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Govett Em.Mark.Inv. (GEM)

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Tuesday 19 September, 2000

Govett Em.Mark.Inv.

Final Results

Govett Emerging Markets Inv Tst PLC
19 September 2000

Unaudited Statement of Total Return (incorporating the revenue account*) 
For the year ended 30th June 2000. 
                                   Year ended                      Year ended 
                              30th June 2000.                 30th June 1999. 
                 Revenue    Capital    Total    Revenue    Capital     Total  
                  £000's    £000's    £000's     £000's     £000's    £000's  
  Realised and         -     5,261     5,261          -      7,011     7,011 
  gains in                                                                    
  Net foreign          -     (600)     (600)          -       (239)     (239) 
  Income from        550        -       550         663          -       663 
  Deposit             37        -        37          28          -        28 
  Investment        (123)    (492)     (615)        (64)      (255)     (319) 
  Other             (324)     (75)     (399)       (288)       (88)     (376) 
  Net return         140    4,094     4,234         339      6,429     6,768 
  costs and                                                                   
  Interest          (116)    (458)     (574)         (8)       (33)      (41) 
  Return on           24    3,636     3,660         331      6,396     6,727 
  before tax                                                                  
  Tax on             (65)       -       (65)       (100)        42      (58) 
  Return on          (41)   3,636     3,595         231      6,438     6,669 
  after tax                                                                   
  for the                                                                     
  to equity                                                                   
  Ordinary dividends                                                          
  Final- nil           -        -        -      (179)     -      (179)
  Transfer (from)/to  (41)    3,636    3,595      52    6,438    6,490
  Return per Ordinary (0.11)p 10.16p   10.05p   0.65p   18.00p   18.65p
  Share (pence)                                                               
* The revenue column of this statement represents the revenue account of the
All the revenue and capital items in the above statement derive from
continuing activities.
                                                    2000      1999 
                  NET ASSETS                        £000      £000 
                  Investment at valuation         44,728    43,990
                  Net current liabilities         (3,968)   (6,825)
                                                  40,760    37,165

            Net asset value per Ordinary share    113.95p   103.90p
The Annual General Meeting of the Company will be held on 25th October 2000
at Shackleton House (3rd Floor), 4 Battle Bridge Lane, London Bridge, 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
September 2000. Copies will be available to the public at the registered
office of the Company, Shackleton House, 4 Battle Bridge Lane, London.
This preliminary statement, which has been agreed with the auditors, was
approved by the Board on 19th September 2000. It is not the Company's
statutory accounts. The statutory accounts for the year ended 30th June 1999
have been delivered to the Registrar 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 30th
June 2000 will be delivered to the Registrar of Companies by 31st October
Shackleton House                                  By order of the Board
4 Battle Bridge Lane                     AIB Govett Secretaries Limited
London                                                        Secretary
SE1 2HR                                             19th September 2000.
                                      Registered in England no: 2863050
Chairman's Statement                                    
The seventh year of Govett Emerging Markets Investment Trust PLC saw a
continued recovery in the world's developing markets. This was in spite of a
more cautious performance from global markets in the first six months of
2000. The first half of the Trust's financial year saw a strong relative
performance, with an increase in net asset value of 24.0 per cent against a
rise in the index of 16.4 per cent. The second half, however, was
disappointing, with a decline of 11.6 per cent against a decline of 2.1 per
cent for the index.  
Over the year as a whole, net asset value per share rose from 103.9 pence to
113.95 pence and the share price, having peaked in February at 112.75 pence,
closed for the year end at 94.5 pence. The net result was a return of 9.7 per
cent, compared with the index gain of 13.9 per cent. This under performance
was mainly due to the correction in the technology sector that occurred in
March, which impacted a substantial part of the Trust's geared portfolio.
However, our Managers retain their confidence in the long-term potential of
this sector. 
Having only recently become Chairman of the Company, I wish to devote my
remarks as much to the future as to the past. 
In June of this year a major institutional shareholder requisitioned the
Board to convene an Extraordinary General Meeting to consider proposals that
would give shareholders an opportunity to realise their investment in the
Company. Your Board concluded, after careful consideration, that there was no
prospect of such a proposal leading to a liquidation or workable
reconstruction of the Company. The Board does, however, recognise that
certain substantial shareholders wish to dispose of their holdings at a
valuation more closely related to net asset value than is available on the
stock market. Accordingly, the Board put forward a counter proposal to bring
forward the continuation vote, as provided in the Articles of Association of
the Company, from November 2003 to July 2001. At Extraordinary General
Meetings of the Company held on 7th July 2000, the Board's resolution was
carried by 14,641,426 votes (57.7 per cent) to 10,731,408 (42.3 per cent),
but the requisitionists' resolution was defeated by 15,389,933 votes (60.7
per cent) to 9,976,247 (39.3 per cent). A resolution will therefore be
proposed at the Annual General meeting on 25th October 2000 to alter the
Articles of Association in order to bring forward the continuation vote to
July 2001. The Board is also actively considering a number of other options
which could enable shareholders to determine the future of the Company at an
earlier date. 
In June my predecessor, Mr. John Morrell, who had overseen the activities of
the trust since its inception, retired from the Board. I would like to
express the Board's warm thanks to him for his contribution to the Trust's
affairs over the previous seven years, in which he combined long experience
of the investment trust industry with wide knowledge of the world's emerging
markets. We are also most grateful to the Hon. Kevin Pakenham for the
valuable professional advice he provided to the Board while he was Chairman
of AIB Govett Asset Management Limited, and who, as intimated last year, has
now retired from the Board. In turn, we are very pleased to welcome to the
Board Mr. Garth Milne who brings with him more than thirty years' experience
of the investment trust market. As a result the Board, as newly
reconstituted, now consists of four members with relevant knowledge of both
investment trusts and emerging markets and who are all independent of the
management company. 
In recent discussions with the managers, the Board has proposed that the
management contract should be restructured in order to provide a lower basic
fee but greater incentive to good performance. I am glad to be able to report
that agreement has been reached in principle on a scheme that should align
the interests of shareholders and managers more closely. With effect from 1st
July 2000, the management fee will be reduced from 1.25 per cent to 1.00 per
cent, and will be calculated with reference to net assets instead of gross
assets. In addition, a bonus will be payable related to outperformance, with
a cap of 1.50 per cent on the overall fee. 
Despite the setback earlier this year, in the wake of the correction in the
market rating of new economy sectors, we remain of the view that the world's
emerging markets offer positive investment opportunities. In many countries
there has been a strong economic recovery during the last year, with
prospects of above average rates of sustainable growth. Although not uniform
or universal, there is now a much greater recognition of the need for
structural reform, while globalisation and the technological revolution are
creating new momentum in the developing world. 
Since the pre-tax revenue return this year is more than offset by the
overseas tax charge, the directors do not recommend the payment of a


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