of the administrator, Northern
Trust Global Services Limited and its professional advisers to ensure
compliance with the Companies Act and the UKLA Listing Rules. 
• Loss of investment team or Investment Manager 
A sudden departure of the Investment Manager or several members of the
investment management team could result in a short-term deterioration in
investment performance. The Manager takes steps to reduce the likelihood of
such an event by ensuring appropriate succession planning and the adoption of a
team-based approach, as well as special efforts to retain key personnel. 
• Discount 
A disproportionate widening of the discount relative to the Company's peers
could result in loss of value for shareholders. The Board regularly discusses
discount policy and has set parameters for the Company's broker to follow with
regard to the buy-back of shares. 
• Corporate governance and shareholder relations 
Details of the Company's compliance with corporate governance best practice,
including information on relations with shareholders, are set out in the
Corporate Governance Report on pages 17 to 21. 
• Operational 
Like most other investment trust companies, the Company has no employees. The
Company therefore relies upon the services provided by third parties and is
dependent on the control systems of the Investment Manager and the Company's
service providers. The security, for example, of the Company's assets, dealing
procedures, accounting records and maintenance of regulatory and legal
requirements, depend on the effective operation of these systems. These are
regularly tested and monitored. The custodian and the Investment Manager also
produce annual reports on internal controls which are reviewed by their
respective auditors and give assurance regarding the effective operation of
controls. 
• Financial 
The financial risks faced by the Company are disclosed in note 20 on pages 41
to 44. 
• Future developments 
The future development of the Company is much dependent upon the success of the
Company's investment strategy in the light of economic and equity market
developments in the countries in which it invests. The Investment Manager
discusses the outlook in his report on page 8. 
2. Directors 
The present Directors are listed below and on page 2. They are all
non-executive and have served throughout the year (except Ivo Coulson who was
appointed a Director on 29 September 2010). 
Steven Bates (53) spent 18 years with the Fleming group until 2002, latterly as
co-head of emerging markets of JPMorgan Fleming Asset Management. He has
extensive experience in both emerging and developed markets. He is a director
of Zephyr Management UK Limited which is a specialist asset management business
and is also the chief investment officer of Salisbury Partners. He is also on
the boards of a number of financial companies involved in emerging markets. He
was appointed a Director of Baring Emerging Europe PLC on 27 January 2003 and
was appointed Chairman of Baring Emerging Europe PLC on 19 January 2010. 
John Cousins (70) was formerly chief executive of BZW Puget Mahé in Paris and
managing director of BZW Equities in London. Prior to that, he held various
posts with Kleinwort Benson and has over 30 years of experience in
international equity investment. He is a former chairman of the International
Equity Rules and Compliance Committee of the London Stock Exchange. He was
appointed a director of Baring Emerging Europe PLC on 11 October 2002 and had
been a director of The Baring Emerging Europe Trust PLC since 1994. 
Josephine Dixon (51) is a director of Worldwide Healthcare Trust PLC, and is a
Chartered Accountant who has previously held a number of senior executive
positions, including that of finance director in a publicly quoted company. She
is also a member of the Greenwich Hospital Trust. She was appointed a Director
of Baring Emerging Europe PLC on 5 July 2004. 
Saul Estrin (58) is a Professor and Head of the Department of Management at the
London School of Economics where he is a specialist on emerging markets. He was
formerly a Professor at the London Business School and Research Director of the
Centre for New and Emerging Markets, which analysed the prospects for private
sector development and business opportunities in emerging markets. He has
written numerous books and articles on emerging economies. He was appointed a
Director of Baring Emerging Europe PLC on 5 July 2004. 
Jonathan Woollett (53) is a founding partner of Acoro Capital Partners LLP, an
investment partnership focussing on unlisted financial sector investments in
Central and Eastern Europe. He has nearly 20 years experience in the region
with 10 years to 2008 at the European Bank for Reconstruction and Development
("EBRD") in London. Prior to EBRD he was the director responsible for the
establishment of asset management and mutual fund businesses in Central and
Eastern Europe at Credit Suisse Asset Management. Prior to Credit Suisse, he
worked for UBS, having started his banking career with Deutsche Bank in 1979.
He was appointed a Director of Baring Emerging Europe PLC on 23 July 2008. 
Ivo Coulson (46) has over 25 years of experience in the City, first with BZW as
a director in their investment management division and then as a director with
SG Warburg in their equity trading operation, latterly heading up their closed
end fund team. He is currently head of portfolio management at Stanhope Capital
LLP, a prominent multi family office based in the West End of London and a non
executive director of JPMorgan Smaller Companies Investment Trust PLC. He was
appointed a Director of Baring Emerging Europe PLC on 29 September 2010. 
In accordance with the Articles of Association Josephine Dixon and Saul Estrin
retire by rotation and being eligible, offer themselves for re-election. Ivo
Coulson offers himself for election following his appointment to the Board on
29 September 2010. John Cousins has decided to retire from the Board and will
not seek re-election at the AGM. 
The Directors' and their families' interests in the Company's shares are stated
below: 
Beneficial             30 November 2010   30 September 2010   30 September 2009 
                                                                           
Steven Bates                      3,000               3,000               3,000 
                                                                           
John Cousins                          -                   -                   - 
                                                                           
Josephine Dixon                   2,325               2,325               2,325 
                                                                           
Saul Estrin                       1,000               1,000               1,000 
                                                                           
Jonathan Woollett                 3,000               3,000               3,000 
                                                                           
Ivo Coulson                           -                   -                   -
(appointed 29                                                                  
September 2010)                                                                 
There were no contracts or arrangements subsisting during or at the end of the
financial year in which any Director is or was materially interested. No
Director held a shareholding in any of the investments in the Company's
portfolio during the year ended 30 September 2010. 
3. Substantial shareholdings 
At 30 November 2010, the Company had received notification of the following
disclosable interests in the ordinary share capital of the Company: 
                                 Number of shares                         % 
                                                                           
City of London Investment            7,328,289 shares                    21.26%
Management Ltd                                                                  
                                                                           
Sarasin & Partners LLP               2,277,686 shares                     6.61% 
                                                                           
Lazard Asset Management              1,808,710 shares                     5.25%
LLC                                                                             
                                                                           
Advance Developing Markets           1,664,894 shares                     4.83%
Fund Ltd.                                                                       
                                                                           
Legal & General Group plc            1,406,000 shares                     4.08% 
4. Corporate governance 
Introduction 
The Board is accountable to the Company's shareholders for the governance of
the Company's affairs and this statement describes how the principles of the
Combined Code on Corporate Governance ("the Code") issued by the Financial
Reporting Council in 2009 have been applied to the affairs of the Company. In
applying the principles of the Code, the directors have also taken account of
the Code of Corporate Governance published by the Association of Investment
Companies ("the AIC Code"), which has established a framework of best practice
specifically for the Boards of investment trust companies. There is some
overlap in the principles laid down by the two Codes and there are some areas
where the AIC Code is more appropriate for investment trust companies. 
Applications of the Code's principles 
The Board is committed to high standards of corporate governance and seeks to
observe the principles and supporting principles identified in the Code and,
where appropriate, the principles identified in the AIC Code. It should be
noted that, as an investment trust, most of the Company's day-to-day
responsibilities are delegated to third parties and the Directors are all
non-executive. Thus not all the provisions of the Code are directly applicable
to the Company. 
The Board 
The Board currently consists of six non-executive Directors and is chaired by
Steven Bates (he was appointed Chairman on 19 January 2010). All the Directors
are considered by the Board to be independent of the Investment Manager. Their
biographies are set out on pages 15 and 16. Collectively the Board has the
requisite range of business and financial experience which enables it to
provide clear and effective leadership and proper stewardship of the Company. 
The number of meetings of the Board, the Audit Committee and the Nomination
Committee held during the financial year and the attendance of individual
Directors are shown below: 


                                  Board     Audit Committee          Nomination
                                                                      Committee


                                                                           
Number of meetings                    4                   2                   1
in the year                                                                     
                                                                           
Steven Bates                          4                   2                   1 
                                                                           
John Cousins                          4                   2                   1 
                                                                           
Josephine Dixon                       4                   2                   1 
                                                                           
Saul Estrin                           4                   2                   1 
                                                                           
Jonathan Woollett                     4                   2                   1 
                                                                           
Ivo Coulson                           -                   -                   -
(appointed 29                                                                  
September 2010)                                                                 
All of the Directors (except Ivo Coulson who was appointed on 29 September
2010) attended the Annual General Meeting held in January 2010. 
In addition, as part of its responsibility to monitor investments the Board
visited, along with the Investment Manager, a number of companies and
authorities in Turkey during September 2010. 
The Board deals with the Company's affairs, including the consideration of
overall strategy, the setting and monitoring of investment policy and the
review of investment performance. The Investment Manager takes decisions as to
asset allocation and the purchase and sale of individual investments. The Board
papers circulated before each meeting contain full information on the financial
condition of the Company. Key representatives of the Investment Manager attend
most of the Board meetings, enabling Directors to probe further or seek
clarification on matters of concern. 
Matters specifically reserved for discussion by the full Board have been
defined and a procedure adopted for the Directors to take independent
professional advice if necessary at the Company's expense. 
The Chairman of the Company is a non-executive Director. A senior non-executive
Director has not been identified as the Board is comprised entirely of
non-executive Directors. 
At every Annual General Meeting any Director: 
(i) who has been appointed by the Board since the last Annual General Meeting;
or 
(ii) who has held office at the time of the two preceding Annual General
Meetings and who did not retire at either of them; or 
(iii) who has held office with the Company, other than employment or executive
office, for a continuous period of nine years or more at the date of the
meeting, shall retire from office and may offer himself for re·appointment by
the members. 
Performance evaluation/re-election of Directors 
An appraisal process has been established in order to review the effectiveness
of the Board, the Committees and individual directors. This process involves
the consideration by the Chairman and the Board of responses from individual
directors to a questionnaire which is completed on an annual basis. In addition
the other directors meet collectively once a year to evaluate the performance
of the Chairman. As a result of this evaluation, the Nomination Committee
having considered the Board structure, size and composition, the balance of
knowledge, experience, skill range, diversity and age profile, recommends the
election of Ivo Coulson and re-election of Josephine Dixon and Saul Estrin who
retire by rotation and offers themselves for re-election at the Annual General
Meeting. 
The performance of the Company is considered in detail at each Board meeting. 
Board committees 
The Board believes that the interests of shareholders in an investment trust
company are best served by limiting its size so that all Directors are able to
participate fully in all the activities of the Board. It is for this reason
that the membership of the Audit and Nomination Committees is the same as that
for the Board as a whole. 
Audit Committee 
Josephine Dixon is the Chairman of the Committee which meets at least twice a
year and is responsible for reviewing the annual and interim reports, the
nature and scope of the external audit and the findings therefrom, and the
terms of appointment of the Auditors, including their remuneration and the
provision of any non-audit services. Non audit services provided by the
Auditors mainly comprised work on the Company's taxation affairs. The Committee
has considered the independence of the Auditors and the objectivity of the
audit process and is satisfied that KPMG Audit Plc has fulfilled its
obligations to shareholders. It also regularly reviews the terms of the
different service providers to the Company including contracts with the
Investment Manager, the Company Secretary and the Custodian. The Audit
Committee meets representatives of the Investment Manager and its Compliance
Officer who report as to the proper conduct of business in accordance with the
regulatory environment in which both the Company and the Investment Manager
operate. The Company's external Auditors also attend this committee at its
request and report on their findings in relation to the Company's statutory
audit. 
As the Company has no employees, section C.3.4 of the Code, which deals with
arrangements for staff to raise concerns in confidence about possible
improprieties in respect of financial reporting or other matters, is not
directly relevant to it. The Audit Committee has however, confirmed with the
Investment Manager and the administrator that they do have "whistle blowing"
policies in place for their staff. 
The Chairman of the Audit Committee will be present at the AGM to deal with
questions relating to the financial statements. 
Nomination Committee 
The Committee, which meets at least annually, reviews the Board's size and
structure and is responsible for Board succession planning. 
The Board appointed one new Director, Ivo Coulson during the year upon the
recommendation of the Committee. This followed the appointment of a search
agency for the purpose of finding a Director. The Committee considered an
extensive list of candidates put forward by the search company and interviewed
a short list of individuals for the position. A recommendation was then made to
the Board and following acceptance by the Board as a whole, the appointment was
confirmed. 
Remuneration 
The Board as a whole considers Directors' remuneration and therefore has not
appointed a separate remuneration committee. As the Company is an investment
trust and all Directors are non-executive, the Company is not required to
comply with the Code in respect of executive Directors' remuneration.
Directors' fees are detailed in the Directors' Remuneration Report on page 25. 
Internal controls 
The Board has established a process for identifying, evaluating and managing
significant risks faced by the Company. The process is subject to regular
review by the Board and accords with "Internal Control: Guidance for Directors
on the Combined Code" ("The Turnbull guidance") which was issued in September
1999 and revised in September 2005. 
The Directors are responsible for the Company's system of internal control
which is designed to safeguard shareholders' investment and the Company's
assets. These systems of internal control are designed to provide reasonable
but not absolute assurance against material misstatement or loss. 
The Turnbull guidance recommends a risk-based approach to the assessment of
internal controls. The Board has completed a risk map for the Company and
established procedures for the monitoring and review of the risks identified.
The Board as a whole is primarily responsible for the monitoring and review of
risks associated with investment matters and the Audit Committee is primarily
responsible for other risks. 
As the Board has contractually delegated to external parties the investment
management, the custodial services and the day-to-day accounting and company
secretarial requirements, the Company relies significantly upon the internal
controls operated by those companies. Therefore the Directors have concluded
that the Company should not establish its own internal audit function. The
Board continues to monitor its system of internal control in order to ensure it
operates as intended and the directors review annually whether an internal
audit function is required. Investment management services are provided by
Baring Asset Management Limited ("Barings") and details of the agreement with
Barings are given in note 3 to the accounts. The Custodian is State Street Bank
& Trust Company Limited. Secretarial services are provided by Northern Trust
Global Services Limited. 
The risk map has been considered at all regular meetings of the Board and Audit
Committee. As part of the risk review process, regular reports are received
from the Investment Manager on all investment matters including compliance with
the investment mandate, the performance of the portfolio compared with the
benchmark and compliance with investment trust status requirements. 
The Board also receives and reviews annual reports from the Investment Manager
and the Custodian on their internal controls and their operation. These reports
are designed to provide details of the internal control procedures operated by
the relevant entity and include a report by an independent reporting
accountant. 
The Board confirms that appropriate procedures to review the effectiveness of
the Company's system of internal control have been in place which cover all
controls including financial, operational and compliance controls and risk
management. An assessment of internal control, which includes a review of the
Company's risk map, an assessment of the quality of reports on internal control
from the service providers and the effectiveness of the Company's reporting
process, is carried out on an annual basis. 
Accountability and audit 
Set out on page 26 is a statement by the Directors of their responsibilities in
respect of the accounts. The Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the accounts, as the
assets of the Company consist mainly of securities which are readily
realisable. 
As noted earlier, an Audit Committee has been established consisting of
independent Directors. 
The Board as a whole regularly reviews the terms of the management and
secretarial contracts. 
The Directors who held office at the date of approval of this Directors' Report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's Auditors are unaware; and each Director has
taken all the steps that they ought to have taken as Directors to make
themselves aware of any relevant audit information and to establish that the
Company's Auditors are aware of that information. 
The Directors were covered by directors' and officers' insurance that was in
place during the financial year and at the date of this report. 
Relations with shareholders 
The Board regularly reviews the Investment Manager's contacts with the
Company's shareholders and monitors its shareholder profile. The Board
supplements this with some direct contact with shareholders and is available to
speak with any shareholder who wishes to do so. The Board supports the
principle that the Annual General Meeting be used to communicate with private
investors. The full Board attends the Annual General Meeting and the Chairman
of the Board chairs the meeting. Details of the proxy votes received in respect
of each resolution are made available to shareholders at the meeting. The
Investment Manager attends to give a presentation to the meeting. A quarterly
newsletter is produced by the Investment Manager and is available to
shareholders. 
If a shareholder would like to contact the Board directly, he or she should
write to the Chairman at 155 Bishopsgate, London EC2M 3XY and mark their letter
private and confidential. 
Evaluation of performance of Investment Manager 
Investment performance is reviewed at each regular Board meeting at which
representatives of the Investment Manager are required to provide answers to
any questions raised by the Board. The Board has instigated an annual formal
review of the Investment Manager which includes consideration of: 
• performance compared with benchmark and peer group; 
• investment resources dedicated to the Company; 
• investment management fee arrangements and notice period compared with the
peer group; and 
• marketing effort and resources provided to the Company. 
The Board believes that Baring Asset Management Limited has served the Company
well both in terms of investment performance and general support and will
continue its appointment. 
Statement of compliance 
The Board considers that it has complied with all the material provisions set
out in Section 1 of the Code throughout the year. It did not, however, comply
with the following provisions as explained above: 
• due to the small size of the Board and nature of the business a separate
remuneration committee has not been established; 
• a senior non-executive Director has not been identified; and 
• the Chairman is a member of the Audit Committee. 
5. VAT on management fees 
During the year under review no VAT on past management fees was recovered (in
2009, £960,000 of VAT on past management fees incurred since 31 March 2005 and
£79,000 in respect of interest was recovered). An additional reclaim covering
the period prior to March 2005 has been submitted, details of which are set out
in note 21 to the financial statements on page 45. 
6. Witholding tax 
The Company has sought to recover excess withholding tax from companies held in
Poland and has engaged KPMG for this exercise. During the year ended 30
September 2010, an amount of £208,000 has been recovered. A further amount of £
333,000 has been reclaimed but is subject to an appeal by the Polish tax
authorities; this has not been recognised in the financial statements for the
year ended 30 September 2010. 
7. Creditor payment policy 
It is the Company's payment policy to obtain the best possible terms for all
business and therefore there is no consistent policy as to the terms used. In
general, the Company agrees with its suppliers the terms on which business will
take place and it is its policy to abide by the terms. As an investment trust,
the Company does not transact business of a trading nature. There were no trade
creditors at 30 September 2010. 
8. Socially responsible investment 
The Board has delegated the investment management function to Baring Asset
Management Limited. The Investment Manager's primary objective is to produce
superior financial returns to investors. It believes that over the long term
sound social, environmental and ethical policies make good business sense and
takes these issues into account when, in its view, they have a material impact
on either the investment risk or the expected return from an investment. 
9. Exercise of voting powers 
The Board has delegated authority to the Investment Manager to vote the shares
held by the Company in accordance with current best practice. Wherever
practical the Investment Manager does vote the shares, but in the markets where
the Company invests this is not always feasible. The Investment Manager may
refer to the Board on any matters of a contentious nature. 
10. Annual General Meeting ("AGM") 
THIS SECTION IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. 
If you are in any doubt as to any aspect of the proposals referred to in this
document or as to the action you should take, you should seek your own advice
from a stockbroker, solicitor, accountant, or other professional adviser. 
If you have sold or otherwise transferred all of your shares, please pass this
document together with the accompanying documents to the purchaser or
transferee, or to the person who arranged the sale or transfer so they can pass
these documents to the person who now holds the shares. 
The AGM will be held on Tuesday, 18 January 2011 at 2:30pm. The formal notice
of the AGM is set out on pages 46 and 47. Separate resolutions are proposed for
each substantive issue. Resolutions relating to the following items of special
business will be proposed at the AGM, for which shareholder approval is
required in order to comply with the Companies Act 2006. 
Authorities to allot shares and to disapply pre-emption rights (resolutions 9
and 10) 
Approval is sought to give the Board the authority to allot ordinary shares or
grant rights to subscribe for or convert any securities into ordinary shares up
to an aggregate nominal amount equal to £172,336 (representing 1,723,360
ordinary shares of 10 pence each). This amount represents approximately 5% of
the issued ordinary share capital (excluding treasury shares) of the Company as
at 30 November 2010, being the latest practicable date prior to publication of
the notice of meeting on pages 46 to 47 (the "Notice"). 
As at the date of the Notice, 3,318,207 ordinary shares are held by the Company
in treasury. This amount represents 9.63% of the total ordinary share capital
in issue (excluding treasury shares) as at the latest practicable date prior to
publication of the Notice. 
The Directors do not intend to allot ordinary shares pursuant to this power
other than to take advantage of opportunities in the market as they arise and
only if they believe it is advantageous to the Company's existing shareholders
to do so. 
Resolution 10 would, if passed, give the Board the authority to allot shares
(or sell any shares held in treasury) for cash on a non pre-emptive basis up to
an aggregate amount of £188,927. This amount represents 1,889,270 shares and is
approximately 5% of the total share capital of the Company in issue (including
treasury shares) as at 30 November 2010, being the latest practicable date
prior to publication of the Notice. This will enable the Company to issue new
shares (or to sell treasury shares) to investors when the Directors consider
that it is in the best interests of shareholders to do so. This power will not
be utilised when it would result in any dilution of the net asset value per
ordinary share. 
In respect of this amount, the Board confirm their intention to follow the
provisions of the Pre-Emption Group's Statement of Principles regarding
cumulative usage of authorities within a rolling three year period. The
Principles provide that usage in excess of 7.5% of share capital should not
take place without prior consultation with shareholders. 
The full text of the resolutions is set out in the Notice. 
If Resolutions 9 and 10 are approved, the authorities will expire at the
conclusion of the AGM in 2012. 
Authority to purchase own shares (resolution 11) 
At the AGM held on 19 January 2010, shareholders renewed the Director's
authority to buyback up to 14.99% of the Company's ordinary shares. Pursuant to
this authority, a total of 2,166,599 shares were purchased and cancelled during
the year under review. This represented 5.73% of the issued share capital at 30
September 2010. The prices paid for these shares ranged from 638.80p to 893.00p
and the total cost amounted to £17,486,000. No further shares have been brought
back since the Company's year end. 
The Board proposes that the Company should be given renewed authority to
purchase ordinary shares in the market either for cancellation or to be held,
sold, transferred or otherwise dealt with as treasury shares in accordance with
the Companies Act. 
The Directors consider that the renewal of this authority is in the interests
of shareholders as a whole as the repurchase of ordinary shares at a discount
to their net asset value ("NAV") would enhance the NAV of the remaining
ordinary shares. Accordingly a special resolution will be proposed at the AGM
to authorise the Company to make market purchases of up to 14.99% of the
ordinary shares in issue, equivalent to 5,166,620 ordinary shares as at 30
November 2010, being the latest practicable date prior to publication of the
Notice. Under the Listing Rules of the Financial Services authority, this is
the maximum percentage of its equity share capital that a company may purchase
through the market pursuant to such authority. 
Purchases of shares will be made within guidelines set from time to time by the
Board and will only be made in the market at prices below the prevailing NAV
and, in any event, not below a minimum price of 10 pence per share. 
The authority for the Company to purchase its own ordinary shares will, by
virtue of the Treasury Share Regulations 2003 and the Companies (Share Capital
and Acquisition by a Company of its Own Shares) Regulations 2009, allow the
Company to hold ordinary shares so purchased in treasury, as an alternative to
immediate cancellation. 
Any exercise by the Company of the authority to purchase shares will occur only
when market conditions are appropriate. Purchases will be funded either by
using available cash resources, debt or by selling investments. 
This authority shall expire at the earlier of the conclusion of the AGM in 2012
or 17 July 2012, unless such authority has been renewed prior to such time. 
The full text of the resolution is set out in the Notice of Meeting on pages 46
and 47. 
The Board considers that all the resolutions to be put to the meeting are in
the best interests of the Company and its shareholders as a whole. The Board
unanimously recommends that you vote in favour of them. 
11. Conflict of interest 
Section 175 of the Companies Act 2006, which came in to effect on 1 October
2009, introduced a duty for directors to avoid unauthorised conflicts of
interest. The Articles of Association approved by Resolution 2 at the General
Meeting held on 15 January 2009 allows the Directors to authorise such
conflicts and potential conflicts, where appropriate. The Board has expanded
the terms of reference of the Audit Committee to review conflicts and potential
conflicts and make recommendations to the Board as to whether any such
conflicts should be authorised. 
12. Companies Act 2006 Disclosures 
In accordance with Section 992 of the Companies Act 2006 the Directors disclose
the following information: 
• the Company's capital structure is summarised on page 39, voting rights are
summarised on page 48, and there are no restrictions on voting rights nor any
agreement between holders of securities that result in restrictions on the
transfer of securities or on voting rights; 
• there exist no securities carrying special rights with regard to the control
of the Company; 
• details of the substantial shareholders in the Company are listed on page 16; 
• the Company does not have an employees' share scheme; 
• the rules concerning the appointment and replacement of Directors, amendment
of the Articles of Association and powers to issue or buy back the Company's
shares are contained in the Articles of Association of the Company and the
Companies Act 2006; 
• there exist no agreements to which the Company is party that may affect its
control following a takeover bid; and 
• there exist no agreements between the Company and its Directors providing for
compensation for loss of office that may occur because of a takeover bid. 
The Board recognises the requirement under Section 417(5) of the Act to detail
information about environmental matters (including the impact of the Company's
business on the environment), any Company employees and social and community
issues; including information about any policies it has in relation to these
matters and effectiveness of these policies. As the Company has no employees or
policies in these matters this requirement does not apply. Notwithstanding, the
Investment Manager takes into account these considerations when making
investment decisions and determines its voting instructions at investee company
meetings accordingly. 
13. Auditors 
The Company's Auditors, KPMG Audit Plc, have indicated their willingness to
continue in office. Resolutions for their re-appointment and to authorise the
Board to determine their remuneration will be proposed at the Annual General
Meeting. 
By order of the Board 
M. J. Nokes 
Secretary 
1 December 2010 
Directors' Remuneration Report 
for the year ended 30 September 2010 
This report is presented in accordance with Section 421 of the Companies Act
2006. As the Board of Directors is comprised solely of non-executive Directors,
it is exempt under the Listing Rules from appointing a Remuneration
Committee.The determination of the level of fees paid to Directors, which are
reviewed on a periodic basis, is dealt with by the whole Board. 
The Company's Articles of Association limits the aggregate fees payable to the
Board of Directors to a total of £175,000. Subject to this overall limit, it is
the Company's policy to determine the level of Directors' fees having regard to
fees payable to non-executive Directors in the industry generally, the role
that individual Directors fulfil, and the time committed to the Company's
affairs. 
No Director has a service contract with the Company. 
During the year ended 30 September 2010 the Chairman received a fee of £30,000
per annum, the Chairman of the Audit Committee received a fee of £25,000 per
annum and other Directors £22,500 per annum. 
The Company does not provide pension benefits, share options or long-term
incentive schemes for Directors. 
Directors' emoluments for the year (audited) 
The Directors who served during the year received the following emoluments in
the form of fees: 
                                            2010                      2009 
                                                                          
Steven Bates (appointed                         27.7                      22.5
Chairman 19 January 2010)                                                      
                                                                          
John Cousins                                    22.5                      22.5 
                                                                          
Josephine Dixon                                 25.0                      25.0 
                                                                          
Saul Estrin                                     22.5                      22.5 
                                                                          
Jonathan Woollett                               22.5                      22.5 
                                                                          
Ivo Coulson (appointed 29                          -                         -
September 2010)                                                                
                                                                          
Iain Saunders (retired 19                        9.1                      30.0
January 2010)                                                                  
                                                                          
Total                                          129.3                     145.0 
Share price performance 
The following graph compares the share price and net asset value performance
against the benchmark*†: 
Approval 
A resolution for the approval of the Directors' Remuneration Report for the
year ended 30 September 2010 will be proposed at the Annual General Meeting. 
By order of the Board 
M. J. Nokes 
Secretary 
1 December 2010 
Statement of Directors' responsibilities in respect of the annual report and
the financial statements 
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations. 
Company law requires the Directors to prepare financial statements for each
financial year. Under that law they have elected to prepare the financial
statements in accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice). 
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the Directors are required to: 
• select suitable accounting policies and then apply them consistently; 
• make judgments and estimates that are reasonable and prudent; 
• state whether applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial statements;
and 
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business. 
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities. 
Under applicable law and regulations, the Directors are also responsible for
preparing a Directors' Report, Directors' Remuneration Report and Corporate
Governance Statement that complies with that law and those regulations. 
The financial statements are published on the www.bee-plc.com website, which is
maintained by the Company's Manager, Baring Asset Management Limited. The
maintenance and integrity of the website maintained by Baring Asset Management
Limited is, so far as it relates to the Company, the responsibility of Baring
Asset Management Limited. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions. 
The Directors each confirm to the best of their knowledge that: 
a) the financial statements, prepared in accordance with applicable accounting
standards, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and 
b) this Annual Report includes a fair review of the development and performance
of the business and the position of the Company, together with a description of
the principal risks and uncertainties that it faces. 
For and on behalf of the Board 
Steven Bates 
Chairman 
1 December 2010 
Independent Auditors' Report 
to the members of Baring Emerging Europe PLC 
We have audited the financial statements of Baring Emerging Europe PLC for the
year ended 30 September 2010 which comprise the Income Statement, the Balance
Sheet, the Reconciliation of Movement in Shareholders' Funds, the Cashflow
Statement and the related notes set out on pages 29 to 45. The financial
reporting framework that has been applied in their preparation is applicable
law and UK Accounting Standards (UK Generally Accepted Accounting Practice). 
This report is made solely to the Company's members, as a body, in accordance
with Sections 495, 496 and 497 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an Auditors' Report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as a
body, for our audit work, for this report, or for the opinions we have formed. 
Respective responsibilities of Directors and Auditors 
As explained more fully in the Directors' Responsibilities Statement set out on
page 26, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's (APB's)
Ethical Standards for Auditors. 
Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements is provided on
the APB's web-site at www.frc.org.uk/apb/scope/UKP. 
Opinion on financial statements 
In our opinion the financial statements: 
• give a true and fair view of the state of the Company's affairs as at 30
September 2010 and of its return for the year then ended; 
• have been properly prepared in accordance with UK Generally Accepted
Accounting Practice; and 
• have been prepared in accordance with the requirements of the Companies Act
2006. 
Opinion on other matters prescribed by the Companies Act 2006 
In our opinion: 
• the part of the Directors' Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006; and 
• the information given in the Directors' Report for the financial year for
which the financial statements are prepared is consistent with the financial
statements; and 
Matters on which we are required to report by exception 
We have nothing to report in respect of the following: 
Under the Companies Act 2006 we are required to report to you if, in our
opinion: 
• adequate accounting records have not been kept, or returns adequate for our
audit have not been received from branches not visited by us; or 
• the financial statements and the part of the Directors' Remuneration Report
to be audited are not in agreement with the accounting records and returns; or 
• certain disclosures of Directors' remuneration specified by law are not made;
or 
• we have not received all the information and explanations we require for our
audit. 
Under the Listing Rules we are required to review: 
• the Directors' Statement, set out on page 26, in relation to going concern;
and 
• the part of the Corporate Governance Statement relating to the Company's
compliance with the nine provisions of the June 2009 Combined Code specified
for our review. 
Neil Palmer (Senior Statutory Auditor) 
for and on behalf of KPMG Audit Plc, Statutory Auditor 
Chartered Accountants 
15 Canada Square 
London 
E14 5GL 
1 December 2010 
Income statement 
(incorporating the Revenue Account*) for the year ended 30 September 2010 


                         Year      Year      Year      Year      Year      Year
                     ended 30  ended 30  ended 30  ended 30  ended 30  ended 30
                    September September September September September September
                         2010      2010      2010      2009      2009      2009
                                                                               
                      Revenue   Capital     Total   Revenue   Capital     Total
                                                                               
              Notes      £000      £000      £000      £000      £000      £000


                                                                           
Gains on         10         -    51,798    51,798         -    15,228    15,228
investments                                                                    
held atfair                                                                    
value                                                                          
through                                                                        
profit or                                                                      
loss                                                                            
                                                                           
Income            2     5,430         -     5,430     5,834         7     5,841 
                                                                           
Investment        3   (2,422)         -   (2,422)   (1,570)   (1,012)   (2,582)
management                                                                     
fee and                                                                        
performance                                                                    
fee                                                                             
                                                                           
VAT               4         -         -         -       870        90       960
recovered                                                                      
from HMRC on                                                                   
management                                                                     
fees                                                                            
                                                                           
Other             5   (1,307)         -   (1,307)   (1,155)         -   (1,155)
expenses                                                                        
                                                                           
Net return              1,701    51,798    53,499     3,979    14,313    18,292
before                                                                         
finance                                                                        
costs and                                                                      
taxation                                                                        
                                                                           
Finance           6      (17)         -      (17)      (17)         -      (17)
costs                                                                           
                                                                           
Return on               1,684    51,798    53,482     3,962    14,313    18,275
ordinary                                                                       
activities                                                                     
before                                                                         
taxation                                                                        
                                                                           
Taxation          7     (655)         -     (655)     (561)         -     (561) 
                                                                           
Return                  1,029    51,798    52,827     3,401    14,313    17,714
attributable                                                                   
to ordinary                                                                    
shareholders                                                                    
                                                                           
Return per        9     2.91p   146.54p   149.45p     8.99p    37.84p    46.83p
ordinary                                                                       
share                                                                           
*The total column of this statement is the profit and loss account of the
Company. 
All revenue and capital items in the above statement derive from continuing
operations. 
The annexed notes on pages 33 to 45 form part of these accounts. 
The supplementary revenue and capital columns are both prepared under the
guidance published by the Association of Investment Companies. 
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement. 
Balance sheet 
as at 30 September 2010 


                                                       2010                2009
                                                                               
                                  Notes                £000                £000


                                                                           
Non current assets                                                              
                                                                           
Investments at fair                  10             307,030             271,189
value through                                                                  
profit or loss                                                                  
                                                                           
Current assets                                                                  
                                                                           
Debtors                              11               6,139               3,567 
                                                                           
Cash at bank and in                                   1,846              11,125
hand                                                                            


                                                                               
                                                      7,985              14,692


                                                                           
Creditors: amounts                   12               (469)             (3,591)
falling due within                                                             
one year                                                                        
                                                                           
Net current assets                                    7,516              11,101 
                                                                           
Net assets                                          314,546             282,290 
                                                                           
Capital and                                                                    
reserves                                                                        
                                                                           
Called-up share                                       3,779               3,995
capital                                                                         
                                                                           
Share premium                                         1,411               1,411
account                                                                         
                                                                           
Special reserve                                      14,306              31,792 
                                                                           
Redemption reserve                                    1,009                 793 
                                                                           
Capital reserve                                     291,115             239,317 
                                                                           
Revenue reserve                                       2,926               4,982 
                                                                           
Total equity                                        314,546             282,290
shareholders' funds                                                             
                                                                           
Net asset value per                  14             912.60p             770.57p
share                                                                           
The financial statements on pages 29 to 45 were approved by the Board on 1
December 2010 and signed on its behalf by: 
Josephine Dixon 
Director 
The annexed notes on pages 33 to 45 form part of these accounts. 
Company registration number 4560726 
Reconciliation of movement in shareholders' funds 
for the year ended 30 September 2010 


             Called-up     Share  Special  Redemption  Capital  Revenue    Total
                                                                                
                 share   premium  reserve     reserve  reserve  reserve         
                                                                                
               capital   account                                                
                                                                                
                  £000      £000     £000        £000     £000     £000     £000


                                                                            
For the year                                                                    
ended                                                                            
                                                                            
30 September                                                                    
2010                                                                             
                                                                            
Beginning of     3,995     1,411   31,792         793  239,317    4,982  282,290
year                                                                             
                                                                            
Return for           -         -        -           -   51,798    1,029   52,827
the year                                                                         
                                                                            
Buyback of           -         - (17,486)           -        -        - (17,486)
own shares                                                                      
for                                                                             
cancellation                                                                     
                                                                            
Transfer to      (216)         -        -         216        -        -        -
capital                                                                         
redemption                                                                      
reserve                                                                          
                                                                            
Dividends            -         -        -           -        -  (3,085)  (3,085)
paid                                                                             
                                                                            
Balance at       3,779     1,411   14,306       1,009  291,115    2,926  314,546
30 September                                                                    
2010                                                                             


             Called-up     Share  Special  Redemption  Capital  Revenue    Total
                                                                                
                 share   premium  reserve     reserve  reserve  reserve         
                                                                                
               capital   account                                                
                                                                                
                  £000      £000     £000        £000     £000     £000     £000


                                                                            
For the year                                                                    
ended                                                                            
                                                                            
30 September                                                                    
2009                                                                             
                                                                            
Beginning of     4,273     1,411   44,175         515  225,004    5,036  280,414
year                                                                             
                                                                            
Return for           -         -        -           -   14,313    3,401   17,714
the year                                                                         
                                                                            
Buyback of           -         - (12,383)           -        -        - (12,383)
own shares                                                                      
for                                                                             
cancellation                                                                     
                                                                            
Transfer to      (278)         -        -         278        -        -        -
capital                                                                         
redemption                                                                      
reserve                                                                          
                                                                            
Dividends            -         -        -           -        -  (3,455)  (3,455)
paid                                                                             
                                                                            
Balance at       3,995     1,411   31,792         793  239,317    4,982  282,290
30 September                                                                    
2009                                                                             
The annexed notes on pages 33 to 45 form part of these accounts. 
Cashflow statement 
for the year ended 30 September 2010 


                                                Year ended 30     Year ended 30
                                                    September         September
                                                                               
                                                         2010              2009
                                                                               
                                      Notes              £000              £000


                                                                           
Operating activities                                                            
                                                                           
Income received from                                    5,534             6,653
investments                                                                     
                                                                           
Interest received                                           1                16 
                                                                           
Investment management                                 (3,404)           (1,717)
fees and performance fees                                                      
paid                                                                            
                                                                           
VAT recovered (including                                    -             1,039
interest thereon)                                                               
                                                                           
Other cash payments                                   (1,268)           (1,224) 
                                                                           
Net cash inflow from                     15               863             4,767
operating activities                                                            
                                                                           
Servicing of finance                                                            
                                                                           
Interest paid                                            (17)              (17) 
                                                                           
Taxation                                                                        
                                                                           
Overseas tax paid                                       (488)             (728) 
                                                                           
Financial investment                                                            
                                                                           
Purchases of investments                             (84,457)          (93,829) 
                                                                           
Sales of investments                                   95,391           111,895 
                                                                           
Net cash inflow from                                   10,934            18,066
financial investment                                                            
                                                                           
Equity dividends paid                                 (3,085)           (3,455) 
                                                                           
Net cash inflow before                                  8,207            18,633
financing                                                                       
                                                                           
Financing                                                                       
                                                                           
Buyback of ordinary                                  (17,486)          (13,386)
shares                                                                          
                                                                           
Net cash outflow from                                (17,486)          (13,386)
financing                                                                       
                                                                           
(Decrease)/increase in                   16           (9,279)             5,247
cash                                                                            
The annexed notes on pages 33 to 45 form part of these accounts. 
Notes to the accounts 
1. Accounting policies 
A summary of the principal policies, all of which have been applied
consistently throughout the year, is set out below: 
(a) Basis of accounting 
These financial statements have been prepared in accordance with the applicable
United Kingdom accounting standards and with the Statement of Recommended
Practice ("SORP") "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" (issued in January 2009). The adoption of the January
2009 SORP has had no effect on the financial statements of the Company other
than the amendment to FRS 29 in respect of fair value disclosures and the
details of this are given in note 20(g). 
The financial statements, and the net asset value per share figures, have been
prepared in accordance with UK Generally Accepted Accounting Practice ("UK
GAAP"). 
(b) Valuation of investments 
Upon initial recognition the investments are designated by the Company as "at
fair value through profit or loss". They are included initially at fair value
which is taken to be their cost, including expenses incidental to purchase.
Subsequently the investments are valued at fair value which is bid market price
for listed investments. Unquoted investments are included at a valuation
determined by the Directors after discussion with the Investment Manager on the
basis of the latest accounting and other relevant information. 
Changes in the fair value of investments held at fair value through profit or
loss and gains or losses on disposal are included in the capital column of the
income statement within "Gains/(losses) from investments held at fair value
through profit or loss". All purchases and sales are accounted for on a trade
date basis. 
Year-end exchange rates are used to translate the value of investments which
are denominated in foreign currencies. 
(c) Foreign currency 
Transactions denominated in foreign currencies are translated into sterling at
actual exchange rates as at the date of the transaction or, where appropriate,
at the rate of exchange in a related forward exchange contract. Monetary assets
and liabilities denominated in foreign currencies at the year-end are reported
at the rates of exchange prevailing at the year-end or, where appropriate, at
the rate of exchange in a related forward exchange contract. Any gain or loss
arising from a change in exchange rates subsequent to the date of the
transaction is included as an exchange gain or loss in capital reserve. Foreign
exchange movements on fixed asset investments are included in the Income
Statement within gains on investments held at fair value through profit or
loss. 
(d) Income 
Investment income, which includes related taxation, has been accounted for on
an ex-dividend basis or when the Company's right to the income is established. 
Interest receivable on deposits is accounted for on an accruals basis. 
(e) Expenses 
All expenses are accounted for on an accruals basis and are charged as follows: 
• the basic investment management fee is charged wholly to revenue; 
• any investment performance bonus payable to Baring Asset Management Limited
is charged wholly to capital; 
• dealing costs are charged wholly to capital; and 
• other expenses are charged wholly to revenue. 
(f) Interest payable 
Interest payable is accounted for on an accruals basis, and is charged wholly
to revenue. 
(g) Capital reserve 
Gains or losses on disposal of investments and changes in fair values of
investments are transferred to the capital reserve. Any investment performance
fee payable to Baring Asset Management Limited is accounted for in the capital
reserve. 
(h) Special reserve 
Pursuant to a special resolution passed on 8 November 2002, the Company's
application to reduce its share premium account was approved by the High Court
and registered with the Registrar of Companies on 18 December 2002. The amount
of the reduction was £86,624,982, representing the share premium arising on the
issue of shares by the Company on 17 December 2002. This amount was transferred
to a special reserve which is available for the repurchase by the Company of
its own shares. 
(i) Taxation 
The charge for taxation is based upon the net revenue for the year. The tax
charge is allocated to the revenue and capital accounts according to the
marginal basis whereby revenue expenses are first matched against taxable
income arising in the revenue account; the effect of this for the year ended 30
September 2010 was that all the deductions for tax purposes went to the revenue
account. 
Deferred taxation will be recognised as an asset or a liability if transactions
have occurred at the balance sheet date that give rise to an obligation to pay
more taxation in the future, or a right to pay less taxation in the future. An
asset will not be recognised to the extent that the transfer of economic
benefit is uncertain. 
2. Income 


                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Income from investments                                                        
                                                                          
Overseas dividends -                           5,429                     5,746
Quoted                                                                         
                                                                          
Other income                                                                   
                                                                          
Deposit interest                                   1                        16 
                                                                          
Interest on VAT recovered                          -                        79
from HMRC                                                                      
                                                                           


                                               5,430                     5,841

3. Investment management fee

Baring Asset Management Limited ("Barings") acts as Investment Manager of the
Company under an agreement terminable by either party giving not less than six
months' written notice. Under this agreement Barings receives a basic fee
(charged to revenue) which is calculated monthly and payable at an annual rate
of 0.8% of the net asset value of the Company. The Directors have decided upon
a policy of non-allocation of the investment management fees and as such they
have been charged wholly to the revenue account.

In addition under the agreement Barings is entitled to a performance fee
(charged to capital) which is payable at the rate of 10% of the amount by which
the change in the Company's net asset value per share (on a total return basis)
exceeds the benchmark. The performance fee is capped at 0.6% of the net asset
value of the Company on the first day of the performance period. The
performance fee is calculated annually on 30 September. The whole of the
performance fee is charged to the capital account as it is deemed to have
arisen entirely as a result of the capital performance of the Company.

The investment management fee comprises:
                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Basic fee (charged to                          2,422                     1,570
revenue)                                                                       
                                                                          
Performance fee (charged                                                      
to capital):                                                                   
                                                                          
- provision for year                               -                     1,012 
                                                                           


                                               2,422                     2,582

At 30 September 2010, £205,000 (30 September 2009: £1,187,000) of this fee
remained outstanding.

4. VAT recovered from HMRC on management fees
                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Recovered in respect of                            -                       870
basic management fees -                                                       
Revenue                                                                        
                                                                          
Recovered in respect of                            -                        90
performance fees - Capital                                                     
                                                                           


                                                   -                       960

On 30 June 2009, the Company received £960,000 of VAT on past management fees
invoiced since 31 March 2005 which has been credited to the Company's revenue
and capital accounts in accordance with the Board's policy for allocation of
management fees and finance costs.

5. Other expenses
                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Custody and administration                     1,113                       952
expenses                                                                       
                                                                          
Auditor's remuneration                                                        
for:                                                                           
                                                                          
- audit                                           26                        26 
                                                                          
- other services*                                 39                        32 
                                                                          
Directors' fees                                  129                       145 
                                                                           


                                               1,307                     1,155

*KPMG other services includes £31,000 for withholding tax work in Poland (2009:
£24,000).

6. Finance costs
                                                2010                      2009


                                                                          
(All charged to revenue)                        £000                      £000 
                                                                          
On short-term loan and                                                        
overdraft facility with                                                       
State Street Bank & Trust                                                     
Company repayable within 5                                                    
years, not by installments                                                     
                                                                          
Bank overdraft                                    17                        17 
                                                                           


                                                  17                        17

7. Taxation

(a) Current tax charge for the year:
                  2010       2010       2010       2009       2009       2009
                                                                             
               Revenue    Capital      Total    Revenue    Capital      Total
                                                                             
                  £000       £000       £000       £000       £000       £000


                                                                         
Overseas           655          -        655        561          -        561
taxation                                                                     
(note 7(b))                                                                   
(b) Factors affecting the current tax charge for the year 
The taxation rate assessed for the year is different from the standard rate of
corporation taxation in the UK. The differences are explained below: 


                         2010      2010      2010      2009      2009      2009
                                                                               
                      Revenue   Capital     Total   Revenue   Capital     Total
                                                                               
                         £000      £000      £000      £000      £000      £000


                                                                           
Return on ordinary      1,684    51,798    53,482     3,962    14,313    18,275
activities before                                                              
taxation                                                                        
                                                                           
Return on ordinary        472    14,503    14,975     1,109     4,008     5,117
activities                                                                     
multiplied by the                                                              
standard rate of                                                               
corporation tax of                                                             
28% (2009: 28%)                                                                 
                                                                           
Effects of:                                                                     
                                                                           
Non taxable           (1,520)         -   (1,520)         -         -         -
overseas dividends                                                              
                                                                           
Overseas                  655         -       655       561         -       561
withholding tax                                                                 
                                                                           
Capital gains not           -  (14,503)  (14,503)         -   (4,264)   (4,264)
subject to tax                                                                  
                                                                           
Excess management       1,048         _     1,048   (1,109)       256     (853)
expenses unutilised                                                            
/(utlised)                                                                      
                                                                           
Current tax charge        655         _       655       561         -       561
for the year                                                                    
The Company is not liable to tax on capital gains due to its status as an
investment trust. 
The Company has an unrecognised deferred tax asset of £283,000 (2009: £nil)
based on the long term prospective corporation tax rate of 27% (2009: 28%).
This asset has accumulated because deductible expenses have exceeded taxable
income in past years. No asset has been recognised in the accounts because,
given the composition of the Company's portfolio, it is not likely that this
asset will be utilised in the foreseeable future. 
8. Dividend 


                           2010            2010            2009            2009
                                                                               
                Pence per share            £000 Pence per share            £000


                                                                           
Annual dividend           2.90p           1,000           8.50p           3,114
per ordinary                                                                   
share -                                                                        
proposed                                                                        
9. Return per ordinary share 


                                       Total                            Total
                                                                             
               Revenue    Capital       2010    Revenue    Capital       2009


                                                                         
Return per       2.91p    146.54p    149.45p      8.99p     37.84p     46.83p
ordinary                                                                     
share                                                                         
Revenue return (earnings) per ordinary share is based on the net revenue on
ordinary activities after taxation of £1,029,000 (2009: £3,401,000). 
Capital return per ordinary share is based on net capital profits for the
financial year of £51,798,000 (2009: net capital profits of £14,313,000). 
These calculations are based on the weighted average of 35,346,596 (2009:
37,820,907 shares) ordinary shares in issue during the year. 
At 30 September 2010 there were 34,467,110 ordinary shares of 10 pence each in
issue (2009: 36,633,709) which excludes 3,318,207 ordinary shares held in
treasury (2009: 3,318,207 shares held in treasury). The shares held in treasury
are treated as not being in issue when calculating the weighted average of
ordinary shares in issue during the year. 
10. (i) Fixed asset investments 


                         Quoted           Total          Quoted           Total
                                                                               
                       overseas            2010        overseas            2009


                                                                           
Country of                 £000            £000            £000            £000
listing                                                                         
                                                                           
Czech Republic           11,519          11,519          23,040          23,040 
                                                                           
Hungary                  14,428          14,428          14,872          14,872 
                                                                           
Poland                   30,796          30,796          24,661          24,661 
                                                                           
Russia                  179,916         179,916         154,493         154,493 
                                                                           
Turkey                   58,373          58,373          42,935          42,935 
                                                                           
Other                    11,998          11,998          11,188          11,188 
                                                                           
Total                   307,030         307,030         271,189         271,189 
10. (ii) Movements in the year 


                  Quoted                Total     Quoted                 Total
                                                                              
                overseas   Unquoted      2010   overseas   Unquoted       2009
                                                                              
                    £000       £000      £000       £000       £000       £000


                                                                          
Book cost at     201,824        104   201,928    246,756        157    246,913
beginning of                                                                  
year                                                                           
                                                                          
Gains/(losses)    69,365      (104)    69,261     23,941      (157)     23,784
on investments                                                                
heldat                                                                        
beginning of                                                                  
year                                                                           
                                                                          
Valuation at     271,189          -   271,189    270,697          -    270,697
beginning of                                                                  
year                                                                           
                                                                          
Movements in                                                                  
year:                                                                          
                                                                          
Purchases at      82,278          -    82,278     92,488          -     92,488
cost                                                                           
                                                                          
Sales proceeds  (98,226)        (9)  (98,235)  (107,020)      (204)  (107,224) 
                                                                          
Gains/(losses)    26,788          -    26,788   (30,400)        151   (30,249)
on investments                                                                
sold in year                                                                   
                                                                          
Gains on          25,001          9    25,010     45,424         53     45,477
investments                                                                   
held at year                                                                  
end                                                                            
                                                                          
Valuation at     307,030          -   307,030    271,189          -    271,189
end of year                                                                    
Expenses incidental to the purchase or sale of investments are included within
the purchase cost or deducted from sales proceeds. Transaction costs on
purchases for the year ended 30 September 2010 amounted to £125,000 (2009: £
169,000) and on sales for the year they amounted to £186,000 (2009: £200,000). 
10. (iii) Gains/(losses) on investments 


                                                2010                       2009
                                                                               
                                                £000                       £000


                                                                           
Gains/(losses) on                             26,788                   (30,249)
investments sold in the                                                        
year                                                                            
                                                                           
Gains on investments held                     25,010                     45,477
at year end                                                                     
                                                                           
Total gains on investments                    51,798                     15,228 
A list of the Company's investments by market value is shown on page 9 and a
geographical and industrial classification of the investment portfolio is shown
on page 11. 
11. Debtors 


                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Amounts due within one                                                        
year                                                                           
                                                                          
Amounts due from brokers                       4,246                     1,402 
                                                                          
Prepayments and accrued                        1,893                     1,998
income                                                                         
                                                                          
Other debtors                                      -                       167 
                                                                           


                                               6,139                     3,567

12. Creditors
                                                2010                       2009
                                                                               
                                                £000                       £000


                                                                           
Amounts falling due within                                                     
one year                                                                        
                                                                           
Purchases for future                               -                      2,179
settlement                                                                      
                                                                           
Other creditors                                  469                      1,412 
                                                                            


                                                 469                      3,591

Since November 2003, the Company has had a US$10 million unsecured loan and
overdraft facility with State Street Bank and Trust Company. Under this
facility, the Company may draw up to a maximum principal amount of US$10
million in varying proportions and for varying periods at prevailing interest
rates.

13. Called-up share capital
                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Allotted, issued and fully                                                    
paid up                                                                        
                                                                          
37,785,317 (2009:                              3,779                     3,995
39,951,916) ordinary                                                          
shares of 10 pence (fully                                                     
paid)                                                                          
During the year 2,166,599 ordinary shares were repurchased for cancellation for
£17,486,000 (2009: 2,782,796 ordinary shares were repurchased for cancellation
for £12,383,000). During the year no ordinary shares were repurchased to be
held in treasury and no ordinary shares which were held in treasury were
cancelled. The Company holds 3,318,207 ordinary shares in treasury which are
treated as not being in issue when calculating the number of ordinary shares in
issue during the year (2009: 3,318,207 ordinary shares were held in treasury).
Shares held in treasury are non-voting and not eligible for receipt of
dividends. 
14. Net asset value per share 
Total shareholders' funds and the net asset value per share attributable to the
ordinary shareholders at the year-end calculated in accordance with the
Articles of Association were as follows: 
                                            2010                      2009 
                                                                          
Total shareholders' funds                    314,546                   282,290
(£000)                                                                         
                                                                          
Net asset value (pence per                   912.60p                   770.57p
share)                                                                         
The net asset value per share is based on total shareholders' funds above, and
on 34,467,110 ordinary shares in issue at the year-end (2009: 36,633,709
ordinary shares in issue) which excludes 3,318,207 ordinary shares held in
treasury (2009: 3,318,207 ordinary shares held in treasury). The ordinary
shares held in treasury are treated as not being in issue when calculating the
net asset value per share. 
15. Reconciliation of net return before finance costs and taxation to net cash
outflow from operating activities 


                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Net revenue return before                     53,499                    18,292
finance costs and taxation                                                     
                                                                          
Net capital return before                   (51,798)                  (14,313)
finance costs and taxation                                                     
                                                                          
Decrease in accrued income                       105                       907 
                                                                          
(Decrease )/increase in                        (943)                       796
sundry creditors                                                               
                                                                          
VAT recovered from HMRC                            -                        97
(including interest                                                           
thereon) capitalised                                                           
                                                                          
Performance fee                                    -                   (1,012)
capitalised                                                                    
                                                                          
Net cash inflow from                             863                     4,767
operating activities                                                           
16. Analysis of changes in cash during the year 


                                                 2010                      2009
                                                                               
                                                 £000                      £000


                                                                           
Beginning of year                              11,125                     5,878 
                                                                           
Net cash (outflow)/inflow                     (9,279)                     5,247 
                                                                           
End of year                                     1,846                    11,125 
                                                                           
Analysis of balance:                                                            
                                                                           
Bank balance                                    1,846                    11,125 
17. Financial commitments 
At 30 September 2010, there were no outstanding capital commitments (2009:
nil). 
18. Custodian's lien 
Under the terms of the custody agreement with State Street Bank & Trust Company
("State Street"), the Company has granted a lien over its securities and other
assets that are deposited with State Street to cover all sums due in connection
with the custody agreement. 
19. Related party disclosures 
Under FRS 8, the Company is required to provide additional information
concerning its relationship with the Investment Manager, Barings, and details
of the investment management fee charged by Baring Asset Management Limited are
set out in note 3. The ultimate holding company of Barings is Massachusetts
Mutual Life Insurance Company. 
20. Risk management policies and procedures 
As an investment trust the Company invests in equities and other investments
for the long-term so as to secure its investment objective stated on page 3. In
pursuing its investment objective, the Company is exposed to a variety of risks
that could result in either a reduction in the Company's net assets or a
reduction of the profits available for dividends. 
These risks, include market risk (comprising currency risk, interest rate risk,
and other price risk), liquidity risk, and credit risk, and the Directors'
approach to the management of them are set out below. 
The objectives, policies and processes for managing the risks, and the methods
used to measure the risks, that are set out below, have not changed from the
previous accounting period. 
(a) Market risk 
Special considerations and risk factors associated with the Company's
investments are discussed on page 4. The fair value or future cash flows of a
financial instrument held by the Company may fluctuate because of changes in
market prices. This market risk comprises three elements - currency risk (see
(b) below), interest rate risk (see (c) below) and other price risk (see (d)
below). The Board of Directors reviews and agrees policies for managing these
risks, which have remained substantially unchanged from those applying in the
year ended 30 September 2009. The Company's Investment Manager assesses the
exposure to market risk when making each investment decision, and monitors the
overall level of market risk on the whole of the investment portfolio on an
ongoing basis. 
(b) Currency risk 
Some of the Company's assets, liabilities, and income, are denominated in
currencies other than sterling (the Company's functional currency, and in which
it reports its results). As a result, movements in the rate of exchange between
sterling and the currencies of the countries in which the Company invests,
which are identified in the table shown in note 10, may affect the sterling
value of those items. In addition the Company's uninvested cash balances are
usually held in US dollars. 
Management of the risk 
The Investment Manager monitors the Company's exposure and reports to the Board
on a regular basis. 
Income denominated in foreign currencies is converted to sterling on receipt.
The Company does not use financial instruments to mitigate the currency
exposure in the period between the time that income is included in the
financial statements and its receipt. 
Foreign currency exposures 
At 30 September 2010 monetary assets included cash balances totalling £
1,846,000 (2009: £11,125,000) that were held in US dollars. 
Foreign currency sensitivity 
The following table illustrates the sensitivity of the profit after taxation
for the year and the equity in regard to the Company's monetary financial
assets to changes in the exchange rates for the various currencies to which the
Company is exposed. 
If sterling had weakened by an average of 10%, this would have had the
following effect: 


                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Income statement - profit                                                     
after taxation:                                                                
                                                                          
Revenue return                                   193                       345 
                                                                          
Capital return                                 5,180                     1,523 
                                                                          
Total profit after                             5,373                     1,868
taxation for the year                                                          
                                                                          
Equity                                         5,373                     1,868 
If sterling had strengthened by an average of 10%, this would have had the
following effect: 


                                                2010                      2009
                                                                              
                                                £000                      £000


                                                                          
Income statement - profit                                                     
after taxation:                                                                
                                                                          
Revenue return                                 (193)                     (345) 
                                                                          
Capital return                               (5,180)                   (1,523) 
                                                                          
Total profit after                           (5,373)                   (1,868)
taxation for the year                                                          
                                                                          
Equity                                       (5,373)                   (1,868) 
(c) Interest rate risk 
Interest rate movements may affect the level of income receivable on cash
deposits. 
Cash at bank at 30 September 2010 (and 30 September 2009) was held at floating
interesting rates, linked to current short-term market rates. 
(d) Other price risk 
Other price risk (i.e. changes in market prices other than those arising from
interest rate risk or currency risk) may affect the value of the quoted and
unquoted equity investments. 
Management of the risk 
The Board of Directors believe that as the Company's investment objective is to
provide exposure to Emerging European Securities its neutral position in
respect of this risk is full exposure to the market as represented by its
benchmark. The Investment Manager has been given discretion around the
benchmark to enable it to add value. The amount by which the portfolio diverges
from the benchmark is closely monitored by the Board with the goal of ensuring
that the risk taken is proportionate to the value added. 
Concentration of exposure to other price risk 
A sector breakdown and geographical allocation of the portfolio is contained in
the Investment Manager's Report on pages 10 and 11. 
Other price risk sensitivity 
The following table illustrates the sensitivity of the profit after taxation
for the year and the equity to an increase or decrease of 10% in the fair
values of the Company's equities. This level of change is considered to be
reasonably possible based on observation of current market conditions. The
sensitivity analysis is based on the Company's equities at each balance sheet
date, with all other variables held constant. 


                        Increase in    Decrease in    Increase in    Decrease in
                         fair value     fair value     fair value     fair value
                                                                                
                               2010           2010           2009           2009
                                                                                
                               £000           £000           £000           £000


                                                                            
Income statement -                                                              
profit after                                                                    
taxation:                                                                        
                                                                            
Capital return -             27,070       (27,070)         27,119       (27,119)
increase/(decrease)                                                              
                                                                            
Total profit after           27,070       (27,070)         27,119       (27,119)
taxation - increase/                                                            
(decrease)                                                                       
                                                                            
Equity                       27,070       (27,070)         27,119       (27,119) 
(e) Liquidity risk 
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities. 
Management of the risk 
Liquidity risk is not significant as the majority of the Company's assets are
investments in quoted equities that are readily realisable. 
The Board gives guidance to the Investment Manager as to the maximum amount of
the Company's resources that should be invested in any one holding. The policy
is that the Company should remain fully invested in normal market conditions
and that short-term borrowing may be used to manage short-term cash
requirements. 
(f) Credit risk 
The failure of the counterparty to a transaction to discharge its obligations
under that transaction could result in the Company suffering a loss. 
Management of the risk 
This risk is not significant, and is managed as follows: 
• the majority of transactions take place through clearing houses on a delivery
versus payment basis; 
• investment transactions are carried out with an approved list of brokers,
whose credit-standing is reviewed periodically by the Investment Manager, and
limits are set on the amount that may be due from any one broker; and 
• cash at bank is held only with reputable banks with high quality external
credit ratings. 
None of the Company's financial assets are secured by collateral or other
credit enhancements. 
(g) Fair values of financial assets and liabilities 
Financial assets and liabilities are either carried in the balance sheet at
their fair value (investments and derivatives), or the balance sheet amount if
it is a reasonable approximation of fair value (amounts due from brokers,
dividends receivable, accrued income, amounts due to brokers, accruals and cash
balances). 
The table below sets out fair value measurements using the FRS29 fair value
hierarchy. 
Financial assets at fair value through profit or loss at 30 September 2010: 


                                                                         Total
                                                                              
                                             Level 1                      2010
                                                                              
                                                £000                      £000


                                                                          
Equity investments                           307,030                   307,030 
                                                                          
Total                                        307,030                   307,030 
Categorisation within the hierachy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows: 
Level 1 - valued using quoted prices in active markets for identical assets. 
Level 2 - valued by reference to valuation techniques using observable inputs
other than quoted prices included within Level 1 (there are no Level 2
investments at 30 September 2010). 
Level 3 - valued by reference to valuation techniques using inputs that are not
based on observable market data (there are no Level 3 investments at 30
September 2010 with a market value). 
The valuation techniques used by the Company are explained in the accounting
policies note on page 33. 
21. Contingent asset 
(a) VAT 
On 28 June 2008 the European Court of Justice announced that it had found in
favour of the Association of Investment Companies and JPMorgan Claverhouse
Trust plc in declaring that management expenses of investment trusts should be
exempt from VAT. Her Majesty's Customs and Revenue ("HMRC") subsequently
announced that it had accepted that fund management services are exempt from
VAT and it withdrew from the appeal in the JPMorgan Claverhouse Investment
Trust case. The Company is therefore no longer charged VAT on management fees.
Since its launch in December 2002 the Company paid approximately £1.6 million
of VAT on its management fees and recovered approximately £0.4 million of this
through its quarterly VAT returns. On 30 June 2009 the Company received the
repayment of £960,000 of VAT on management fees invoiced since 31 March 2005.
An additional reclaim covering the period prior to 31 March 2005 has been
submitted to HMRC and it is hoped to recover a significant proportion of the
remaining £240,000 net loss of VAT outstanding. This potential recovery of VAT
has not been recognised in the financial statements for the year ended 30
September 2010. 
(b) Withholding tax 
The Company has sought to recover excess withholding tax from companies held in
Poland. To date an amount of £208,000 was recovered in the year to 30 September
2010. A further amount of £333,000 has been reclaimed but is subject to an
appeal by the Polish tax authorities. This potential recovery of withholding
tax has not been recognised in the financial statements for the year ended 30
September 2010. Subsequent to the year end the Company has engaged KPMG to
assist with the recovery of excess withholding tax on dividends received from
companies in Russia. This potential recovery of withholding tax has not been
recognised in the financial statements for the year ended 30 September 2010 as
the amounts reclaimable are uncertain and have not yet been quantified. 
Notice of Annual General Meeting 
Notice is hereby given that the Annual General Meeting of the Company will be
held at 155 Bishopsgate, London EC2M 3XY on Tuesday, 18 January 2011, at 2:30pm
to consider and, if thought fit, pass the following resolutions, which will be
proposed as to resolutions 1, 2, 3, 4, 5, 6, 7, 8 and 9 as ordinary
resolutions, and as to resolutions 10 and 11 as special resolutions: 
1. To receive the Directors' Report and statement of accounts for the year
ended 30 September 2010. 
2. To approve the Directors' Remuneration Report for the year ended 30
September 2010. 
3. To approve the annual dividend. 
4. To re-elect Josephine Dixon as a Director of the Company. 
5. To re-elect Saul Estrin as a Director of the Company. 
6. To elect Ivo Coulson as a Director of the Company. 
7. To re-appoint KPMG Audit Plc as Auditors of the Company from the conclusion
of this meeting until the conclusion of the next general meeting at which the
financial statements are laid before members. 
8. To authorise the Directors to determine the Auditors' remuneration. 
Special business 
To consider the following resolutions: 
9. Authority to allot new ordinary shares - Ordinary Resolution: 
That, the Board be and it is hereby generally and unconditionally authorised to
exercise all powers of the Company to allot shares and to grant rights to
subscribe for or convert any security into shares in the Company (within the
meaning of Section 551 of the Companies Act 2006) up to an aggregate nominal
amount of £172,336, (being approximately 5% of the issued share capital of the
Company as at 30 November 2010 being the latest practicable date prior to the
publication of this notice of meeting excluding shares held in treasury at that
date) PROVIDED THAT this authority shall expire at the conclusion of the next
Annual General Meeting of the Company after the passing of this resolution,
save that the Company may before such expiry make one or more offers or
agreements which would or might require relevant securities to be allotted or
rights to subscribe for or convert securities into shares to be granted after
such expiry and the Board may allot relevant securities or grant rights to
subscribe for or convert securities into shares in pursuance of such offers or
agreements as if the authority conferred hereby had not expired. 
10. Authority to disapply pre-emption rights on allotment of ordinary shares -
Special Resolution: 
That if resolution 9 set out in the notice convening the Annual General Meeting
of the Company dated 1 December 2010 (the Notice) is passed, the Board be given
power to allot equity securities (as defined in the Companies Act 2006) for
cash under the authority given by that resolution and/or where the allotment is
treated as an allotment of equity securities under section 560(3) of the
Companies Act 2006, free of the restriction in section 561(1) of the Companies
Act 2006, such power to be limited: 
(a) to the allotment of equity securities in connection with an offer of equity
securities to ordinary shareholders in proportion (as nearly as may be
practicable) to their existing holdings, and so that the Board may impose any
limits or restrictions and make any arrangements which it considers necessary
or appropriate to deal with treasury shares, fractional entitlements, record
dates, legal, regulatory or practical problems in, or under the laws of, any
territory or any other matter; and 
(b) in the case of the authority granted under resolution 9 of the Notice and/
or in the case of any transfer of treasury shares which is treated as an
allotment of equity securities under section 560(3) of the Companies Act 2006,
to the allotment or such transfer (otherwise than under paragraph (a) above) of
equity securities up to a nominal amount of £188,927, 
such power to apply until the end of next years AGM but during this period the
Company may make offers, and enter into agreements, which would, or might,
require equity securities to be allotted after the power ends and the Board may 
allot equity securities under any such offer or agreement as if the power had
not ended. 
11. Authority to repurchase the Company's shares - Special Resolution: 
That, the Company be and is hereby generally and unconditionally authorised in
accordance with Section 701 of the Act to make market purchases (within the
meaning of Section 693 of the Act) of ordinary shares of 10 pence each in the
capital of the Company (the "shares") provided that: 
(a) the maximum number of shares hereby authorised to be purchased shall be
5,166,620 (being approximately 14.99% of the issued share capital of the
Company as at the date of this document, excluding shares held in treasury); 
(b) the minimum price (exclusive of any expenses) which may be paid for a share
is 10 pence; 
(c) the maximum price (exclusive of any expenses) which may be paid for a share
is an amount equal to the highest of (a) 105% of the average of the middle
market quotations for a share taken from the London Stock Exchange Daily
Official List for the 5 business days immediately preceding the day on which
the share is purchased; or (b) the price of the last independent trade; or (c)
the highest current independent bid; 
(d) the authority hereby conferred shall expire at the earlier of the
conclusion of the Annual General Meeting of the Company in 2012, or 17 July
2012, unless such authority is renewed prior to such time; 
(e) the Company may make a contract to purchase shares under the authority
hereby conferred prior to the expiry of such authority which will be or may be
executed wholly or partly after the expiration of such authority and may make a
purchase of shares pursuant to any such contract; and 
(f) all shares purchased pursuant to the said authority shall be either: 
(i) cancelled immediately upon completion of the purchase; or 
(ii) held, sold, transferred or otherwise dealt with as treasury shares in
accordance with the provisions of the Act. 
By order of the Board 
M. J. Nokes 
Secretary 
1 December 2010 
155 Bishopsgate 
London 
EC2M 3XY 
Notes to the Notice of Annual General Meeting 
1. Members are entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at the meeting. A
shareholder may appoint more than one proxy in relation to the Annual General
Meeting provided that each proxy is appointed to exercise the rights attached
to a different share or shares held by that shareholder. A proxy need not be a
shareholder of the Company. A proxy form which may be used to make such
appointment and give proxy instructions accompanies this notice. If you do not
have a proxy form and believe that you should have one, or if you require
additional forms, please contact the Company's registrars, Capita Registrars
(contact details can be found on page 2). 
2. To be valid any proxy form or other instrument appointing a proxy must be
received by post or (during normal business hours only) by hand at the offices
of the Company's registrars, Capita Registrars, PXS, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU no later than 2:30pm on Sunday, 16 January 2011. 
3. The return of a completed proxy form, other such instrument or any CREST
Proxy Instruction (as described in paragraph 9 below) will not prevent a
shareholder attending the Annual General Meeting and voting in person if he/she
wishes to do so. 
4. Any person to whom this notice is sent who is a person nominated under
section 146 of the Companies Act 2006 to enjoy information rights (a "Nominated
Person") may, under an agreement between him/her and the shareholder by whom he
/she was nominated, have a right to be appointed (or to have someone else
appointed) as a proxy for the Annual General Meeting. If a Nominated Person has
no such proxy appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to the shareholder
as to the exercise of voting rights. 
5. The statement of the rights of shareholders in relation to the appointment
of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The
rights described in these paragraphs can only be exercised by shareholders of
the Company. 
6. To be entitled to attend and vote at the Annual General Meeting (and for the
purpose of the determination by the Company of the votes they may cast),
Shareholders must be registered in the Register of Members of the Company at 2:
30pm on Sunday, 16 January 2011 (or, in the event of any adjournment, on the
date which is two days before the time of the adjourned meeting for the
purposes of which no account is to be taken of any part of a day that is not a
working day). Changes to the Register of Members after the relevant deadline
shall be disregarded in determining the rights of any person to attend and vote
at the meeting. 
7. As at 30 November 2010 (being the last business day prior to the publication
of this Notice) the Company's issued share capital consisted of 34,467,110
ordinary shares, carrying one vote each. Therefore, the total voting rights in
the Company as at 30 November 2010 are 34,467,110. 
8. CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST Personal Members or other CREST sponsored
members, and those CREST members who have appointed a service provider(s),
should refer to their CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf. 
9. In order for a proxy appointment or instruction made using the CREST service
to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must
be properly authenticated in accordance with Euroclear UK & Ireland Limited's
specifications, and must contain the information required for such instruction,
as described in the CREST Manual (available via www.euroclear.com/CREST). The
message, regardless of whether it constitutes the appointment of a proxy or is
an amendment to the instruction given to a previously appointed proxy must, in
order to be valid, be transmitted so as to be received by the issuer's agent
(ID RA10) by 2:30pm on Sunday, 16 January 2011. For this purpose, the time of
receipt will be taken to be the time (as determined by the time stamp applied
to the message by the CREST Application Host) from which the issuer's agent is
able to retrieve the message by enquiry to CREST in the manner prescribed by
CREST. After this time any change of instructions to proxies appointed through
CREST should be communicated to the appointee through other means. 
10. CREST members and, where applicable, their CREST sponsors, or voting
service providers should note that Euroclear UK & Ireland Limited does not make
available special procedures in CREST for any particular message. Normal system
timings and limitations will, therefore, apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member, or
sponsored member, or has appointed a voting service provider, to procure that
his CREST sponsor or voting service provider(s) take(s)) such action as shall
be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are referred, in
particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings. 
11. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001. 
12. Any corporation which is a member can appoint one or more corporate
representatives who may exercise on its behalf all of its powers as a member
provided that they do not do so in relation to the same shares. 
13. Under section 527 of the Companies Act 2006 members meeting the threshold
requirements set out in that section have the right to require the company to
publish on a website a statement setting out any matter relating to: (i) the
audit of the Company's accounts (including the auditor's report and the conduct
of the audit) that are to be laid before the Annual General Meeting; or (ii)
any circumstance connected with an auditor of the Company ceasing to hold
office since the previous meeting at which annual accounts and reports were
laid in accordance with section 437 of the Companies Act 2006. The Company may
not require the shareholders requesting any such website publication to pay its
expenses in complying with sections 527 or 528 of the Companies Act 2006. Where
the Company is required to place a statement on a website under section 527 of
the Companies Act 2006, it must forward the statement to the Company's auditor
not later than the time when it makes the statement available on the website.
The business which may be dealt with at the Annual General Meeting includes any
statement that the Company has been required under section 527 of the Companies
Act 2006 to publish on a website. 
14. Any member attending the meeting has the right to ask questions. The
company must cause to be answered any such question relating to the business
being dealt with at the meeting but no such answer need be given if (a) to do
so would interfere unduly with the preparation for the meeting or involve the
disclosure of confidential information, (b) the answer has already been given
on a website in the form of an answer to a question, or (c) it is undesirable
in the interests of the company or the good order of the meeting that the
question be answered. 
15. A copy of this notice, and other information required by s311A of the
Companies Act 2006, can be found at www.bee-plc.com. 
Inspection of documents 
The following documents will be available for inspection at the Company's
registered office from 1 December 2010 until the time of the AGM and at the AGM
location from 15 minutes before the AGM until it ends: 
• Copies of letters of appointment of the non-executive directors. 
ISA & Savings Scheme 
The Company's shares can be purchased through the Baring Emerging Europe ISA &
Savings Scheme which provides a simple and cost-effective method for investing
either lump sums or on a regular basis. 
The Baring Emerging Europe ISA investment limits are: 
                       Minimum Investment Limits  Maximum Investment Limits 
                                                                           
Regular investment                              £250                       £850 


                                                                               
                                           per month                  per month


                                                                           
Lump sum investment                           £3,000                    £10,200 


                                                                               
                                (Additional lump sum                  per annum
                                  top-ups of £1,000)                           

The Baring Emerging Europe Savings Scheme has a minimum regular investment of £
50 per month or a minimum lump sum investment of £250.

Further information

For further information on the ISA & Savings Scheme, please write to:

Baring Asset Management Limited c/o NTGS50 Bank Street London E14 5NT

Telephone: 0845 082 2479

Alternatively information can be obtained from the Company's website:
www.bee-plc.com

Please remember that the value of an investment and the income from it can fall
as well as rise as a result of market and currency fluctuations and you may not
get back the amount originally invested. Past performance is not a guarantee of
future performance.

Baring Asset Management Limited, the Manager of the Baring Emerging Europe ISA
& Savings Scheme, is authorised and regulated by the Financial Services
Authority.
END
-0- Dec/01/2010 14:22 GMT


 
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