Interim Results

GOVETT ASIAN RECOVERY TRUST PLC Interim Results for the six months to 30th September 2003 (unaudited) CHAIRMAN'S STATEMENT I am pleased to report that in the six months to 30th September 2003 your Company's Net Asset Value per Ordinary share rose by 35.1% to 147.5p, compared with an increase of 26.8% in the Company's benchmark, the MSCI All Countries Asia Pacific Index in sterling terms. The share price benefited from both this underlying performance and a narrowing of the discount in the period, rising 41.0% to 134p on 30th September. Markets throughout the region have been buoyed by the fact that Asian economies are improving, helped by a pick-up in the US and strong interest from overseas investors. Japan recovered significantly, boosted by firm export growth and a sharp recovery in private sector capital spending. Other markets showing strong growth included Thailand and Indonesia, where markets surged as signs of a strong economic recovery attracted interest from overseas investors, Taiwan, following a recovery in global demand for semiconductors, and Hong Kong, where equities were bolstered by rapid economic growth in mainland China. The Company has appointed Gartmore Investment Limited as Manager to the Company with effect from 17th November 2003. This followed the announcement by Allied Irish Banks, p.l.c. of the intended sale of certain of the management contracts of Govett Investment Management Limited to Gartmore Investment Management plc. Your Board is confident that Gartmore, with its worldwide resources and considerable experience in managing portfolios across Asia, will meet the Company's investment objectives. Following the appointment of Gartmore, Noel McEvoy, who is also Chairman and Chief Executive Officer of Govett Investment Management Limited, resigned as a Director of your Company. I would like to thank Noel, on behalf of the Company, for his contribution to the Board. Our new Manager is confident that economic activity in the Pan-Pacific region will continue to expand over the rest of the financial year, bolstered by China's robust growth and the continued benefit to exports from the ongoing recovery in the global economy. This should provide a positive influence on markets, although recent rallies could trigger some profit-taking in the short term. I will be writing to shareholders separately to outline plans for the future of your Company. David Price Chairman STATEMENT OF TOTAL RETURN Six months to 30th September 2003 Revenue Capital Total £'000 £'000 £'000 Realised & unrealised gains/(losses) on - 13,662 13,662 investments Net foreign currency exchange differences - (137) (137) Income from investments 410 - 410 Deposit interest 9 - 9 Investment management fee (191) (123) (314) Other (expenses)/income (94) 16 (78) ---------- ---------- ---------- Net return/(loss) before finance costs and 134 13,418 13,552 taxation Interest payable (134) - (134) ---------- ---------- ---------- Return/(loss) on ordinary activities - 13,418 13,418 before taxation Tax on ordinary activities (20) 251 231 ---------- ---------- ---------- (Loss)/return on ordinary activities after (20) 13,669 13,649 taxation ======= ======= ======= (Loss)/(return) per Ordinary share (pence) (0.1)p 38.4p 38.3p ======= ======= ======= STATEMENT OF TOTAL RETURN (Comparative) Six months to 30th September 2002 Revenue Capital Total £'000 £'000 £'000 Realised & unrealised gains/(losses) on - (12,974) (12,974) investments Net foreign currency exchange differences - (1,194) (1,194) Income from investments 354 - 354 Deposit interest 44 - 44 Investment management fee (204) - (204) Other (expenses)/income (131) 35 (96) ---------- ---------- ---------- Net return/(loss) before finance costs and 63 (14,133) (14,070) taxation Interest payable (57) - (57) ---------- ---------- ---------- Return/(loss) on ordinary activities 6 (14,133) (14,127) before taxation Tax on ordinary activities (33) - (33) ---------- ---------- ---------- (Loss)/return on ordinary activities after (27) (14,133) (14,160) taxation ======= ======= ======= (Loss)/(return) per Ordinary share (pence) (0.1)p (39.0)p (39.1)p ======= ======= ======= The above figures are unaudited. The revenue column above represents the Revenue Account of the Company. All the revenue and capital items in the above statement derive from continuing activities. BALANCE SHEET At 30th September At 31st March 2003 2003 £'000 £'000 Fixed asset investments Quoted - overseas 52,794 42,068 Current assets Debtors 4,066 1,855 Cash at bank 4,303 674 ------- ------- 8,369 2,529 Creditors: amounts falling due within one (8,619) (5,541) year ------- ------- Net current liabilities (250) (3,012) Provisions for liabilities and charges - (110) ------- ------- Total assets less current liabilities 52,544 38,946 ===== ===== Financed by: Capital and reserves Called-up share capital 3,561 3,566 Other reserves: Capital redemption reserve 171 166 Special capital reserve 31,304 31,355 Capital reserve - realised 8,456 5,644 Capital reserve - unrealised 9,341 (1,516) ------- ------- Total other reserves 49,272 35,649 Revenue reserve (289) (269) ------- ------- Equity shareholders' funds 52,544 38,946 ===== ===== Net asset value per share 147.5p 109.2p ===== ===== CASH FLOW STATEMENT Six months to Six months to 30th September 30th September 2003 2002 £'000 £'000 Operating activities Investment income received 549 394 Deposit interest received 10 45 Investment management fees paid (163) (240) Directors' fees paid (19) (24) Other cash payments (91) (163) ------- ------- Net cash inflow from operating activities 286 12 ------- ------- Return on investments and servicing of finance Interest paid (153) (57) ------- ------- Taxation Taxation recovered 251 8 ------- ------- Capital expenditure and financial investment Purchase of investments (36,956) (83,034) Sale of investments 39,444 88,692 Indian balances excluded (391) - Capital income 49 56 ------- ------- Net cash inflow from investment activities 2,146 5,714 ------- ------- Net cash inflow before financing 2,530 5,677 ------- ------- Financing Shares repurchased (51) - Increase/(decrease) in loans 1,150 (5,511) ------- ------- Net cash inflow/(outflow) from financing 1,099 (5,511) ------- ------- Increase in cash 3,629 166 ===== ===== Notes: 1. The financial information contained in this Interim Statement is unaudited and does not constitute accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31st March 2003 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The Report of the Auditors on those accounts contained no qualification or statement under Section 237(2) or (3) of the Companies Act 1985 2. There have been no changes in accounting policies since 31st March 2003. 3. Total Return per Ordinary share has been calculated on the return to equity shareholders of £13,649,000 (2002: negative £14,160,000) and 35,631,575 shares (2002: 36,202, 077), being the weighted average number of Ordinary shares in issue during the period. 4. The Net Asset Value per Ordinary share is calculated on net assets of £ 52,544,000 (31st March 2003: £38,946,000) and 35,608,077 shares in issue at 30th September 2003 (31st March 2003: 35,658,077). 5. Contingent Liabilities: Cash balances held in India amounting, at 30th September 2003, to the equivalent of £391,000 are currently blocked pending resolution of an action by an agency of the Indian Government in relation to a closed investment transaction. Additionally, as an extension of this action, regulatory action in India may be initiated against various parties including this company which, inter alia, may seek to repatriate investment proceeds from the UK. These issues affect some 20 foreign institutional investors. The Company has ceased to recognise any value in these balances for the purpose of these accounts. The Company is defending itself strenuously against this potential action. The Company has commenced proceedings in the Indian High Court seeking an order lifting the blocking order imposed on the Company's bank account and, as an interim protective measure, a direction that the blocked funds should not be taken arbitrarily. These proceedings are continuing. INTERIM REPORT The Interim Report for the six months to 30th September 2003 will be posted to shareholders shortly. Copies will also be available from the offices of Gartmore Investment Limited, Gartmore House, 8 Fenchurch Place, London EC3M 4PB. Gartmore Investment Limited Secretaries 26th November 2003

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