Final Results

Govett Asian Recovery Trust PLC
21 June 2001


GOVETT ASIAN RECOVERY TRUST ANNUAL REPORT 2001
 
Chairman's Statement.
 
The last year has been a very difficult one for investors in Asian markets.
During the year ended 31st March 2001, your Company's net assets fell by
32.97%, while the share price fell by 36.05%.This compares with a fall in our
benchmark MSCI AC Asia Pacific (cum Japan)Index of 26.06%.
 
This underperformance is particularly disappointing, given your Company's
strong outperformance in the previous year. Following strong gains in 1999 and
early 2000, Asian markets fell sharply as the outlook for global growth
deteriorated in tandem with mounting fears of an economic downturn in the
United States.
 
All Asian stock markets fell during this period. This weakness was
particularly marked in a small number of sectors and it was your Company's
relatively high exposure in these sectors, particularly information technology
and telecommunications, which resulted in the underperformance compared with
the benchmark.
 
This exposure was predominantly in stocks in the Japanese market where the
Manager believed initially that the underlying businesses of these companies
would not be affected by a downturn in the United States. Mounting evidence
that the downturn in these sectors was becoming more global in nature
resulted in sharp falls in a number of our core holdings. During the second
half of the Company's year, the Manager restructured the investment portfolio
to reflect a more cautious view towards all of the region's markets and
towards technology and telecommunications stocks in particular.
 
Our relatively cautious approach towards the level of gearing was maintained
during the year and we only began to reduce cash and increase gearing towards
the year-end, as attractive opportunities appeared in the Japanese stock
market and elsewhere. During the year, we acquired a holding in UK Treasury
stock to offset the borrowing in Japanese yen.  Towards the end of 2000, the
hedge we had in place to protect our equity portfolio against weakness in the
Japanese Yen, the Korean Won, the New Taiwan Dollar and the Singapore dollar
was increased.  This served us well as all of these currencies weakened during
the year both against sterling and against the US dollar.
 
The widening of the discount of your Company's share price to net asset value
during the year reflected, in large part, the poor performance of Asian
markets and the reduction in investors' appetite for risk. During the year,
your Company repurchased a total of 720,000 shares at discounts ranging
between 22.8% and 24.7%, enhancing the net asset value by 0.5%. We propose to
renew the authority to buy back shares at the Annual General Meeting and will
continue to use these powers as opportunities arise.
 
Looking forward, the series of interest rate cuts in both the United States
and Asia has begun to create a more favourable environment for investment in
equities. There is likely to be continuing volatility in the coming months,
which I believe could provide attractive buying opportunities.
 
David Price
21 June 2001
 
 
 
Statement of Total Return (incorporating the revenue account*) for the year
ended 31st March 2001
 

                                                                              
                           Year ended                     Year ended          
                        31st March 2001                31st March 2000        
                      Revenue   Capital   Total     Revenue  Capital   Total
                        £000s     £000s   £000s       £000s    £000s   £000s 
  Realised & unrealised     -   (29,541) (29,541)         -    38,292  38,292 
  (losses)/gains on                                                           
  investments                                                                 
  
  Net foreign currency      -     2,032    2,032          -    (1,756) (1,756)
  exchange differences                                                        
        
  Income from             908         -      908        817         -     817 
  investments                                                                 
  
  Deposit interest        325         -      325         23         -      23 
                                                                      
  Management fee         (527)        -     (527)      (623)     (209)   (832)
                                                                             
   
  Other expenses         (315)       97     (218)      (382)       (6)   (388)

  Net return before       391   (27,412) (27,021)      (165)   36,321  36,156 
  finance costs and 
  taxation                                                                
   
  Interest payable       (209)        -     (209)      (221)        -    (221)

  Return on ordinary      182   (27,412) (27,230)      (386)    36,321 35,935 
  activities before 
  taxation                                                                    
  
  Tax on ordinary         (86)     (103)    (189)       (82)   (1,026) (1,108)
  activities                                                                  
  
  Return on ordinary       96   (27,515) (27,419)      (468)   35,295  34,827 
  activities after taxation                                                   
          
  Return per ordinary    0.26p   (75.52)p (75.26)p    (1.26)p   95.43p  94.17p
  share                                                              
 
* The revenue column of this statement represents the revenue account of the
Company.
 
All items derive from continuing activities.
 
 

                                                                           
     Balance Sheet as at 31st March 2001                                   
                                                           2001        2000
                                                                           
                                                          £000s       £000s
     Investments at Valuation                            61,741      93,337
     
     Debtors                                                857       1,899
     Cash at bank                                         3,615       7,259
     
     Creditors: amounts falling due within one year    (11,663)    (19,105)
                                                                           
     Net current/(liabilities)                          (7,191)     (9,947)
                                                                           
     Provisions for liabilities and charges                   -       (387)
     
     Total assets less current liabilities               54,550     83,003
                                                                           
                                                                           
     Financed by                                                           
     Capital and Reserves                                                  
     Called-up share capital                          3,620           3,692
     Other reserves                                                        
     Capital redemption reserve                       112                40
     Special capital reserve                          31,881         32,915
     Capital reserve - realised                       21,985         22,261
     Capital reserve - unrealised                     (2,709)        24,530
     Revenue reserve                                  (339)           (435)
                                                                           
     Equity shareholders' funds                        54,550        83,003
                                                                           
     Net Asset Value per share                         150.68p      224.81p
 
 

 
   Cashflow Statement for the year ended 31st March 2001

                                                                             
                                                             2001        2000
                                                            £000s       £000s
                                                                             
   Operating activities                                                      
                                                                             
   Cash received from investments                             859         749
   Interest received                                          325          22
   Management fees paid                                      (786)       (320)
   Directors' fees paid                                       (57)        (57)
   Other net cash payments                                   (152)       (304)
                                                                             
   Net cash inflow from operating activities                  189          90
                                                                             
                                                                             
   Returns on investments and servicing of finance                           
   Interest paid                                             (209)       (221)
                                                                             
   Taxation                                                                  
   Taxation paid                                             (490)       (639)
                                                                             
   Capital expenditure and financial investment                              
   Purchases of investments                               (86,932)    (94,600)
   Sales of investments                                    87,758      89,965
   Loss on disposal of hedging transactions                  (377)          -
   Capital income/(expenses)                                   97         (43)
                                                                             
   Net cash inflow/(outflow) from investing activities        546      (4,678)
                                                                             
   Financing                                                                 
   Shares repurchased                                     (1,034)        (468)
   (Decrease)/increase in loans                           (2,682)      12,443
                                                                             
   Decrease/(increase) in cash                            (3,680)       6,527
                                                                             
                                                                             
                                                                             
                                                                             
 
The Annual General Meeting of the Company will be held at 12 noon on 24th
July 2001 at Glaziers Hall, 9 Montague Close, London Bridge, London SE1 9DD.
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 June
2001. Copies will be available to the public at the registered office of the
Company, Shackleton House, 4 Battle Bridge Lane, London.
 
The directors' do not propose the payment a dividend for the year ended 31st
March 2001 (2000: £nil).
 
The above results for the year ended 31st March 2001 are unaudited. This
preliminary statement, which has been agreed with the auditors, was approved
by the Board on 21 June 2001. It is not the Company's statutory accounts. The
statutory accounts for the period ended 31 March 2000 have been delivered to
the Register of Companies and received an audit report which was unqualified
and did not contain statements under s237(2) or (3) of the Companies Act
1985. The statutory accounts for the year ended 31 March 2001 have not yet
been audited or filed.
 
By order of the Board
Shackleton House                              AIB Govett Secretaries Limited
4 Battle Bridge Lane                          Secretary
London                                        21 June 2000
SE1 2HR
Registered in England no: 3582911