RNS Number:9898A
Govett Asian SmallerCo'sInv.Tst Ld
23 March 2001
Govett Asian Smaller Companies Investment Trust Limited
Preliminary Announcement of unaudited results for the year ended 31st
December 2000
Deteriorating investor sentiment resulted in all Asian markets posting
negative returns over the year, led by steep falls in the more cyclical and
growth orientated Taiwanese and South Korean markets. Within the Region, the
better quality financials and defensive utilities helped to cushion the
decline in the perceived safe-haven markets of Hong Kong and Singapore.
However, Thailand, Indonesia and the Philippines lost vital critical mass as
investors continued to shun these markets on domestic political concerns.
Against this difficult market background, your Company's net asset value fell
by 30.9% in sterling terms during the year. This compares with a decline of
37.3% in sterling terms in the SG Asian Small Cap Index for the same period.
As in 1999, no dividend is proposed.
Shareholders will be aware that expenses are charged to the revenue account.
Given that our investment objective is to maximise capital growth, this has
resulted in a current year revenue loss that, in accordance with the
requirements of the Association of Investment Trust Companies, is not
reflected in the calculation of the published daily net asset values until
the annual report and accounts have been completed. This was exacerbated in
2000 as the revenue loss in 1999 was carried over into 2000. The appropriate
adjustment to the calculation of the published net asset values for prior
year revenue losses was made on 19th February 2001. With effect from 1st
January 2001 and in accordance with the Statement of Recommended Practice
(SORP) for investment trust accounts, your board intends to charge 70% of both
management fees and the cost of long term bank borrowing to the capital
account. This was reflected in daily published net asset values from 26th
February 2001.
Going into 2001, Asian economies are expected to see significantly slower
growth compared to last year. The outstanding concerns over the US growth
rate in 2001 should make Asian economies more vulnerable as exports,
especially in technology, to the key US market may suffer. Domestic public
spending across Asia will also be constrained by deteriorating fiscal
balances and the pressure on government balance sheets from nationalisation
and the absorption of corporate bad debt.
While we are cautious about Asian economic growth, we are optimistic that
Asia will benefit from an improving global liquidity environment in 2001.
Already this year, the US Fed has cut interest rates by 150 basis points and
recent comments by Alan Greenspan have fuelled expectations that more
interest rate cuts are likely to occur in the months ahead. In view of the
more favourable outlook for liquidity, we expect a rebound in Asian financial
markets during the course of 2001.
Although the backlash against cronyism, poor corporate governance and
bailouts, set in motion by the Asian crisis, has been positive for Asian
economies, the year 2000 also saw considerable backsliding in financial and
corporate reforms. Proposed privatisations, asset sales, higher taxes,
mergers and closures/bankruptcies were challenged by both workers and
managements. Going forward, we are hopeful that continued volatility in
financial markets and the unfolding economic slowdown will serve as stark
reminders to Asian governments and corporates that financial and corporate
reforms must continue in earnest to ensure longer-term economic stability.
Asian markets are likely to remain volatile in the short-term. However, at
current levels, it is our view that markets have discounted the sharp
slowdown in economic and earnings growth and are more likely to respond
positively to an improving global monetary environment. The under-performance
of Asian smaller companies in 2000 has also produced attractive buying
opportunities in selective growth and value stocks, which we are looking to
exploit at appropriate levels.
Your board looks forward to meeting shareholders at the Annual General
Meeting on 2 May 2001.
Peter Robertson
Chairman
22nd March 2001
Unaudited Statement of Total Return (incorporating the revenue account *) for
the year ended 31st December 2000
Year ended Year ended
31st December 2000 31st December 1999
US DOLLARS Revenue* Capital Total Revenue* Capital Total
$000s $000s $000s $000s $000s $000s
Realised & unrealised - (23,337) (23,337) - 28,380 28,380
(losses)/gains
on investments
Net foreign currency - (84) (84) - (724) (724)
exchange differences
Income from investments 1,111 - 1,111 931 - 931
Deposit interest 88 - 88 69 - 69
Investment management (1,072) - (1,072) (1,024) - (1,024)
fee
Other expenses (545) (108) (653) (455) (330) (785)
Net return before (418) (23,529) (23,947) (479) 27,326 26,847
finance costs and taxation
Interest payable (296) - (296) (218) - (218)
Return on ordinary (714) (23,529) (24,243) (697) 27,326 26,629
activities before tax
Tax on ordinary (66) (38) (104) (28) - (28)
activities
Return on ordinary (780) (23,567) (24,347) (725) 27,326 26,601
activities after taxation
Return per (2.97)c (89.78)c (92.75)c (2.10)c 79.40c 77.30c
Ordinary share
*The revenue column of this statement represents the revenue account of the
Company.
Unaudited Statement of Total Return (incorporating the revenue account *) for
the year ended 31st December 2000
STERLING Year ended Year ended
31st December 2000 31st December 1999
Revenue* Capital Total Revenue* Capital Total
#000s #000s #000s #000s #000s #000s
Realised & unrealised - (15,623) (15,623) - 17,540 17,540
(losses)/gains on
investments
Net foreign currency - (56) (56) - (447) (447)
exchange differences
Income from investments 734 - 734 576 - 576
Deposit interest 58 - 58 43 - 43
Investment (708) - (708) (634) - (634)
management fee
Other expenses (360) (72) (432) (282) (204) (486)
Currency adjustment on (23) 3,476 3,453 8 1,405 1,413
retranslation of balances
Net return before (299) (12,275) (12,574) (289) 18,294 18,005
finance costs and taxation
Interest payable (196) - (196) (135) - (135)
payable
Return on ordinary (495) (12,275) (12,770) (424) 18,294 17,870
activities before tax
Tax on ordinary (44) (25) (69) (17) - (17)
activities
Return on ordinary (539) (12,300) (12,839) (441) 18,294 17,853
activities after taxation
Return per (2.05)p (46.86)p (48.91)p (1.28)p 53.15p 51.87p
Ordinary share
*The revenue column of this statement represents the revenue account of the
Company.
Average exchange rate for the year #1 = US$1.514 (1999: #1 = US$1.614)
BALANCE SHEET - US DOLLARS 2000 1999
$000 $000
Investments at Valuation 38,812 69,194
Debtors 911 186
Cash 3,357 1,739
Creditors (182) (3,874)
Net current assets/(liabilities) 4,086 (1,949)
Total Resources 42,898 67,245
Financed by
Capital and reserves
Called-up share capital 263 263
Share premium account 52,665 52,665
Other reserves
Capital redemption reserve 112 112
Capital reserve - realised (1,927) (671)
Capital reserve - unrealised (7,098) 15,213
Revenue reserve (1,117) (337)
Equity shareholders'funds 42,898 67,245
Net Asset Value per share - US Dollars US$1.63 US$2.56
BALANCE SHEET - STERLING 2000 1999
#000 #000
Investments at Valuation 25,982 42,761
Debtors 610 115
Cash 2,248 1,075
Creditors (122) (2,394)
Net current assets/(liabilities) 2,736 (1,204)
Total Resources 28,718 41,557
Financed by
Capital and reserves
Called-up share capital 165 165
Share premium account 33,060 33,060
Other reserves
Capital redemption reserve 68 68
Capital reserve - realised 924 (930)
Capital reserve - unrealised (4,752) 9,402
Revenue reserve (747) (208)
Equity shareholders'funds 28,718 41,557
Net Asset Value per share - # #1.09 #1.58
CASHFLOW STATEMENT - US Dollars
2000 1999
$000 $000
Operating activities
Cash received from investments 1,116 808
Interest received 88 69
Investment management fees paid (1,274) (838)
Directors' fees paid (78) (71)
Other net cash payments (781) (383)
Net cash outflow from operating activities (929) (415)
Returns on investments and servicing of finance
Interest paid (335) (179)
Taxation
UK taxation (paid)/received (135) 540
Investing activities
Purchases of investments (44,646) (40,950)
Sales of investments 51,275 67,027
Foreign exchange differences arising on settlement 131 (331)
of trades
Sundry capital items (108) (169)
Net cash inflow/(outflow) from investing activities 6,652 25,577
Equity dividend paid - (375)
Financing
Shares purchased - (22,073)
(Decrease) in loans (3,300) (2,230)
Increase in cash 1,953 845
CASHFLOW STATEMENT - #
2000 1999
#000 #000
Operating activities
Cash received from investments 737 501
Interest received 58 43
Investment management fees paid (843) (519)
Directors' fees paid (51) (44)
Other net cash payments (544) (230)
Net cash outflow from operating activities (643) (249)
Returns on investments and servicing of finance
Interest paid (222) (111)
Taxation
UK taxation (paid)/received (94) 335
Investing activities
Purchases of investments (29,888) (25,373)
Sales of investments 34,326 41,530
Foreign exchange differences arising on settlement 27 4
of trades
Sundry capital items (72) (104)
Net cash inflow/(outflow) from investing activities 4,393 16,057
Equity dividend paid - (232)
Financing
Shares purchased - (13,991)
Decrease in loans (2,039) (1,285)
Increase in cash 1,395 524
The Annual General Meeting of the Company will be held on 2 May 2001 at
Shackleton House (3rd Floor), 4 Battle Bridge Lane, London, SE1 2HR. We look
forward to meeting shareholders at the AGM, which will be followed by a brief
presentation.
The Company's annual report and accounts will be sent to shareholders in
March 2001. Copies will be available to the public at the registered office
of the Company, Shackleton House, 4 Battle Bridge Lane, London SE1 2HR.
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 23rd March 2001. It is not the Company's statutory
accounts. The statutory accounts for the year ended 31st December 1999 have
been delivered to the Registrar of Companies and received an audit report
which was unqualified. The statutory accounts for the year ended 31st
December 2000 have not yet been approved, audited or filed.
By order of the Board
Shackleton House AIB Govett Secretaries Limited
4 Battle Bridge Lane Assistant Secretary
London SE1 2HR Registered in Jersey no: 45906
23rd March 2001
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