Expansion bears fruit as Govett advances to $55m

Govett, the City fund manager, last year tasted the fruits of its expansion, reporting higher pre-tax profits despite difficult conditions in financial markets.

Group profits before tax were 1 per cent higher at $55.2m in the year to December. Excluding capital gains, they rose by 14.7 per cent to $41.4m. Profits from fund mangement, up 33 per cent, provided more than half of total net income.

The shares closed unchanged at 299p. They have not recovered from the blow dealt by a $20m lawsuit filed recently by a US fund Govett has managed since 1987.

The effect of falling market values on fund management income during 1994 was more than offset by the amount of new cash raised. A fund launched in London early last year now has $40m in assets, while a distribution agreement with US mutual fund Van Kampen American Capital brought more than £200m of new mutual fund assets under management.

Ian Whitehead, Govett's chief financial officer, said the agreement brought the group access to most of the big American brokerage firms. Earlier this month Govett increased the value of its $8.6bn funds under management nearly five times with its agreement to acquire US investment manager Duff & Phelps, with funds of $41bn.

Grim market conditions took investment income down from $18.5m in 1993 to $6.7m. Capital gains nearly halved to $4.9m.

Net income from the life assurance business fell, before capital gains, to $8.5m, but capital gains in the first quarter increased its total net income to $17.4m. Earnings per share in 1994 climbed to 65.3 cents, and the dividend was raised from 28 to 29 cents.