REG - Polar Cap Glb Health PCGH ZDP PLC - Final Results
13/12/2023 07:15
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RNS Number : 5538W Polar Capital Global Health Tst PLC 13 December 2023
POLAR CAPITAL GLOBAL HEALTHCARE TRUST PLC
Legal Entity Identifier: 549300YV7J2TWLE7PV84
AUDITED RESULTS ANNOUNCEMENT FOR THE YEAR ENDED
30 SEPTEMBER 2023
FINANCIAL HIGHLIGHTS
For the year to 30 September 2023
Performance
Net Asset Value per Ordinary Share (Total Return)* 4.21%
Benchmark index 1.19%
(MSCI ACWI Health Care Index (total return in sterling with dividends
reinvested))
Share Price Total Return* 1.92%
Since restructuring
Net asset value per Ordinary share (total return) since restructuring *~ 67.56%
Benchmark index total return since restructuring 66.01%
Expenses 2023 2022
Ongoing charges* 0.87% 0.84%
Financials As at As at Change %
30 September 2023 30 September 2022
Total net assets (Group and Company) £419,182,000 £404,833,000 3.5%
Net asset value per Ordinary share 345.66p 333.83p 3.5%
Net asset value per ZDP share^ 120.41p 116.91p 3.0%
Price per Ordinary share 319.00p 315.00p 1.3%
Discount per Ordinary share* 7.7% 5.6%
Price per ZDP share^ 116.00p 114.00p 1.8%
Net gearing* 9.37% 7.41%
Ordinary shares in issue (excluding those held 121,270,000 121,270,000 -
in treasury)
Ordinary shares held in treasury 2,879,256 2,879,256 -
ZDP shares in issue^ 32,128,437 32,128,437 -
Dividends
The Company has paid or declared the following dividends relating to the
financial year ended 30 September 2023:
Pay date Amount per Record Date Ex-Date Declared Date
Ordinary share
First interim: 31 August 2023 1.00p 4 August 2023 3 August 2023 11 July 2023
Second interim: 29 February 2024 1.20p 2 February 2024 1 February 2024 12 December 2023
Total (2022: 2.10p) 2.20p
* See Alternative Performance Measures provided in the Annual Report.
~ The Company's portfolio was restructured on 20 June 2017. The total return
NAV performance since restructuring is calculated by reinvesting the dividends
in the assets of the Company from the relevant payment date.
^ For information purposes.
For further information please contact:
Ed Gascoigne-Pees Tracey Lago, FCG John Regnier-Wilson
Camarco Polar Capital Global Healthcare Trust Plc Polar Capital LLP
Tele. 020 3757 4984 Tele. 020 7227 2742 Tele. 020 7227 2725
STATUS OF ANNOUNCEMENT
The figures and financial information contained in this announcement are
extracted from the Audited Annual Report for the year ended 30 September
2023 and do not constitute statutory accounts for the period. The Annual
Report and Financial Statements include the Report of the Independent
Auditors which is unqualified and does not contain a statement under either
section 498(2) or Section 498(3) of the Companies Act 2006.
The Annual Report and Financial Statements for the year ended 30 September
2023 have not yet been delivered to the Registrar of Companies. The figures
and financial information for the period ended 30 September 2022 are extracted
from the published Annual Report and Financial Statements for the period ended
30 September 2022 and do not constitute the statutory accounts for that
year. The Annual Report and Financial Statements for the period ended 30
September 2022 have been delivered to the Registrar of Companies and included
the Report of the Independent Auditors which was unqualified and did not
contain a statement under either section 498(2) or Section 498(3) of the
Companies Act 2006.
The Directors' Remuneration Report and certain other helpful Shareholder
information have not been included in this announcement but forms part of
the Annual Report which will be available on the Company's website and will
be sent to Shareholders in December 2023.
CHAIR'S STATEMENT
Dear Shareholders,
On behalf of the Board, I am pleased to provide to you the Company's Annual
Report for the year ended 30 September 2023.
Performance
The Company has performed well this year, ending the year 3.02% ahead of its
benchmark (MSCI ACWI Healthcare Index, Total Return), performing well against
the peer group and returning a NAV per share total return of 4.21%. This was
despite the year under review continuing to be a difficult period for markets
with challenging macro-economic conditions and geo-political events, which
have sadly continued into the current year.
Whilst we are now seeing inflation and interest rates somewhat stabilising,
the longer term effects of this continue to be felt and we have seen discounts
across the investment trust sector in general widen considerably. At the
financial year end the discount was 7.7% compared to the prior year figure of
5.6%.
The outperformance was driven by strong stock selection, largely out of the
focus on the three key themes highlighted in last year's Annual report and
Financial Statements, namely: rising utilisation, disrupting the delivery of
healthcare and consolidation.
Further detail is provided within the Manager's Report.
Outlook
Whilst the healthcare sector has been somewhat out of favour against the
broader market, fundamentals remain extremely strong with valuations still
very attractive. There is much to be excited about, as demonstrated during the
year by the delivery and announcement of ground-breaking medical developments
e.g. in Alzheimer's research and the introduction onto the market of highly
effective weight-loss medications.
The Managers believe that while the themes that generated performance last
year will still be relevant, there are three further areas which may drive
shorter term returns: innovation, the growing use of technology, such as AI
and robotics, and Emerging Markets. Further detail is provided in the
Manager's Report.
We believe all of these factors support our optimism for continued strong
performance for the Company during the current financial year.
Dividends
The Company's focus continues to remain on capital growth and consequently
dividends are expected to represent a relatively small part of Shareholders'
total return. The Company has a policy to pay two small dividends per year.
In August 2023 the Company paid an interim dividend of 1.00p per ordinary
share. The Board has declared a further interim dividend of 1.20p per ordinary
share payable to shareholders on the register as at 2 February 2024. This will
bring the total dividend paid for the financial year under review to 2.20p per
ordinary share, a small increase on the previous financial year.
Share Capital
The Company has 121,270,000 ordinary shares in issue as at the date of writing
and no shares have been bought back or issued during the financial year under
review. The Company's share price on 30 September 2023 was 319.00p (2022:
315.00p). The Company's market capitalisation at the financial year end was
£386.9m (2022: £382.0m). The Board has reconfirmed the authority given to
the Manager to use discretion to purchase shares in the market when deemed
appropriate to do so.
Subsidiary Undertaking
The Company is parent to a wholly owned subsidiary, PCGH ZDP Plc. The
subsidiary was created as part of the Company's restructure in 2017; the
purpose of the subsidiary is to issue zero dividend preference ("ZDP") shares
and provide a loan to the parent in the form of structural gearing. The
subsidiary has a fixed life whereby the loan will be repaid and the ZDP shares
will be redeemed in June 2024 at which time the entity will be liquidated. The
Company remains in a strong position to repay the outstanding loan amount at
the time of redemption. Options for repayment are either through new
alternative gearing facilities or by raising cash via the sale of stock within
the portfolio. The Company has no current intention to refinance the loan.
Further information on the redemption process is provided on the Company's
website www.polarcapitalglobalhealthcaretrust.co.uk
(http://www.polarcapitalglobalhealthcaretrust.co.uk) .
The Board
As referenced in my statement to Shareholders last year, the Board is aware of
the FCA's Diversity and Inclusion Policy and notes that its current
composition does not meet the recommended gender or ethnicity requirements.
Given the Company's fixed life and the potential reconstruction in 2025, the
Board (via the Nomination Committee) has concluded that the appropriate time
for recruitment would be shortly before or after any reconstruction plans. We
have engaged with some of our major shareholders via our Company Secretary and
they are understanding of this timeframe. It is a priority of the Board to be
able to meet all aspects of the FCA's Diversity policy as part of future
succession plans. At the appropriate time, the Board will ensure that
diversity continues to be considered throughout any recruitment process,
especially when compiling a shortlist of candidates and selecting individuals
for interview.
There have been no changes to the membership of the Board during the year
under review. The Directors' biographical details are available on the
Company's website and are provided in the Annual Report.
As reported in the last interim report, we have been joined by a board
apprentice, Ei-Lene Heng. Ei-Lene will sit with us as a Board for c.12 months
to gain experience before continuing her career and potential future director
roles. An interview with Ei-Lene on her experience as a Board apprentice is
contained in the Annual Report and Accounts.
Annual General Meeting
The Company's Annual General Meeting ("AGM") will be held at 16 Palace Street at 2:30pm on Thursday, 8 February 2024. The notice of AGM has been provided to Shareholders and will also be available on the Company's website. Detailed explanations of the formal business and the resolutions to be proposed at the AGM are contained within the Shareholder Information section and in the Notice of AGM. We will once again upload a copy of the Manager's Investment Presentation to the Company's website ahead of the AGM and will hold the formal business of the meeting in person. We have provided a zoom link in the Notice of AGM which will enable anyone interested to view the formal business and ask questions via the on-line chat function. The Managers will be available to answer questions and meet shareholders present. All formal business resolutions will be voted on by a poll and we therefore encourage shareholders to submit their votes ahead of the meeting by proxy card which is provided with the Notice of Meeting.
Lisa Arnold
Chair
12 December 2023
INVESTMENT MANAGER'S REPORT - FOR THE YEAR ENDED 30 SEPTEMBER 2023
The objective of Polar Capital Global Healthcare Trust plc (the Company) is to
generate long-term capital appreciation by investing in a globally diversified
portfolio of healthcare companies.
The Company's diversification strategy, coupled with its focus on
large-capitalisation healthcare companies with robust, medium-term growth
outlooks, helps drive the positive risk/ return profile of the underlying
assets, relative to the more volatile areas of healthcare. Further, the broad
investment remit affords the opportunity to invest in growth areas regardless
of the economic, political and regulatory environment. Importantly, the
Company also has the opportunity to invest in earlier-stage, more innovative
and disruptive companies that tend to be lower down the market-capitalisation
and liquidity scales. This is a key advantage of the Company's closed ended
structure. Regardless of size, subsector or geography, stock selection is
central to the process, as we look to identify companies where there is a
disconnect between valuations and the near and medium-term growth drivers.
In terms of structure, the majority of the Company's assets (calculated on a
gross basis and referred to as the Growth portfolio) will be invested in
companies with a market capitalisation >$5bn at the time of investment,
with the balance invested in companies with a market capitalisation <$5bn
(a maximum of 20% of gross assets, and referred to as the Innovation
portfolio). At the end of the reporting period, 31 companies in the portfolio
were Growth investments (95.0% of net assets) and 11 were Innovation
investments (14.3%). Structural debt, in the form of Zero Dividend Preference
shares, currently offers access to additional liquidity and the opportunity to
enhance returns.
Market Cap at 30 September 2023 30 September 2022
Large (>US$10bn) 80.4% 78.5%
Medium (US$5bn - US$10bn) 14.6% 16.0%
Small (20% over a 72-week period. Novo
Nodisk's drug, Wegovy, has demonstrated high-teens percentage weight loss over
a 68-week period.
The impact GLP-1s are having on weight loss is hugely impressive, but there is
just as much excitement with some of the secondary benefits of the drug class.
Novo Nordisk released the top-line results of a cardiovascular outcomes study
called SELECT which revealed that Wegovy reduces the risk of major adverse
cardiovascular events by 20% in adults with obesity and established
cardiovascular disease. So not only does the drug help patients lose weight,
but it also reduces their risk of further serious cardiovascular events, such
as myocardial infarction (heart attack) and stroke. Further, Novo Nordisk and
Eli Lilly are also looking at how these drugs could help patients with
disorders such as obstructive sleep apnoea (a disorder where breathing stops
and starts while you sleep), pain associated with osteoarthritis, heart
failure, non-alcoholic steatohepatitis (fatty liver disease) and diabetes
prevention. Clearly we need to see the final data from the ongoing clinical
trials, but it is easy to understand why the scientific community, and indeed
the investment community, is so excited by the potential of these drugs. For
context, by 2030 the combined estimated sales of Eli Lilly' tirzepatide and
Novo Nordisk's Wegovy is c$40bn in obesity alone (Source: Bloomberg), a figure
that only represents modest penetration of the global pandemic that is
obesity.
The euphoria surrounding the positive implications of the obesity drugs is
easy to understand, but it is the potentially negative long-term implications
for other healthcare subsectors that needs more careful consideration.
Continuous glucose monitoring, for example, is an area where the market is
starting to question the total addressable market given the GLP-1s' positive
effect on controlling blood sugar levels and, potentially, delaying the need
for diabetics to move on to insulin. An even bigger concern for medical device
companies that have exposure to diabetes is the potential for GLP-1s to
prevent diabetes. Obstructive sleep apnoea is another area where GLP-1s could
prove effective, as illustrated by the pressure being seen on the valuations
of companies that manufacture continuous positive airway pressure devices and
implants that are used to open airways. Another concern, albeit a bit more
tenuous, is the impact that obesity drugs could have on the demand for large
joints such as hips and knees. Novo Nordisk is running a clinical trial that
is looking at not just weight loss, but also at how much knee pain
participants suffer from and how this affects participants' daily life. With
osteoarthritis the most common cause of joint replacements, there is some
concern that the demand for large joint replacements will wane over time.
In conclusion, obesity medications could have a hugely positive impact on the
health of millions of patients globally and could be of financial benefit to
healthcare systems spending huge amounts of money to treat effects of the
disease. In terms of investment opportunities, the companies developing the
drugs are understandably attracting lots of attention, but it is also the
supply chain in areas like manufacturing and distribution that should benefit
from the huge demand for the therapies. Relevant Company investments included
Zealand Pharma, Aptar Group and Beckton Dickinson, in addition to the holding
in Eli Lilly. However, it is important to remain measured given we are a very
long way from solving the world's obesity pandemic. Not because the drugs
aren't effective, but because access to care will remain a challenge for many,
and not just in emerging markets.
Artificial intelligence: Adding value today
Another hot topic of conversation in 2023 has been artificial intelligence
(AI) and machine learning (ML) and how they can be used to make healthcare
more productive. AI and ML technologies can sift through enormous volumes of
health data and analyse it much faster than humans can. For example, AI can
assist physicians with note taking and content summaries that can help ensure
that medical records are as accurate and as thorough as possible. AI could
also automate coding in hospitals and the sharing of information between
departments and billing. Fraud prevention is another area where AI and ML can
be used to help identify unusual or suspicious patterns in insurance claims,
diagnostic procedures and billing. In essence, the opportunities for AI and ML
to add value in a very heavily regulated industry are endless but it makes
sense to focus on areas where there is tangible evidence of progress and where
we can invest today.
Diagnostics is a field of medicine where AI and ML are starting to have a
material impact on accuracy and, more importantly, patient outcomes. Take
colonoscopy for example, a technique that remains the gold standard in
detecting and preventing colorectal cancer. The current procedure does have
limitations with some studies suggesting that more than half of
post-colonoscopy colon cancer cases arise from lesions missed at patients'
previous colonoscopies. Researchers at the Mayo Clinic are investigating how
AI can be used to improve polyp detection. In the case of colon cancer, the AI
system works alongside the physician in real time, scanning the colonoscopy
video feed and drawing small, red boxes around polyps that might otherwise get
overlooked.
AI-based real-time image analysis software is also being used in ultrasound
machines to enhance sonographers' ability to interpret images. Obstetrics has
embraced the technology given its impact on efficiency and workflow but more
importantly its ability to reduce omissions and errors. A good example is
Intelligent Ultrasound's SCANNAV Assist software that has been incorporated
into GE Healthcare's Volusion SWIFT ultrasound machines.
Revenue cycle management is also benefitting from intelligent automation, with
US company R1 RCM one of the leading protagonists. Hospitals, health systems
and physician groups can all benefit from technologies and services that
improve financial performance and promote patient satisfaction. Patient
scheduling, pre-registration and clearance, coding and processes to deal with
denials can all benefit enormously from predictive, technology-driven
solutions. As for the patients, efficient and organised scheduling,
registration, admissions and payment can lead to high levels of satisfaction,
and importantly, high levels of retention.
Relevant Company investments included Intuitive Surgical, Iqvia, Intelligent
Ultrasound and R1 RCM.
Emerging markets: Is China on the road to recovery?
The lifting of the Covid lockdowns was the catalyst for a strong rebound in
economic activity in China in early 2023. However, growth stalled, with
falling consumer spending, a real estate crisis and slumping exports all
contributing factors. This macro slowdown adversely affected a number of
industries, including the life sciences tools and services sector. There are
also some healthcare-specific challenges that have been weighing on the sector
in recent months, primarily an anti-corruption campaign that is looking to
"resolutely punish corruption" in the medical sector "with a zero-tolerance
attitude".
Promoting systematic governance throughout the entire healthcare sector, the
anti-corruption campaign seeks to uncover questionable links between hospital
managers, doctors and medical representatives. If successful, the campaign
could significantly advance China's healthcare industry, making it more
affordable and freeing much-needed resources for innovative medicines,
devices, technologies and services. However, the initiative has resulted in a
slowdown in activity with doctors reluctant to participate in academic
conferences or prescribe imported drugs. There has also been a marked decline
in orthopaedic and ophthalmic surgeries as clinicians and surgeons temporarily
reduce activity. Further, medical device companies have highlighted a modest
impact on capital placements in the short term with hospital procurement
processes also under the microscope.
As soon as the Chinese healthcare system has successfully navigated its way
through the anti-corruption campaign, investors can once again focus on the
strong, underlying fundamentals of the region. Government policy is supportive
for healthcare, encouraging investment in research and development to satisfy
the desire for best-in-class medicines. Further, volume-based procurement
(VBP), which has weighed on the biopharmaceutical and medical device
industries for the past five years, appears to be stabilising. The government
is comfortable with the price adjustments VBP has put in place and is easing
up on its policies, seeking a greater balance between cost control and
innovation. With a more supportive regulatory backdrop, coupled with a
recovery in the economy, companies with significant exposure to China could be
interesting as we look into 2024, with life sciences tools and services,
medical devices and biopharmaceuticals the most likely beneficiaries stocks.
Positioning and process: Constructive on biotechnology, healthcare facilities,
healthcare supplies and equipment
We remain constructive on the healthcare sector as a whole, in particular on
biotechnology, healthcare facilities, healthcare supplies and equipment, which
were three of our largest overweight subsector positions as at 29 September
2023. Despite the challenging environment for early-stage biotechnology
investing, we remain constructive on the broader subsector, which continues to
be innovative and highly productive with many of the Company's investments in
businesses with either late-stage assets or commercialised drugs or both.
Consolidation was a key theme highlighted in last year's report and we were
pleased to see that the pace of M&A activity picked up in 2023, with many
large biopharmaceutical companies announcing their intention to acquire
biotechnology assets in order to reinvigorate revenue growth and strengthen
their pipelines.
From a geographical perspective, the Company continues to have an overweight
stance in Europe and Japan. The biggest change to the portfolio was moving
North America from being an overweight to an underweight, which does not
reflect a less positive perspective on the region but was an effect of stock
selection and changes in the allocation to subsectors.
We entered the year with an underweight in healthcare supplies and equipment
given the challenges the industry faced (supply-chain constraints, low
hospital volumes due to staffing shortages, a strengthening US dollar).
However, our stance turned more positive towards the start of 2023 with the
view that utilisation of healthcare would start to reaccelerate after a period
of low hospital and procedural volumes during the pandemic. This thesis proved
accurate and we believe utilisation will continue to stay elevated at least
for the short term, hence our overweight in the sector as at the end of the
financial year. Additionally, the medical technology sector is ripe to take
advantage of the opportunities afforded by AI which is already being deployed,
for instance to assist medical imaging reading (Intelligent Ultrasound Group)
and in robotic surgery (Intuitive Surgical).
Increased utilisation should also be beneficial for healthcare facilities,
therefore our overweight in the sector has not changed significantly over the
period under review. As delivery disruption is an important secular trend in
healthcare, our holdings in the sector are in businesses providing access to
healthcare services in the lowest-cost settings such as the home and
outpatient facilities or Ambulatory Surgery Centres (ASC) and businesses
involved in behavioural health services.
As in the past, the pharmaceuticals sector remains a significant underweight
relative to the benchmark for the Company. We take the view that,
collectively, pharmaceutical companies have fairly uninspiring revenue and
earnings growth profiles. However, there are therapeutic areas which are very
attractive and could lead to significant revenue and earnings growth. Such an
area of interest is metabolic health which covers diseases such as diabetes
and obesity. Over the year we increased our exposure to this theme by adding
to our holdings in Eli Lilly which, together with Zealand Pharma (a
biotechnology company), is the most direct expression of our positive view on
weight-loss therapies.
Geographical Exposure at 30 September 2023 30 September 2022
United States 65.1 % 72.3%
United Kingdom 10.6 % 6.4%
Denmark 8.3% 4.3%
Japan 7.6 % 6.9 %
Switzerland 7.1 % 6.4 %
France 3.9 % 2.6 %
Sweden 2.8 % 2.9 %
Germany 2.3% 2.2 %
India 0.8 % -
Ireland 0.8 % 1.0 %
Netherlands - 2.3 %
Other net liabilities (9.3%) (7.3%)
Total 100% 100.0%
Source: Polar Capital
Sector Exposure at 30 September 2023 30 September 2022
Pharmaceuticals 30.8% 31.3%
Biotechnology 20.2% 28.3%
Healthcare Equipment 15.4% 12.1%
Managed Healthcare 11.1% 13.1%
Healthcare Facilities 9.7% 7.4%
Healthcare Supplies 7.6% 2.9%
Life Sciences Tools & Services 6.8% 4.3%
Metal & Glass Containers 2.5% 2.4%
Healthcare Services 2.4% 2.1%
Healthcare Technology 2.0% 1.5%
Healthcare Distributors 0.8% 1.9%
Other net liabilities (9.3%) (7.3%)
Total 100% 100%
Source: Polar Capital
While the previous tables focus on subsector and geographical weightings,
bottom-up stock selection is central to the team's investment process. The
healthcare industry is extremely complicated and dynamic, and subject to
varied news flow which lends itself to active management. We look to take
advantage of dislocations between near-term valuations and medium-term
fundamentals. Our own in-house idea generation is complemented by input from
external research, with conviction built through company meetings, investor
conferences and dialogue with expert physician and consultant networks. The
team also has a strong valuation discipline, looking at a large number of
metrics including sales and earnings revisions, price-to-earnings, enterprise
values and free cashflow.
Zero Dividend Preference shares
In terms of a top-down strategy for the Company's portfolio, active decisions
are made on market capitalisation, subsector and geographical exposure,
depending on the current macro outlook of the team which is formulated with
the help of third-party research and monitoring many key risk indicators. The
debt raised through the original issuance of Zero Dividend Preference (ZDP)
shares allows the ability to take on gearing with the aim of enhancing
returns. As a reminder, the PCGH ZDP plc was incorporated with a limited life
of seven years, ending on 19 June 2024, on which date the ZDP Shares will be
repaid and the PCGH ZDP plc Board will convene a general meeting to propose a
resolution to voluntarily wind up the operations of the Company.
Net Gearing
During the financial year, gearing averaged 7.5%, but it has been adjusted to
reflect the risk/reward outlook throughout the past 12 months. In the first
eight months, gearing was kept at an average of c7% in order to strike a
balance between our constructive outlook on the healthcare sector and more
cautious posturing with regards to broader equity markets and the
macroeconomic environment. However, as the year progressed and the
underperformance of the healthcare sector relative to the broader market
widened, gearing was increased to take advantage of the opportunities this
dislocation offered. We therefore exited the 2023 financial year with net
gearing at 9.4%.
Outlook for healthcare: Primed for a change in fortunes
one for healthcare with investors favouring more economically sensitive
sectors as they ponder the idea of avoiding a recession and enjoying a
so-called soft landing. With sentiment weak, and exchange-traded fund (ETF)
outflows pointing to diminished appetite for the healthcare sector, the
classic contrarian indicators are pointing to a more constructive stance. More
importantly, healthcare's fundamentals remain strong, as illustrated by the
delivery of ground-breaking medical breakthroughs, a material pickup in
utilisation and patient volumes plus much-needed progress in shifting the site
of care out of inpatient hospital settings and in to lower-cost, more
efficient outpatient settings such as surgery day centres and ASCs.
As we look forward to the next financial year, there is much to engage and
excite. The introduction of highly effective weight-loss medications has
created huge amounts of interest, and is driving significant dispersions in
returns for the so-called GLP-1 winners (the drug developers, device
manufacturers and distributors) versus the GLP-1 losers (medical device
companies with exposure to areas such as sleep apnoea, diabetes and
orthopaedics). However, once the market has all the relevant clinical data and
the euphoria dies down, there will likely be a wide range of interesting
investment opportunities driven by the recent dislocation.
The adoption of AI platforms machine and ML software could revolutionise
select diagnostic procedures, improving clinician workflow and driving
superior outcomes for patients. In a highly complex and data-intensive
industry, AI and ML are also being used to drive efficiencies for healthcare
systems in areas such as revenue collection, patient scheduling and insurance
claims. Emerging markets, especially China, are another area of interest which
could see a renaissance in the coming months and years as the healthcare
system finds the right balance between cost control, compliance and attracting
innovative, best-in-class therapies, devices and capital equipment.
In conclusion, the healthcare sector is heavily out of favour but attractively
valued, is delivering high levels of innovation and has consistently shown the
ability to deliver strong revenue and earnings growth, regardless of the
economic, political and regulatory environment. It is these characteristics
that fuel our optimism for the year ahead.
James Douglas and Gareth Powell
Co-Managers of the Polar Capital Global Healthcare Trust plc
12 December 2023
PORTFOLIO REVIEW
Full Investment Portfolio
As at 30 September
Ranking Stock Sector Country Market Value % of total net assets
£'000
2023 2022 2023 2022 2023 2022
1 (5) Eli Lilly Pharmaceuticals United States 28,037 16,997 6.7% 4.2%
2 (1) Johnson & Johnson Pharmaceuticals United States 26,228 35,964 6.2% 8.9%
3 (4) AstraZeneca Pharmaceuticals United Kingdom 25,937 19,761 6.2% 4.9%
4 (3) Abbvie Biotechnology United States 25,463 24,932 6.1% 6.2%
5 (-) Elevance Health Managed Healthcare United States 21,404 - 5.1% -
6 (33) Zealand Pharma Biotechnology Denmark 19,655 7,437 4.7% 1.8%
7 (-) Intuitive Surgical Healthcare Equipment United States 17,482 - 4.2% -
8 (9) Humana Managed Healthcare United States 14,748 13,908 3.5% 3.4%
9 (10) Alcon Healthcare Supplies Switzerland 14,397 12,040 3.4% 3.0%
10 (13) HCA Healthcare Healthcare Facilities United States 13,830 10,872 3.3% 2.7%
Top 10 investments 207,181 49.4%
11 (-) Becton Dickinson Healthcare Equipment United States 12,453 - 3.0% -
12 (20) Astellas Pharma Pharmaceuticals Japan 12,333 9,701 2.9% 2.4%
13 (-) Takeda Pharmaceutical Pharmaceuticals Japan 12,312 - 2.9% -
14 (-) Zimmer Biomet Healthcare Equipment United States 12,304 - 2.9% -
15 (16) Acadia Healthcare Healthcare Facilities United States 10,787 10,082 2.6% 2.5%
16 (23) Molina Healthcare Managed Healthcare United States 10,611 9,603 2.5% 2.4%
17 (18) DexCom Healthcare Equipment United States 10,560 9,812 2.5% 2.4%
18 (22) Aptargroup Metal & Glass Containers United States 10,480 9,623 2.5% 2.4%
19 (11) Swedish Orphan Biovitrum Biotechnology Sweden 10,400 11,758 2.5% 2.9%
20 (-) Lonza Life Sciences Tools & Services Switzerland 10,358 - 2.5% -
Top 20 investments 319,779 76.2%
21 (-) Coloplast Healthcare Supplies Denmark 10,077 - 2.4% -
22 (32) Tenet Healthcare Healthcare Facilities United States 10,069 7,582 2.4% 1.9%
23 (-) IQVIA Life Sciences Tools & Services United States 9,993 - 2.4% -
24 (-) R1 RCM Healthcare Services United States 9,878 - 2.4% -
25 (-) Merck KGaA Pharmaceuticals Germany 9,758 - 2.3% -
26 (-) Legend Biotech Biotechnology United States 9,565 - 2.3% -
27 (-) BioMerieux Healthcare Equipment France 8,777 - 2.1% -
28 (6) Cytokinetics Biotechnology United States 8,172 14,673 1.9% 3.6%
29 (30) Bio-Rad Laboratories Life Sciences Tools & Services United States 8,099 7,879 1.9% 1.9%
30 (-) Hikma Pharmaceuticals Pharmaceuticals United Kingdom 8,026 - 1.9% -
Top 30 investments 412,193 98.2%
31 (-) EssilorLuxottica Healthcare Supplies France 7,447 - 1.8% -
32 (15) Genmab Biotechnology Denmark 5,125 10,197 1.2% 2.5%
33 (-) MoonLake Immunotherapeutics Biotechnology Switzerland 5,022 - 1.2% -
34 (39) Medley Healthcare Technology Japan 4,953 2,901 1.2% 0.7%
35 (-) Indivior Pharmaceuticals United Kingdom 4,142 - 1.0% -
36 (-) Global Health/India Healthcare Facilities India 3,562 - 0.8% -
37 (37) Intelligent Ultrasound Healthcare Technology United Kingdom 3,272 3,049 0.8% 0.8%
38 (34) Uniphar Healthcare Distributors Ireland 3,196 4,171 0.8% 1.0%
39 (31) Revance Therapeutic Pharmaceuticals United States 2,914 7,647 0.7% 1.9%
40 (38) LivaNova Healthcare Equipment United Kingdom 2,808 2,950 0.7% 0.7%
Top 40 investments 454,634 108.4%
41 (-) Amvis Healthcare Facilities Japan 2,350 - 0.6% -
42 (-) Swedish Orphan Biovitrum rights Issue Biotechnology Sweden 1,271 - 0.3% -
Total equities 458,255 109.3%
Other net liabilities (39,073) (9.3%)
Net assets 419,182 100.0%
Note - Sectors are from the GICS (Global Industry Classification Standard).
STRATEGIC REPORT
The Strategic Report section of this Annual Report comprises the Chair's
Statement, the Investment Manager's Report, including information on the
portfolio, and this Strategic Report. This Report has been prepared to provide
information to shareholders on the Company's strategy and the potential for
this strategy to succeed, including a fair review of the Company's performance
during the year ended 30 September 2023, the position of the Company at the
year end and a description of the principal risks and uncertainties, including
both economic and business risk factors underlying any such forward-looking
information.
BUSINESS MODEL AND REGULATORY ARRANGEMENTS
The Company's business model follows that of an externally managed investment
trust providing Shareholders with access to a global portfolio of healthcare
stocks.
The Company is designated an Alternative Investment Fund ('AIF') under the
Alternative Investment Fund Management Directive ('AIFMD') and, as required by
the Directive, has contracted with Polar Capital LLP to act as the Alternative
Investment Fund Manager ('AIFM') and HSBC Bank Plc to act as the Depositary.
Both the AIFM and the Depositary have responsibilities under AIFMD for
ensuring that the assets of the Company are managed in accordance with the
investment policy and are held in safe custody. The Board remains responsible
for setting the investment strategy and operational guidelines as well as
meeting the requirements of the Financial Conduct Authority ('FCA') Listing
Rules and the Companies Act 2006.
The AIFMD requires certain information to be made available to investors in
AIFs before they invest and requires that material changes to this information
be disclosed in the Annual Report of each AIF. Investor Disclosure Documents,
which set out information on the Company's investment strategy and policies,
gearing, risk, liquidity, administration, management, fees, conflicts of
interest and other Shareholder information are available on the Company's
website.
There have been no material changes to the information requiring disclosure.
Any information requiring immediate disclosure pursuant to the AIFMD will be
disclosed to the London Stock Exchange. Statements from the Depositary and the
AIFM can be found on the Company's website.
INVESTMENT OBJECTIVE AND POLICY
The Company's Investment Objective is to generate capital growth through
investments in a global portfolio of healthcare stocks.
he Company will seek to achieve its objective by investing in a diversified
global portfolio consisting primarily of listed equities. The portfolio is
diversified by geography, industry sub-sector and investment size.
The portfolio will comprise a single pool of investments, but for operational
purposes, the Investment Manager will maintain a Growth portfolio and an
Innovation portfolio. Innovation companies are broadly defined by the
Investment Manager as small/mid cap innovators that are driving disruptive
change, giving rise not only to new drugs and surgical treatments but also to
a transformation in the management and delivery of healthcare. The Growth
portfolio is expected to comprise a majority of the Company's assets. For this
purpose, once an innovation stock's market capitalisation has risen above US
$5bn, it will ordinarily then be treated as a growth stock.
The relative ratio between the two portfolios may vary over the life of the
Company due to factors such as asset growth and the Investment Manager's views
as to the risks and opportunities offered by investments in each pool and
across the combined portfolio. The original make-up of the combined portfolio
was of up to 50 stocks, with growth stocks being primarily US listed. In 2018,
the Board authorised an increase to the number of stocks able to be held to 65
and confirmed there is no restriction on geographical exposure.
The combined portfolio will therefore be made up of interests in up to 65
companies, with no single investment accounting for more than 10% (or 15% in
the case of an investment in another fund managed by the Investment Manager)
of the Gross Assets at the time of investment. The innovation portfolio may
include stocks which are neither quoted nor listed on any stock exchange but
the exposure to such stocks, in aggregate, will not exceed 5% of Gross Assets
at the time of investment. In the event that the Investment Manager launches a
dedicated healthcare innovation fund, the Company's exposure to innovation
stocks may be achieved in whole or in part by an investment in that fund. In
any event, the Company will not, without the prior consent of the Board,
acquire more than 15% of any such healthcare innovation fund's issued share
capital.
The Board remains positive on the outlook for healthcare and the Company will
continue to pursue its Investment Objective in accordance with the stated
investment policy and strategy. Future performance is dependent to a
significant degree on the world's financial markets and their reactions to
economic events and other geo-political forces. The Chair's Statement and the
Investment Manager's Report comment on the development and performance of the
business during the financial year, the outlook and potential risks to the
performance of the portfolio.
STRATEGY AND INVESTMENT APPROACH
The Investment Manager's investment process is primarily based on bottom-up
fundamental analysis. The Investment Manager uses a qualitative filter
consisting of key criteria to build up a watch-list of securities that is
monitored on a regular basis. Due diligence is then carried out on the
individual securities on the watch-list. Each individual holding is assessed
on its own merits in terms of risk: reward including ESG criteria. While the
Company expects normally to be fully or substantially invested, the Company
may hold cash or money market instruments pending deployment in the portfolio.
In addition, it will have the flexibility, when the Investment Manager
perceives there to be actual or expected adverse equity market conditions, to
maintain cash holdings as it deems appropriate.
SERVICE PROVIDERS
Polar Capital LLP has been appointed to act as the Investment Manager and AIFM
as well as to provide or procure company secretarial services, marketing and
administrative services, including accounting, portfolio valuation and trade
settlement which it has arranged to deliver through HSBC Securities Services
("HSS").
The Company also contracts directly, on terms agreed periodically, with a
number of third parties for the provision of specialist services, namely:
· Panmure Gordon & Co as Corporate Broker;
· Herbert Smith Freehills LLP as Solicitors;
· HSBC Securities Services as Custodian and Depositary;
· Equiniti Limited as Share Registrars;
· RD:IR for Investor Relations and Shareholder Analysis;
· Camarco as PR advisors;
· PricewaterhouseCoopers LLP as Independent Auditors;
· Huguenot Limited as website designers and internet hosting
services; and
· Perivan Limited as designers and printers for shareholder
communications.
GEARING
Following the restructure of the Company in June 2017, the Company maintains
long-term structural gearing in the form of a loan from the wholly owned
subsidiary PCGH ZDP Plc. No short-term borrowings have been made and there are
no arrangements made for any bank loans. The Articles of Association provide
that the Company may borrow up to 15% of its Net Asset Value at the time of
drawdown, for tactical deployment when the Board believes that gearing will
enhance returns to shareholders.
In accordance with the Articles of Association of the subsidiary company, PCGH
ZDP Plc, and the loan agreement between the Company as parent and subsidiary,
the Board intends that the subsidiary company will be put into voluntarily
liquidation through a General Meeting on 19 June 2024. The Company has no
current intention to refinance the loan made by the subsidiary company and
remains in a strong position to repay the outstanding amount at the time of
redemption of the ZDP shares.
Further details of the loan provided by the subsidiary are given in the Annual
Report and Accounts.
BENCHMARK
The Company will measure the Investment Manager's performance against the MSCI
ACWI Healthcare Index total return, in sterling with dividends reinvested.
Although the Company has a benchmark, this is neither a target nor determinant
of investment strategy. The portfolio may diverge substantially from the
constituents of this index. The purpose of the Benchmark is to set a
reasonable measure of performance for shareholders above which the Investment
Manager earns a share for any outperformance it has delivered.
INVESTMENT MANAGEMENT COMPANY AND MANAGEMENT OF THE PORTFOLIO
Directors have sought to ensure that the business of the Company is managed by
a leading specialist investment management team and that the investment
strategy remains attractive to shareholders. The Directors believe that a
strong working relationship with Polar Capital LLP (the Investment Manager)
will achieve the optimum return for shareholders. As such, the Board and the
Investment Manager operate in a supportive, co-operative and open environment.
The Investment Manager is Polar Capital LLP ('Polar Capital'), which is
authorised and regulated by the Financial Conduct Authority, to act as
Investment Manager and AIFM of the Company with sole responsibility for the
discretionary management of the Company's assets (including uninvested cash)
and sole responsibility to take decisions as to the purchase and sale of
individual investments. The Investment Manager also has responsibility for
asset allocation within the limits of the investment policy and guidelines
established and regularly reviewed by the Board, all subject to the overall
control and supervision of the Board. Polar Capital provides a team of
healthcare specialists and the portfolio is co-managed by Mr James Douglas and
Mr Gareth Powell. The Investment Manager has other resources which support the
investment team and has experience in managing and administering other
investment trust companies.
Under the terms of the IMA, the Investment Manager also provides or procures
accountancy services, company secretarial, marketing and day-to-day
administrative services, including the monitoring of third-party suppliers,
which are directly appointed by the Company. The Investment Manager has, with
the consent of the Directors, delegated the provision of certain of these
administrative functions to HSBC Securities Services and to Polar Capital
Secretarial Services Limited.
Fee Arrangements
Management Fee
Under the terms of the IMA, the Investment Manager will be entitled to a
management fee together with reimbursement of reasonable expenses incurred by
it in the performance of its duties. The management fee is payable monthly in
arrears and is charged at the rate of 0.75% (prior to 1 October 2020: 0.85%)
per annum based on the lower of the market capitalisation and adjusted net
asset value. In accordance with the Directors' policy on the allocation of
expenses between income and capital, in each financial year 80% of the
management fee payable is charged to capital and the remaining 20% to income.
Performance Fee
The Investment Manager may receive a performance fee paid in cash when various
performance parameters are met. No performance fee has been accrued or is due
to be paid for the year ended 30 September 2023 (2022: nil). Further details
on the termination arrangements and performance fee methodology and
calculation are provided within the Shareholder Information in the Annual
Report.
PERFORMANCE AND KEY PERFORMANCE OBJECTIVES
The Board appraises the performance of the Company and the Investment Manager
as the key supplier of services to the Company against key performance
indicators ('KPIs'). The objectives of the KPIs comprise both specific
financial and Shareholder related measures. These KPI's have not differed from
the prior year.
KPI CONTROL PROCESS OUTCOME
The provision of investment returns to shareholders measured by long- term The Board reviews the performance of the portfolio in detail and hears the As at 30 September 2023, the total net assets of the Company amounted to
views of the Investment Manager at each meeting. £419,182,000 (2022: £404,833,000).
NAV growth and relative performance against the Benchmark.
The Board also considers the value delivered to shareholders through NAV The Company's NAV total return, over the year ended 30 September 2023, was
growth and dividends paid. 4.21% while the Benchmark Index over the same period was 1.19%. The Company's
performance is explained further in the Investment Manager's Report.
Since restructuring on 20 June 2017, the total return of the NAV was 67.56%
and the benchmark was 66.01%. Investment performance is explained in the
Chair's Statement and the Investment Manager's Report.
The achievement of the dividend policy. Financial forecasts are reviewed to track income and distributions. Two dividends have been paid or are payable in respect of the year ended 30
September 2023 totalling 2.20p per share (2022: two dividends totalling 2.10p
per share).
The Company's focus remains on capital growth. While the Company continues to
aim to pay two dividends per year these are expected to be a small part of a
shareholder total return.
Monitoring and reacting to issues created by the discount or premium of The Board receives regular information on the composition of the share The discount of the ordinary share price to the NAV per ordinary share at the
register including trading patterns and discount/premium levels of the year ended 30 September 2023 was 7.7% (2022: 5.6%).
the ordinary share price to the NAV per ordinary share with the aim of reduced Company's ordinary shares. The Board discusses and authorises the issue or buy
discount volatility for shareholders. back of shares when appropriate.
During the year ended 30 September 2023, no new shares were issued or bought
back.
The Board is aware of the vulnerability of a sector specialist investment
trust to a change in investor sentiment to that sector. While there is no
formal discount policy the Board discusses the market factors giving rise to
any discount or premium, the long or short-term nature of those factors and The number of shares in issue, as at the year end was 124,149,256 of which
the overall benefit to shareholders of any actions. The market liquidity is 2,879,256 were held in treasury. The total voting rights of the Company are
also considered when authorising the issue or buy back of shares when 121,270,000 shares.
appropriate market conditions prevail.
A daily NAV per share, calculated in accordance with the AIC guidelines is
issued to the London Stock Exchange.
To qualify and continue to meet the requirements for sections 1158 and 1159 of The Board receives regular financial information which discloses the current The Company was granted investment trust status annually up to 1 October 2014
the Corporation Tax Act 2010 ('investment trust status'). and projected financial position of the Company against each of the tests set and is deemed to be granted such status for each subsequent year subject to
out in sections 1158 and 1159. the Company continuing to satisfy the conditions of section 1158 of the
Corporation Tax Act 2010 and other associated ongoing requirements.
The Directors confirm that the tests have been met in the financial year ended
30 September 2023 and believe that they will continue to be met.
To ensure the efficient operation of the Company by monitoring the services The Board considers annually the services provided by the Investment Manager, The Board has received, and considered satisfactory, the internal controls
provided by third party suppliers, including the Investment Manager, and both investment and administrative, and reviews on a cycle the provision of report of the Investment Manager and other key suppliers including the
controlling ongoing charges. services from third parties including the costs of their services. contingency arrangements to facilitate the ongoing operations of the Company
in the event of withdrawal or failure of services.
The annual operating expenses are reviewed and any non-recurring project
related expenditure approved by the Board. The ongoing charges for the year ended 30 September 2023 were 0.87%, compared
to 0.84% the previous year.
Risk Management
The Board is responsible for the management of risks faced by the Company and,
through delegation to the Audit Committee, has established procedures to
manage risk, oversee the internal control framework and determine the nature
and extent of the principal risks the Company is willing to take in order to
achieve its long-term strategic objectives.
The established risk management process the Company follows identifies and
assesses various risks, their likelihood, and possible severity of impact,
considering both internal and external controls and factors that could provide
mitigation. A post mitigation risk impact score is then determined for each
principal risk.
The Audit Committee carries out, at least annually, a robust assessment of the
principal risks and uncertainties with the assistance of the Investment
Manager, continually monitors identified risks and meets to discuss both
long-term and emerging risks outside of the normal cycle of Audit Committee
meetings.
During the year the Audit Committee, in conjunction with the Board and the
Investment Managers undertook a full review of the Company's Risk Map
including the mitigating factors and controls to reduce the impact of the
risks. The Committee continues to closely monitor these risks along with any
other emerging risks as they develop and implements mitigating actions as
necessary.
The Committee is mindful of the continued impact of geopolitical events as
well as the effects of inflation and rising interest rates. Whilst we are
seeing signs of inflation slowing and energy prices reducing, the continuation
of the Russian war on Ukraine, and also the Middle East crisis has created
further market volatility and continues to impact supply chains whilst high
interest rates continue to be felt by consumers. Geopolitical events such as
these can have a significant impact on global financial markets, and the
global economy. The impact of this is discussed further in the Chair's
Statement and Investment Manager's Report. Further information on how the
Committee has assessed the Company's ability to operate as a going concern and
the Company's longer-term viability can be found in the Report of the Audit
Committee and in the Annual Report.
The key risks, which are those classified as having the highest risk impact
score post mitigation, are detailed below with a high-level summary of the
management through mitigation and status arrows to indicate any change in
assessment over the past year.
Portfolio Management
Description Assessment Mitigation
Investment Performance Breach of Investment policy, Investment Manager unable to deliver the Unchanged from previous year. The Board seeks to mitigate the impact of such risks through the regular
Investment Objective leading to poor performance against the benchmark or reporting and monitoring of the Company's investment performance against its
market/industry average. peer group, benchmark and other agreed indicators of relative performance. A
detailed annual review of the investment strategy is undertaken by the
Investment Manager with the Board including analysis of investment markets and
sector trends.
At each meeting the Board discusses developments in healthcare and drug
pipelines with the Investment Manager in addition to the composition and
diversification of the portfolio with sales and purchases of investments and
the degree of risk which the Investment Manager incurs to generate investment
returns. Individual investments are discussed with the Investment Manager as
well as the Investment Manager's general views on the various investment
markets and the healthcare sector in particular. Analytical performance data
and attribution analysis is presented by the Investment Manager.
The Board is committed to a clear communication program to ensure shareholders
understand the investment strategy. This is maintained through the use of
monthly factsheets which have a market commentary from the Investment Manager
as well as portfolio data, an informative website as well as annual and half
year reports.
Gearing Inability to repay ZDP loan and or inappropriate use of derivatives. Decreased from previous year. The Board considered the benefits and drawbacks of the structural debt at the
time of restructuring and concluded that the ability to lock-in an effective
interest rate of 3% pa for the 7-year life would be beneficial to investment
returns, the Board remains of the same belief. The asset cover necessary to
repay the ZDP shares is reviewed at each Board meeting. If any flexible
gearing is contemplated the Board would agree the overall levels of gearing
with the AIFM. The arrangement of bank facilities and drawing of funds under
such arrangements are controlled by the Board. Derivatives are considered as
being a form of gearing and a policy for their use has been agreed by the
Board. The deployment of any borrowed funds is based on the Investment
Manager's assessment of risk and reward.
The Board intends that the subsidiary company will be put into voluntarily
liquidation through a General Meeting on 19 June 2024. The Company has no
current intention to refinance the loan made by the subsidiary company and
remains in a strong position to repay the outstanding amount at the time of
redemption of the ZDP shares.
Discount/Premium Persistent discount in excess of Board or Shareholder acceptable Unchanged from previous year. The Board regularly considers, in comparison to the sector and peers, the
level of premium and discount of the share price to the NAV and ways to
levels. enhance Shareholder value including share issuance and buy backs.
The Board has carefully monitored the discount level and market movements and
has discussed performance with the Managers and advisers. The discount of the
Company widened during the year under review and as at 30 September 2023, the
discount of the ordinary share price to the NAV per ordinary share was 7.7%
(2022: 5.6%). The Chair also meets regularly with key shareholders to
understand any concerns and views as detailed in the Chair's Statement and
within the s172 Report. Further detail on the performance and the impact of
market movements on the Company is given in the Investment Manager's Report.
Trading Execution of unauthorised trade/dealing error. Error or breach may cause Unchanged from previous year. Investment limits and restrictions are encoded into the dealing and operations
regulatory investigation leading to fines, reputational damage and risk to systems of the Investment Manager and various oversight functions are
investment trust status. undertaken to ensure there is early warning of any potential issue of
compliance or regulatory matters.
Operational Risk
Description Assessment Mitigation
Service Failure Failure in services provided by the Investment Manager, Custodian, Unchanged from previous year. The Board carries out an annual review of internal control reports from
suppliers which includes cyber protocols and disaster recovery procedures. Due
Depositary or other service providers; Accounting, Financial or Custody Errors diligence and service reviews are undertaken with third-party service
resulting in regulatory investigation or financial loss, failure of trade providers including the Custodian and Depositary.
settlement, potential loss of Shareholder assets and investment trust status.
A full review of the internal control framework is carried out at least
annually. Regular reporting is received by the Investment Manager on behalf of
the Board from the Depositary on the safe custody of the Company's assets. The
Board undertakes independent reviews of the Depositary and external
Administrator services and additional resources have been put in place by the
Investment Manager. Management accounts are produced and reviewed monthly,
statutory reporting and daily NAV calculations are produced by the external
Administrator and verified by the Investment Manager. Accounting records are
tested, and valuations verified independently as part of the year-end
financial reporting process.
Cyber Risk Cyber-attack causing disruption to or failure of operational and accounting Unchanged from previous year. The number, severity and success rate of cyberattacks have increased
systems and processes provided by the Investment Manager creating an considerably over recent years. However, controls are in place and the Board
unexpected event and/or adverse impact on personnel or the portfolio. proactively seeks to keep abreast of developments through updates with
representatives of the Investment Manager who undertakes meetings with
relevant service providers.
The Audit Committee once again sought assurance via the Investment Manager,
from each of the Company's service providers on the resilience of their
business continuity arrangements. These assurances and the subsequent detailed
updates that were given to the Committee provided a satisfactory level of
assurance that there had not been, and there was no anticipation of any
disruption in the ability of each service provider to fulfil their duties as
would typically be expected.
Key Person Loss of Investment Manager or other key management professionals. Impact on Unchanged from previous year. The strength and depth of investment team provides comfort that there is not
investor confidence leading to widening of the discount and/or poor over-reliance on one person with alternative portfolio managers available to
performance creating a period of uncertainty and potential termination of the act if needed. For each key business process roles, responsibilities and
Investment Management Agreement. reporting lines are clear and unambiguous. Key personnel are incentivised by
equity participation in the investment management company.
Shareholder Communications Failure to effectively communicate significant events to the shareholder and Unchanged from previous year. Polar Capital Sales Team and the Corporate Broker provide periodic reports to
investor base. the Board on communications with shareholders and feedback received.
The Board is committed to a clear communication programme to ensure
Shareholders understand the investment strategy. This is maintained through
the use of monthly factsheets which have a market commentary from the
Investment Manager as well as portfolio data, an informative website as well
as annual and half year reports.
Contact details and how to contact the Board are provided in regulatory
announcements and the Board are present at the AGM to speak to shareholders.
Regulatory Risk
Description Assessment Mitigation
Non-compliance with statutes, regulations and disclosure requirements, Unchanged from previous year. The Board monitors regulatory change with the assistance of the
including FCA listed company regime and Companies Act 2006; s1158/1159 of the
Corporation Tax Act 2010, the Companies Act 2006 and other UK, European and Investment Manager, Company Secretary and external professional suppliers and
overseas legislation affecting UK companies including MiFID II and the GDPR. implements necessary changes should they be required.
Not complying with accounting standards could result is a suspension of The Board receives regulatory reports for discussion and, if required,
listing or loss of investment trust status, reputational damage and considers the need for any remedial action. In addition, as an investment
Shareholder activism. company, the Company is required to comply with a framework of tax laws,
regulation and company law.
Further risks arise from not keeping abreast of changes in legislation and
regulations which have in recent years been substantial.
Economic and Market Risk
Description Assessment Mitigation
Financial loss due to unexpected natural disaster or other unpredictable event Unchanged from previous year. The Board regularly discusses global geopolitical issues and general economic
disrupting the ability to operate or significant exposure to the economic conditions and developments.
cycles of the markets in which the underlying investments conduct their
business operations as well as the economic impact on
investment markets where such investments are listed. The impact on the portfolio from other geopolitical changes are monitored
through existing control systems and discussed regularly by the Board. While
it is difficult to quantify the impact of such changes, it is not anticipated
that they will fundamentally affect the business of the Company or make
Fluctuations in stock markets and currency exchange rates could be healthcare investing any less desirable. The longer term effects of inflation,
advantageous or disadvantageous to the Company and its performance. recession, the war in Ukraine and the Middle East crisis will continue to be
assessed by the Audit Committee in light of how they will impact the Company's
portfolio and the overall economic and geopolitical environment in which the
Company operates.
Disruption to trading platforms and support services.
The Company through the Investment Manager, has a disaster recovery plan in
place.
SECTION 172 OF THE COMPANIES ACT 2006
The statutory duties of the Directors are listed in s171-177 of the Companies
Act 2006. The Board recognises that under s172, Directors have a duty to
promote the success of the Company for the benefit of its members (our
shareholders) as a whole and in doing so have regard to the consequences of
any decision in the long term, as well as having regard to the Company's wider
stakeholders amongst other considerations. The fulfilment of this duty not
only helps the Company achieve its Investment Objective but ensures decisions
are made in a responsible and sustainable way for shareholders.
To ensure that the Directors are aware of, and understand, their duties, they
are provided with an induction when they first join the Board, including
details of all relevant regulatory and legal duties as a Director and continue
to receive regular and ongoing updates on relevant legislative and regulatory
developments. They also have continued access to the advice and services of
the Company Secretary and, when deemed necessary, the Directors can seek
independent professional advice. The Schedule of Matters Reserved for the
Board, as well as the Terms of Reference of its committees, are reviewed
annually and further describe Directors' responsibilities and obligations and
include any statutory and regulatory duties.
The Board seeks to understand the needs and priorities of the Company's
stakeholders and these are taken into account during discussions and as part
of the decision-making process. As an externally managed investment company,
the Company does not have any employees or customers, however the key
stakeholders and a summary of the Board's consideration and actions where
possible in relation to each group of stakeholders are described in the table
below.
STAKEHOLDER GROUP HOW WE ENGAGE WITH THEM
SHAREHOLDERS The Directors have considered this duty when making the strategic decisions
during the year that affect shareholders, including the continued appointment
of the Investment Manager and the recommendation that shareholders vote in
favour of the resolutions for the Company to continue and to renew the
allotment and buy back authorities at the AGM. The Directors have also engaged
with and taken account of shareholders' interests during the year.
The Company's AGM will be held at 2:30pm on Thursday 8 February 2024 at the
offices of Polar Capital, 16 Palace Street, London SW1E 5JD. The Board
recognises that the AGM is an important event for shareholders and the Company
and is keen to ensure that shareholders are able to exercise their right to
vote and participate. Any changes to these arrangements will be communicated
through the Company's website and via a Regulatory Information Service
announcement.
The Board believes that shareholder engagement remains important, especially
in the current market conditions and is keen that the AGM be a participative
event for all. As was the case in 2023, shareholders will once again have the
opportunity to hear the Managers' pre-recorded presentation, reviewing the
Company's performance in the year and the outlook for 2023-2024, in advance of
the AGM. The presentation will be uploaded to the Company's website ahead of
the AGM. In addition, Shareholders will also be able to watch the proceedings
of the AGM live via Zoom Conference. Details of how to access the online link
are provided in the Notice of AGM. The AGM in-person meeting will comprise the
formal business and questions only. Shareholders are encouraged to send any
questions ahead of the AGM to the Board via the Company Secretary at
cosec@polarcapital.co.uk stating the subject matter as PCGH-AGM. The Chairs of
the Board and of the Committees, along with the Managers, will be in
attendance at the AGM and will be available to respond to questions and
concerns from shareholders.
Should any significant votes be cast against a resolution, the Board will
engage with shareholders and explain in its announcement of the results of the
AGM the actions it intends to take to consult shareholders in order to
understand the reasons behind the votes against. Following the consultation,
an update will be published no later than six months after the AGM and the
Annual Report will detail the impact the Shareholder feedback has had on any
decisions the Board has taken and any actions or resolutions proposed.
Relations with shareholders
The Board and the Manager consider maintaining good communications and
engaging with shareholders through meetings and presentations a key priority.
The Board regularly considers the share register of the Company and receives
regular reports from the Manager and the Corporate Broker on meetings attended
with shareholders and any concerns that are raised in those meetings. The
Board also reviews correspondence from shareholders and may attend investor
presentations.
Shareholders are kept informed by the publication of annual and half year
reports, monthly fact sheets, access to commentary from the Investment Manager
via the Company's website and attendance at events at which the Investment
Manager presents.
Shareholders are able to raise any concerns directly with the Chair or the
Board without intervention of the Manager or Company Secretary, they may do
this either in person at the AGM or at other events, or in writing either via
the registered office of the Company or to the Chair's specific email address
Chair.PCGH@polarcapital.co.uk.
The Company, through the sales and marketing efforts of the Investment
Manager, encourages retail investment platforms to engage with underlying
shareholders in relation to Company communications and enable those
shareholders to cast their votes on Shareholder resolutions; the Company
however has no responsibility over such platforms. The Board therefore
encourage shareholders invested via the platforms to regularly visit the
Company's website or to make contact with the Company directly to obtain
copies of Shareholder communications.
The Company has also made arrangements with its registrar for shareholders,
who own their shares directly rather than through a nominee or share scheme,
to view their account online at www.shareview.co.uk. Other services are also
available via this service.
Outcomes and strategic decisions during the year
AGM
To enable more shareholders the opportunity to hear the Investment Manager's
AGM presentation, the Board has opted to pre-record and upload this to the
website ahead of the voting deadline and in-person formal business AGM. In
addition, shareholders will also have the opportunity to watch the proceedings
of the AGM live via Zoom Conference. Details of how to access the online link
are provided in the Notice of AGM.
INVESTMENT MANAGER Through the Board meeting cycle, regular updates and the work of the
Management Engagement Committee reviewing the services of the Investment
Manager annually, the Board is able to safeguard Shareholder interests by:
· Ensuring adherence to the Investment Policy;
· Ensuring excessive risk is not undertaken in the pursuit of
investment performance;
· Ensuring adherence to the Investment Management Policy and
reviewing the agreed management and performance fees; and
· Reviewing the Investment Manager's decision making and
consistency in investment process.
Maintaining a close and constructive working relationship with the Manager is
crucial as the Board and the Investment Manager both aim to continue to
achieve consistent, long-term returns in line with the Investment Objective.
The culture which the Board maintains to ensure this involves encouraging open
discussion with the Investment Manager; recognising that the interests of
Shareholders and the Investment Manager are aligned, providing constructive
challenge and making Directors' experience available to support the Investment
Manager. This culture is aligned with the collegiate and meritocratic culture
which Polar Capital has developed and maintains.
Outcomes and strategic decisions during the year
ESG
The Board continued to engage with the Investment Manager to understand how
ESG has been integrated into the overall house style, the healthcare team
investment approach and decision making as well as the methodology behind
this. The Board also receives information on how ESG affects Polar Capital as
a business and the healthcare team in particular.
Consumer Duty
The Board has worked with the Investment Manager to ensure the obligations of
the new Consumer Duty regulations are appropriately applied to the Company. In
light of the obligations, all communications including the website, fact
sheets and other published documentation, have been reviewed to ensure they
are appropriate for all end users. A 'value for money' assessment has also
been undertaken and is made available to distributors on request for their due
diligence processes.
Management
The Management Engagement Committee has recommended and the Board has approved
the continued appointment of the Investment Manager on the terms set out
within the Investment Management Agreement.
INVESTEE COMPANIES The Board has instructed the Investment Manager to take into account the
published corporate governance policies of the companies in which it invests.
The Board has also considered the Investment Manager's Stewardship Code and
Proxy Voting Policy. The Voting Policy is for the Investment Manager to vote
at all general meetings of companies in favour of resolutions proposed by the
management where it believes that the proposals are in the interests of
shareholders. However, in exceptional cases, where the Investment Manager
believes that a resolution would be detrimental to the interests of
shareholders or the financial performance of the Company, appropriate
notification will be given and abstentions or a vote against will be lodged.
The Investment Manager has voted at 49 company meetings over the year ended 30
September 2023, with 5.4% of all votes being against management and 37% of
meetings having at least one against or withheld vote.
The Investment Manager reports to the Board, when requested, on the
application of the Stewardship Code and Voting Policy. The Investment
Manager's Stewardship Code and Voting Policy can be found on the Investment
Manager's website in the Corporate Governance section
(www.polarcapital.co.uk). Further information on how the Investment Manager
considers ESG in its engagement with investee companies can be found in the
ESG report in the Annual Report and Accounts.
Outcomes and strategic decisions during the year
The Board receives information on the ratings of investee companies and is
able to use this as a tool to inform discussions with the Manager during Board
meetings.
SERVICE PROVIDERS The Directors have frequent engagement with the Company's other service
providers through the annual cycle of reporting and due diligence meetings or
site visits. This engagement is completed with the aim of having effective
oversight of delegated services, seeking to improve the processes for the
benefit of the Company and to understand the needs and views of the Company's
service providers, as stakeholders in the Company. Further information on the
Board's engagement with service providers is included in the Corporate
Governance Statement and the Report of the Audit Committee. During the year
under review, due diligence meetings have been undertaken by the Investment
Manager and where possible, service providers have joined meetings to present
their reports directly to the Board or the Audit Committee as appropriate.
Outcomes and strategic decisions during the year
The reviews of the Company's service providers have been positive and the
Directors believe their continued appointment is in the best interests of the
Company. The accounting and administration services of HSBC Securities
Services (HSS) are contracted through Polar Capital and provided to the
Company under the terms of the IMA. The Board continue to monitor service
levels and due diligence reviews conducted by the Company Secretary and is
satisfied that the service received continues to be of a high standard.
PROXY ADVISORS The support of proxy adviser agencies is important to the Directors, as the
Company seeks to retain a reputation for high standards of corporate
governance, which the Directors believe contributes to the long-term
sustainable success of the Company. The Directors consider the recommendations
of these various proxy voting agencies when contemplating decisions that will
affect shareholders and also when reporting to shareholders through the Half
Year and Annual Reports.
Recognising the principles of stewardship, as promoted by the UK Stewardship
Code, the Board welcomes engagement with all of its investors. The Board
recognises that the views, questions from, and recommendations of many
institutional investors and proxy adviser agencies provide a valuable feedback
mechanism and play a part in highlighting evolving shareholders' expectations
and concerns.
Outcomes and strategic decisions during the year
Where possible the Chair and other representatives of the Company have engaged
with the stewardship teams of some larger investors to understand and address
their expectations in terms of board governance, recruitment and diversity.
Prior to AGMs, the Company engages with these agencies to fact check their
advisory reports and clarify any areas or topics contained within the report.
This ensures that whilst the proxy advisory reports provided to shareholders
are objective and independent, the Company's actions and intentions are
represented as clearly as possible to assist with shareholders' decision
making when considering the resolutions proposed at the AGM.
Approved by the Board on 12 December 2023
By order of the Board
TRACEY LAGO, FCG
Polar Capital Secretarial Services Limited
Company Secretary
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have prepared the Group and
Company's Financial Statements in accordance with UK-adopted IAS and
applicable law. Additionally, the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules require the directors to prepare the Financial
Statements in accordance with UK-adopted IAS.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the Group and
Company for that period. In preparing the financial statements, the directors
are required to:
· select suitable accounting policies and then apply them
consistently;
· state whether they have been prepared in accordance with UK-adopted
IAS, subject to any material departures disclosed and explained in the
Financial Statements;
· make judgements and accounting estimates that are reasonable and
prudent; and
· prepare the Financial Statements on the going concern basis unless it
is inappropriate to presume that the Group and Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that its Financial Statements and the Directors' Remuneration
Report comply with the Companies Act 2006. They are responsible for such
internal control as they determine is necessary to enable the preparation of
Financial Statements that are free from material misstatement, whether due to
fraud or error, and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Strategic Report, Directors' Report, Directors' Remuneration
Report and Corporate Governance Statement that complies with that law and
those regulations.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors' confirmations
The Directors consider that the annual report and financial statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the group and company's position and
performance, business model and strategy.
Each of the directors, whose names and functions are listed in the Strategic
Report confirm that, to the best of their knowledge:
· the Company Financial Statements, which have been prepared in
accordance with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit of the
company;
· the Group Financial Statements, which have been prepared in
accordance with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit of the
group; and
· the Strategic Report includes a fair review of the development and
performance of the business and the position of the group and company,
together with a description of the principal risks and uncertainties that it
faces.
In the case of each Director in office at the date the Directors' Report is
approved:
· so far as the director is aware, there is no relevant audit
information of which the Group and Company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information
and to establish that the group and company's auditors are aware of that
information.
Lisa Arnold
Chair
12 December 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2023
Note Group Group
Year ended Yea
30 September 2023 r
end
ed
30
Sep
tem
ber
202
2
Revenue return Capital return Total Revenue return Capital return Total
£'000 £'000 return £'000 £'000 return
£'000 £'000
Investment income 3 4,804 - 4,804 4,427 - 4,427
Other operating income 4 104 - 104 26 - 26
Gains on investments held at fair value 5 - 19,574 19,574 - 22,985 22,985
Other currency losses 6 - (1,130) (1,130) - (610) (610)
Total income 4,908 18,444 23,352 4,453 22,375 26,828
Expenses
Investment management fee 7 (650) (2,598) (3,248) (602) (2,406) (3,008)
Other administrative expenses 8 (712) (13) (725) (599) (59) (658)
Total expenses (1,362) (2,611) (3,973) (1,201) (2,465) (3,666)
Profit before finance costs and tax 3,546 15,833 19,379 3,252 19,910 23,162
Finance costs 9 (9) (1,161) (1,170) - (1,096) (1,096)
Profit before tax 3,537 14,672 18,209 3,252 18,814 22,066
Tax 10 (598) (715) (1,313) (535) - (535)
Net profit for the year and total comprehensive income 2,939 13,957 16,896 2,717 18,814 21,531
Earnings per Ordinary share (pence) 12 2.42 11.51 13.93 2.24 15.51 17.75
The total column of this statement represents Group's Statement of
Comprehensive Income, prepared in accordance with UK‑adopted International
Accounting Standards.
The revenue return and capital return columns are supplementary to this and
are prepared under guidance published by the Association of Investment
Companies.
The Group does not have any other income or expense that is not included in
net profit for the year. The net profit for the year disclosed above
represents the Group's total comprehensive income.
There are no dilutive securities and therefore the Earnings per Share and the
Diluted Earnings per share are the same.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the year.
The notes below form part of these Financial Statements.
STATEMENTS OF CHANGES IN EQUITY
For the year ended 30 September 2023
Note Group and Company
Year ended 30 September 2023
Called up share capital Capital redemption reserve Share premium reserve Special distributable reserve Capital reserves Revenue reserve Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Total equity at 1 October 2022 31,037 6,575 80,685 3,672 280,791 2,073 404,833
Total comprehensive income:
Profit for the year ended 30 September 2023 - - - - 13,957 2,939 16,896
Transactions with owners, recorded directly to equity:
Equity dividends paid 11 - - - - - (2,547) (2,547)
Total equity at 31,037 6,575 80,685 3,672 294,748 2,465 419,182
30 September 2023
Note Group and Company
Year ended 30 September 2022
Called up share capital Capital redemption reserve Share premium reserve Special distributable reserve Capital reserves Revenue reserve Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Total equity at 1 October 2021 31,037 6,575 80,685 3,672 261,977 1,782 385,728
Total comprehensive income:
Profit for the year ended 30 September 2022 - - - - 18,814 2,717 21,531
Transactions with owners, recorded directly to equity:
Equity dividends paid 11 - - - - - (2,426) (2,426)
Total equity at 31,037 6,575 80,685 3,672 280,791 2,073 404,833
30 September 2022
The notes below form part of these Financial Statements.
BALANCE SHEETS
As at 30 September 2023
Notes Group Company
30 September 2023 30 September 2022 30 September 2023 30 September 2022
£'000 £'000 £'000 £'000
Non-current assets
Investments held at fair value 13 458,255 434,419 458,255 434,419
Investment in subsidiary 13 - - 50 50
Current assets
Cash and cash equivalents 24 4,680 7,546 4,630 7,496
Receivables 14 505 233 505 233
Overseas tax recoverable 678 666 678 666
5,863 8,445 5,813 8,395
Total assets 464,118 442,864 464,118 442,864
Current liabilities
Bank overdraft 24 (2,014) - (2,014) -
Payables 15 (3,981) (470) (3,981) (470)
Zero dividend preference shares 16 (38,687) - - -
Loan from subsidiary - - (38,687) -
(44,682) (470) (44,682) (470)
Non-current liabilities
Zero Dividend Preference shares 16 - (37,561) - -
Loan from subsidiary - - - (37,561)
Indian capital gains tax provision (254) - (254) -
Total liabilities (44,936) (38,031) (44,936) (38,031)
Net assets 419,182 404,833 419,182 404,833
Equity attributable to equity Shareholders
Called up share capital 17 31,037 31,037 31,037 31,037
Share premium reserve 19 80,685 80,685 80,685 80,685
Capital Redemption reserve 18 6,575 6,575 6,575 6,575
Special distributable reserve 20 3,672 3,672 3,672 3,672
Capital reserves 21 294,748 280,791 294,748 280,791
Revenue reserve 2,465 2,073 2,465 2,073
Total equity 419,182 404,833 419,182 404,833
Net asset value per Ordinary share (pence) 23 345.66 333.83 345.66 333.83
Net asset value per ZDP share (pence) 23 120.41 116.91 - -
The parent company has taken advantage of section 408 of the Companies Act
2006 and has not included its own income statement in the Financial
Statements. The parent company's profit for the year was £16,896 (2022:
£21,531,000).
The Financial Statements were approved and authorised for issue by the Board
of Directors on 12 December 2023 and signed on its behalf by
Lisa Arnold
Chair
Registered number 7251471
The notes below form part of these Financial Statements.
CASH FLOW STATEMENTS
For the year ended 30 September 2023
Group and Company
Note Year ended Year ended
30 September 2023 30 September 2022
£'000 £'000
Cash flows from operating activities
Profit before finance costs and tax 19,379 23,162
Adjustment for non-cash items:
Gains on investments held at fair value through profit or loss (19,574) (22,985)
Adjusted (profit)/loss before tax (195) 177
Adjustments for:
Purchases of investments, including transaction costs (503,002) (480,136)
Sales of investments, including transaction costs 501,992 476,716
(Increase)/decrease in receivables (272) 27
Increase in payables 259 101
Indian capital gains tax (461) -
Overseas tax deducted at source (610) (629)
Net cash used in operating activities (2,289) (3,744)
Cash flows from financing activities
Interest paid (44) (2)
Equity dividends paid 11 (2,547) (2,426)
Net cash used in financing activities (2,591) (2,428)
Net decrease in cash and cash equivalents (4,880) (6,172)
Cash and cash equivalents at the beginning of the year 7,546 13,718
Cash and cash equivalents at the end of the year 24 2,666 7,546
The notes below form part of these Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 September 2023
1. General Information
The consolidated Financial Statements for the year ended 30 September 2023
comprise the Financial Statements of the Company and its wholly-owned
subsidiary PCGH ZDP plc (together referred to as the 'Group').
The principal activity of the Group is that of an investment trust company
within the meaning of Section 1158/1159 of the Corporation Tax Act 2010 and
its investment approach is detailed in the Strategic Report.
The Group and Company's presentational currency is pounds sterling (rounded to
the nearest £'000). Pounds sterling is also the functional currency of the
Group and Company because it is the currency which is most relevant to the
majority of the Group and Company's shareholders and creditors and the
currency in which the majority of the Group and Company's operating expenses
are paid.
2. Accounting Policies
The principal accounting policies which have been applied consistently for all
years presented are set out below:
(a) Basis of Preparation
The Group and Company's Financial Statements have been prepared and approved
by the Directors in accordance with UK- adopted international accounting
standards ("UK-adopted IAS") and with the requirements of the Companies Act
2006.
The Financial Statements have been prepared on a going concern basis under the
historical cost convention, as modified by the revaluation of investments and
derivative financial instruments at fair value through profit or loss.
Where presentational guidance set out in the Statement of Recommended Practice
(SORP) for investment trusts issued by the Association of Investment Companies
(AIC) in July 2022 is consistent with the requirements of UK-adopted IAS, the
Directors have sought to prepare the Financial Statements on a basis compliant
with the recommendations of the SORP.
Basis of consolidation - The Group Financial Statements consolidate the
Financial Statements of the Company and its wholly owned subsidiary, PCGH ZDP
plc, drawn up to the same accounting date. The subsidiary is consolidated from
the date of its incorporation.
The Company has taken advantage of the exemption under section 408 of the
Companies Act 2006 and accordingly has not presented a separate parent company
income statement.
The financial position of the Group and Company as at 30 September 2023 are
shown in the balance sheet as above. As at 30 September 2023 the Group and
Company's total assets exceeded its total liabilities by a multiple of over 9.
The assets of the Group and Company consist mainly of securities that are held
in accordance with the Group and Company's Investment Policy, as set out above
and these securities are readily realisable. The Directors have considered a
detailed assessment of the Group and Company's ability to meet their
liabilities as they fall due. The assessment took account of the Group and
Company's current financial positions, their cash flows and their liquidity
positions and the loan due for repayment to PCGH ZDP plc in June 2024. In
addition to the assessment, the Group and Company carried out stress testing
which used a variety of falling parameters to demonstrate the effects on the
Group and Company's share prices and net asset values. In light of the results
of these tests, the Group and Company's cash balances, and the liquidity
positions, the Directors consider that the Group and Company have adequate
financial resources to enable them to continue in operational existence for at
least 12 months. Accordingly, the Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the Group and Company's
Financial Statements.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and
in accordance with the guidance set out by the AIC, supplementary information
which analyses the Statement of Comprehensive Income between items of a
revenue and capital nature has been presented alongside the Statement of
Comprehensive Income. The results presented in the revenue return column is
the measure the Directors believe appropriate in assessing the Group and
Company's compliance with certain requirements set out in section 1158 of the
Corporation Tax Act 2010.
(c) Income
Dividends receivable from equity shares are recognised and taken to the
revenue return column of the Statement of Comprehensive Income on an
ex-dividend basis.
Special dividends are recognised on an ex-dividend basis and may be considered
to be either revenue or capital items. The facts and circumstances are
considered on a case-by-case basis before a conclusion on appropriate
allocation is reached.
Where the Group and Company has received dividends in the form of additional
shares rather than in cash, the amount of the cash dividend foregone is
recognised in the revenue return column of the Statement of Comprehensive
Income. Any excess
in value of shares received over the amount of the cash dividend foregone is
recognised in the capital return column of the Statement of Comprehensive
Income.
Bank interest is accounted for on an accruals basis. Interest outstanding at
the year end is calculated on a time apportionment basis using market rates of
interest.
(d) Written Options
The Group and Company may write exchange-traded options with a view to
generating income. This involves writing short-dated covered-call options and
put options. The use of financial derivatives is governed by the Group and
Company's policies, as approved by the Board.
These options are recorded initially at fair value, based on the premium
income received, and are then measured at subsequent reporting dates at fair
value. Changes in the fair value of the options are recognised in the capital
return for the period.
The option premiums are recognised evenly over the life of the option and
shown in the revenue return, with an appropriate amount shown in the capital
return to ensure the total return reflects the overall change in the fair
value of the options.
Where an option is exercised, any balance of the premium is recognised
immediately in the revenue return with a corresponding adjustment in the
capital return based on the amount of the loss arising on exercise of the
option.
(e) Expenses
All expenses, including the management fee, are accounted for on an accruals
basis and are recognised when they fall due.
All expenses have been presented as revenue items except as follows:
Expenses are charged to the capital column of the Statement of Comprehensive
Income where a connection with the maintenance or enhancement of the value of
investments can be demonstrated. In this respect the investment management
fees have been charged to the Statement of Comprehensive Income in line with
the Board's expected long-term split of returns, in the form of capital gains
and income from the Group and Company's portfolio. As a result 20% of the
investment management fees are charged to the revenue account and 80% charged
to the capital account of the Statement of Comprehensive Income.
The performance fee (when payable) is charged entirely to capital as the fee
is based on the out-performance of the Benchmark and is expected to be
attributable largely, if not wholly, to capital performance.
The research costs relate solely to specialist healthcare research and are
accounted for on an accrual basis and, are allocated 20% to revenue and 80%
capital. This is in line with the Board's expected long-term split of revenue
and capital return from the Company's investment portfolio.
Finance costs
The ZDP shares are designed to provide a pre-determined capital growth from
their original issue price of 100p on 20 June 2017 to a final capital
repayment of 122.99p on 19 June 2024. The initial capital will increase at a
compound interest rate of 3% per annum.
No dividends are payable on the ZDP shares. The provision for the capital
growth entitlement of the ZDP shares is included as a finance cost and charged
100% to capital within the Statement of Comprehensive Income (AIC SORP
paragraph 53 - issued July 2022).
Overdraft interest costs are allocated 20% to revenue and 80% to capital in
line with the Board's expected long-term split of revenue and capital return
from the Company's investment portfolio.
Share issue costs
Costs incurred directly in relation to the issue of shares in the subsidiary
are borne by the Company and taken 100% to capital. Share issue costs relating
to ordinary share issues by the Company are taken 100% to the share premium
account.
Zero Dividend Preference (ZDP) shares
Shares issued by the subsidiary are treated as a liability of the Group, and
are shown in the Balance Sheet at their redemption value at the Balance Sheet
date. The appropriations in respect of the ZDP shares necessary to increase
the subsidiary's liabilities to the redemption values are allocated to capital
in the Statement of Comprehensive Income. This treatment reflects the Board's
long-term expectations that the entitlements of the ZDP shareholders will be
satisfied out of gains arising on investments held primarily for capital
growth.
(f) Taxation
The tax expense represents the sum of the overseas withholding tax deducted
from investment income, tax currently payable and deferred tax.
The tax currently payable is based on the taxable profits for the year ended
30 September 2023. Taxable profit differs from net
profit as reported in the Statement of Comprehensive Income because it
excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never
taxable or deductible. The Group and Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted at
the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented against capital returns in the
supplementary information in the Statement of Comprehensive Income is the
"marginal basis". Under this basis, if taxable income is capable of being
offset entirely by expenses presented in the revenue return column of the
Statement of Comprehensive Income, then no tax relief is transferred to the
capital return column.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
Financial Statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised.
Investment trusts which have approval as such under section 1158 of the
Corporation Taxes Act 2010 are not liable for taxation on capital gains.
The company is liable to Indian capital gains tax under Section 115 AD of the
Indian Income Tax Act 1961. The Indian capital gains tax provision represents
an estimate of the amount of tax payable by the Company. Tax amounts payable
may differ from this provision depending on when the Company disposes of its
investments. The current provision for Indian capital gains tax is calculated
based on the long term (securities held more than one year) or short term
(securities held less than one year) nature of the investments and the
applicable tax rate at the year end. Currently, the short-term tax rate is 15%
and the long-term tax rate is 10%. The estimated tax charge is subject to
regular review including a consideration of the likely period of ownership,
tax rates and market valuation movements. The provision at the year end is
recognised in the Balance Sheet and the year-on-year movement in the provision
is recognised in the Statement of Comprehensive Income.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised based on tax
rates that have been enacted or substantively enacted at the balance sheet
date.
Deferred tax is charged or credited in the Statement of Comprehensive Income,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
(g) Investments Held at Fair Value Through Profit or Loss
When a purchase or sale is made under contract, the terms of which require
delivery within the timeframe of the relevant market, the investments
concerned are recognised or derecognised on the trade date and are initially
measured at fair value.
On initial recognition the Group and Company has designated all of its
investments as held at fair value through profit or loss as defined by
UK-adopted IAS. All investments are measured at subsequent reporting dates at
fair value, which is either the bid price or the last traded price, depending
on the convention of the exchange on which the investment is quoted.
All investments, classified as fair value through profit or loss, are further
categorised into the following fair value hierarchy:
Level 1: Unadjusted prices quoted in active markets for identical assets and
liabilities.
Level 2: Having inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Having inputs for the asset or liability that are not based on
observable market data.
Changes in fair value of all investments held at fair value and realised gains
and losses on disposal are recognised in the capital return column of the
Statement of Comprehensive Income.
In the event a security held within the portfolio is suspended then judgement
is applied in the valuation of that security.
(h) Receivables
Receivables are initially recognised at fair value and subsequently measured
at amortised cost. Receivables do not carry any interest and are short-term in
nature and are accordingly stated at their nominal value (amortised cost) as
reduced by appropriate allowances for estimated irrecoverable amounts.
(i) Cash and Cash Equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, maturity of three months or less, highly liquid investments that
are readily convertible to known amounts of cash.
(j) Dividends Payable
Dividends payable to shareholders are recognised in the Financial Statements
when they are paid or, in the case of final dividends, when they are approved
by the shareholders.
(k) Payables
Other payables are not interest-bearing and are initially valued at fair value
and subsequently stated at their nominal value (amortised cost).
(l) Foreign Currency Translation
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling on the date of each transaction. Monetary assets, monetary
liabilities and equity investments in foreign currencies at the balance sheet
date are translated into sterling at the rates of exchange ruling on that
date. Realised profits or losses on exchange, together with differences
arising on the translation of foreign currency assets or liabilities, are
taken to the capital return column of the Statement of Comprehensive Income.
Foreign exchange gains and losses arising on investments held at fair value
are included within changes in fair value.
(m) Capital Reserves
Capital reserve arising on investments sold includes:
· gains/losses on disposal of investments
· exchange differences on currency balances
· transfer to subsidiary in relation to ZDP funding requirement
· other capital charges and credits charged to this account in
accordance with the accounting policies above.
Capital reserve arising on investments held includes:
· increases and decreases in the valuation of investments held at
the balance sheet date.
All of the above are accounted for in the Statement of Comprehensive Income.
When making a distribution to shareholders, the Directors determining the
profits available for distribution by reference to the 'Guidance on realised
and distributable profits under the Companies Act 2006' issued by the
Institute of Chartered Accountants of England & Wales and the Institute of
Chartered Accountants of Scotland in April 2017. The availability of
distributable reserves in the Company is dependent on those dividends meeting
the definition of qualifying consideration within the guidance and on the
available cash resources of the Company and other accessible sources of funds.
The distributable reserves are therefore subject to any future restrictions or
limitations at the time such distribution is made.
(n) Repurchase of Ordinary Shares (Including Those Held in Treasury)
The costs of repurchasing Ordinary shares including related stamp duty and
transaction costs are taken directly to equity and reported through the
Statement of Changes in Equity as a charge on the special distributable
reserve. Share repurchase transactions are accounted for on a trade date
basis.
The nominal value of Ordinary share capital repurchased and cancelled is
transferred out of called up share capital and into the capital redemption
reserve.
Where shares are repurchased and held in treasury, the transfer to capital
redemption reserve is made if and when such shares are subsequently cancelled.
(o) Segmental Reporting
Under IFRS 8, 'Operating Segments', operating segments are considered to be
the components of an entity about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance. The chief
operating decision maker has been identified as the Investment Manager (with
oversight from the board).
The Directors are of the opinion that the Group and Company has only one
operating segment and as such no distinct segmental reporting is required.
(p) Key Estimates and judgements
Estimates and assumptions used in preparing the Financial Statements are
reviewed on an ongoing basis and are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances. The results of these estimates and assumptions form the basis
of making judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. The Group and Company do not consider
that there have been any significant estimates or assumptions in the current
financial year.
(q) New and revised accounting Standards
There were no new UK-adopted IAS or amendments to UK-adopted IAS applicable to
the current year which had any significant impact on the Group and Company's
Financial Statements.
i) There were no relevant standards effective for the current annual reporting
period that potentially impact the Group and
Company in issue.
ii) At the date of authorisation of the Group and Company's Financial
Statements, the following relevant standards that potentially impact the Group
and Company are in issue but are not yet effective and have not been applied
in the
Financial Statements.
Standards & Interpretations Effective for periods commencing on or after
Disclosure of Accounting Requirement amended to disclose material accounting policies instead of 1 January 2023
significant accounting policies and provided guidance in making materiality
Policies (Amendments to IAS 1 judgements to accounting policy disclosure.
and IFRS Practice Statement 2)
Definition of Accounting The amendment introduced the definition of accounting estimates and included 1 January 2023
other amendments to IAS 8 to help entities distinguish changes in accounting
Estimates (amendments to estimates from changes in accounting policy.
IAS 8)
The Directors expect that the adoption of the standards listed above will have
either no impact or that any impact will not be material on the Financial
Statements of the Group and Company in future periods.
3. Investment Income
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Revenue:
UK Dividend income 591 472
Overseas Dividend income 4,213 3,955
Total investment income allocated to revenue 4,804 4,427
4. Other Operating Income
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Bank interest 104 26
Total other operating income 104 26
5. Gains on Investments Held at Fair Value
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Net gains on disposal of investments at historic cost 33,182 18,524
Less fair value adjustments in earlier years (14,297) (11,626)
Gains based on carrying value at previous balance sheet date 18,885 6,898
Valuation gains on investments held during the year 689 16,087
19,574 22,985
6. Other Currency losses
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Exchange losses on currency balances (1,130 (610)
7. Investment Management Fee
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Management fee
- charged to revenue 650 602
- charged to capital 2,598 2,406
Investment management fee payable to Polar Capital LLP 3,248 3,008
Management fees are allocated 20% to revenue and 80% to capital.
Details of the fee arrangements are given in the Strategic
Report above.
8. Other Administrative Expenses (Including VAT where appropriate)
Year ended Year ended
30 September 30 September
2023 2022
£'000 £'000
Directors' fees and expenses(1) 143 136
Directors' NIC 14 14
Auditors' remuneration(2): For audit of the Group and Company Financial 60 48
Statements
Depositary fee 30 23
Registrar fee 37 30
Custody and other bank charges 42 37
UKLA and LSE listing fees(3) 40 3
Legal & professional fee 5 6
AIC fees 21 21
Directors' and officers liability insurance 18 16
Corporate brokers fee 25 25
Marketing expenses(4) 47 43
Research costs - allocated to revenue(5) 3 15
Shareholder communications 17 22
HSBC administration fee 208 158
Other expenses 2 2
Total other administrative expenses allocated to revenue 712 599
Research cost - allocated to capital(5) 13 59
Total other administrative expenses 725 658
1 Full disclosure is given in the Directors' Remuneration Report in the Annual
Report.
2 2023 includes £8,000 (2022: £6,875) paid to the Auditors for the audit of
PCGH ZDP Plc.
3 Prior year reflects write off of PCCH ZDP FCA fee accrual which no longer
applies.
4 Includes marketing expenses payable to Polar Capital LLP of £15,500 ( 2022:
£22,500).
5 Research costs payable by the Company amounted to £16,000, and cover the 3
months to 31 December 2022. (£74,000 - full year). These costs are allocated
20% to revenue and 80% to capital and are included in the ongoing charges
calculation. With effect from 1 January 2023, specialist research costs are
absorbed by Polar Capital.
Ongoing charges represents the total expenses of the fund, excluding finance
costs and tax, expressed as a percentage of the average daily net asset value,
in accordance with AIC guidance issued in May 2012.
The ongoing charges ratio for the year ended 30 September 2023 was 0.87%
(2022: 0.84%). See Alternative Performance Measures provided in the annual
report.
9. Finance Costs
Year ended 30 September 2023 Year ended 30 September 2022
Revenue return Capital return Total return Revenue return Capital return Total return
£'000 £'000 £'000 £'000 £'000 £'000
Interest on overdrafts 9 35 44 - 2 2
Appropriation to ZDP shares - 1,126 1,126 - 1,094 1,094
Total finance costs 9 1,161 1,170 - 1,096 1,096
10. Taxation
Year ended Year ended
30 September 2023
30 September 2022
Revenue return Capital Total return Revenue return Capital return Total return
£'000 return £'000 £'000 £'000 £'000
£'000
a) Analysis of tax charge for the year:
Overseas tax 598 - 598 535 - 535
Indian capital gains tax - 715 715 - - -
Total tax for the year (see note 10b) 598 715 1,313 535 - 535
b) Factors affecting tax charge for the year:
The charge for the year can be reconciled to the profit per the Statement of
Comprehensive Income as follows:
Profit before tax 3,537 14,672 18,209 3,252 18,814 22,066
Tax at the UK corporation tax rate of 22% (2022: 19%) 778 3,228 4,006 617 3,575 4,192
Tax effect of non-taxable dividends (1,057) - (1,057) (841) - (841)
Gains on investments that are not taxable - (4,058) (4,058) - (4,251) (4,251)
Non taxable expenses not utillised in the year 279 582 861 224 468 692
Overseas tax suffered 598 - 598 535 - 535
Indian capital gains tax - 715 715 - - -
Expenses not allowable - 248 248 - 208 208
Total tax for the year (see note 10a) 598 715 1,313 535 - 535
c) Factors that may affect future tax charges:
The Company has an unrecognised deferred tax asset of £7,312,000 (2022:
£6,334,000). The deferred tax asset is based on the
current corporation tax rate of 25% (2022: 25%).
It is unlikely that the Company will generate sufficient taxable profits in
the future to utilise these expenses and deficits and therefore no deferred
tax asset has been recognised.
Due to the Company's tax status as an investment trust and the intention to
continue meeting the conditions required to obtain approval of such status in
the foreseeable future, the Company has not provided tax on any capital gains
arising on the revaluation or disposal of investments held by the Company.
The Company is liable to Indian capital gains tax under Section 115 AD of the
Indian Income Tax Act 1961. A tax provision on Indian capital gains is
calculated based on the long term (securities held more than one year) or
short term (securities held less than one year) nature of the investments and
the applicable tax rate at the year end. The current rates of short-term tax
rates are 15% and the long term tax rates are 10% respectively. At the year
ended 30 September 2023, the Company has a deferred tax liability of £254,000
(2022: £nil) on capital gains which may arise if Indian investments are sold.
11. Amounts Recognised as Distributions to Ordinary Shareholders in the
Year
Dividends paid in the year ended 30 September 2023
Payment date No of shares Pence per share Year ended
30 September 2023
£'000
28 February 2023 121,270,000 1.10p 1,334
31 August 2023 121,270,000 1.00p 1,213
2,547
The revenue available for distribution by way of dividend for the year is
£2,939,000 (2022: £2,717,000).
The total dividends payable in respect of the financial year ended 30
September 2023 which is the basis on which the
requirements of Section 1158 Corporation Tax Act 2010 are considered, is set
out below:
Payment date No of shares Pence per share Year ended
30 September 2023
£'000
31 August 2023 121,270,000 1.00p 1,213
29 February 2024 121,270,000 1.20p 1,455
2,668
Dividends paid in the year ended 30 September 2022
Payment date No of shares Pence per share Year ended
30 September 2022
£'000
28 February 2022 121,270,000 1.00p 1,213
31 August 2022 121,270,000 1.00p 1,213
2,426
The total dividends payable in respect of the financial year ended 30
September 2022,which is the basis on which the requirements of Section 1158
Corporation Tax Act 2010 are considered, is set out below:
Payment date No of shares Pence per share Year ended
30 September 2022
£'000
31 August 2022 121,270,000 1.00p 1,213
28 February 2023 121,270,000 1.10p 1,334
2,547
All dividends are paid as interim dividends, and all have been charged to
revenue, where necessary utilising the revenue reserves.
The dividends paid in February each year relate to a dividend declared in
respect of the previous financial year but paid in the
current accounting year.
12. Earnings per Ordinary Share
Year ended Year ended
30 September 2023 30 September 2022
Revenue return Capital return Total return Revenue return Capital return Total return
The calculation of basic earnings per share is based
on the following data:
Net profit for the year (£'000) 2,939 13,957 16,896 2,717 18,814 21,531
Weighted average Ordinary 121,270,000 121,270,000 121,270,000 121,270,000 121,270,000 121,270,000
shares in issue during the year
Basic - Ordinary shares (pence) 2.42 11.51 13.93 2.24 15.51 17.75
As at 30 September 2023 there were no potentially dilutive shares in issue.
13. Investments held at fair value
a) Investments held at far value through profit or loss
30 September 2023 30 September 2022
£'000 £'000
Opening book cost 401,521 380,123
Opening investment holding gains 32,898 28,438
Opening fair value 434,419 408,561
Analysis of transactions made during the year
Purchases at cost 506,254 477,549
Sales proceeds received (501,992) (474,676)
Gains on investments held at fair value 19,574 22,985
Closing fair value 458,255 434,419
Closing book cost 438,965 401,521
Closing investment holding gains 19,290 32,898
Closing fair value 458,255 434,419
The Company received £501,992,000 (2022: £474,676,000) from disposal of
investments in the year. The book cost of these investments when they were
purchased were £468,810,000 (2022: £456,152,000). These investments have
been revalued over time and until they were sold, any unrealised gains/losses
were included in the fair value of the investments.
The following transaction costs, including stamp duty and broker commissions
were incurred during the year:
30 September 30 September
2023 2022
£'000 £'000
On acquisition 481 310
On disposal 257 224
738 534
b) Fair value hierarchy
30 September 30 September
2023 2022
£'000 £'000
Level 1 assets 458,255 434,419
Valuation at the end of the year 458,255 434,419
All Level 1 assets are traded on a recognised Stock Exchange.
c) Subsidiary undertaking
Company and business Country of registration, incorporation and operation Number and class of shares held by the Company Holding
PCGH ZDP Plc England and Wales 50,000 Ordinary shares of £1 100%
The Company is a public limited company with the sole purpose of issuing Zero
Dividend Preference (ZDP) shares. The registered office is at Polar Capital,
16 Palace Street, London SW1E 5JD.
The investment is stated in the Company's Financial Statements at cost, which
is considered by the Directors to equate to fair value.
The subsidiary is non-trading and the value of the net assets have not changed
since the acquisition of the Ordinary share capital by the Company. The cost
is therefore considered to equate to the fair value of the shares held.
14. Called up Share Capital
Ordinary shares - Allotted, Called up and Fully paid: 30 September 30 September
2023 2022
£'000 £'000
Ordinary shares of nominal value 25p each:
Opening balance of 121,270,000 (2022: 121,770,000) 30,317 30,317
Allotted, Called up and Fully paid: 121,270,000 (2022: 121,270,000) Ordinary 30,317 30,317
shares of 25p
2,879,256 (2022: 2,879,256) Ordinary shares, held in treasury 720 720
At 30 September 2023 31,037 31,037
No Ordinary shares were repurchased or issued during the year
(2022: nil).
The Ordinary shares held in treasury have no voting rights and
are not entitled to dividends.
15. Net Asset Value Per Share
Ordinary shares 30 September 30 September
2023 2022
Net assets attributable to Ordinary Shareholders (£'000) 419,182 404,833
Ordinary shares in issue at end of year 121,270,000 121,270,000
Net asset value per Ordinary share (pence) 345.66 333.83
Total issued Ordinary shares 124,149,256 124,149,256
Ordinary shares held in treasury 2,879,256 2,879,256
Ordinary shares in issue 121,270,000 121,270,000
As at 30 September 2023 there were no potentially dilutive shares in issue.
16. Cash and Cash Equivalents
30 September 30 September
2023 2022
£'000 £'000
Cash at bank 4,630 7,496
Bank Overdraft (2,014) -
Company cash and cash equivalents 2,616 7,496
Cash held at subsidiary 50 50
Group cash and cash equivalents 2,666 7,546
17. Transactions with the Investment Manager and Related Party
Transactions
(a) Transactions with the Manager
Under the terms of an agreement dated 26 May 2010 the Group has appointed
Polar Capital [[P ("Polar Capital") to provide investment management,
accounting, secretarial and administrative services. Details of the fee
arrangement for these services are given in the Strategic Report. The total
fees, paid under this agreement to Polar Capital in respect of the year ended
30 September 2023 were £3,248,000 (2022: £3,008,000) of which £537,000
(2022: £259,000) was outstanding at the year-end.
In addition, the total research cost in respect of the year ended 30 September
2023 was £16,000 (2022: £74,000). As at the year end, £nil (2022: £54,800)
was outstanding. From 1 January 2023 all research costs are payable by Polar
Capital. Refer to note 8 above for more details.
(b) Related party transactions
The Group and Company has no employees and therefore no key management
personnel other than the Directors. The Group and Company paid £143,000
(2022: £136,000) to the Directors and the Remuneration Report including
Directors' shareholdings and movements within the year is set out within the
full Annual Report.
Refer to note 13(c) for details of the subsidiary undertaking.
18. Post Balance Sheet Events
There are no significant events that have occurred after the end of the
reporting period to the date of this report which require disclosure.
AGM
The Annual Report and separate Notice for the Annual General Meeting will be
posted to Shareholders in December 2023 and is available from the Company
Secretary at the Company's Registered Office, (16 Palace Street London SW1E
5JD) or from the Company's website. The AGM will be held at the Company's
Registered Office at 2:30pm on 8 February 2024.
FORWARD LOOKING STATEMENTS
Certain statements included in the Annual Report and Financial Statements
contain forward-looking information concerning the Company's strategy,
operations, financial performance or condition, outlook, growth opportunities
or circumstances in the countries, sectors or markets in which the Company
operates. By their nature, forward-looking statements involve uncertainty
because they depend on future circumstances, and relate to events, not all of
which are within the Company's control or can be predicted by the Company.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Actual results could differ
materially from those set out in the forward-looking statements. For a
detailed analysis of the factors that may affect our business, financial
performance or results of operations, we urge you to look at the principal
risks and uncertainties included in the Strategic Report Section the Annual
Report and Financial Statements.
No part of these results constitutes, or shall be taken to constitute, an
invitation or inducement to invest in Polar Capital Global Healthcare Trust
plc or any other entity, and must not be relied upon in any way in connection
with an investment decision. The Company undertakes no obligation to update
any forward-looking statements.
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the company's website (or any other website) is
incorporated into, or forms part of, this announcement.
-END-
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