Final Results

4 March 2011

Charlemagne Capital Limited

Audited Results for the year ended 31 December 2010

Charlemagne Capital Limited ("Charlemagne", or the "Group"), the specialist emerging markets equity investment manager, today announces audited results for the year ended 31 December 2010.

Key Highlights

·; Assets Under Management - US$3.48 billion - an increase of 14.1%

·; Operating Profit - US$6.7 million - an increase of 17.5% at a margin of 23.4% (2009: 23.9%)

·; Profit before tax - US10.4 million - an increase of 50.7%

·; Earnings per share - 3.1 US cents per share - an increase of 55.0%

·; Management Fees - US$22.2 million - an increase of 19.4%

·; Performance Fees - US$6.1 million - an increase of 45.2%

·; Non recurring Performance Fees - US$3.8 million - an increase of 216.7%

·; Total Dividends paid and declared in 2010 - US$7.8 million (2009: US$4.9 million) - an increase of 59.2%

Commenting on the results, Jayne Sutcliffe, Chief Executive:

"I am pleased to report strong performance in the second half of the year resulting in continued growth in AuM, which reached US$3.48 billion by 31 December 2010.

The fundamental case for emerging markets is still compelling and we believe that the Company is well positioned to benefit from strong investor flows.

We remain confident in the strength of Charlemagne's business model and its ability to deliver long term growth."

Enquiries:

There is a presentation for analysts and investors at 09.30am today at the offices of Smithfield Consultants, 10 Aldersgate St., London EC1A 4HJ.

Notes to Editors

Charlemagne Capital is a specialist emerging markets equity investment management group. Charlemagne Capital Limited was admitted to the AIM market of the London Stock Exchange on 4 April 2006.

Charlemagne's product range comprises mutual funds, institutional and specialist fund products and hedge funds primarily covering GEMs, EMEA, Latin America and Asia. Charlemagne Capital employs a range of investment strategies including: long only, long/short, structured products and private equity. Charlemagne Capital's funds aim to exploit the inefficiencies in the market via a strict bottom up approach and focused stock selection.

Chairman's Statement

Markets provided positive investment growth over the year building on the recovery in the latter part of 2009. The upward trend was not consistent throughout the entire period with a volatile second quarter causing an overall decline in asset values at half year. However, growth in the second six months was strong and we ended the year in a healthy net gains position, with Assets under Management (AuM) 14.1% higher than at the beginning of the year.

Our fee income increased during the year due to the rise in our average level of assets managed. Fees generated in both the first and second half of the year were above 2009 levels with the second half fees being 12.5% higher than the first. Another important factor is the ability of the business to earn increased performance fees on some of its mandates in 2010. We do not forecast performance fees and many of our funds remain below their high water marks but we are hopeful of earnings from this source in 2011.

Additionally the resolution towards the end of 2009 of certain matters which have taken several years to conclude in one of our private equity vehicles, SWR Investments Limited, produced additional performance fees in 2010 of US$3.75m, net of costs, as a result of distributions made to shareholders of the vehicle. Since this is not in the nature of a recurring item, we have treated it as we have in previous years as a non-operational item to avoid distorting our regular income history.

Overall, the group saw small outflows (2%) of starting AuM for the year. For the mutual funds, net inflows in the second half of the year into the Magna mutual fund range resulted in only a very small outflow position for the year as a whole. Significant inflows into the OCCO Eastern European Fund resulted in it reaching capacity and being closed to new investors for the time being.

The White Label institutional advisory business experienced net outflows, particularly in the second half and the last quarter has seen portfolio rebalancing by clients within Institutional Mandates.

Our basic strategy remains to focus on our core emerging markets expertise. We have an optimistic view on equity valuations due to the potential superior economic and corporate growth within these markets. We will also continue to look for new opportunities and invest further in our internal capabilities whilst operating as cost effectively as possible to produce maximum returns for our shareholders. We continue to foster an environment which will encourage the retention of our talented individuals and enable the recruitment of additional expertise where necessary.

It is our intention and policy to declare regular dividends which reflect the earnings and cash flow of the Group. Shareholders have already received dividends of US$1.1 million (0.4 cents per share) in respect of the first interim distribution for 2010 (2009: US$1.1 million) alongside a special interim dividend of US$3.1 million (1.1 cents per share) (2009: nil). The Directors believe that the distinction between ordinary and special dividends is no longer appropriate except in exceptional circumstances where there is a significant element of non recurring income and intend to reflect the practice of other investment managers and declare a composite dividend taking account of performance fees received in the ordinary course of business during the year. Therefore a further amount of US$3.6 million (1.3 cents per share) is now being declared in respect of the second interim distribution for 2010 (2009: US$ 1.7 million ordinary and US$ 2.1 million special).

The Company did not buy back any shares for cancellation during 2010 (2009: US$0.1 million). Repurchases of shares may resume when conditions are deemed appropriate but the Directors have noted that illiquidity in the Group's shares is making such programmes increasingly difficult to implement. The Group continues to hold the bulk of its assets in cash and has no borrowings.

The outlook for the future depends on both the continuing fundamentals within the emerging market economies and our ability to increase our proportionate participation in investor inflows to the sector. Recent events have thrown some regional markets into turmoil. However our experience suggests there is still significant appetite for investment in emerging markets and our strategy remains to ensure we have the appropriate products and services to satisfy demand.

Chairman's Statement (continued)

Once again I thank the staff at Charlemagne Capital for their efforts. The market environment this year has been a difficult time for active fund management but through their hard work and skill we have shown that we can meet the ongoing challenges involved in providing the best service possible to our investors whilst expanding our operations to build for the future.

Michael Baer

4 March 2011

Financial and Operating Review

Financial Results

The results for the year ended 31 December 2010 reflect the improvement in market conditions during the year. Operating profit before tax and non-recurring items was US$6.7 million, up 17.5% on last year and profit after tax and minority interests showed an increase of 51% including one off items. During the year as market conditions improved certain funds earned substantial performance fees which crystallised at the year end.

AuM at the end of 2010 were US$3.48 billion, an increase of 14.1% over the prior year (2009: US$3.05 billion). Net redemptions across all segments were US$64 million with a poor fourth quarter being experienced by the White Label business and a rebalancing of Institutional Mandates. The second half of the year has seen net inflows into the Magna mutual fund range, almost making up for earlier net redemptions and significant inflows into OCCO resulting in it reaching capacity and being closed to new investors for the time being. As at the end of February 2011, the latest date available before publication, AuM were US$3.37 billion.

Revenues from net management fees in the period increased by 19.4% from those of the prior year to stand at US$22.2 million (2009: US$18.6 million). This is as a result of the increase in average AuM over the year. The Group's net management fee margin reduced to 72 basis points ("bps") for the year (2009: 74 bps) due to reorganisations and some changes in product mix.

The investment performance of funds managed and advised by the Group was positive for three out the four quarters and for the year as a whole. The appreciation achieved in the second half more than compensated for the negative first half performance brought about by market conditions in the second quarter. Crystallised net performance fees of US$6.1 million (2009: US$4.2 million) were earned during the year. The majority of this fee was earned on the Group's OCCO Hedge Fund product with the balance from the institutional category and Magna sub funds. The remainder of the performance fee paying funds managed by the Group are nearer to their targets than at the previous year end but still have some way to go before performance fees will accrue.

Operating expenses for the year were US$21.8 million (2009: US$18.1 million), an increase of 20.4%. The majority of the fixed costs of the Group are incurred in Sterling and the average conversion factor for that currency against the dollar was within 2% of the previous year average. In 2009, the Directors instigated a currency purchase in respect of a proportion of fixed costs and again in 2010 a similar purchase of Sterling to cover approximately one quarter's expenses was made when rates were at a similar level. Therefore there was no significant effect due to exchange rates this year.

We reported last year that certain savings had been made in respect of staff costs and that some of these factors would not be repeated in 2010. It was expected that operating expenses, excluding profit related bonuses, would rise by at least 15% over the 2009 figures. The actual increase in operating expenses excluding bonuses has been 18%. The increase has been due to a number of factors; the main ones being investment in additional staff resource, an increase in share based incentive scheme charges due to positive movement in share price and an increase in social security contributions. Performance related awards have increased in line with rises in operating profit and AuM.

The Group's operating profit margin for the year was 23.4% (2009: 23.9%) reflecting the fact that the extra income generated has almost compensated for the additional costs incurred. If AuM remain at present levels or increase and there is no significant weakening of the US dollar against Sterling, this margin can be expected to be maintained in 2011, although it is unlikely that it will return to the levels of earlier years until AuM increase further and more significant performance fees are once again being earned.

As reported previously, the Group earned performance fees of US$3.7 million, net of applicable costs, in respect of a private equity vehicle during the year. As in 2005 and 2009, when the bulk of the income from

Financial and Operating Review (continued)

Financial Results (continued)

this vehicle was recognised, this income has been treated as non-operational in order not to distort regular income.

Profit, after taxation provisions of US$0.4 million and minority interests, was US$8.6 million during 2010 compared with US$5.7 million in 2009. The uplift reflects the rise in AuM and performance fees and the inclusion of non recurring income for the private equity vehicle, offset by the increases in performance related awards and cost base.

Operating earnings per share rose by 20% to 2.4 US cents (2009: 2.0 US cents). The operating earnings per share calculation has been arrived at before both taxation and non-recurring forms of income and expenditure as we believe that this better reflects the underlying profitability of the business. After taxation and other income and expenditure, earnings per share attributable to shareholders were 3.1 US cents per share (2009: 2.0 US cents per share) on a fully diluted basis.

The Group's business model remains cash generative. In the absence of unforeseen circumstances it continues to be the Directors' intention that substantially all cash generated will be returned to shareholders by means of dividends and share buy back programmes.

Group net assets at the end of 2010 were US$29.1 million compared to US$27.5 million at the beginning of the year, reflecting the fact that the Group paid US$7.9 million in dividends during the year, with movements in reserves and retained profits accounting for the remainder.

A first interim ordinary dividend of 0.4 US cents per share and a special interim dividend of 1.1 US cents per share were declared and were paid on 15 October 2010. A further interim dividend of 1.3 US cents has been declared by Directors and will be paid on 15 April 2011 at a cost of US$3.6 million. It is not proposed to recommend a final dividend. Interim dividends have been recommended by the board in order that the funds can be paid to shareholders more quickly than would otherwise be the case.

Operations and Investment Review

There has been an overall increase in AuM of US$430 million for the full year due to an increase in market values of US$494 million and net outflows from the Group's products of US$64 million inclusive of reorganisations.

Emerging markets continued to gain ground over the final quarter, as investors weighed the improving economic and corporate outlook in both the developed world and elsewhere with the potential consequences of rising inflation. But this has yet, in our view, to be translated into concrete action, in terms of increasing their exposure to the asset class. Our feedback from institutional investors, and their advisers, indicates they are optimistic that significant inflows into the sector are still to come. The recovery in the US economy and in some other parts of the developed world has put a brake on this, but we consider this temporary.

Our optimism, therefore, remains undimmed. The asset class underperformed developed markets by almost 7% in the last four months of the year; the PE ratio discount has again emerged, now around 10% and earnings per share are expected to grow by another 15-20% this year and close to 15% in 2012. The prime risks are the rise in inflation in emerging countries, from 4-5% last year to an estimated 6% in 2011 and political uncertainty in parts of the developing world.

Most countries have already started tightening and economists are expecting inflation to start to fall by the end of the year. One catalyst for this may be further currency appreciation: taken as an average, emerging currencies gained around 5% last year and we expect this to continue over the longer term.Financial and Operating Review (continued)

Operations and Investment Review (continued)

Magna

During 2010 there were two new sub funds added to the Magna range, the Undervalued Assets Fund and the Emerging Markets Dividend Fund, raising US$43 million of inflows between them since June. The Asia sub fund was closed during the year following a combination of redemptions and reorganisations from the fund.

We have been pleased with the performance of the product range. At year end, four out of five funds were in the 1st or 2nd quartile for the year. During the year, we recommended to the board of Magna that we restructure certain share classes. This has resulted in a withdrawing of performance fees from certain core funds, with performance fees being retained on the more specialist funds. Whilst most performance fee paying sub-funds are considerably closer to their performance fee targets, it will probably be some time before we can forecast performance fees with any certainty. At the end of 2010, there were eight sub-funds within the Magna Umbrella Fund with a total AuM of US$589 million (2009: US$562 million). We are launching a MENA and a New Frontiers sub fund during early 2011.

OCCO

The fund has grown from US$105 million at the end of 2009 to US$308 million as at the end of 2010 with net subscriptions of US$182 million during the year. Capacity has now been reached and the fund is closed to new subscriptions for the time being. The fund performed well during all quarters in the year demonstrating its ability to produce positive returns uncorrelated to the performance of the associated markets. The fund has earned performance fees of US$4.2 million in 2010.

Specialist

This fund area includes private equity property funds amongst other miscellaneous products. 2010 has been marginally better than 2009 in terms of appetite for new product offerings amongst investors in such funds. Our ability to source new monies remains constrained but we have had subscriptions of US$26 million during the year. Performance has been negative in this area and given underlying market conditions, no performance fees were earned in this category in 2010. It is not possible to predict when conditions may be such that asset sales can be made within the vehicles which may then lead to such fees becoming payable.

Institutional - Advisory

The institutional advisory relationships have again suffered from client redemptions during the year. As with other sectors, these redemptions have been outweighed by market appreciation during 2010. No performance fees were generated during the year. At the end of the year the institutional advisory accounts, covering five funds from two organisations had a total AuM of US$984 million (2009: US$912 million).

Institutional - Mandates

This category contains a number of individual mandates together with a range of pooled funds tailored to the needs of institutions. In common with other areas, this category has seen a rise in asset values due to market movement but saw net redemptions during the year. Clients have continued to support the Group and the number of client accounts remains unchanged over the year. Performance fees of US$0.8 million were generated during the year. At the end of the year, Institutional Mandates had a total AuM of US$1.36 billion (2009: US$1.23 billion).

Consolidated Statement of Comprehensive Income

 Consolidated Statement of Financial Position

Approved by the Board of Directors on 4 March 2011.

Adrian Jones Jane Bates

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Company Statement of Financial Position

Approved by the Board of Directors on 4 March 2011.

Adrian Jones Jane Bates

Notes to the Financial Statements

1. The Company

Charlemagne Capital Limited (formerly Regent Fund Management (Cayman) Limited and Regent Europe Limited) was incorporated in the Cayman Islands as an exempt company with limited liability (registered number CR-75327) on 29 July 1997. The Company's registered office is at P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies. The consolidated financial statements of the Company for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in a jointly controlled entity.

2. Basis of Preparation

Statement of Compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and their interpretations adopted by the International Accounting Standards Board ("IASB"). The financial statements were authorised for issue by the Directors on 4 March 2011.

Basis of Measurement

The consolidated financial statements are prepared on the historical cost basis except that the following are stated at their fair value: financial instruments at fair value through profit or loss including derivative financial instruments. Recognised assets and liabilities that are hedged are stated at fair value in respect of the risk that is hedged.

Functional and Presentation Currency

The Company's shares are issued in United States Dollars ("US Dollars") as the US Dollar is a more widely recognised currency internationally than the local currency of the Cayman Islands. The functional and presentation currency of the financial statements is US Dollars and not Cayman Islands Dollars reflecting the fact that the transactions are denominated in US Dollars.

Use of Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in note 27.

Changes in Accounting Policies

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2010, and have not been applied in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except for IFRS 9 Financial Instruments, which becomes mandatory for the Group's 2013 consolidated financial statements and could change the classification and measurement of financial assets. The Group does not plan to adopt this standard early and the extent of the impact has not been determined.

Notes to the Financial Statements (continued)

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements and have been applied consistently by the Group entities.

Basis of Consolidation

Subsidiaries

Subsidiaries are those enterprises controlled by the Group. Control exists where the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Jointly controlled entities

Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement, and are accounted for using the equity accounting method in the consolidated financial statements.

Transactions eliminated on consolidation

Intra-group balances and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but to the extent that there is no evidence of impairment.

Investment in funds managed by Charlemagne Capital Group companies

Certain Group companies, from time to time, purchase shares in funds managed by other Charlemagne Capital Group companies. Such holdings can amount to over 20% of the issued share capital and occasionally more than 50%. Those holdings over 50% of the issued share capital, are treated as subsidiaries. Those holdings which are over 20% but not more than 50% of the issued share capital are treated as associates and equity accounted in the consolidated financial statements for the Group. No holdings of over 20% but below 50%, and no holdings of over 50% in Charlemagne managed funds existed at 31 December 2010 or 2009.

Foreign Currency

Foreign currency transactions

Transactions in foreign currencies are translated to US Dollars at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to US Dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to US Dollars at the foreign exchange rate ruling at the date of the transaction.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to US Dollars at foreign exchange rates ruling at the reporting date. The income and expenses of foreign operations are translated to US Dollars at the foreign exchange rates at the dates of the transactions. Foreign currency differences are recognised in "foreign currency exchange reserve" directly in equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign currency exchange reserve is transferred to profit or loss.

Notes to the Financial Statements (continued)

3. Significant Accounting Policies (continued)

Derivative Financial Instruments

The Group uses derivative financial instruments including forward exchange contracts to manage its exposure to foreign exchange, interest rate and equity market risks arising from operational, financing and investment activities and for trading purposes.

Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of the resultant gain or loss depends on the nature of the item being hedged (see Cash flow hedges below).

Cash flow hedges

Where a derivative is designated as a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative are recognised directly in equity. The amount recognised in equity is removed and recognised in profit or loss in the same period as the hedged cash flows affect profit or loss under the same profit or loss line item as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in the profit or loss.

If the derivative expires or is sold, terminated, or exercised, or no longer meets the criteria for cash flow hedge accounting, or the designation is revoked, then hedge accounting is discontinued and the amount recognised in equity until the forecast transaction affects profit or loss. If the forecast transaction is no longer expected to occur, then hedge accounting is discontinued and the balance in equity is recognised immediately in profit or loss.

Property and Equipment

Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.

Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of items of property and equipment. The estimated useful lives are as follows:

Furniture and fixtures 5 years

Computer equipment 3 years

Other equipment 4 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

Investments

Classification and measurement

An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group's risk management or investment strategy. Upon initial recognition attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. All investments are designated at fair value through profit or loss, except for derivative financial instruments which are classified as held for trading.

Notes to the Financial Statements (continued)

3. Significant Accounting Policies (continued)

Investments (continued)

Recognition and derecognition

The Group recognises financial assets at fair value through profit or loss on the date it commits to purchase the instruments. From this date any gains and losses arising from changes in fair value of the assets are recorded. These assets are derecognised when the rights to receive cash flows from the assets have expired or when the Group has transferred substantially all risks and rewards of ownership.

Fair value measurement principles

The value of financial instruments is based on their quoted market bid price, where available, at the balance sheet date without any deduction for transactions costs. If a quoted market price is not available on a recognised exchange or from a broker/dealer for non-exchange traded financial instruments, the fair value of the instrument is estimated by the Board of Directors.

The following represents the fair value hierarchy of financial instruments measured at fair value in the statement of financial position. The hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

Trade and Other Receivables

Trade and other receivables are measured at amortised cost less impairment losses.

Trade and Other Payables

Trade and other payables are measured at amortised cost.

Cash and Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits. For the purpose of the statement of cash flows, cash and cash equivalents would be presented net of bank overdrafts if any existed.

Impairment of Non Financial Assets

The carrying amounts of the Group's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. All impairment losses and reversals are recognised in profit or loss.

Share Capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of tax effects.

Notes to the Financial Statements (continued)

3. Significant Accounting Policies (continued)

Share Capital (continued)

Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares are classified as cancelled shares and presented as a deduction from total equity.

Treasury shares

Shares issued to the Charlemagne 2005 Employee Benefit Trust (note 23) are accounted for as treasury shares within equity (see note 21).

Dividends

Dividends are recognised as a liability in the year in which they are declared and approved.

Revenue Recognition

Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows:-

(a) investment management, administration and advisory fees contractually receivable by the Group are recognised in the year in which the respective fees are earned. Performance fees arising upon the achievement of specified targets are recognised at the respective funds' year-ends, when such performance fees are confirmed as receivable, or when there is a crystallising event, including but not limited to, redemption of shares against which performance fees have been accrued;

(b) profit or loss on sale of investments is recognised when title is passed;

(c) interest is recognised on a time apportioned basis using the effective interest rate;

(d) dividend income from unlisted investments is recognised when the shareholder's right to receive payment is established. Dividend income from listed investments is recognised when the share price of the investment turns ex-dividend;

(e) revenue related to provision of services is recognised on an accruals basis.

Operating Lease Payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease.

Employee Benefits

Obligations for contributions to employees' International Pension Plans are recognised as an expense in profit or loss as incurred. Obligations to the Charlemagne 2005 Employee Benefit Trust are recognised as an expense in profit or loss to the extent that these have been provisionally allocated to discretionary revocable sub-trusts of which certain Directors and employees of the Group may become beneficiaries.

In common with other groups which have initiated employee benefit trusts, from time to time the Group may receive inquiries from revenue authorities regarding taxation aspects. It is the policy of the Group to account for any taxation due as a result of such inquiry in the year in which the substance of any settlement is agreed.

Notes to the Financial Statements (continued)

3. Significant Accounting Policies (continued)

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense, with a corresponding increase in liabilities, over the period the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.

The fair value of employee stock options is measured using a Black-Scholes or binomial lattice model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average competitor volatility), weighted average expected life of the instruments (based on general option holder behaviour), expected dividends, and a risk-free interest rate. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

Income Tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. A deferred tax asset is reduced to the extent that it is no longer probable that the related tax benefit will be realised.

From time to time the Group receives inquiries from revenue authorities into its taxation affairs, as is common for entities operating international transfer pricing policies. It is the policy of the Group to account for any taxation due as a result of such inquiry in the year in which the substance of any settlement is agreed.

Investment in Subsidiaries, Associates and Jointly Controlled Entities

The Company's investments in the subsidiaries and associates are stated at cost less impairment losses. The interest in jointly controlled entities is accounted for in the Company's balance sheet as a financial asset at fair value through profit or loss in accordance with IAS 39. In the absence of a quoted market price for the jointly controlled entity share of net assets is considered to approximate fair value.

Comparative Figures

Where necessary, comparative figures have been adjusted to conform to changes in presentation for the current year.

Earnings per Share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

Notes to the Financial Statements (continued)

4. Revenue

5. Personnel Expenses

In addition to the operational expenses in 2010 there were also one-off performance awards of US$4.4 million (2009: US$1.4 million) relating to the share of profit of a jointly controlled entity. The total amount of US$1.8 million was paid to the Employee Benefit Trust and Pension out of the one-off performance awards.

The highest paid Director had emoluments of US$0.96 million (2009: US$1.18 million).

The number of employees of the Group as at the end of the year was 67 (2009: 63) full time equivalent.

The Group operates a discretionary bonus scheme, as approved by the Board, which is based on the Group's profit before taxation. Bonuses are accounted for in the financial year in which the bonus is earned.

In 2005 the Group created an employee benefit trust, the Charlemagne 2005 Employee Benefit Trust ("EBT"). The EBT is controlled by an independent Trustee (the "Trustee"). The EBT was created in order to motivate and retain the Group's Directors and employees, each of whom is a potential beneficiary from the trust.

Under UK tax legislation, certain UK income tax and social security obligations can be imposed on the Group in relation to these arrangements. The Group's EBT arrangements provide that the Trustee must retain sufficient sums to allow such liabilities to be met. In December 2010 the UK Treasury published draft legislation that further impacts upon EBT arrangements. Based upon advice received, the Board remains of the view that no liabilities to the Group exist in relation to these EBT arrangements. However the Board will continue to monitor the position in the light of the draft legislation and the UK Tax Authorities' actions in relation to similar structures.

Notes to the Financial Statements (continued)

5. Personnel Expenses (continued)

Contributions to the EBT have been expensed through Personnel Expenses. Of the total amount contributed relating to 2010, the Directors of Charlemagne Capital Services Limited ("CCSL"), the Group's global employment company, have recommended to the Trustee that the sum of US$1.7 million be provisionally allocated to discretionary revocable sub-trusts of which certain Directors of the Company may be potential beneficiaries (2009: Nil). However no amount has been included in Directors' emoluments since the amounts have not been allocated to any Director or employee with any certainty.

6. Related Party Transactions

Identity of related parties

The Group is related to its subsidiaries (note 14), its jointly controlled entity (note 15) and to its Directors and executive officers.

Transactions with Directors and executive officers

As at 31 December 2010 Directors of the Company and their immediate interests controlled 32% (2009: 33%) of the voting shares of the Company.

Summary of transactions

The following is a summary of transactions with related parties during the year. All such transactions were entered into in the ordinary course of business.

a. Approximately 57% (2009: 58%) of the turnover from investment management, administration, performance incentive fees, advisory fees and commissions is derived from funds over which the Directors consider the Group has influence by virtue of its management, administration and advisory roles.

b. Certain Directors have shareholdings in certain funds managed by Charlemagne Capital Group companies.

c. During last year the Group established a new subsidiary entity and entered into an economic interest agreement with this entity in respect of one of the management contracts held by the Group. An employee of the Group holds a 49.9% minority interest in the shares of this entity and has an option to acquire a further 12.6% of the shares in issue (see notes 14 and 23).

d. Performance fee earned from jointly contolled entity - please refer to note 15 for details.

7. Profit from Operations

Notes to the Financial Statements (continued)

8. Segment Reporting

IFRS 8 Operating Segments introduces the "management approach" to segment reporting. IFRS 8, became mandatory for the Group's 2009 financial statements, requires the disclosure of segment information based on the internal reports regularly reviewed by the Group's Chief Operating Decision Maker in order to assess each segment's performance and to allocate resources to them. Currently the Group presents segment information in respect of its business segments. Management believe that the information currently presented is consistent with information reviewed by management and therefore no significant changes have resulted from adoption of IFRS 8.

Notes to the Financial Statements (continued)

9. Taxation

10. Profit Attributable to Shareholders

The net profit attributable to shareholders reflected in the financial statements of the Company itself amounts to US$ 21.0 million (2009: US$1.89 million).

11. Dividends

A second interim ordinary dividend of 0.6 US cents (GB 0.4011p) and a special interim dividend of 0.75 US cents (GB 0.5014p) per ordinary share in respect of the year ended 31 December 2009 was paid on 23 April 2010 to those shareholders on the register on 26 March 2010 and was distributed from retained earnings in 2010.

An interim ordinary dividend of 0.4 US cents (GB0.2596p) and a special interim dividend of 1.1 US cents (GB 0.7138p) per ordinary share was paid on 15 October 2010 to those shareholders on the register on 17 September 2010 and distributed from retained earnings in 2010.

A further interim dividend of 1.3 US cents (GB 0.7983p) per ordinary share in respect of the year ended 31 December 2010 will be paid on 15 April 2011 to those shareholders on the register on 18 March 2011 and will be distributed from retained earnings in 2011.

12. Earnings Per Share

The calculation of basic earnings per share of the Group is based on the net profit attributable to shareholders for the year of US$8.57 million (2009: US$5.66 million) and the weighted average number of shares of 276,963,431 (2009: 277,380,078) in issue during the year.

Notes to the Financial Statements (continued) 

12. Earnings Per Share (continued)

The calculation of diluted earnings per share of the Group includes options that have vested but not yet been exercised and the weighted average number of share options where the specified performance conditions have been satisfied, but the service criteria have not yet been met (note 23).

Shares issued during the year ended 31 December 2006 to Sanne Trust Company Limited (note 23) have been excluded from the earnings per share calculation as such shares are currently accounted for as treasury shares.

13. Property and equipment

There was no property and equipment in the Company.

Assets which were purchased at a historic cost of US$0.6 million and are fully depreciated are still being used by the company.

Notes to the Financial Statements (continued) 

14. Interests in Subsidiaries

Balances with subsidiaries are included within current assets and current liabilities within the parent company statement of financial position. The Company has agreed to provide ongoing financial support to one of its subsidiaries, Charlemagne Capital (Investments) Limited, in order to allow it to meet its liabilities as they fall due.

Particulars of the principal subsidiaries of the Company at 31 December 2010 are as follows:

Notes to the Financial Statements (continued)

15. Interest in Jointly Controlled Entity

During last year SWR resolved outstanding taxation matters and subsequently released significant provisions. At 31 December 2009 the valuation of the Group's interest represented its share of SWR's net assets at fair market value. The subsequent distribution of the net assets of SWR triggered the payment of a performance fee of US$3.7m net of applicable bonuses to the Group in the first quarter of 2010. SWR has now been formally liquidated.

16. Investments

There were no investments held by the Company.

17. Deferred Taxation

There is an unrecognised deferred taxation asset of US$8,906 (2009: unrecognised asset of US$11,308) representing the tax effect of depreciation in excess of capital allowances.

18. Trade and Other Receivables

As at 31 December 2010, there was no margin deposits held by the Group (2009:US$5,214) in respect of the normal trading in currencies, futures and options (note 24).

Notes to the Financial Statements (continued)

19. Cash and Cash Equivalents

20. Trade and Other Payables

21. Issued Share Capital

During the year ended 31 December 2010, the Company did not repurchase any of its own shares (2009: 425,057 at market value for cancellation).

As at the date of signing the financial statements there were 280,385,616 (2009: 280,385,616) ordinary shares of US$0.01 each issued and fully paid.

Included within share capital are 3,262,185 shares which are held on behalf of a subsidiary of the Company (see note 23). These are accounted for as treasury shares and are included as a debit reserve within equity.

Notes to the Financial Statements (continued)

22. Share Capital and Reserves

Under Cayman Island law all categories of reserves are distributable. However, under normal circumstances the Company considers that only retained profits are distributable to shareholders. In the previous periods, the Company has repurchased some of its own shares. These shares were cancelled upon repurchase and accordingly the issued share capital of the Company was reduced by their nominal value. The premium on shares repurchased during 2009 was transferred to retained earnings.

The Board's policy is to maintain an adequate capital base so as to maintain investor, creditor and market confidence and to sustain future development of business. The Board of Directors monitors the return on capital and the level of dividends to ordinary shareholders.

There were no changes to the Group's approach to capital management during the year.

Two of the Company's subsidiaries are subject to externally imposed capital requirements and are required to submit periodic returns summarising their financial resources. These companies have complied with relevant regulatory requirments in all material respects during the year.

23. Share Based Incentive Plans

Equity Settled

The Group has established several share based incentive programmes that entitle certain employees to acquire shares in the Company subject to the vesting conditions set out below at an exercise price that was set at the date of grant.

The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of share options that are expected to vest.

The number and weighted average exercise price of outstanding share options is as follows:

Notes to the Financial Statements (continued)

23. Share Based Incentive Plans (continued)

Equity Settled (continued)

The options outstanding at 31 December 2010 have an exercise price between GBPNil and GBP0.748 and a weighted average contractual life of 6.1 years. Outstanding share options are contingent upon specified performance and service criteria being satisfied.

During the period 60,548 options were cancelled for cash of GBP10,131. In these instances the company had already recognised the full original fair values of these options as an expense in profit or loss. The Company did not recognise any gain in profit or loss where the cash award was less than the fair value of the options.

During the period 1,217,078 options failed to meet the required service criteria. Amounts of GBP6,566 previously provided for these options were written back to profit or loss.

During the period 160,000 options vested early and were exercised. In these instances the company recognised the remaining original fair values of these options amounting to GBP3,187 as an expense in profit or loss. The average exercise price of these options was GBP0.089.

As at 31 December 2010 50,023 options had vested but had not been exercised. The average exercise price of these options is GBP0.73.

As at 31 December 2010 the performance criteria of some of the remaining options had been achieved however, the service criteria have yet to be met, so none of the remaining options are exercisable at this time.

The fair values of the options granted during the year are measured at the grant date using a Black-Scholes or binomial lattice model and spread over the three year vesting period of these schemes. The values are adjusted to reflect the actual number of shares that are expected to vest and recognised as an employee expense with a corresponding increase in equity.

The weighted average fair value of the options issued during the period was GBP0.16 (2009: GBP0.03)

The estimate of the fair value of the share options granted with a grant price of GBP Nil has been calculated by reference to the face value of the award adjusted for the loss of dividends over the vesting period. All other options are measured using a binomial lattice model to estimate the early exercise behaviour. The contractual life of the options, 7-10 years, is used as an input to this model.

The Company's shares were not traded before the initial options were granted. In setting the volatility assumption therefore regard was given to the share price volatilities of the Company's closest traded comparator companies, as well as the share price since listing. Based on daily and weekly price observations, the share price volatility was estimated at around 50% which was comparable to that of its competitors over a longer period. For those options issued substantially after listing the share price volatility has been assumed to be 40% or 37.4% or 60% relating the average volatility between listing and the grant dates.

Notes to the Financial Statements (continued)

23. Share Based Incentive Plans (continued)

An employee of the Group holds a 49.9% minority interest in the shares of a group entity and has an option to acquire a further 12.6% of the shares in issue. The Group has retained an option to re-acquire the shares held by the employee for a nominal

sum under certain conditions, should the employee's option no longer be exercisable for any reason. As at the grant date, the Directors believe that the option granted to the employee had no significant value. All options involved in this arrangement expire on 31 December 2018.

The share options are granted under service and non-market performance conditions. Such conditions are not taken into account in the grant date fair value measurement of the services received. There are no market conditions associated with the share option grants.

Cash Settled

At 24 March 2006, the Group's global employment company, Charlemagne Capital Services Limited (CCSL), made a contribution of US$6.28m to the Charlemagne 2005 Employee Benefit Trust (EBT). The Directors of CCSL recommended to the Trustee of the EBT that this sum be used to purchase Company shares and those shares be held until EPS performances targets and service targets are met, after which time the shares should be sold. The Trustee of the EBT (Sanne Trust Limited, an independent trustee company) may at its discretion allocate the proceeds to discretionary sub-trusts of which certain employees and their families are beneficiaries.

The EBT subsequently purchased 3,422,185 Company shares. During 2009 the Directors of CCSL recommended to the Trustee of the EBT that 2,404,236 of the Company shares held by the EBT should be sold. The value of these shares as at the date of recommended disposal was less than the original cost of these shares and the difference of US$4.3 million was transferred from retained earnings to treasury shares within reserves.

The Directors of CCSL recommended that the Trustee of the EBT should use the proceeds of the sale to immediately purchase a further 2,404,236 Company shares which will be held until new AuM performances targets and service targets associated with new cash-settled awards issued during the year have been satisfied, after which time the shares should be sold. The Trustee of the EBT may at its discretion allocate the proceeds to discretionary sub-trusts of which certain employees and their families are beneficiaries.

During the year 160,000 shares were provided by the EBT to satisfy equity settled options which had been exercised. The proceeds from the options exercised in respect of these shares was less than the original cost of these shares and the difference of US$0.3 million was transferred from retained earnings to treasury shares within reserves. The 3,262,185 remaining shares held by the EBT had a fair value of US$930,473 as at 31 December 2010 (2009: US$919,290), based on the market price as at that date, after adjusting for the waiver of dividend rights at an assumed dividend yield of 5%.

During the year 455,804 awards which had previously met their performance criteria also met their service criteria and the associated liabilities were met at fair market value.

The fair value of the future cash settlement is spread over the vesting period, and recognised as an expense in the accounts with a corresponding increase in liabilities. The fair value is re-measured at each reporting date, with any adjustment in the cumulative fair value being recognised in the reporting period.

Expenses in respect of share based incentive plans

The following amounts have been charged as an expense within these financial statements:

As at 31 December 2010, total liabilities in respect of cash-settled share-based incentive plans were US$834,061 (2009: US$285,431). No liabilities had vested by the end of the period.

Notes to the Financial Statements (continued)

24. Financial Risk Management

Financial assets of the Group include cash and cash equivalents, investments and other receivables. Financial liabilities include accruals and other payables. The carrying amounts of these other assets approximate their fair values.

The Group operates a central Treasury function based upon weekly cash flow forecasts for each of the operating entities and the Group as a whole. This enables the regulatory liquidity requirements to be managed accurately for each entity subject to them. The Group normally operates a position of holding US dollars for all amounts in excess of working capital needs held in local currencies. Such balances are placed on deposit with major banks taking account of prudent spreading of risk. Where a decision is taken to hold local currency balances in excess of working capital needs, it is required that an Executive Director approves the position. All currency positions are formally monitored monthly by the Board as part of the Group's reporting procedures.

The Group's periodic use of derivatives is partly for hedging purposes, and partly for speculative investment. Where hedging is involved, the policy is fully or partly to match positions held in other assets. Speculative investment is carefully used, in accordance with parameters set by the Board, in short term situations where physical assets are inappropriate.

There is strict segregation between the investment management and deal settlement functions.

In the course of the Group's normal trading in currencies, futures and options, margin deposits of varying amounts of cash are held by the Group's brokers. As at 31 December 2010, no margin deposits were held (2009: US$5,214), such deposits being included within other receivables in the statement of financial position (note 18).

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

The Group is exposed to liquidity risk to the extent that it holds stakes in certain financial instruments for which no developed market exists. Therefore, the Group might be unable to sell such stakes quickly at close to fair value. This risk is managed by the Group by means of cash flow planning to ensure that future cash requirements are anticipated and, where financial instruments have to be sold to meet these requirements, the process is carried out in a controlled manner intended to minimize the liquidity risk involved. The Group maintains an overdraft facility with its bankers which can be used if necessary.

Residual contractual maturities of financial liabilities:

Notes to the Financial Statements (continued)

24. Financial Risk Management (continued)

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

The majority of debtors arise from fund management and related activities of the Group. As such the Group is able to determine that the credit risk is considered minimal in relation to the majority of its debtors. For other debtors a credit evaluation is undertaken on a case by case basis. To reduce exposure to credit risk arising from non-performance by counterparties in derivative transactions, the Group's policy is to transact business through brokers with high credit ratings wherever practicable. The Group invests available cash and cash equivalents with various banks. The Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments but, given their high credit ratings, management does not expect any counterparty to fail to meet its obligations.

At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:

The credit risk on transactions with funds primarily relates to transactions awaiting settlement. This risk is considered small due to the short settlement period involved and the high credit quality of the funds involved. Included in receivables faling due in more than three months is an amount of US$200,000 which has been subject to a total impairment provision of US$502,000 (2009: US$ 128,000).

The cash and cash equivalents held by the Group are held by a number of international banks and it is the Group's policy to avoid concentrating credit risk in any one institution. The credit risk is also managed by carrying out regular reviews of each institution's credit ratings and of their published financial position.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and equity prices will affect the Group's income or the value of its holding of financial instruments.

The Group is exposed to market risk directly via its investment holdings and indirectly via assets under its management, from which its fee income is derived. As the investments held directly and indirectly are mostly in the emerging markets, there is a concentration of this risk and any general movement in these markets would have a significant impact on the Group's income and the value of the Group's investments.

Notes to the Financial Statements (continued)

24. Financial Risk Management (continued)

Foreign currency risk

The Group is exposed to foreign currency risk on investments and expenses denominated in currencies other than US Dollars. The Group will normally hedge large exposures to foreign currency risk by using forward exchange contracts.

In respect of monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.

The Group's exposure as at the balance sheet date was as follows:

As at 31 December 2010, had the US Dollar strengthened by 1% in relation to all other currencies, with all other variables held constant, the net assets of the Group would have been decreased in both profit and equity by US$52,179 (2009: US$61,417). A weakening of the US Dollar against the above currencies would have had the opposite effect.

Interest rate risk

The Group is exposed to interest rate risk with regard to holdings in cash and cash equivalents. All cash holdings and cash equivalents are held at maturity dates of less than one month and are at variable rates. The Group does not have any borrowings. Surplus funds are placed on short term deposit.

Other price risk

Price risk arises from equity securities held by the Group. As at the reporting date these assets amounted to the following:

The majority of the Group's investments are readily realisable into cash. A 3% increase in the reported Net Asset Values of these assets at the reporting date would lead to a US$60,690 increase in the value of those investments (2009: US$27,540). An equal and opposite decrease in the reported Net Asset Values would have decreased the value of the investments by an equal and opposite amount.

Notes to the Financial Statements (continued)

24. Financial Risk Management (continued)

Fair value hierarchy

The table below analyses financial instruments measured at fair value at the end of the reporting period, by the level of the fair value hierachy (see note 2)

25. Commitments

Operating lease commitments during the next twelve months are as follows: