Final Results

Charlemagne Capital Limited

Annual results to 31 December 2011 (Audited)

Charlemagne Capital ("Charlemagne") has today announced its audited annual results for the year ended 31 December 2011:

Financial Highlights

·; Total revenue for the year - US$27.8m including:

·; Management Fees - US$22.6 million (2010: US$22.2 million)

·; Performance Fees - US$4.9 million (2010: US$6.1 million)

·; Operating Profit - US$6.1 million (2010: US$6.7 million)

·; Net Profit after Tax and Minority Interest - US$3.3 million (2010: US$8.6 million including non recurring items of US$3.8 million)

·; Earnings per share - 1.2 US cents per share (2010: 3.1 US cents per share)

·; Total Dividends - paid and declared in 2011 - US$2.8 million (2010: US$7.8 million)

·; Second Interim Dividend declared- 0.6 US cents per share to be paid on 27 April 2012 at a cost of US$1.7 million

·; Assets Under Management - US$2.33 billion (2010 US$3.48 billion)

·; Strong financial position - US$26 million held in cash

Operational Highlights

·; Successful fundraising and strong performance of the OCCO Eastern European Fund

·; Continued success of the emerging market equity income strategy

·; Completion of further private equity property investments in China and Brazil

·; Mark Bickford-Smith appointed co-Chief Investment Officer with effect from 31 January 2012

Commenting on the 2011 full year results Chief Executive, Jayne Sutcliffe said:

"2011 was a challenging year for investors, as instability in the eurozone and concerns over levels of government debt in developed countries resulted in increased market volatility. This significantly impacted investment returns across the emerging market asset class and weakened investor confidence. For the year as a whole, Charlemagne delivered operating financial performance broadly in line with the previous year, in the absence of non recurring income. Against a difficult and frustrating backdrop, with emerging equity markets severely hit in the second half of the year and industry fund outflows at close to the record levels seen in 2008, we focused on strengthening existing investment strategies and increasing support and information to our clients.

2012 has started positively for us with assets under management rising to US$2.5 billion as at 29 February 2012, principally as a result of investment performance. Investor confidence has also improved and we have seen net positive flows into the mutual fund business over the first two months of the year. Markets may remain volatile for some time to come as concerns over the macro economic environment remain and continue to impact investor demand. Typically, it will take a sustained period of market stability to lead to strong and consistent investor flows. We are confident that the Group is positioned well to take advantage of any recovery in emerging market equities. As emerging market specialists, we operate within what we believe is the most attractive sector of the fund industry where we have a significant long term track record and a depth of expertise and experience spanning a number of market cycles. We are continuing to strengthen our infrastructure and invest in talent, focussing on our core competencies while taking advantage of new opportunities in specialist and emerging areas and asset classes.

The Group is financially strong, with significant cash resources and no debt. We have reviewed our costs in line with reduced revenues, but have not in any way reduced the level of resource to which we are committed to meet the needs of our clients.

I am very pleased to welcome Mark Bickford-Smith who was appointed co-Chief Investment Officer with effect from 31 January 2012. Mark has 27 years of investment experience, managing portfolios and providing investment leadership. He has a wealth of emerging market expertise and his appointment adds further strength and depth to our investment resource."

Enquiries:

There is a presentation for analysts and investors at 09.30am today at the Company's offices, 39 St James's Street, London SW1A 1JD.

Chairman's Statement

Global markets posted significant negative returns for the year with Emerging Markets countries and regions being substantially impacted by the slowdown experienced in the second half of 2011. Currency volatility had a further negative effect on returns from Emerging Markets and the MSCI Emerging Markets Index ended the year down by 20.4% with virtually the whole of this negative movement occurring in the third quarter. Industry flowsturned negative this year with dedicated emerging market funds reporting net outflows of US$48 billion compared with inflows of US$95 billion in 2010. This has clearly been a challenging backdrop for the Group's activities and we ended the year with Assets under Management (AuM) at US$2.3 billion, 33.1% lower than at the beginning.

Outflows accounted for nearly 11% of starting AuM for the year. Unsurprisingly, the majority of these outflows occurred during the third quarter, correlating to the significant falls in markets. The Magna mutual fund range saw outflows for the year but there was a marked improvement in the second half with the fourth quarter seeing a return to positive flows and several key investment strategies, notably the GEM dividend strategy which provides a more defensive exposure to the emerging markets, achieved net inflows for the full year. The OCCO Eastern European Fund completed a successful closing in the second quarter raising US$ 120 million of new subscriptions and within the private equity funds, further direct investments have been completed in Brazil and China. The sub-advisory White Label business experienced consistent net outflows throughout the year, principally from US retail clients and institutional mandates also experienced significant outflows.

Regular net fee income for the year was higher than the previous year due to the higher average level of assets managed during the first eight months. However fees generated in the second half of the year were 13.2% lower than in the first half and below the level for most of 2010 and, until the average level of AuM has risen, management fee revenues are likely to continue to fall into 2012. Given the market turmoil it is not surprising that performance fees earned this year were lower in total but it is very pleasing to note the positive performance of the OCCO product, which did generate increased fees in such a difficult environment. There was no non recurring income generated this year.

The current trading environment for the group is therefore challenging with AuM at a comparatively low level. Revenue remains closely aligned with the level and mix of funds within AuM. The cost base remains under constant review and we are implementing identified savings and efficiencies while seeking to balance these against ensuring we retain the requisite functional infrastructure.

Our strategy is to focus on core competencies and areas of specialisation and competitive advantage within the emerging markets, including EM Income, Latin America, EE, MENA and Frontier markets where we believe our expertise can add value. We continue to be optimistic that, although the global economic slowdown has affected the asset class, the emerging world will continue to produce a positive environment for corporate earnings in the coming years.

As previously stated it is our intention and policy to continue 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 2011 (2010: US$1.1 million alongside a special interim dividend of US$3.1 million in respect of one off income). A further amount of US$1.7 million (0.6 cents per share) is now being declared in respect of the second interim distribution for 2011 (2010: US$3.6 million).

The outlook for the future depends on how quickly investor confidence returns within our target markets generally and our ability to replace those funds that have recently been lost. Stock price movements have led to some very attractive valuations in the asset class, at a time when inflationary concerns in emerging markets are starting to abate. The Group continues to hold the bulk of its assets in cash and has no borrowings and is therefore well positioned to weather the current downturn and grow its business in the future.

Chairman's Statement (continued)

Finally, I wish to thank the staff at Charlemagne Capital for their efforts. The market environment has been difficult for everyone over recent times and I call upon their continued hard work, motivation, skill and commitment to ensure we achieve the future development essential for success.

Michael Baer

19 March 2012

Financial and Operating Review

Financial Results

The results for the year ended 31 December 2011 reflect the mixed market conditions during the year. Operating profit before tax and non-recurring items was US$6.1 million, down 9.2% on the previous year and profit after tax and minority interests showed a decrease of 61.1% due principally to the absence of one off items this year. During the second half of the year market conditions deteriorated significantly however certain funds still earned performance fees which crystallised at the year end.

Revenue from net management fees in the period increased by 1.8% from those of the prior year to US$22.6 million (2010: US$22.2 million) as a result of the higher level in average AuM over most of the year. However net management fees earned in the second half of the year were US$10.5 million compared with US$12.1 million in the first half, reflecting the significant fall in AuM experienced in the third quarter. The Group's net management fee margin increased to 78 basis points ("bps") for the year (2010: 72 bps) due to changes in relative weightings in different products.

The overall investment performance of funds managed and advised by the Group was positive in US Dollar terms for two out the four quarters but negative for the year as a whole. The most significant falls occurred in the third quarter when assets lost nearly 23% of their starting value. Crystallised net performance fees of US$4.9 million (2010: US$6.1 million) were earned during the year. The majority of this fee was earned on the Group's OCCO product with the balance from Magna. The remainder of the performance fee paying funds managed by the Group are below required thresholds and are unlikely to generate performance fees in 2012.

Operating expenses for the year were unchanged at US$21.8 million (2010: US$21.8 million). 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 4.3% higher than the previous year average, therefore expenses reduced in real terms.

The Group's operating profit margin for the year was 21.7% (2010: 23.4%) reflecting the small fall in total income generated in the year. If AuM were to remain at present levels, this margin will be substantially reduced in 2012.

Profit, after taxation provisions of US$0.4 million and minority interests, was US$3.3 million during 2011 compared with US$8.6 million in 2010. The fall in profit mainly reflects the absence of non recurring income, which amounted to US$3.8 million last year, plus an increase in profit attributable to the minority interest due to the increase in fees earned from the OCCO product.

Operating earnings per share fell by 8.3% to 2.2 US cents (2010: 2.4 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 1.2 US cents per share (2010: 3.1 US cents per share) on a fully diluted basis.

Cash generated by the group during the year was US$2.1 million. In the absence of unforeseen circumstances it has been the Directors' intention that the bulk of cash generated will be returned to shareholders by means of dividends and share buy back programmes as appropriate.

A first interim dividend of 0.4 US cents per share was declared and paid on 21 October 2011. A further interim dividend of 0.6 US cents has been declared by Directors and will be paid on 27 April 2012 at a cost of US$1.7 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.

Financial and Operating Review (continued)

Financial Results (continued)

Group net assets at the end of 2011 were US$28.5 million compared to US$29.1 million at the beginning of the year, reflecting the fact that the Group paid US$6.2 million in dividends during the year, with movements in reserves and retained profits accounting for the remainder. Net assets attributable to shareholders have decreased from US$27.7 million to US$26.2 million due to dividends paid in the year out of profits generated in the prior year.

Operations and Investment Review

There has been an overall decrease in AuM of US$1,155 million for the full year, comprising a decrease in market values of US$753 million and net outflows from the Group's products of US$402 million inclusive of reorganisations.

Global markets posted significant negative returns for the year primarily due to the European debt crisis worries and uncertainties over global growth. Emerging and Frontier markets showed the weakest performance and alongside this dedicated emerging market funds reported net outflows of US$48 billion, only just less than the highest annual outflows ever, recorded in 2008. Regional funds that suffered particularly badly were Asia, Latin America and EMEA.

However the fourth quarter saw a small recovery in market values and the group saw a return to positive flows in all categories except White Label.

It was an unusually difficult year for stock picking and our style was adversely affected by the sharp underperformance of small-cap stocks within a declining emerging markets index. 2012 is showing signs that the market is becoming driven more by fundamentals, which should benefit our process. Emerging Market equity valuations are currently at an attractively low level particularly considering the stronger macro and corporate fundamentals of these markets which are in much better shape with little or no exposure to many of the problems in the developed world. We believe any moderation in global uncertainty should witness emerging markets rewarded for their better fundamentals and growth prospects. We are already seeing evidence of this with dedicated emerging market funds reporting strong net inflows during 2012 so far and positive performance in market values. AuM as at the end of February 2012, the latest date available for publication, were US$2.5 billion.

Magna

During 2011 there were two new sub funds added to the Magna range, the MENA and New Frontiers sub funds raising US$31 million of net inflows between them. The GEMS Dividend sub fund and the Undervalued Assets sub fund also continued to attract net inflows for the year. The significant outflows from the GEMS and EE sub funds were mainly due to the internal transfer of an institutional holding into a dedicated fund for a single client (included in reorganisations at note 8 to the financial statements).

At the end of 2011, there were ten sub-funds within the Magna Umbrella Fund with a total AuM of US$260 million (2010: US$589 million).

OCCO

The fund has grown from US$308 million at the end of 2010 to US$444 million as at the end of 2011 with net subscriptions of US$116 million during the year. The fund is closed to new subscriptions for the time being. Once again the fund performed well during the most volatile quarters in the year and ended the year 5.4% up demonstrating its ability to produce positive returns uncorrelated to the performance of the associated markets. The fund has earned performance fees of US$4.7 million in 2011.

Financial and Operating Review (continued)

Operations and Investment Review (continued)

Specialist

This fund area comprises principally a range of Private Equity property funds amongst other miscellaneous products. 2011 has seen further direct property investments completed in Brazil and China. No performance fees were earned in this category in 2011. 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.

White Label

The White Label sub-advisory business experienced consistent outflows throughout the year with virtually the entire US$162 million net outflow coming out of the US retail client facing relationship. At the end of the year the White Label sub-advisory accounts, covering five funds from two organisations had a total AuM of US$572 million (2010: US$984 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 fall in asset values due to market movement and has also suffered net redemptions during the year equivalent to nearly 19% of the starting AuM. No performance fees were generated during the year. At the end of the year, Institutional Mandates had a total AuM of US$0.88 billion (2010: US$1.36 billion).

Consolidated Statement of Comprehensive Income

 Consolidated Statement of Financial Position

Approved by the Board of Directors on 19 March 2012.

Lloyd 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 19 March 2012.

Lloyd 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 2011 comprise the Company and its subsidiaries (together referred to as the "Group").

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 19 March 2012.

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 2011, 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 only 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 2011 or 2010.

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, 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 and Associates

The Company's investments in the subsidiaries and associates are stated at cost less impairment losses.

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

There were no one-off performance awards in addition to the operational expenses in 2011 (2010: US$4.4 million relating to the share of profit of a jointly controlled entity).

The highest paid Director had emoluments of US$0.99 million (2010: US$0.96 million).

The number of employees of the Group as at the end of the year was 66 (2010: 67) 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. During 2011 the UK Treasury published 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 new legislation and the UK Tax Authorities' actions in relation to similar structures.

Notes to the Financial Statements (continued)

5. Personnel Expenses (continued)

No contributions have been made to the EBT during the year. Of the total amount contributed relating to 2010, the Directors of Charlemagne Capital Services Limited ("CCSL"), the Group's global employment company, 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. 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), and to its Directors and executive officers.

Transactions with Directors and executive officers

As at 31 December 2011 Directors of the Company and their immediate interests controlled 31% (2010: 32%) of the voting shares of the Company. The Directors' Remuneration Report on pages 17 and 18 gives details of share interests and remuneration.

Summary of transactions

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

a. Approximately 60% (2010: 57%) 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 and the Company have shareholdings in certain funds managed by Charlemagne Capital Group companies.

c. During 2009 the Group established a 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).

7. Profit from Operations

Notes to the Financial Statements (continued)

8. Segment Reporting

In accordance with IFRS 8 Operating Segments, the Group presents segment information in respect of its business segments that is consistent with information reviewed by management and 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.

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$0.8 million (2010: US$21.0 million).

11. Dividends

A second interim dividend of 1.3 US cents (GB0.7983p) per ordinary share in respect of the year ended 31 December 2010 was paid on 15 April 2011 to those shareholders on the register on 18 March 2011 and was distributed from retained earnings in 2011.

An interim dividend of 0.4 US cents (GB0.2456p) per ordinary share was paid on 21 October 2011 to those shareholders on the register on 23 September 2011 and distributed from retained earnings in 2011.

A further interim dividend of 0.6 US cents (GB0.3786p) per ordinary share in respect of the year ended 31 December 2011 will be paid on 27 April 2012 to those shareholders on the register on 30 March 2012 and will be distributed from retained earnings in 2012.

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$3.33 million (2010: US$8.57 million) and the weighted average number of shares of 277,123,431 (2010: 276,963,431) 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$0.7 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 2011 are as follows:

Notes to the Financial Statements (continued)

15. Interest in Jointly Controlled Entity

During 2009 SWR resolved outstanding taxation matters and subsequently released significant provisions. 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 liability of US$2,412 (2010: unrecognised asset of US$8,906) representing the tax effect of depreciation in excess of capital allowances.

18. Trade and Other Receivables

As at 31 December 2011, there was no margin deposits held by the Group (2010:nil) 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 2011 and 2010, the Company did not repurchase any of its own shares.

As at the date of signing the financial statements there were 280,385,616 (2010: 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 requirements 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 2011 have an exercise price between GBPNil and GBP0.748 and a weighted average contractual life of 1.4 years. Outstanding share options are contingent upon specified performance and service criteria being satisfied.

During the period 30,334 options were cancelled for cash of GBP5,970. 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 340,000 options failed to meet the required service criteria. Amounts of GBP4,298 previously provided for these options were written back to profit or loss.

During the period 12,059,714 options failed to meet the required performance criteria. Amounts of GBP236,328 previously provided for these options were written back to profit or loss.

As at 31 December 2011 99,988 options had vested but had not been exercised. The average exercise price of these options is GBP0.74.

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 GBP0.15 (2010: GBP0.16)

The estimate of the fair value of the share options granted with a grant price of GBPNil and share awards granted 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 performance 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 performance targets and service targets associated with new issues of cash-settled awards 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 2010 financial 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$541,866 as at 31 December 2011 (2010: US$930,473), 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 228,590 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 2011, total liabilities in respect of cash-settled share-based incentive plans were US$437,069 (2010: US$834,061). 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 2011, no margin deposits were held (2010: US$nil).

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 falling due in more than three months are amounts totalling US$558,733 after allowing for a total impairment provision of US$701,216 (2010: US$ 502,000).

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. Investments subject directly to market risk which are held at fair value amount to $1,640,000. If the value of these investments, as at 31 December 2011, increased by 1% the profit of the Group would be increased by $16,400.

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 2011, 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$39,410 (2010: US$52,179). 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$49,200 increase in the value of those investments (2010: US$60,690). 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:

26. Amounts due to and from Subsidiaries

The amounts due to and from subsidiaries are unsecured, repayable on demand and bear interest at commercial rates.

27. Critical accounting estimates, and judgement in applying accounting policies

The Directors considered the development, selection and disclosure of the Group's critical accounting policies and estimates and the application of these policies and estimates. Estimates and judgements are continually evaluated and are based on historical and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Fair value of financial instruments

The fair value of financial instruments that are not quoted in an active market are determined by the Directors by using valuation techniques.

Where valuation techniques are used to determine fair values, they are validated and periodically reviewed by qualified personnel independent of the area that created them. To the extent practical, models use only observable data. However areas such as credit risk, volatilities and correlations require the Directors to make estimates. Changes to the assumptions about these factors could affect reported fair values of financial instruments.

28. Contingent Liabilities

The Group has no significant contingent liabilities.