BEEP.L Regulatory News (BEEP)

BLACKROCK EMERGING EUROPE PLC ANNUAL RESULTS ANNOUNCEMENT for the year ended 31 January 2014 Investment ObjectiveThe Company's objective is to achieve long term capital growth, principally byinvesting in companies that do business primarily in Eastern Europe, Russia,Central Asia and Turkey. Overview Performance record Financial Highlights Attributable to ordinary shareholders 31 January 2014 31 January 2013 Change %AssetsNet assets (US$'000)(1) 159,056 197,954 -19.7Net asset value per ordinary share (basic) 438.86c 504.17c -13.0- with income reinvested -11.8Net asset value per ordinary share (basic)(2) 267.03p 318.01p -16.0- with income reinvested -14.9MSCI EM Europe 10-40 Index (US$) (netreturn)(3) 476.66 570.46 -16.4MSCI EM Europe 10-40 Index (£) (netreturn)(3) 290.04 359.81 -19.4 -------- -------- --------Ordinary share price (mid-market)(2) 405.94c 439.16c -7.6-with income reinvested -6.1Ordinary share price (mid-market) 247.00p 277.00p -10.8 -with income reinvested -------- -------- --------Discount to net asset value(4) 7.5% 10.6% -------- -------- --------Gross market exposure(5) 111.5% 110.9% ======== ======== ======== For the year ended For the year ended Change 31 January 2014 31 January 2013 %RevenueNet revenue after taxation (US$'000) 1,932 3,433 -43.7Final dividend per ordinary share 3.50c 6.50c -46.2Revenue return per ordinary share 5.13c 7.77c -34.0Total return per ordinary share -61.57c 52.52c -217.2Ongoing charges ratio(6) 1.3% 1.2% -------- -------- -------- 1. The change in net assets reflects market movements during the year, tenderoffers, share buy backs and the conversion of subscription shares.2. Based on a £:US$ exchange rate of 1.6435 (2013: 1.5854).3. Net return indices calculate the reinvestment of dividends net ofwithholding taxes using the tax rates applicable to institutional investors whoare not resident in the local market.4. 2013 discount is based on the diluted net asset value per share of 491.43c.5. Long positions plus short positions as a percentage of net assets.6. Calculated in accordance with AIC guidelines. Overview Chairman's statement Market overviewEmerging European shares, alongside those in emerging markets generally, failedto participate in the improving sentiment which lifted equity markets in muchof the developed world last year. In a volatile period, the MSCI EM Europe10-40 Index returned -16.4% in US Dollar terms in the financial year underreview. Much of the weakness arose from the fear that, by reducing or'tapering' its purchases of US bonds, the US Federal Reserve would indirectlydeprive emerging markets of the ready liquidity which has been supportive tomarket values in recent years. Countries such as Turkey with significantcurrent account deficits, and therefore more dependent on external financing,were particularly severely hit. PerformanceIn the year to 31 January 2014 the Company's net asset value ("NAV") returned-11.8% in US Dollar terms (-14.9% in sterling terms) and the share pricereturned -6.1% (-9.5% in sterling terms), the difference reflecting a narrowingof the discount. This compares with a return from the benchmark index of -16.4%in US dollar terms and -19.4% in sterling terms (all percentages with incomereinvested). Since the year end and up until the close of business on 20 March, theCompany's NAV per share has decreased by 5.6% compared with the fall in thebenchmark of 2.9% over the same period (in US dollar terms). This reflects theuncertainties in markets following the recent events in Ukraine and inparticular the negative sentiment towards Russia arising from the actions takenin Crimea. This matter is unresolved at the time of writing. Revenue return and dividendsThe Company's revenue return for the year amounted to 5.13 cents per share(2013: 7.77 cents). The decrease in the Company's revenue return reflects acombination of lower dividend per share payments from a small number ofhigh-dividend yield companies in the year and the change in composition ofportfolio holdings following the introduction of the new investment strategy.Shareholders should note that the portfolio of the Company is not constructedwith any yield target. In order to maintain the Company's investment truststatus, the Directors are recommending the payment of a final dividend of 3.50cents per share (2013: 6.50 cents). The dividend will be paid in sterling on1 July 2014 to shareholders on the Company's register on 23 May 2014; the exdividend date is 21 May 2014. Shareholders who wish to receive their dividendin US Dollars should either complete the currency election form which will besent with the annual report or make the appropriate election via CREST. Investment policy, discount control mechanism and change of nameIt was announced on 10 April 2013 that the Board had become increasingly awareof the drawbacks associated with managing a portfolio constrained by theguidelines set out in the Company's investment policy at that time and theCompany held a general meeting on 21 June 2013 at which shareholders approved achange in the Company's investment policy which entailed the adoption of a morefocused and unconstrained investment approach. The revised policy is designedto allow the Investment Manager to focus on its best investment ideas ratherthan be constrained by benchmark weightings when constructing the Company'sportfolio. The Board has introduced a new discount control mechanism which it believes isbetter aligned to the investment horizon adopted by the portfolio managers whenthey purchase stocks. This includes a performance triggered tender offer andperiodic opportunities for the return of capital, together with use of theCompany's share buy back authorities, where appropriate. Further details on the revised investment policy and discount control mechanismare given in the Strategic Report. Following approval of the revised investment policy the Company's name waschanged to BlackRock Emerging Europe plc on 21 June 2013. Management feeThe Board is mindful of the impact of the Retail Distribution Review on fundcharges and the desire to make these charges as simple and transparent aspossible. The Board and the Manager have therefore agreed that the Company willpay a base management fee but no longer be charged a performance related fee.From 1 July 2013, this fee is 1% per annum of the value of the Company'saverage daily market capitalisation. This measure provides an incentive to theInvestment Manager to keep any discount as close to NAV as possible. Tender offerAt the general meeting of the Company held on 21 June 2013, shareholdersapproved a tender offer whereby up to 7.5% of the Company's ordinary shares inissue (excluding treasury shares) on 28 June 2013 were repurchased by theCompany at a price of 283.32p per share (which represented the NAV on28 June less the costs of the tender offer and of a further deduction of 1%). Subscription sharesDuring the year the Company issued a total of 67,850 ordinary shares followingthe conversion of 2012 subscription shares into ordinary shares for a totalconsideration of £185,000 (US$284,000). The subscription share rights inrespect of the remaining 8,465,178 subscription shares lapsed on 15 July 2013and the remaining subscription shares were converted into deferred shares andsubsequently cancelled. Alternative Investment Fund Manager's DirectiveThe Alternative Investment Fund Managers' Directive (the 'Directive') is aEuropean Directive which seeks to reduce systemic risk by regulatingalternative investment fund managers ('AIFMs'). AIFMs are responsible formanaging investment products that fall within the category of AlternativeInvestment Funds ('AIFs') and investment trusts are included in this. TheDirective was implemented on 22 July 2013 although the Financial ConductAuthority has permitted a transitional period of one year after that duringwhich UK AIFMs must seek authorisation. The Board has taken, and will continueto take, independent advice on the consequences for the Company and has decidedin principle that BlackRock Fund Managers Limited will be appointed as its AIFMin advance of the end of the transitional period on 22 July 2014. New reporting requirementsFor companies with a financial year ending on, or after, 30 September 2013there have been a number of changes to the framework for reporting toshareholders. These changes are intended to increase the quality and structureof reporting and include the introduction of a Strategic Report which replacesthe Business Review, previously part of the Directors' Report. There have also been separate changes to the regime for reporting on Directors'remuneration which require the Directors' Remuneration Report to be prepared intwo parts; an annual report on remuneration which will be subject to anadvisory shareholder vote and a Directors' remuneration policy which will bethe subject of a binding shareholder vote for the first time this year and atleast every three years thereafter. Further information in respect of theresolutions to be proposed at the Annual General Meeting is provided in theDirectors' Report in the Annual Report and Financial Statements. A separate report has been included relating to the work and responsibilitiesof the Company's Audit Committee, whilst the Independent Auditors' Report fromPricewaterhouseCoopers LLP has also changed. The audit report now includes anoverview of the scope of the audit and describes the risks that had thegreatest effect on the overall audit strategy and the allocation of resourcesduring the audit. Board of DirectorsFollowing the conclusion of the Company's financial year Rory Landman retiredas a non-executive Director of the Company. I would like to thank Rory onbehalf of the Board for his outstanding contribution and wise counsel to theCompany and we wish him the very best for the future. Rachel Beagles has succeeded Rory as Chairman of the Company's Audit Committee.Rachel is also the Company's Senior Independent Director. Annual General MeetingThe AGM will be held at 12 noon on 24 June 2014 at the offices of BlackRock at12 Throgmorton Avenue, London EC2N 2DL. We hope that as many shareholders aspossible will attend. Following the AGM there will be a presentation by SamVecht, the Portfolio Manager, on the Company's performance and the outlook forthe year ahead. Articles of AssociationAt the forthcoming AGM, shareholders will be asked to approve new Articles ofAssociation in substitution for the current Articles. The Board is proposing tomake these amendments to the Articles in response to the Alternative InvestmentFund Managers' Directive; details of the principal changes are given on pages24 and 25 of the Directors' Report in the Annual Report and FinancialStatements. OutlookReturns from emerging European equities have tested even the most patient oflong term investors in recent years. Valuations across the region are extremelyattractive when compared to historic norms and have become cheaper over the lastyear. Since the year end, Russian equity valuations have been driven close to anall time low by the events in Ukraine which remain unresolved at the date ofwriting. Logic would suggest a significant re-rating at some point but politicaluncertainty will hamper this recovery. It is striking how sentiment towards developed European markets has markedlyimproved in recent months and how this shift has been backed by significantportfolio flows back into the region. Given the relative lack of liquidity inemerging European markets, any similar trend should produce a marked impact onprices. More specific to the Company, we are optimistic that the new unconstrainedinvestment approach approved by shareholders in June last year provides theportfolio managers with much greater scope to assemble a focused portfoliofrom the many attractive investment opportunities in the region. Neil EnglandChairman24 March 2014 Performance Strategic report The Directors present the Strategic Report of the Company for the year ended31 January 2014. The aim of the Strategic Report is to provide shareholders with the ability toassess how the Directors have performed their duty to promote the success ofthe Company for shareholders' collective benefit. ObjectiveThe Company's objective is to achieve long term capital growth, principally byinvesting in companies that do business primarily in Eastern Europe, Russia,Central Asia and Turkey. Strategy, Business model and investment policyThe Company is an investment trust which invests in accordance with theobjective given above. It has no employees and outsources its managementfunction to the Investment Manager, BlackRock Investment Management (UK)Limited. It was announced on 10 April 2013 that the Board had become increasingly awareof the drawbacks associated with managing a portfolio constrained by theguidelines set out in the Company's investment policy at that time. The Companyuses the MSCI EM Europe 10-40 Index (net return) as a benchmark index againstwhich its investment performance is measured and for some time, this index hasbeen biased towards a small number of large capitalisation stocks in a limitednumber of sectors such as Energy and Financials. Under the previous investmentpolicy, the Investment Manager's wish to control performance volatility againstthe benchmark index could have encouraged holdings in companies that were notnecessarily the Investment Manager's preferred long term investments. A new investment policy was therefore proposed and this was approved byshareholders and came into effect on 21 June 2013. The revised policy isdesigned to allow the Investment Manager to focus on its best investment ideasrather than be constrained by benchmark weightings when constructing theCompany's portfolio. Details of the revised investment policy are setout below. The Investment Manager's portfolio selection is unconstrained by benchmarkweightings and the Company's portfolio is expected to contain between 20 to 30holdings at any one time. The Investment Manager selects stocks by combiningpolitical and macroeconomic insights with fundamental analysis of companies andby looking for long term appreciation from mispriced value or growth. Theweightings of holdings within the Company's portfolio are based upon theInvestment Manager's conviction level and an assessment of upside potentialand liquidity. As a result, the weighting of a company in the portfolio couldbe materially higher or lower than its benchmark weighting. The portfolio of the Company is not constructed with any yield target. The Company invests so as not to hold more than 15% of its net assets in anyone stock at the time of investment. The Company may undertake transactions in derivatives for both hedging andinvestment purposes. The Company may use derivatives to diversify risk. It may use a variety ofstrategies which include the purchase or sale of options traded on recognisedor designated investment exchanges as well as over-the-counter. The Company mayalso establish short positions for up to a limit of 10 % of net assets. Toestablish short exposures, the Company may use credit default swaps, majorgeneric global indices as well as local indices and individual stocks. In addition, the Company may borrow to enhance its portfolio performance butthe aggregate of gearing through the use of derivatives and borrowing shall notexceed 20 % of the Company's net asset value. No more than 15% of the gross assets of the portfolio shall be invested inother UK listed investment companies (including other investment trusts). The Company's financial statements will be maintained in US Dollars. Althoughmany investments are likely to be denominated and quoted in currencies otherthan in US Dollars, the Company does not currently employ a hedging policyagainst fluctuations in exchange rates. No material change will be made to the Company's investment policy withoutshareholder approval. DISCOUNT PROTECTIONThe Board seeks to maintain the share price discount to NAV at below 10% innormal market conditions. In the year to 31 January 2014 the average discountto NAV has been 8.97%. In recent years, the Board has used periodic tenderoffers, together with share buy backs, as the Company's discount managementtools. In the period since July 2010 the Board has conducted seven periodictender offers, each for up to 7.5% of the Company's ordinary shares in issue(excluding treasury shares). While the periodic tender offers have kept theCompany's discount level within the parameters set by the Board, they have alsoreduced the size of the Company and hence liquidity in the Company's ordinaryshares. On 21 June 2013 the Company held a general meeting at which shareholdersapproved proposals to provide for a final periodic tender offer for up to 7.5%of the ordinary shares in issue (excluding ordinary shares held in treasury) on28 June 2013, the record date, at a discount of 1% to the Formula Asset Value(NAV less costs). It was announced on 23 July 2013 that the tender offer had been oversubscribedwith 59.7% of ordinary shares validly tendered. The basic entitlement of allshareholders who had validly tendered their shares was accepted in full withexcess tenders being satisfied to the extent of approximately 2.4% of theexcess shares tendered. 2,938,349 ordinary shares of 10 cents each wererepurchased by the Company and held in treasury; this equates to 7.5% of theCompany's ordinary shares in issue as at 28 June 2013 (excluding treasuryshares). An amount of £8,325,000 (283.32 pence per share) was paid to exitingshareholders (US$12,796,000). In the circular to shareholders dated 24 May 2013, the Board concluded thatwhile it will continue to seek to maintain the Company's share price discountto NAV at below 10 % in normal market conditions, periodic tender offers wouldno longer be one of the tools it uses to achieve this. Instead the Board hasintroduced a performance triggered tender offer and periodic opportunities forthe return of capital (further details are given below), together with use ofthe Company's share buy back authorities, where appropriate, as the tools to beused to manage the Company's discount in the future. Performance triggered tender offerThe Board will put forward proposals for a tender offer for up to 25% of theCompany's ordinary shares in issue (excluding treasury shares), if the Companyhas underperformed its benchmark index by in excess of 3% on a cumulative basis(measured on a NAV per share total return basis over the 3 year period from21 June 2013). Periodic opportunities for return of capitalPrior to 21 June 2018, the Board will formulate and submit to shareholdersproposals (which may constitute a tender offer and/or other method ofdistribution) to provide shareholders with an opportunity to realise the valueof their investment in the Company at NAV less applicable costs. If the firstsuch return of capital is not undertaken in conjunction with a liquidation ofthe Company, the Board intends to offer shareholders further opportunities torealise the value of their investment in the Company at net asset value lessapplicable costs at subsequent 5 yearly intervals. PerformanceIn the year to 31 January 2014, the Company's NAV returned -11.8% in US Dollarterms compared with a return of -16.4% from the MSCI EM Europe 10-40 Index (netreturn). The Company's ordinary share price returned -6.1% in US Dollar terms(all percentages calculated with income reinvested). The Investment Manager's Report forms part of this Strategic Report andincludes a review of the main developments during the year, together withinformation on investment activity within the Company's portfolio. Results and dividendsThe results for the Company are set out in the Income Statement. The total lossfor the year, after taxation, was US$23,172,000 (2013: profit of US$23,212,000)of which the revenue return amounted to US$1,932,000 (2013: US$3,433,000), andthe capital loss amounted to US$25,104,000 (2013: profit of US$19,779,000). The Company's revenue return amounted to 5.13 cents per share (2013: 7.77 cents). The Directors recommend the payment of a final dividend of 3.50 cents (2013:6.50 cents) per share which will be paid on 1 July 2014 to shareholders on theregister of members at the close of business on 23 May 2014. Key performance indicatorsAt each Board meeting, the Directors consider a number of performance measuresto assess the Company's success in achieving its objectives. The keyperformance indicators ("KPIs") used to measure the progress and performance ofthe Company over time are comparable to those reported by other investmenttrusts and are set out below. 2014 2013Net asset value* -11.8% +13.3%Share price** -6.1% +8.8%Benchmark index (net return) -16.4% +14.5%Discount to net asset value 7.5% ***10.6%Revenue return per share - basic (cents) 5.13 7.77Ongoing charges ratio* 1.3% 1.2% -------- -------- * Calculated in accordance with AIC guidelines on a total return basis.** Calculated in US Dollar terms on a mid to mid basis with income reinvested.*** Based on the diluted NAV of 491.43 cents as at 31 January 2013. Nodilution is applicable in 2014. The Board regularly reviews a number of indices and ratios to understand theimpact on the Company's relative performance of the various components such asasset allocation and stock selection. The Board also reviews the performanceand ongoing charges of the Company against a peer group of Emerging Europe openand closed-end funds. The ongoing charges ratio has increased in the year due to the reduction in netassets arising from the market movements during the year, the tender offer andshare buyback, together with the change in the management fee arrangements. Performance is assessed on a total return basis for both the NAV and the shareprice. The performance of the benchmark is assessed on a net return basis,reflecting the withholding tax rates applicable to institutional investors whoare not resident in the local market. The Directors recognise that it is in the long term interests of shareholdersthat shares do not trade at a significant discount to their prevailing NAV. The portfolio of the Company is not constructed with any yield target. Principal risksThe key risks faced by the Company are set out below. The Board regularlyreviews and agrees policies for managing each risk, as summarised below. - Market risk - Market risk arises from volatility in the prices of theCompany's investments. It represents the potential loss the Company mightsuffer through realising investments in the face of negative market movements.Investment in securities of issuers in Eastern Europe (including Ukraine),Russia, Central Asia and Turkey involves significant risks and specialconsiderations, which are not typically associated with investing in securitiesof issuers in the United Kingdom. They are additional to the normal risksinherent in any such investments and include political, economic, legal,currency, inflation and taxation risks. For example, there is a risk of lossdue to lack of adequate systems for transferring, pricing, accounting for andsafekeeping or record keeping of securities. In particular, the Russian marketpresents a variety of risks in relation to the settlement and safekeeping ofsecurities. In addition the securities markets of developing countries are not as large asthe more established securities markets and have substantially less tradingvolume, which may result in a lack of liquidity and higher price volatility.Accounting, auditing and financial reporting standards and practices anddisclosure requirements applicable to many companies in developing countriesare less rigorous. As a result there may be less information available publiclyto investors in such securities. Such information which is available is oftenless reliable. In order to mitigate this risk the Board considers asset allocation, stockselection and levels of gearing on a regular basis and has set investmentrestrictions and guidelines which are monitored and reported on by theInvestment Manager. The Board monitors the implementation and results of theinvestment process with the Investment Manager. - Political Risk - Investment in securities of issuers in Eastern Europe(including Ukraine), Russia, Central Asia and Turkey involves a high degree ofpolitical risk. This may entail sudden changes in political leadership,disputes over territorial sovereignty and political interference in thebusiness environment and the rights of shareholders. Sanctions imposed eitherby, or on these, countries arising from political events may have a substantialimpact at times upon the countries in which the Company invests, and theireconomies, which in turn could have a material adverse effect on the Company'sperformance. In order to mitigate this risk the Board considers asset allocation, stockselection and levels of gearing on a regular basis and has set investmentrestrictions and guidelines which are monitored and reported on by theInvestment Manager. The Board monitors the implementation and results of theinvestment process with the Investment Manager. - Performance risk - The Board is responsible for deciding the investmentstrategy to fulfil the Company's objectives and monitoring the performance ofthe Investment Manager. An inappropriate strategy may lead to poor performance.To manage this risk the Investment Manager provides an explanation ofsignificant stock selection decisions and the rationale for the composition ofthe investment portfolio. The Board monitors and maintains an adequate spreadof investments in order to minimise the risks associated with particularcountries or factors specific to individual companies and sectors, based on thediversification requirements inherent in the Company's investment policy. Pastperformance is not necessarily a guide to future performance and the value ofyour investment in the Company and the income from it can fluctuate as thevalue of the underlying investments fluctuate. - Financial risk - The Company's investment activities expose it to a varietyof financial risks which include foreign currency risk, credit risk andinterest rate risk. Further details are disclosed in note 18 on pages 55 to 59of the Annual Report and Financial Statements, together with a summary of thepolicies for managing these risks. - Operational risk - In common with most other investment trust companies, theCompany has no employees. The Company therefore relies upon the servicesprovided by third parties and is dependent on the control systems of theInvestment Manager and the Company's other service providers. The security, forexample, of the Company's assets, dealing procedures, accounting records andmaintenance of regulatory and legal requirements, depends on the effectiveoperation of these systems. These have been regularly tested and monitored andan internal controls report, which includes an assessment of risks togetherwith procedures to mitigate such risks, is prepared by the Investment Managerand reviewed by the Audit Committee twice a year. The Custodian, the Bank ofNew York Mellon (International) Limited ("BNYM") and the Investment Manageralso produce quarterly and annual reports respectively, which are reported onby their respective reporting accountants and give assurance regarding theeffective operation of controls. - Regulatory risk - The Company operates as an investment trust in accordancewith Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Companyis exempt from capital gains tax on the profits realised from the sale of itsinvestments. The Investment Manager monitors the amount of retained income toensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act2010 are not breached and the results are reported to the Board at eachmeeting. Following authorisation under the Alternative Investment Fund Managers'Directive ("the Directive") the Company and its appointed AIFM will be subjectto the risk that the requirements of this directive are not correctly compliedwith. The Board and Investment Manager also monitor changes in government policy andlegislation which may have an impact on the Company. Future prospectsThe Board's main focus is the achievement of capital growth and an attractivetotal return. The future of the Company is dependent upon the success of theCompany's investment strategy. The outlook for the Company is discussed in boththe Chairman's Statement and the Investment Manager's Report. Social, community and human rights issuesAs an investment trust, the Company has no direct social or communityresponsibilities. However, the Company believes that it is in shareholders'interests to consider human rights issues, environmental, social and governancefactors when selecting and retaining investments. Details of the Company'spolicy on socially responsible investment are set out on page 33 of the AnnualReport and Financial Statements. Directors and employees and gender representationThe Directors of the Company on 31 January 2014, all of whom held officethroughout the year, are set out in the Directors' biographies on page 19 ofthe Annual Report and Financial Statements. The results of the evaluation ofthe Board and its Committees are set out in the Corporate Governance Report onpages 30 and 31 of the Annual Report and Financial Statements. Following theretirement of Mr Landman on 31 January 2014 the Board consists of four maleDirectors and one female Director. The Company does not have any employees. The information set out on pages 10 to 18 of the Annual Report and FinancialStatements, including the Investment Manager's Report, forms part of theStrategic Report. The Strategic Report was approved by the Board at its meeting on 24 March 2014. By order of the BoardBlackRock Investment Management (UK) LimitedCompany Secretary24 March 2014 Related party transactionsThe Investment Manager is regarded as a related party under the Listing Rulesand details of the investment management fees payable are set out in note 4. The investment management fee for the year was US$1,451,000 (2013:US$1,423,000). In addition, there was a write back of US$24,000 (2013: US$ nil)in respect of the performance fee of US$297,000 which had been accrued inrelation to tendered assets on which a fee had crystallised in the year to31 January 2012. At the year end, an amount of US$405,000 (2013: US$1,330,000)was outstanding in respect of these fees. The Company may from time to time have a holding in BlackRock's InstitutionalUS Dollar Liquidity Fund ("ILF"), a money market fund, which is viewed as areadily realisable asset and which is used to invest cash balances that wouldotherwise be placed on short term deposit. At the year end the Company had noinvestment in the ILF (2013: US$ nil). In addition to the above services, with effect from 1 November 2013, BlackRockhas provided the Company with marketing services. The total fees paid orpayable for these services for the year ended 31 January 2014 amounted toUS$32,000 including VAT. (2013: nil) of which US$32,000 including VAT (2013:nil) was outstanding at 31 January 2014. The Board consists of five non-executive Directors, all of whom are consideredto be independent by the Board. None of the Directors has a service contractwith the Company. In respect of the years ended 31 January 2014 and 31 January2013 the Chairman received an annual fee of £37,000, the Chairman of the AuditCommittee/Senior Independent Director received an annual fee of £27,000 andeach other Director received an annual fee of £23,500. With effect from1 February 2014 the annual remuneration of the Chairman of the Audit Committee/Senior Independent Director was increased to £27,500. This excludes expensespaid to each of the Directors which are set out in the Directors' RemunerationReport in the Annual Report and Financial Statements. All members of the Board hold ordinary shares in the Company as set out below: 31 January 2014 Ordinary shares of US$0.10Rachel Beagles 10,096Mark Bridgeman 3,650Philippe Delpal 12,000Neil England 124,133Rory Landman (retired on 31 January 2014) 52,000Robert Sheppard 10,000 Mr Neil England has purchased a further 32,500 ordinary shares and Mrs Beagleshas purchased a further 10,000 ordinary shares since the year end. Statement of directors' responsibilitiesThe Directors are responsible for preparing the Annual Report, the Directors'Remuneration Report and the financial statements in accordance with applicablelaw and regulations. Company law requires the Directors to prepare financial statements for eachfinancial year. Under that law the Directors have prepared the financialstatements in accordance with United Kingdom Generally Accepted AccountingPractice (United Kingdom Accounting Standards and applicable law). Undercompany law the Directors must not approve the financial statements unless theyare satisfied that they give a true and fair view of the state of affairs ofthe Company and of the net return/(loss) of the Company for that period. Inpreparing these financial statements, the Directors are required to: - select suitable accounting policies and then apply them consistently; - make judgements and accounting estimates that are reasonable and prudent; - state whether applicable UK Accounting Standards have been followed, subjectto any material departures disclosed and explained in the financial statementsrespectively; - prepare the financial statements on the going concern basis unless it isinappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that aresufficient to show and explain the Company's transactions and disclose withreasonable accuracy at any time the financial position of the Companyand enable them to ensure that the financial statements and the Directors'Remuneration Report comply with the Companies Act 2006. They are alsoresponsible for safeguarding the assets of the Company and hence for takingreasonable steps for the prevention and detection of fraud and otherirregularities. The Directors are responsible for the maintenance and integrity of theCompany's website. Legislation in the United Kingdom governing the preparationand dissemination of financial statements may differ from legislation inother jurisdictions. The Directors consider that the Annual Report and Financial Statements, takenas a whole, are fair, balanced and understandable and provide the informationnecessary for shareholders to assess the Company's performance, business modeland strategy. Each of the Directors, whose names and functions are listed on page 19 of theAnnual Report and Financial Statements confirm that, to the best of theirknowledge: - the financial statements, which have been prepared in accordance with UnitedKingdom Generally Accepted Accounting Practice (United Kingdom AccountingStandards and applicable law), give a true and fair view of the assets,liabilities, financial position and net loss of the Company; and - the Strategic Report contained in the Annual Report and Financial Statementsincludes a fair review of the development and performance of the business andthe position of the Company, together with a description of the principal risksand uncertainties that it faces. For and on behalf of the Board of DirectorsNeil EnglandChairman24 March 2014 Performance Investment manager's report Investment strategyFollowing approval from shareholders for a new investment objective and policyat the general meeting held on 21 June 2013, the transition was made to afocused, unconstrained portfolio approach. The portfolio was reduced from 45 to28 holdings, with the weighting of positions driven by the expected returnopportunity, conviction and liquidity, without reference to the weighting inthe benchmark. This focused approach allows the team to look beyond the large companies whichdominate the benchmark in favour of the best ideas in the investment universe.This wider perspective provides the potential to uncover 'hidden gems' acrossEmerging Europe and deploy capital where it is best-placed to generate returnsover the long-term. Market overviewIn the twelve months to 31 January 2014, the MSCI EM Europe10-40 Index fell,returning -16.4% over the year (in US dollar terms and with net incomereinvested). This was in contrast to the performance of the more developed European markets,which rose over the period. While the Eurozone problems are not behind us, theworst of the crisis appears to have abated and developed markets were supportedby better growth outlook and a more stable financial system. Despite the interrelationships of the economies across the continent, EmergingEuropean markets performed more in line with the broader emerging marketsindex in the year under review. The performance of emerging market equities washeavily influenced by external factors. In the summer of 2013, the prospect ofthe US tapering its bond buying programme weighed heavily on emerging markets,especially those perceived to be vulnerable due to the increase in globalyields which resulted in increasing challenges in financing current accountdeficits. This was also relevant later in the year. In the Emerging Europe universe, Turkey was one of the countries to suffer fromthis trend. Sentiment in the country had already been negatively impactedfollowing the development of the Gezi Park protests. However, we believed thatthe impact of tapering was a far bigger fundamental issue. As the Turkish lirafell and the equity market suffered, the pressure on Turkey's central bank tonormalise monetary policy and hike rates, grew. In January 2014, the CentralBank took action and meaningfully hiked interest rates. The bank more thandoubled the weekly repo rate from 4.5% to 10% and increased the overnightlending rate from 7.75% to 12%, which represented a long awaited return tomonetary policy orthodoxy. Although the action should stabilise the Turkisheconomy in the medium-term, the initial market reaction was negative. Thatsaid, towards the end of the financial year and beyond, the Turkish markethas rallied. In November 2013, the Emerging European universe welcomed back Greece as aconstituent country of the MSCI Emerging Markets Index, rendering attractivecompanies in that country available for investment once again. We visited Athens and met with senior politicians, policy makers and a numberof corporate CEOs and the local representative of the IMF. The range andseniority of the meetings and the speed with which they could be securedsuggests that the need for capital in Greece was high on the list ofpriorities. The largest constituent of the Emerging European market, Russia, underperformedover the year. Investors remained concerned over the lack of growth in thedomestic economy and the prospects for companies in the resources sector in thewake of a slowdown in China's investment activity. The gloomy picture wascompounded by weakness in the rouble although this will ultimately besupportive for many (but not all) exporters. PortfolioIn the twelve months to 31 January 2014, the portfolio returned -11.8%,outperforming the benchmark by 4.6% (in US dollar terms and with net incomereinvested). Outperformance was particularly driven by stock selection in Russia. The strongest performers over the year were stocks owned in the Russianinternet sector, including search engine, Yandex and social media pioneer,Mail.ru. Russia enjoys some of the highest internet engagement rates globallyand Russian companies lead the domestic market in search and social media. Forinstance, Yandex eclipses Google with a 60% share of the Russian search market.We believe that several technology stocks can provide better value access tothe growth of the Russian consumer when compared with many staples stocks. The Company enjoyed strong returns from its position in IT outsourcing companyLuxoft. This was a rare opportunity to participate in an IPO that we feltcomfortable with; we are typically very sceptical. Here we leveraged ourknowledge of the industry gleaned from following Indian outsourcers to gainconfidence in this emerging Russian sector. The Company also benefitted from the position in Russian oil producerSurgutneftegaz. The company generates the highest free cash flow of all majorRussian oil companies. This has allowed the company to generate a huge cashbalance of approximately US$30 billion (compared to a market capitalisation ofapproximately US$26 billion). The Company holds the preference shareclass, which is committed to paying a minimum dividend. Positions in the Turkish banking sector detracted from performance in the wakeof the decision of the central bank to hike interest rates. During this period,the Company added to the exposure in Turkish banks. Both Halk Bank and GarantiBank have a long track record of delivering high returns on equity. Thecorrection in the Turkish markets means that these stocks trade at the lowerend of their historical ranges and represent a rare opportunity to buy stablebanks with strong franchises on depressed book values at their lowest in 5years. Outlook Russia & UkraineSince the Company’s financial year end, events in Ukraine's Crimean peninsulahave dominated the headlines. The removal of President Yanukovych and formationof a western-leaning government in Kiev prompted President Putin to takemilitary action over Crimea. The referendum that led to the peninsula’sabsorption into the Russian Federation enabled Russia to secure a strategicallyimportant territory but will carry a significant economic cost in terms of bothrisk perceptions and international retaliation through sanctions. Initial sanctions on mid-level Russian and Crimean political figures were seenas largely symbolic. However, subsequent additions to the sanctioned individualslist included prominent politicians and businessman regarded as close to Putin.To date there has been very little impact on the operations of the companies weinvest in, but we continue to monitor developments closely. We do not think thatfurther escalation is the most likely outcome as it would not be economicallyrational but, as a political decision, it cannot be ruled out completely. The Company continues to maintain significant holdings in Russia. The recentevents have pushed Russian valuations close to their historical lows and thisindicates that the market has tried hard to price in geo-political risks. Shouldthe situation around Ukraine start to stabilise, particularly as the countryelects a new government the Russians see as legitimate, the market could rallysignificantly – it is not often sensible to sell stock at the point of maximumworry. The military action comes at a time in which the macroeconomic environment inRussia is worsening. The Company’s holdings in Russia often focus on companiesthat are likely to be able to maintain their own growth despite the wider economy,such as food retailer Magnit or technology outsourcer Luxoft. We also look for companies where valuations have been unjustifiably depressed bythe current events. For example, Russia’s leading bank Sberbank has the unusualdistinction of being one of the most profitable, and yet one of the cheapest,major companies globally. Surgutneftegaz trades at a negative enterprise value –the company holds more cash on its balance sheet than its market valuation and hasa long track record of paying healthy dividends. It should be noted that dividendyields in Russia and indeed across Emerging Europe are now among the highest in theworld. Turkey Turkey is facing a challenging economic period. Turkey’s current account deficitis a cause for concern, especially as the Federal Reserve’s tapering process hastightened global monetary liquidity. This is a risk we have consistently warned ofin the past. Recent weakness in the Turkish lira caused the Central Bank to raiseinterest rates, and this will slow economic growth. The decline in the lira andthe higher interest rate environment sets the stage for a future rebalancing of,and recovery in, the economy, as Turkish exporters become more competitive andimport demand returns to more sustainable levels. As some Turkish stocks have dipped close to ‘Lehman crisis’ valuations, we believethat many of the risks have already been discounted. In particular, we wouldhighlight banks such as Halk Bank and Garanti Bank which have been sold offdisproportionately to the wider market on concerns over short-term profitability dueto higher interest rates and headwinds for credit quality. Both banks have strongfranchises that should continue to generate attractive returns through the economiccycle. Turkey is also facing important elections this coming year, which may generate marketvolatility, but we believe that economic factors remain the crucial long-term driversof the market. Central Europe The ongoing recovery in the Eurozone should provide a supportive environment forgrowth to accelerate over the course of the year across Central Europe. That said, in Poland valuations remain relatively expensive, already discounting animprovement in economic activity. Further, pension reform will likely create atechnical overhang for the equity market in the second half of 2014. We haveconcentrated exposure in companies that are likely to benefit from improving consumerdemand but are trading at valuations attractive relative to their own history, suchas the food retailer Jeronimo Martins. In Hungary, the economy has been hindered rather than helped by unorthodox monetarypolicies in recent years. However, the current account balance in Hungary improvedby 2% of GDP in 2013 and with positive real interest rates, the country is in bettershape to drive an economic recovery. We are particularly positive on the outlook for Romania, where the economy alsostarted to pick up in 2013 after four difficult post-crisis years. The Company holdsa position in BRD, a leading bank, which has had its profitability suppressed forsome time by a poor credit cycle which is now drawing to a close. Improving economicmomentum should now translate into strong earnings momentum for companies acrossRomania like BRD. Conclusion The past year has been another testing twelve months for investors in the EmergingEuropean region, as already-cheap valuations declined further, close to globalfinancial crisis lows. Beyond, the news headlines, however, the region retains itslong-term competitive strengths as a low labour cost, low-tax destination for business,with a motivated, educated workforce and access to recovering European markets. The Company's refreshed investment policy will allow us to concentrate on the mostcompelling opportunities in this most interesting of regions and we believe that thelong-term outlook for the region and the Company remains bright. SAM VECHT and DAVID REIDBlackRock Investment Management (UK) Limited24 March 2014 Performance Performance attribution Contribution to return against the benchmark* Country Stock Total Commentary Selection Selection** EffectCountryRussia & CIS 7.71 1.69 9.40 Off benchmark positions across Russia and the Common Wealth of Independent States ("CIS") were positive contributors toRussia 7.51 1.26 8.77 performance over the year. In Russia, companies in the internet sector performed especially well and have strong positions in their domestic search and social media markets.Turkmenistan 0.83 - 0.83 Emerging energyKazakhstan -0.01 - -0.01 power, Dragon Oil was a strong performer over the year. At current oil prices, Dragon Oil is able to generate a 9% free cash flow yield, whilst still continuing to grow production at 10% per annum, making it one of the most cash-generative and fastest-growing energy companies in the region. The company is also very attractively valued at just 2.6 times EV to EBITDA. In simple terms, this means that the company could raise enough money to buy out its entire market capitalisation in under three years. Economic pressures weighed on Ukrainian stocks over the year. The Company has limited exposure to this country with current portfolio holdings being restricted to agriculture exporters which will benefit slightly from a more competitive currency once the politicalUkraine -0.62 0.43 -0.19 environment calms. -------- -------- --------Central and Eastern Europe -1.45 0.38 -1.07 The normalisation of financial risk across Europe and the recovery in the northern European region has been beneficial for Hungary particularly. This has had a positive impact on the investee companiesHungary 0.52 0.11 0.63 held in the Company's portfolio. The Czech Republic and Poland have benefited from the economic recovery in Germany. The Company has remained underweight throughout the period as, although the Investment Managers recognises the economic strength, investee company valuationsCzech Republic -0.41 0.28 -0.13 are not compellingPoland -1.39 -0.01 -1.40 The Company's position inRomania -0.17 - -0.17 Romanian financial BRD Groupe Societe Generale detracted from performance over the period. The stock underperformed after disappointing results in 2013 which was driven primarily by increased provisioning coverage. However, the underlying non performing Loan dynamics are improving more quickly than expected and there are signs of sharply accelerating loan growth in housing, as well as rapidly rising deposit balances for corporates. -------- -------- -------- Positions in the Turkish banking sector detracted from performance in the wake of the decision of the central bank to hike interest rates. During this period, the Company added to the exposure in Turkish banks on the improving trade balance and economic rebalancing, a function of the weakening of the lira in 2013. The overweight position hurt relative performance as short-term political issues affected sentiment. However, we believe that the long-term investment case for Turkey remains Turkey 0.10 -0.54 -0.44 intact. -------- -------- ------- Greece was added to the list of Index countries in 2013. Greece continues to recover from its substantial economic problems and investee company valuations are considered overpriced. Consequently there are no attractive opportunities currently which the Investment Manager wishes to pursue, although the market performed well onGreece -0.63 - -0.63 recovery momentum. -------- -------- -------Regional Growth -0.13 - -0.13 -------- -------- -------Cash/gearing -1.78 -------- -------- -------Other factors -0.75 -------- -------- -------Management fees -0.80 Other includes the impact of the tender offer, the conversion of subscription shares, operating expenses, taxation and financeOther 0.05 charges. -------- -------- -------Total 5.61 1.52 4.60 -------- -------- -------- * Due to the limitations of a static attribution methodology, the numbersquoted are indicative and not exact.** The interaction effect is included within stock selection. Performance Ten largest equity investments Sberbank - 10.0% (2013: 11.7%) is Russia's largest bank and is state-owned. Ithas branches throughout the country and a 50% share in the retail depositmarket. The bank continues to build on its restructuring strategy which hasdriven much of its success over the past few years, improving its services andthe efficiency with which they are delivered. Gazprom - 8.3% (2013: 9.0%) is Russia's largest gas producer and transporter,with an export monopoly. Despite its status as one of the most profitablecompanies in the world, it has until recently been out of favour withinvestors. Trading on 3x earnings and 5.6% dividend yield, the currentvaluation overlooks a number of virtues whilst pricing in many of the risks.Russian gas exports to Europe rose by 25% year-on-year to 13.5 billion cubicmetres in September and the company is close to agreeing Chinese export deals. Garanti Bank - 7.7% (2013: 5.4%) is Turkey's second-largest private bank.Garanti has a long track record of delivering high returns on equity. Thecorrection in the Turkish markets means that this stock trades at the lower endof its historical range and represents a rare opportunity to buy a stable bankwith a strong franchise at a depressed book value close to its 5 year low. Dragon Oil - 7.2% (2013: 1.4%), headquartered in Dubai, UAE, is a 100% operatorof the Cheleken Contract Area, offshore Turkmenistan, where it re-develops twooil fields. The company has a strong record of double digit % production growthwhich looks set to continue. At current oil prices, the company has thepotential to generate US$ 400-500 million of free cash flow annually comparedto an enterprise value of just US$2.2 billion. Halk Bank - 7.1% (2013: 1.8%) is a state controlled Turkish Bank. Like itspeer, Garanti, the bank has a long history of delivering attractive returns,particularly in its highly profitable SME banking operation. Despite this, thebank's valuation has fallen to levels last seen during the 'Lehman Brotherscrisis'. Recent measures to stabilize the Turkish economy will benefit the bankover the medium term, something which is not yet fully reflected in the equityprice. Surgutneftegaz (preference shares) - 6.7% (2013: 4.0%) is one of the largestoil producers in Russia. The company is attractive under a number of valuationmetrics; it trades on a P/E multiple of 3.4x, for instance. However, we aremost encouraged by the company's free cash flow per barrel generation.Surgutneftegaz generates the highest free cash flow of all Russian oilcompanies. This has allowed the company to generate a huge cash balance ofapproximately US $30billion compared to a market capitalisation ofapproximately US$26 billion. Jeronimo Martins - 5.0% (2013: nil) is the operator of the largest chain ofdiscount supermarkets in Poland. The company is looking to expand its stores inPoland to 3,200 in 2016 from 2,800 currently. The company is exposed to theongoing improvement in the Polish economic landscape and is also looking toexpand into the fragmented pharmacy outlet market. OTP Bank - 4.3% (2013: 2.9%) is Hungary's largest bank and a major provider offinancial services across central and Eastern Europe. After an economy stuck inthe doldrums while dealing with the effects of the global financial crisis,confidence in Hungary has risen. Both business and consumer confidence areapproaching high points, with wages, retail sales and exports all seeingincreases. Hungary has significant pent up demand for credit; private sectordebt has fallen to approximately 50% of GDP and OTP will be a beneficiary atthe beginning of a new credit cycle.KGHM Polska Miedz - 4.3% (2013: nil) is a Polish mining company and is one ofthe largest producers of copper and silver in the world. The stock generates a5% free cash flow yield, is under owned by domestic investors and is wellpositioned for a global economic recovery. BRD Groupe Société Générale - 3.8% (2013: nil) is the second largest RomanianBank, with over 2 million clients and 900 branches. The normalisation of creditconditions in Romania will result in positive earnings momentum and potentialfor the stock to re-rate. All investments reflect the value of the holding as a percentage of net assets.Percentages in brackets represent the value of the holding at 31 January 2013.Together, the ten largest investments represent 64.4% of the net assets(ten largest investments at 31 January 2013: 51.3%). Performance Top and bottom 5 contributors to relative performance Top Five Yandex (total effect on relative performance 1.8%) The Russian internet pioneerbenefited from its position as the number one provider of search in its homecountry which is seeing strong advertising growth. Yandex eclipses Google witha 60% share of the Russian search market. Mail.ru (total effect on relative performance 1.6%) Russia enjoys some of thehighest internet engagement rates globally and Russian companies, includingmail.ru, lead the domestic market in social media. We believe that severaltechnology stocks can provide better value access to the growth of the Russianconsumer when compared with many staples stocks. Luxoft (total effect on relative performance 1.5%) is a Russian IT outsourcingcompany. We leveraged our knowledge of the industry gleaned from followingIndian outsourcers to gain confidence in an IPO from this emerging Russiansector. Luxoft has grown rapidly due to its competitive strengths in humanresources and customer service operations. Surgutneftegaz (preference shares) (total effect on relative performance 1.3%)The company generates the highest free cash flow of all major Russian oilcompanies. This has allowed the company to generate a huge cash balance ofapproximately US$30 billion (compared to a market capitalisation ofapproximately US$26 billion). The Company holds the preference share class,which is committed to paying a minimum dividend payout. Moscow Exchange (total effect on relative performance 0.9%) The Russiansecurities exchange has performed well operationally, with profitabilityprotected by the status as the monopoly provider of clearing and settlement.The company continues to move towards international standards of settlement,depository system and reducing collateral requirements, which hastendevelopment of the capital market. BOTTOM FIVE Garanti Bank (total effect on relative performance -2.0%) Garantiunderperformed in the wake of the decision of the central bank to hike interestrates. Garanti Bank has a long track record of delivering high returns onequity. The recent correction in the Turkish markets means that this stocktrades at the lower end of its historical range and represents a rareopportunity to buy a stable bank with a strong franchise on a depressed bookvalue at the lowest in 5 years. Koza Altin (total effect on relative performance -0.9%) The Turkish gold minersuffered in the decline of sentiment towards the Turkish market. The increasein global yields as the Federal Reserve began to taper its quantitative easingprogram weighed on the gold price. Bank PEKAO (total effect on relative performance -0.7%) The Company did nothold a position in the Polish bank, preferring instead peer, PKO. HMS Group (total effect on relative performance -0.5%) is a Russian industrialpump manufacturer. HMS Group suffered as a result of business headwinds inthe first half of the year in particular, with results missing expectations ashigh margin turnkey contracts were completed whilst new contracts were delayed.The company has also been dealing with the integration of their newly acquiredgas compressor business. Dogan Holdings (total effect on relative performance -0.5%) is a Turkishconglomerate. Dogan Holdings shares continued to drift lower with the Turkishmarket as the over-capitalised company was yet to generate significant newinvestment opportunities in which to deploy its significant cash holdings. Total effect on relative performance includes the contribution from assetallocation, stock selection and interaction relative to the benchmark index. Performance Portfolio analysis as at 31 January 2014 MSCI EM Net Europe current % % 10-40 Czech assets portfolio portfolio Index Republic Russia Poland Hungary Kazakhstan Turkey Other /(liabilities) 31.01.14 31.01.13 31.01.14ConsumerDiscretionary - - - - - - 2.0 - 2.0 0.5 2.7Consumer Staples - 3.3 5.0 - - - 3.2 - 11.5 6.4 7.0Energy - 20.3 - 3.7 - - 7.2 - 31.2 31.4 33.9Financials - 13.0 3.6 4.3 - 17.9 3.8 - 42.6 36.2 32.3Healthcare - 1.5 - - - - - - 1.5 4.0 0.8Industrials - 3.8 1.9 - - - - - 5.7 4.0 2.0InformationTechnology - 8.8 - - - - - - 8.8 3.6 -Materials - - 4.3 - - 1.9 - - 6.2 7.4 8.0TelecommunicationsServices - - - - - 2.0 - - 2.0 11.0 9.1Utilities - - - - - - - - - 1.5 4.2Other - - - - - - - (11.5) (11.5) (6.0) -% net assets31.01.14 - 50.7 14.8 8.0 - 21.8 16.2 (11.5) 100.0 - -% net assets31.01.13 5.8 64.8 6.6 7.0 2.4 18.4 4.0 (9.0) - 100.0 -MSCI EM Europe10-40 Index31.01.14 2.7 56.3 18.1 2.8 - 14.8 5.3 - - - 100.0 The table above shows the analysis of the net assets as at 31 January 2014 bysector and region, compared with the net assets as at 31 January 2013 and theMSCI EM Europe 10-40 Index breakdown as at 31 January 2014. Performance Investments as at 31 January 2014 Country Long % of of exposure net operation US$'000 assetsFinancialsSberbank Russia 15,849 10.0Garanti Bank Turkey 12,209 7.7Halk Bank Turkey 11,265 7.1OTP Bank Hungary 6,958 4.3PKO Bank Polski Poland 5,718 3.6Turkiye Sinai Kalkinma Turkey 4,957 3.1Moscow Exchange Micex-Rights Russia 4,773 3.0Long CFD position-BRD Groupe Société Générale Romania 6,069 3.8 -------- -------- 67,798 42.6 -------- --------EnergyGazprom Russia 13,147 8.3Dragon Oil Turkmenistan 11,384 7.2Surgutneftegaz (preference shares) Russia 10,881 6.7MOL Hungary 5,801 3.7Volga Gas Russia 4,910 3.1Rosneft Russia 3,428 2.2 -------- -------- 49,551 31.2 -------- --------Consumer StaplesJeronimo Martins Poland 7,910 5.0Magnit Russia 5,231 3.3MHP Ukraine 5,113 3.2 -------- -------- 18,254 11.5 -------- --------Information TechnologyYandex Russia 5,170 3.2Luxoft Russia 4,876 3.1Mail.ru Russia 3,997 2.5 -------- -------- 14,043 8.8 -------- --------MaterialsKGHM Polska Miedz Poland 6,724 4.3Koza Altin Turkey 3,093 1.9 -------- -------- 9,817 6.2 -------- --------IndustrialsGlobaltrans Russia 5,035 3.1PKP Cargo Poland 2,948 1.9HMS Group Russia 1,059 0.7 -------- -------- 9,042 5.7 -------- --------Telecommunications ServicesTurkcell Turkey 3,220 2.0 -------- -------- 3,220 2.0 -------- --------Consumer DiscretionaryApranga PVA Lithuania 3,181 2.0 -------- -------- 3,181 2.0 -------- --------HealthcareMD Medical Group Russia 2,396 1.5 -------- -------- 2,396 1.5 -------- --------Total investments - gross exposure 177,302 111.5 -------- --------Less: gross exposure on CFDs (6,069) (3.8) -------- --------Equity investments held at fair value 171,233 107.7Net current liabilities (12,158) (7.7)Preference shares (19) (0.0) -------- --------Net assets 159,056 100.0 ======== ======== The total number of investments (excluding CFD positions) held at31 January 2014 was 27 (31 January 2013: 48). All investments are in equityshares unless otherwise stated. At 31 January 2014, the Company did not holdany equity interests comprising more than 3% of any company's share capitalother than Volga Gas PLC, in which the Company had an interest of 3.46%. During the year, the Company entered CFDs to gain long and short exposure onindividual securities. At the year end there were no short positions (2013:1 position with a profit of US$21,000 and an underlying market value ofUS$1,866,000) 1 long CFD position was held (2013: 2) with a net fair valueprofit of US$928,000 (2013: profit of US$492,000) and an underlying marketvalue of US$6,069,000 (2013: US$6,253,000). Ten largest investments 2014 2013 Market Market value % of value % ofSecurity Country Sector US$'000 net assets US$'000 net assetsSberbank Russia Financials 15,849 10.0 23,098 11.7Gazprom Russia Energy 13,147 8.3 17,912 9.0Garanti Bank Turkey Financials 12,209 7.7 10,611 5.4Dragon Oil Turkmenistan Energy 11,384 7.2 2,771 1.4Halk Bank Turkey Financials 11,265 7.1 3,590 1.8Surgutneftegaz(preferenceshares) Russia Energy 10,881 6.7 7,874 4.0Jeronimo Martins Poland Consumer Staples 7,910 5.0 - -OTP Bank Hungary Financials 6,958 4.3 5,709 2.9KGHM Polska Miedz Poland Materials 6,724 4.3 - -Long CFDposition-BRDGroupe SociétéGénérale Romania Financials 6,069 3.8 - - ======== ======== ======== ======= ======= ======= Financial statements Income statement for the year ended 31 January 2014 Revenue Revenue Capital Capital Total Total 2014 2013 2014 2013 2014 2013 Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 (Losses)/gains oninvestments held atfair value throughprofit or loss - - (25,842) 19,113 (25,842) 19,113Exchange gains/(losses) - - 122 (260) 122 (260)Net returns oncontracts fordifference (340) (389) 598 1,002 258 613Income from investmentsheld at fair valuethrough profit or loss 3 5,416 7,425 - - 5,416 7,425Interest receivable 3 1 1 - - 1 1Investment management 4 (1,451) (1,423) 24 - (1,427) (1,423)Other operatingexpenses 5 (1,103) (1,076) (6) (76) (1,109) (1,152) -------- ------- -------- -------- -------- --------Net return/(loss)before finance costsand taxation 2,523 4,538 (25,104) 19,779 (22,581) 24,317Finance costs (65) (107) - - (65) (107) -------- ------- -------- -------- -------- --------Net return/(loss) onordinary activitiesbefore taxation 2,458 4,431 (25,104) 19,779 (22,646) 24,210Taxation charges (526) (998) - - (526) (998) -------- ------- -------- -------- -------- --------Net return/(loss) onordinary activitiesafter taxation 1,932 3,433 (25,104) 19,779 (23,172) 23,212 ======== ======== ======== ======= ======== =======Return/(loss) perordinary share - basicand diluted (cents) 7 5.13 7.77 (66.70) 44.75 (61.57) 52.52 ======== ======= ======== ======== ======== ======== The total column of this statement represents the Profit and Loss Account ofthe Company. The supplementary revenue and capital columns are both prepared under guidancepublished by the Association of Investment Companies ("AIC"). The Company hadno recognised gains or losses other than those disclosed in the IncomeStatement. All items in the above statement derive from continuing operations.All income is attributable to the equity holders of BlackRock Emerging Europeplc. There is no material difference between the profit and ordinary activitiesbefore taxation and the profit for the financial year stated above and theirhistorical cost equivalents. Reconciliation of movements in shareholders' funds for the year ended 31 January 2014 Called up Share Capital share premium redemption Capital Revenue capital account reserve reserves reserve Total Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000For the year ended31 January 2014At 1 February 2013 4,692 41,406 5,324 165,956 (19,424) 197,954Net (loss)/return forthe year - - - (25,104) 1,932 (23,172)Shares purchased andheld in treasury (334) - 334 (12,796) - (12,796)Shares purchased andcancelled (15) - 15 (641) - (641)Tender offer andsubscription shareissue costs - - - (31) - (31)Conversion ofsubscription shares 6 278 - - - 284Subscription shareslapsed (185) - 185 - - -Dividend paid 6 - - - (2,542) - (2,542) -------- -------- -------- -------- -------- --------At 31 January 2014 4,164 41,684 5,858 124,842 (17,492) 159,056 -------- -------- -------- -------- -------- --------For the year ended31 January 2013At 1 February 2012 5,409 41,259 4,519 177,190 (22,857) 205,520Net return for theyear - - - 19,779 3,433 23,212Shares purchased andheld in treasury (775) - 775 (29,458) - (29,458)Shares purchased andcancelled (30) - 30 (1,206) - (1,206)Subscription sharesissued 85 - - (85) - -Subscription shareissue costs - - - (264) - (264)Conversion ofsubscription shares 3 147 - - - 150 ------- -------- -------- -------- -------- -------At 31 January 2013 4,692 41,406 5,324 165,956 (19,424) 197,954 ======= ======== ======== ======== ======== ======= Balance sheet as at 31 January 2014 2014 2013 Notes US$'000 US$'000Fixed assetsInvestments held at fair value through profit or loss 171,233 211,467 -------- --------Current assetsDebtors 2,690 2,668Amounts due in respect of contracts for difference 928 530Cash at bank and in hand 576 1 -------- -------- 4,194 3,199 -------- --------Creditors - amounts falling due within one year (16,352) (16,676)Amounts due in respect of contracts for difference - (17) -------- -------- (16,352) (16,693) -------- --------Net current liabilities (12,158) (13,494) -------- --------Total assets less current liabilities 159,075 197,973Creditors - amounts falling due after more than one year (19) (19) -------- --------Net assets 159,056 197,954 ======== ========Capital and reservesCalled up share capital 8 4,164 4,692Share premium account 9 41,684 41,406Capital redemption reserve 9 5,858 5,324Capital reserves 9 124,842 165,956Revenue reserve 9 (17,492) (19,424) -------- --------Total shareholders' funds 159,056 197,954 ======== ========Net asset value per ordinary share (cents) - basic 7 438.86 504.17 ======== ========Net asset value per ordinary share (cents) - diluted 7 438.86 491.43 ======== ======== Cash flow statement for year ended 31 January 2014 2014 2013 Notes US$'000 US$'000 Net cash inflow from operating activities 5(b) 2,216 5,552Returns on investment and servicing of financeOverdraft interest (56) (107)CFD financing interest (241) (193) -------- -------- (297) (300)Taxation paid (602) (1,072) -------- --------Capital expenditure and financial investmentPurchase of investments (188,505) (218,622)Proceeds from sale of investments 200,922 236,078 -------- --------Net cash inflow from capital expenditure andfinancial investment 12,417 17,456 -------- --------Equity dividends paid (2,542) - -------- --------Net cash inflow before financing 11,192 21,636 -------- --------FinancingRepurchase of shares (13,437) (30,596)Proceeds from conversion of subscription shares 284 150Tender and subscription share issue costs (176) - -------- --------Net cash outflow from financing (13,329) (30,446) ======== ========Decrease in cash in the year (2,137) (8,810) ======== ======== Notes to the financial statements 1. Principal activitiesThe principal activity of the Company is that of an investment trust companywithin the meaning of section 1158 of the Corporation Tax Act 2010. 2. Accounting policies(a) Basis of preparationThe Company's financial statements have been prepared on a going concern basisand on the historical cost basis of accounting, modified to include therevaluation of fixed asset investments and derivatives at fair value throughprofit or loss in accordance with the Companies Act 2006, applicable accountingstandards in the United Kingdom ("UK GAAP") and with the Statement ofRecommended Practice 'Financial Statements of investment trust companies' andventure capital trusts ("SORP"), revised in January 2009. The principal accounting policies adopted by the Company are set out below. Thepolicies have been applied consistently throughout the year and are consistentwith those applied in the preceding year. All of the Company's operations areof a continuing nature. The Company's financial statements are presented in US dollars, which is thefunctional and presentation currency of the Company. The US dollar is thefunctional currency because it is the currency most closely related to theprimary economic environment in which the Company invests. All values arerounded to the nearest thousand dollars (US$'000) except where otherwiseindicated. (b) Presentation of the Income StatementIn order to reflect better the activities of an investment trust company and inaccordance with guidance issued by the Association of Investment Companies,supplementary information which analyses the Income Statement between items ofa revenue and a capital nature has been presented alongside the IncomeStatement. (c) Segmental reportingThe Directors are of the opinion that the Company is engaged in a singlesegment of business being investment business. (d) IncomeDividends receivable (including, where appropriate, overseas withholding taxes)on equity shares are treated as revenue for the year on an ex-dividend basis.Where no ex-dividend date is available, dividends receivable on or before theyear end are treated as revenue for the year. Provisions are made for dividendsnot expected to be received. The return on a debt security is recognised on atime apportionment basis. Special dividends, if any, are treated as a capital receipt or a revenuereceipt depending on the facts or circumstances of each particular case. Dividends are accounted for in accordance with Financial Reporting Standard 16'Current Taxation' (FRS 16) on the basis of income actually receivable, withoutadjustment for tax credits attaching to the dividend. Dividends from overseascompanies continue to be shown gross of withholding tax. Interest income is accounted for on an accruals basis. Where the Company has elected to receive its dividends in the form ofadditional shares rather than in cash, the amount of the cash dividend foregoneis recognised as income. Any excess in the value of the shares received overthe amount of the cash dividend foregone is recognised in capital reserves. (e) ExpensesAll expenses are accounted for on an accruals basis. Expenses which areincidental to the acquisition of an investment are charged to the capitalcolumn of the Income Statement. Expenses incurred on the sale of investmentsare deducted from the proceeds of the sale of the investments. The Board hasdecided that capital profits should not reflect the indirect costs incurred ingenerating capital returns therefore fees payable to the Investment Manager arecharged to the revenue column of the Income Statement except for anyperformance fees, which were payable until 1 July 2013, which were charged tothe capital column of the Income Statement to the extent that performance wasgenerated through capital returns from the investment portfolio. Transaction charges in relation to the purchase and sale of investments arecharged to the capital column of the Income Statement. (f) Finance costsFinance costs are accounted for on an accruals basis in the revenue column ofthe Income Statement using the effective interest rate method. (g) TaxationThe current tax effect of different items of expenditure is allocated betweencapital and revenue on the marginal basis using the Company's effective rate ofcorporation taxation for the accounting period. Deferred tax is recognised in respect of all timing differences at the balancesheet date, where transactions or events that result in an obligation to paymore tax in the future or right to pay less tax in the future have occurred atthe balance sheet date. Deferred tax assets are recognised only when, on thebasis of available evidence, it is more likely than not that there will betaxable profits in the future against which the deferred tax asset can beoffset. Deferred tax assets and liabilities are not discounted to reflect thetime value of money. Deferred tax is provided at the amount expected to be paid/recovered using the tax rates and laws which have been enacted orsubstantially enacted at the balance sheet date. (h) Investments held at fair value through profit or lossThe Company's investments (fixed assets and current assets) are classified asheld at fair value through profit or loss in accordance with FRS 26 -'Financial Instruments: Recognition and Measurement' and are managed andevaluated on a fair value basis in accordance with its investment strategy. All investments are designated upon initial recognition as held at fair valuethrough profit or loss. Sales of assets are recognised at the trade date of thedisposal. Proceeds will be measured at fair value which will be regarded as theproceeds of sale less any transaction costs. The fair value of the financial investments is based on their quoted bid priceat the balance sheet date on the exchange on which the investment is quoted,without deduction for the estimated future selling costs. Changes in the value of investments held at fair value through profit or lossand gains and losses on disposal are recognised in the capital column of theIncome Statement as '(losses)/gains on investments held at fair value throughprofit or loss'. Also included within this heading are transaction costs inrelation to the purchase or sale of investments. In order to improve the disclosure of how companies measure the fair value oftheir financial investments, the disclosure requirements in FRS 29 have beenextended to include a fair value hierarchy. The fair value hierarchy consistsof the following three levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets orliabilities Level 2 - inputs other than quoted prices included within level 1 that areobservable for the asset or liability Level 3 - inputs for the asset or liability that are not based on observablemarket data Fair values for unquoted investments, or investments for which the market isinactive, are established by using various valuation techniques. These mayinclude recent arm's length market transactions or the current fair value ofanother instrument which is substantially the same. Where no reliable fairvalue can be estimated for such instruments, they are carried at cost subjectto any provision for impairment. (i) Valuation of derivative financial instrumentsDerivatives are initially accounted and measured at fair value on the date thederivative contract is entered into and subsequently measured at fair value.The gain or loss on re-measurement is taken to the Income Statement. Thesources of the return under the derivative contract (e.g. notional dividends,financing costs, interest returns and capital charges) are allocated to therevenue and capital columns of the Income Statement in alignment with thenature of the underlying source of income and in accordance with the guidancegiven in the AIC SORP. (j) Preference sharesThe Company's preference shares are classified as a liability under FinancialReporting Standard 25: 'Financial Instruments: Disclosure and Presentation'. (k) Dividends payableUnder FRS 21 final dividends should not be accrued in the financial statementsunless they have been approved by shareholders before the balance sheet date.Dividends payable to equity shareholders are recognised in the Reconciliationof Movement in Shareholders' Funds when they have been approved by theshareholders and become a liability of the Company. Interim dividends are onlyrecognised in the financial statements in the period in which they are paid. (l) Foreign currency translationAll transactions in foreign currencies are translated into US dollars at therates of exchange ruling on the dates of such transactions. Foreign currencyassets and liabilities at the balance sheet date are translated into US dollarsat the exchange rates ruling at that date. Exchange differences arising on therevaluation of investments held as fixed assets are included in the capitalcolumn of the Income Statement. Exchange differences arising on the translationof foreign currency assets and liabilities are taken to the capital column ofthe Income Statement. (m) Cash and cash equivalentsCash comprises cash in hand and on demand deposits. Cash equivalents areshort-term, highly liquid investments that are readily convertible to knownamounts of cash and that are subject to an insignificant risk of changes invalue. (n) Capital redemption reserveThe nominal value of ordinary share capital for cancellation is transferred outof share capital and into the capital redemption reserve. (o) Shares repurchased and held in treasuryThe full cost of shares repurchased and held in treasury is charged to capitalreserves. Where treasury shares are subsequently reissued, any surplus is takento the share premium account. (p) Capital reservesThe following transactions are accounted for in capital reserves: - gains and losses on the disposal of fixed asset investments;- realised exchange differences of a capital nature;- cost of professional advice, including irrecoverable VAT, relating to the capital structure of the Company;- other capital charges and credits charged or credited to this reserve in accordance with the above policies;- cost of purchases of own ordinary shares;- increases and decreases in the valuation of investments held at the year end;- unrealised exchange differences of a capital nature; and- payment of dividends. (q) Going concernThe Company's Articles of Association require that an ordinary resolution beput to the Company's shareholders at three yearly intervals at the AGM toapprove the continuation of the Company. The last such resolution was put toshareholders at the 2013 AGM and the next such resolution will be put toshareholders at the AGM in 2016. The Directors are satisfied that the Companyhas adequate resources to continue in operational existence for the foreseeablefuture and therefore consider the going concern assumption to be appropriate. (r) DebtorsDebtors are sales for future settlement, other debtors, pre-payments andaccrued income in the ordinary course of business. If collection is expected inone year or less (or in the normal operating cycle of the business if longer),they are classified as current assets. If not, they are presented asnon-current assets. Debtors are recognised initially at fair value andsubsequently measured at amortised cost using the effective interest ratemethod. (s) CreditorsCreditors are purchases for future settlements, interest payable, share buybackcost and accruals in the ordinary course of business. Creditors are classifiedas current liabilities if payment is due within one year or less (or in thenormal operating cycle of the business if longer). If not, they are presentedas non-current liabilities. Creditors are recognised initially at fair valueand subsequently measured at amortised cost using the effective interest ratemethod. 3. Income 2014 2013 US$'000 US$'000Investment income:UK dividends - 60Overseas dividends 5,416 7,365 -------- -------- 5,416 7,425 -------- --------Interest receivable:Deposit interest 1 1 -------- -------- 5,417 7,426 ======== ========4. Investment management 2014 2013 Revenue Capital Total Revenue Capital Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000Investmentmanagement 1,451 - 1,451 1,423 - 1,423Performance fees - (24) (24) - - - -------- -------- -------- -------- -------- -------- 1,451 (24) 1,427 1,423 - 1,423 ======== ======== ======== ======== ======== ======== Details of the investment management fee are disclosed in the Directors' Reporton page 20 of the Annual Report and Financial Statements. As at 31 January 2014 there was a write back of the performance fee due to theInvestment Manager of US$24,000 (2013: US$ nil) in respect of the performancefee of US$297,000 which had been accrued in relation to tendered assets onwhich a fee had crystallised in the year to 31 January 2012. 5. Other operating expenses 2014 2013 US$'000 US$'000(a) Other operating expensesCustody fee 173 300Directors' fees and expenses 300 329Auditors' remuneration:- fees for statutory audit 41 40Other administrative costs 589 407 -------- -------- 1,103 1,076Transaction charges - capital 6 76 -------- -------- 1,109 1,152 ======== ========The Company's ongoing charges - calculated in accordancewith AIC guidelines were: 1.3% 1.2% ======== ======== No fees were paid to the Auditors for other services in respect of the yearunder review (2013: US$ nil). The underlying audit fee is invoiced in sterlingand is therefore susceptible to exchange rate fluctuations. Expenses of US$6,000 (2013: US$76,000) charged to the capital column of theIncome Statement relate to transaction costs charged by the custodian on thepurchases and sales of investments. 2014 2013 US$'000 US$'000(b) Reconciliation of net return before finance costs andtaxation to net flow from operating activitiesNet (loss)/return before finance costs and taxation (22,581) 24,317Add/(less): capital loss/(return) before finance costsand taxation 25,104 (19,779) -------- --------Net revenue return before finance costs and taxation 2,523 4,538Contracts for difference financing payable 241 193Expenses credited/(charged) to capital 18 (76)Decrease in accrued income - 68Decrease in other debtors 10 10(Decrease)/increase in creditors (576) 819 -------- --------Net cash inflow from operating activities 2,216 5,552 ======== ========6. Dividends The Directors have proposed a final dividend of 3.50 cents per ordinary shares(2013: 6.50 cents). The dividend will be paid on 1 July 2014, to shareholderson the Company's register on 23 May 2014. The total dividend proposed in respect of the year ended 31 January 2014 meetsthe requirements of section 1158 of the Corporation Tax Act 2010 and section833 of the Companies Act 2006. 2014 2013 US$'000 US$'000Dividend payable on equity shares:Final proposed of 3.50* cents per ordinary share(2013: 6.50 cents) 1,269 2,542 -------- -------- 1,269 2,542 -------- --------*Based on 36,242,928 in issue on 24 March 2014. 7. Return and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculatedusing the following: 2014 2013Basic US$'000 US$'000 -------- --------Net revenue return attributable to ordinary shareholders(US$'000) 1,932 3,433Net capital (loss)/return attributable to ordinaryshareholders (US$'000) (25,104) 19,779 -------- --------Total (loss)/return (US$'000) (23,172) 23,212 -------- --------Total shareholders' funds (US$'000) 159,056 197,954 -------- --------The weighted average number of ordinary shares in issueduring the year on which the basic return per ordinaryshare was calculated was: 37,636,613 44,195,647 ========== ==========The actual number of ordinary shares in issue at the endof each year on which the basic net asset value wascalculated was: 36,242,928 39,263,427 ========== ========== 2014 2013 Revenue Capital Total Revenue Capital TotalBasic cents cents cents cents cents centsCalculated onweighted averagenumber of shares 5.13 (66.70) (61.57) 7.77 44.75 52.52Calculated onactual number ofshares 5.33 (69.26) (63.93) 8.74 50.38 59.12 -------- -------- -------- -------- -------- --------Net asset valueper share 438.86 504.17Ordinary share price* 405.94 439.16Subscription shareprice* N/A 20.61 ======== ======== * The Company's ordinary share price is quoted in sterling and the aboverepresents the US dollar equivalent using an exchange rate of 1.6435(2013: 1.5854). Diluted 2014 2013Net revenue return attributable to ordinary shareholders(US$'000) N/A 3,433Net capital return attributable to ordinary shareholders(US$'000) N/A 19,779 -------- --------Total return (US$'000) N/A 23,212 ======== ========Total shareholders' funds (US$'000) N/A 234,886 -------- --------The weighted average number of ordinary shares in issueduring the year on which the diluted return per ordinaryshare was calculated was: N/A 44,195,647 -------- ----------The number of ordinary shares on which the diluted netasset value was calculated was: N/A 47,796,455 ======== ========== 2014** 2013 Revenue Capital Total Revenue Capital TotalDiluted cents cents cents cents cents centsReturn per share N/A N/A N/A - - -Calculated onweighted averagenumber of shares N/A N/A N/A - - -Calculated onactual number ofshares N/A N/A N/A - - - -------- -------- -------- -------- -------- --------Net asset valueper share 438.86 491.43Ordinary share price* 405.94 439.16Subscription share price* N/A 20.61 ======== ======== * The Company's ordinary share price is quoted in sterling and the aboverepresents the US dollar equivalent using an exchange rate of 1.6435(2013: 1.5854).** No diluted earnings per share have been calculated for the years ended31 January 2014 or 31 January 2013. All subscription share rights lapsedduring the year ended 31 January 2014. 8. Called up share capital 2011 2012 Total Ordinary Treasury Subscription Subscription shares Nominal shares shares shares shares in value (Nominal) (Nominal) (Nominal) (Nominal) issue US$'000Allotted,called up andfully paidshare capitalcomprised:Ordinaryshares of 10cents each:At1 February2013 39,263,427 5,800,000 - - 45,063,427 4,506Sharesrepurchasedand cancelled (150,000) - - - (150,000) (15)Sharesrepurchasedand held intreasury inrespect ofsharestendered on23 July 2013 (2,938,349) 2,938,349 - - - -Sharescancelled fromtreasury - (3,338,349) - - (3,338,349) (334)Subscriptionshares of1 cent each:At1 February 2013 - - 10,023,846 8,533,028 18,556,876 186Subscriptionshares lapsed - - (10,023,846) (8,465,178) (18,489,026) (185)Conversion of2012subscriptionshares at 273pper share 67,850 - - (67,850) - 6 ---------- --------- -------- -------- ---------- --------At 31 January2014 36,242,928 5,400,000 - - 41,642,928 4,164 ========== ========= ======== ======== ========== ======== 2,938,349 (2013: 6,647,171) ordinary shares were repurchased pursuant to theperiodic tender offer and held in treasury at a total cost of US$12,796,000(2013: US$29,161,000). In addition, 150,000 (2013: 299,700) ordinary shareswere bought back at a total cost of US$641,000 (2013: US$1,206,000) forcancellation. 3,338,349 shares held in treasury were cancelled on 23 July 2013. The nominalvalue of shares held in treasury is US$540,000 (2013: US$580,000). The Company also issued 67,850 ordinary shares following the exercise ofsubscription shares for a total consideration of US$284,000. The subscriptionrights in respect of the remaining 10,023,846 2011 subscription shares and the8,465,178 2012 subscription shares lapsed on 16 July 2012 and 15 July 2013,respectively. Both the 2011 and 2012 subscription shares were converted intodeferred shares and subsequently cancelled. At 31 January 2014, the Company had 36,242,928 (2013: 39,263,427) ordinaryshares in issue (excluding 5,400,000 (2013: 5,800,000) ordinary held intreasury). 9. Reserves Capital Capital reserve reserve Share Capital (arising on (arising on premium redemption investments investments Revenue account reserve sold) held) reserve US$'000 US$'000 US$'000 US$'000 US$'000 At 1 February 2013 41,406 5,324 159,246 6,710 (19,424)Net return for the year - - - - 1,932Movement during theyear: -Cost of sharesrepurchased and held intreasury - - (12,796) - -Cost of sharesrepurchased andcancelled - 15 (641) - -Cancellation oftreasury shares - 334 - - -Exercise ofsubscription shares 278 - - - -Subscription share lapsed - 185 - - -Losses on sales ofinvestments - - (5,554) - -Change in investmentholdings gains - - - (20,288) -Gains on foreigncurrency transactions - - 122 - -Gains on contracts fordifference - - 183 415 -Tender offer andsubscription shareissue costs - - (31) - -Interest and expensescharged to capitalafter taxation - - 18 - -Dividends paid in the year - - (2,542) - - -------- -------- -------- -------- --------At 31 January 2014 41,684 5,858 138,005 (13,163) (17,492) ======== ======== ======== ======== ======== 10. Publication of non statutory accountsThe financial information contained in this announcement does not constitutestatutory accounts as defined in the Companies Act 2006. The 2014 annual reportand financial statements will be filed with the Registrar of Companies shortly. The report of the Auditors for the year ended 31 January 2014 contains noqualification or statement under section 498(2) or (3) of the Companies Act2006. The comparative figures are extracts from the audited financial statements ofBlackRock Emerging Europe plc for the year ended 31 January 2013, which havebeen filed with the Registrar of Companies, unless otherwise stated. The reportof the Auditor on those financial statements contained no qualification orstatement under section 498 of the Companies Act. This announcement was approved by the Board of Directors on 24 March 2014. 11. Annual ReportCopies of the Annual Report and Financial Statements will be sent to membersshortly and will also be available from the registered office, c/o The CompanySecretary, BlackRock Emerging Europe plc, 12 Throgmorton Avenue, London EC2N 2DL. 12. Annual General MeetingThe Annual General Meeting of the Company will be held at 12 ThrogmortonAvenue, London EC2N 2DL on Tuesday, 24 June 2014 at 12 noon. 24 March 201412 Throgmorton AvenueLondon EC2N 2DL ENDS For further information, please contact: Simon White, Managing Director, Investment Trusts, BlackRock InvestmentManagement (UK) LimitedTel: 020 7743 5284 Henrietta Guthrie, Lansons CommunicationsTel: 020 7294 3612 The Annual Report and Financial Statements will also be available on theBlackRock Investment Management website at http://www.blackrock.co.uk/beep.Neither the contents of the Investment Manager's website nor the contents ofany website accessible from hyperlinks on the Investment Manager's website (orany other website) is incorporated into, or forms part of, this announcement.