Annual Report and Financial Statements for the year ended 30 September 2022
2022 Annual Report and Financial Statements for the year ended 30 September 2022
Contents
Overview
Your Business at a Glance 1
Highlights 2
Performance 3
Chair’s Statement 4
Board of Directors 6
Investment Team 8
Manager’s Report
Investment Manager’s Report 11
Ten Largest Investments 21
Full Investment Portfolio 22
Environmental, Social and Governance
Corporate Responsibility for ESG 24
Investment Perspective 26
ESG Dashboard 28
Governance
Strategic Report 30
Section 172 of the Companies Act 2006 37
Report of the Directors 40
Report on Corporate Governance 42
Audit Committee Report 51
Directors’ Remuneration Report 58
Statement of Directors’ Responsibilities 63
Independent Auditors’ Report 64
Financial Statements and Notes
Statement of Comprehensive Income 73
Statements of Changes in Equity 74
Balance Sheets 75
Cash Flow Statements 76
Notes to the Financial Statements 77
Shareholder Information
Alternative Performance Measures (APMs) 97
Glossary of Terms 99
Corporate Information – AGM 101
Corporate Information – Other 102
Contact Information 106
Purpose
The purpose of the Group, comprising
the Company and the wholly owned
subsidiary PCGH ZDP Plc, is to provide
a vehicle for investors in which assets
are invested across a diversified global
portfolio of healthcare stocks which aim
to deliver long term capital growth to
Shareholders. The purpose is achieved
through implementation of the
Investment Objective and investment
policies incorporating parameters to
ensure excessive risk is not undertaken.
Investment Objective
The generation of capital growth
through investments in a global
portfolio of healthcare stocks.
See more at: polarcapitalhealthcaretrust.co.uk
We were delighted to be awarded
winner of the Biotech and Healthcare
specialist sector at the Investment Week
- Investment Company of the Year
Awards in November 2022.
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Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 1
Overview
Your Business at a Glance
Who we are
The Group comprises the Company, Polar Capital Global Healthcare Trust Plc and
the subsidiary, PCGH ZDP Plc.
Management
The Company is an investment trust led by an experienced
Board of independent non-executive Directors with a variety
of expertise in investment and healthcare matters and with
experience in the regulatory and legal framework within
which the Group operates. The role of the Board is to provide
oversight of the Company’s activities and to seek to ensure
that the appropriate controls are in place to deliver the
Investment Objective and to manage the risks associated with
such activities.
The Investment Manager is Polar Capital LLP (“Polar Capital”)
and the appointed Co- Managers are Dr James Douglas
and Mr Gareth Powell supported by the wider Polar Capital
Healthcare Team. Polar Capital LLP is also the Alternative
Investment Fund Manager for the purposes of AIFM
Regulations and is authorised and regulated by the Financial
Conduct Authority.
Life
The Group was formed on 30 March 2017 as part of a
reconstruction of the Company which included the creation
of the subsidiary, PCGH ZDP Plc, the change of name on
20 June 2017 from Polar Capital Global Healthcare Growth
and Income Trust plc and a change in objective from the
creation of income and growth, to growth alone. The
Company was originally launched on 15 June 2010.
In the absence of any prior alternative proposals, the articles
of association of the Company require the Directors to put
forward at the first Annual General Meeting to be held
after 1 March 2025 a resolution to place the Company into
voluntary liquidation.
Capital structure
At 30 September 2022 the Company had in issue
124,149,256 Ordinary shares of 25 pence each of which
2,879,256 were held in treasury (2021:124,149,256 Ordinary
shares of which 2,879,256 were held in treasury). During
the year ended 30 September 2022 no shares were issued or
bought back.
Benchmark
The benchmark since launch has been the MSCI ACWI Health
Care Index (total return in sterling with dividends reinvested).
Dividend policy
The Company’s focus remains on capital growth, and while
the Company continues to aim to pay two dividends per year
these are expected to be a small part of shareholder total
return.
Gearing
The Company maintains long-term structural gearing in the
form of a loan from the wholly owned subsidiary PCGH ZDP
Plc. No additional short-term borrowings have been made
and there are no arrangements made for any bank loans.
The Company may borrow up to 15% of its Net Asset Value
at the time of drawdown for tactical deployment when the
Board believes (on the recommendation of the Manager) that
gearing will enhance returns to shareholders.
Fees
The Investment Manager is entitled to a management fee
at the rate of 0.75% per annum of the lower of the Group
market capitalisation and the Company’s adjusted net asset
value. 80% of the management fee is charged to the capital
account and 20% is charged to income.
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 2022 (2021: nil).
Further details are included in the Strategic Report.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20222
Overview
Highlights
Financial Highlights
Net Asset Value per Ordinary Share (Total Return)*
Benchmark Index
Total Net Assets (Group and Company)
Net Asset Value per Ordinary Share
Price per Ordinary Share
Share Price Total Return*
Highlights in detail for the year to 30 September 2022
Performance
Net asset value per Ordinary share (total return)* 5.59%
Benchmark Index (MSCI ACWI/Health Care Index (total return in sterling with dividends reinvested)) 6.93%
Since restructuring
Net asset value per Ordinary share (total return) since restructuring *~ 60.79%
Benchmark index total return since restructuring 64.05%
Expenses 2022 2021
Ongoing charges* 0.84% 0.83%
Financials
As at
30 September 2022
As at
30 September 2021
Change
%
Total net assets (Group and Company) £404,833,000 £385,728,000 5.0%
Net asset value per Ordinary share 333.83p 318.07p 5.0%
Net asset value per ZDP share^ 116.91p 113.50p 3.0%
Price per Ordinary share 315.00p 288.00p 9.4%
Discount per Ordinary share* 5.6% 9.5%
Price per ZDP share^ 114.00p 113.50p 0.4%
Net gearing* 7.41% 6.04%
Ordinary shares in issue (excluding those held in treasury) 121,270,000 121,270,000 -
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 2022:
Pay date
Amount per
Ordinary share Record Date Ex-Date Declared Date
First interim: 31 August 2022 1.00p 5 August 2022 4 August 2022 14 July 2022
Second interim: 28 February 2023 1.10p 3 February 2023 2 February 2023 9 December 2022
Total (2021: 2.00p) 2.10p
* See Alternative Performance Measures on pages 97 and 98.
~ 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.
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)*
NET ASSET VALUE PER ORDINARY SHARE
2021
2022
333.83p
2021
2022
6.93%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2021
2022
315.00p
2021
2022
£404.8m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
318.07p
13.40%
2021
2022
288.00p
£385.7m
(TR: Total Return, rebased to 100 at June 2010)
5.59%
19.46%
2021
2022
10.11%
24.55%
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 3
Overview
Performance since launch (15 June 2010)
Performance since reconstruction (20 June 2017)
Performance
0
100
200
300
400
500
600
Sep
2022
Mar
2022
Sep
2021
Mar
2021
Sep
2020
Mar
2020
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2019
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2017
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2016
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2016
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2015
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2015
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2014
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2014
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2013
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2013
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2012
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2012
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2011
Mar
2011
Sep
2010
Jun
2010
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at launch on 15 June 2010)
Company reconstruction 20 June 2017
Ordinary Share Price (TR) NAV per share (TR)
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at reconstruction on 20 June 2017)
Ordinary Share Price (TR) NAV per share (TR)
50
100
150
200
Mar
2025
Sep
2024
Mar
2024
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2023
Mar
2023
Sep
2022
Mar
2022
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2021
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2021
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2020
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2020
Sep
2019
Mar
2019
Sep
2018
Mar
2018
Sep
2017
Jun
2017
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20224
Overview
Chair’s
Statement
Lisa Arnold
Chair
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 2022.
Performance
The portfolio performed well over the financial year delivering
absolute returns of 5.59%, despite the challenging market
and economic conditions, especially following Russia’s
invasion of Ukraine which commenced in late February
2022. Whilst ahead of the overall market and the peer
group, performance did slightly lag the benchmark (MCSI
Global Healthcare Index) by 1.3%. In the financial year, the
share price total return increased by 10.1% as the discount
narrowed. At the financial year end the discount was 5.6%
compared to the prior year of 9.5%.
Further detail is provided within the Investment Manager’s
Report on pages 11 to 20.
Outlook
The industry fundamentals remain strong, valuations are
still attractive, and with the macro and political background
supportive, we remain very optimistic for the outlook for
healthcare. Further information on the underlying themes
and drivers for the sector are provided in the Investment
Manager’s report on pages 14 to 16. The Board continues
to monitor performance and remains confident that the
Company is well placed to generate attractive returns for
shareholders.
Board
The Board is aware of the FCA’s Diversity and Inclusion
Policy published in April 2022 and, whilst the current Board
composition does not currently meet the following target
requirements, a minimum of 40% female Board members
and at least one non-white ethnic minority Board member, it
does meet the requirement to have a senior female Board role
in the form of myself as Chair. We will continue to keep this
under consideration as part of the Board’s future succession
plans and will provide full disclosures in next year’s annual
report as required under the FCA’s policy. Further details are
provided in the ESG Statement on page 25 and the Report on
Corporate Governance on page 47.
Dividends
The Company’s focus remains 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 but it is recognised
that these will not necessarily be of equal amounts and may
be reduced.
In August 2022 the Company paid an interim dividend of
1.00p per ordinary share. The Board has declared a further
interim dividend of 1.10p per ordinary share payable to
shareholders on the register as at 3 February 2023. This will
bring the total dividend paid for the financial year under
review to 2.10p per ordinary share, a small increase on the
previous financial year.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 5
Overview
Environmental, Social and Governance
(“ESG”)
During the year under review, the Board continued its
ESG journey and further extended its engagement with
the Investment Manager on the progress that has been
made in integrating ESG into their investment approach
and processes. As stated previously the Board believes the
Manager is best placed to integrate ESG factors into the
decision making process, with the Board providing oversight
and challenge, to gain assurance that the process is being
executed as expected. This year, particular focus has been
on how ESG has influenced our Manager’s decision making
and the methodology used to assess current and potential
investee companies. Whilst there is still some way to go in
terms of quality, comparable data for all companies, the
Manager has recently introduced an ESG dashboard which
allows us to review the ratings of investee companies within
the portfolio and to inform discussions between the Board
and Manager at Board meetings. As at 30 September 2022,
based on MSCI ESG ratings, the portfolio and the benchmark
were both AAA rated.
The Board also receives information on the progress that has
been made at the corporate side of Polar Capital’s business.
Please refer to the ESG statement on pages 24 to 28 which
incorporates both the investment and corporate approaches.
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 2022 was 315.00p
(2021: 288.00p). The Company’s market capitalisation at
the financial year end was £382.0m (2021: £349.3m). The
Company’s share price traded in a discount range of 3.9%
to 15.5% throughout the year, ending at a discount of
5.6% compared to 9.5% at the start of the year. 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. Further information can be found on the
Company’s website www.polarcapitalglobalhealthcaretrust.
co.uk.
Annual General Meeting
The Company’s twelfth Annual General Meeting (“AGM”)
will be held at 16 Palace Street at 2pm on Thursday 9
February 2023. The notice of AGM has been provided to
shareholders and will also be available on the Company’s
website. Detailed explanations on the formal business and the
resolutions to be proposed at the AGM is contained within
the Shareholder Information section on page 101 and in the
Notice of AGM. We look forward to welcoming you to the
Company‘s AGM on 9 February 2023 should you choose to
attend.
Lisa Arnold
Chair
9 December 2022
ANNUAL
GENERAL
MEETING
on
9 February
2023
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20226
Overview
Board of Directors
Lisa Arnold Chair
Neal Ransome Independent Non-Executive Director and Audit Committee Chair
Appointed to the Board on 1 February 2018 and as Chair of the Board with effect from 26 February
2020, a member of the Audit and Management Engagement Committees.
Skills and experience
Lisa was formerly a global pharmaceuticals and healthcare analyst for NatWest Markets from 1987 and continued her healthcare
career in roles with UBS Warburg, Commerzbank and Lehman Brothers. Lisa has held a number of independent adviser and
non-executive roles including nine years with the Medicines and Healthcare Products Regulatory Agency (MHRA) and eight years
as a non-executive director of Futura Medical plc.
Other appointments
Lisa holds a number of pension trustee directorships and is the chair of the Allied Domecq Pension Fund and chair of the
investment committee of the Sainsbury’s Pension Fund. She is also a non-executive director of PIMCO Europe Limited where she
chairs the audit committee.
PCGH Share Interests
20,000 (0.02% of ISC)
Annual Remuneration
£41,000
Rationale for supporting re-election
Lisa has had a long career as a global pharmaceuticals and healthcare analyst ahead of her taking on non-executive director
positions. Since joining the Board and taking on the Chair Lisa has delivered investment and strategic experience along with her
detailed and effective leadership skills. Through Lisa’s pension fund roles, particularly with the early adoption of TCFD, she has a
comprehensive understanding of the importance and challenges of ESG and climate related issues. In her role as Chair, Lisa has
continued to work closely with the corporate brokers and the Managers to improve communication both internally and externally
for the benefit of all and, in particular, when considering a shareholder perspective. Lisa continues to lead the Board with an
inclusive and engaging manner and her nomination for re-election as Chair and non-executive Director is supported by both the
Board and the Managers.
Appointed to the Board on 13 December 2017 and, with effect from 28 February 2018, as Chair of
the Audit and Management Engagement Committees.
Skills and experience
Neal is a chartered accountant with an MA in Modern History from Oxford University. Neal was a partner at PwC from 1996
to 2013. He led PwC’s Pharmaceutical and Healthcare M&A practice for 17 years and was also chief operating officer of PwC’s
Advisory Services business.
Other appointments
Neal is currently chairman of ProVen VCT plc and Octopus AIM VCT Plc.
PCGH Share Interests
10,073 (0.01% of ISC)
Annual Remuneration
£35,000 (including Audit Committee Chair supplement)
Rationale for supporting re-election
Neal has recent and relevant financial expertise with a strong accounting background which enables him to perform in-depth
analyses of the Company’s performance and Financial Statements. In addition to his financial expertise, Neal has a wealth of
experience in evaluating pharmaceutical and healthcare companies having previously led PwC’s Pharmaceutical and Healthcare
M & A practice. Neal is Chair of the Company’s Audit Committee, a role in which he has had extensive experience on other boards.
Neal’s re-election as a non-executive Director and Audit Committee Chair is supported by the Board and the Managers.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 7
Overview
Andrew Fleming Non-Executive Director
Jeremy Whitley Non-Executive Director
Appointed to the Board on 1 December 2019, also a member of the Audit and Management
Engagement Committees.
Skills and experience
Andrew is chair of Saltus Asset Management Limited and was previously chief executive of Waverton Investment Management.
He started his career at Gartmore where he was a main board director and head of equities. Andrew went on to hold senior
positions at ABN Amro and was chief executive of Kames Capital for nine years. He was a director and chairman of JP Morgan
Japanese Investment Trust plc retiring in December 2018 and is a director of Keystone Positive Change Investment Trust plc
which has a dual mandate including an impact focus.
Other appointments
Andrew is chair of Saltus Asset Management and CTVC Limited. He is also a trustee of the Rank Foundation and chairs its
Investment Committee.
PCGH Share Interests
10,000 (0.01% of ISC)
Annual Remuneration
£29,500
Rationale for supporting re-election
Andrew continues to share his investment and management experience and is a key participant in Board meetings. He has
worked with the Board and the Managers to ensure the continuation and continued improvement of service. In addition to his
extensive investment and commercial management expertise he also has prior ESG experience having launched one of Europe’s
first ESG funds some 20 years ago and was a very early advocate and signatory of the UNPRi principles. Andrew’s re-election as a
non-executive Director is supported by the Board and Managers.
Appointed to the Board on 1 December 2019, also a member of the Audit and Management
Engagement Committees.
Skills and experience
Jeremy was formerly Head of UK and European Equities at Aberdeen Asset Management, a position he held from 2009 to 2017.
Previous roles there included being a senior investment manager on the Global equities team as well as the Asian equities team, based
in Singapore, where he was lead manager of the Edinburgh Dragon Trust. He began his investment career at SG Warburg & Co in 1988.
Other appointments
Jeremy is Chairman of The Scottish Oriental Smaller Companies Trust plc and a non-executive director of JP Morgan Indian
Investment Trust plc.
PCGH Share Interests
20,000 (0.02% of ISC)
Annual Remuneration
£29,500
Rationale for supporting re-election
Jeremy’s experience, not least from his prior roles at Abrdn Asset Management, has enabled him to bring a global perspective
to the regular review of the portfolio and he has been a strong advocate for clear performance attribution analysis. Jeremy
also brings to the Board experience from other investment trust management houses. Jeremy’s re-election as a non-executive
Director is supported by the Board and the Managers.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20228
Overview
James Douglas, PhD – Co-Manager Gareth Powell, CFA – Co-Manager
James joined Polar Capital in September 2015 as a senior analyst for
the healthcare team. He has 23 years of industry experience and has
been an integral part of the management team for the Company
since restructure.
Skills and experience
Prior to joining Polar Capital, he was in equity sales specialising in
global healthcare at Morgan Stanley, RBS and HSBC. James also
has equity research experience garnered from his time at UBS,
where he worked as an analyst in the European pharmaceutical and
biotechnology team. Before moving across to the financial sector,
he worked as a consultant for Evaluate Pharma. James received both
his PhD and his first class honours degree in Medicinal Chemistry
from Newcastle University and holds an ACCA diploma in Financial
Management (DipFM).
Gareth joined Polar Capital to set up the healthcare team in 2007.
He has over 24 years’ investment experience in the healthcare sector
with 18 years as a Portfolio Manager.
Skills and experience
Prior to joining Polar Capital Gareth worked at Framlington, where he
began his career in investment management in 1999. He joined the
healthcare team in 2001 and helped launch the Framlington Biotech
Fund, which he managed from 2004 until his departure. Gareth
studied Biochemistry at Oxford and is a CFA charterholder.
David Pinniger, CFA
David joined Polar Capital’s healthcare team
in August 2013 and is the Lead Manager of
the Polar Capital Biotechnology Fund. He
has over 22 years’ investment experience in
the healthcare sector.
Skills and experience
Prior to joining Polar Capital, David spent
five years as a Portfolio Manager of the
International Biotechnology Trust at SV
Life Sciences. He also previously spent
three years working at venture capital
firm Abingworth as an analyst managing
biotechnology investments held across the
firm’s venture and specialist funds, and
four years at Morgan Stanley as an analyst
covering the European pharmaceuticals and
biotechnology sector. David received a first
class honours degree in Human Sciences
from Oxford University in 1999 and is a
CFA charterholder
Deane Donnigan, Pharm D
Deane joined Polar Capital in June 2013 as
a senior analyst for the healthcare team.
She has 37 years’ industry experience
of which over 21 are in healthcare asset
management.
Skills and experience
She trained as a clinical pharmacist having
graduated with a post baccalaureate
Doctor of Pharmacy, from the University
of Georgia. In 1990, she accepted a
position with Emory University Hospital
in Atlanta, Georgia as a clinical specialist
in Drug Information and Adult Internal
Medicine. In 1997, Deane left the US to
begin her career in fund management at
Framlington in the UK. Having started as an
analyst, she spent 14 years at Framlington,
eventually becoming Lead Portfolio Manager
on both the Framlington Healthcare and
Biotechnology funds.
Brett Pollard, PhD
Brett Pollard joined the Polar Capital
Healthcare team in September 2021 as an
investment analyst. Prior to Polar Capital,
Brett was Managing Director of Strategy and
Corporate Development at Scapa plc, with
responsibility for investor relations. Since
2001 he has worked across the healthcare
sector and within equity capital markets as a
healthcare analyst, most recently at Numis.
Brett also has worked in and led financial
communications, corporate development,
investor relations and operations.
Skills and experience
Studied cell and molecular biology at the
University of St. Andrews; PhD in molecular
virology.
Investment Team
Daniel Mahony, PhD
Daniel joined Polar Capital to set up the
healthcare team in 2007 and was a key
member of the team until October 2021.
Dan has since moved to being a consultant
to the healthcare team and continues to
consult on all healthcare products. He has
31 years of industry experience, comprising
more than 24 years’ investment experience
in the healthcare sector.
Skills and experience
Prior to joining Polar Capital, he was head
of the European healthcare research team
at Morgan Stanley. Daniel received his PhD
from Cambridge University in 1995 and a
first class honours degree in Biochemistry
from Oxford University in 1991.
Damiano Soardo, CFA
Damiano joined the healthcare team in
October 2020 as an Investment Analyst.
Damiano is responsible for supporting the
fund managers by performing analysis
of business models, industry trends and
financials. Previously, Damiano worked in the
Operations department when he joined Polar
Capital in February 2016 and subsequently
moved to the Risk team in January 2019.
Skills and experience
Prior to joining Polar Capital, he worked as
a technical consultant at a FinTech company.
Damiano has an MSc in Mathematics
and Foundations of Computer Science
from the University of Oxford and is a
CFA charterholder.
Audrey Stynes
Audrey joined the healthcare team in
April 2019 as the team assistant. Aside from
organising the team’s administration and
communication workload both internally
and externally, she coordinates presentations
and marketing material in addition to
generating bespoke reports that inform daily
fund management activities for the team
at large. Previously, Audrey worked in the
Product and Operations department when
she joined Polar Capital in March 2018.
Skills and experience
Audrey graduated with a BA (1st Class
Hons) in Early Childhood Education from
the Dublin Institute of Technology and a
MA in Early Childhood Education and Care
from the Dublin Institute of Technology,
Oslo University College, University of Malta
and the University of Gothenburg.
Tara Raveendran, PhD
Tara joined Polar Capital in September 2021
as a consultant focused on independent
research for the team. Prior to joining Polar
Capital, she was the Head of Healthcare
& Life Sciences Research at Shore Capital.
Previously Tara spent over 15 years working
in equity research, specialising in European
pharmaceuticals, biotechnology and
medtech at Lehman Brothers and Jefferies.
She has also worked with a number of
healthcare-focused startups through her life
sciences consultancy, SSquared Consulting,
most recently working with the UK
government’s Vaccine Taskforce.
Skills and experience
BSc in Biochemistry and PhD in Structural
Biology from Imperial College, London.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 9
Overview
The demand for products
and services is growing
significantly. Innovation
continues at a rapid pace
and valuations are attractive.
Manager’s Report
Manager’s
Report
Track record and an
experienced team
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202210
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 11
Manager’s Report
Investment Manager’s
Report
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 structure
as a closed-end company. 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,
30 companies in the portfolio were Growth investments
(94.5% of net assets) and 11 were Innovative investments
(12.8%). Structural debt, in the form of Zero Dividend
Preference Shares, offers access to additional liquidity and the
opportunity to enhance returns.
Dr James Douglas
Co-Manager
Gareth Powell
Co-Manager
Market Capitalisation
Market Capitalisation at
30 September
2022
30 September
2021
Large (>US$10bn) 78.5% 78.9%
Medium (US$5bn - US$10bn) 16.0% 14.8%
Small (<US$5bn) 12.8% 12.2%
Other net liabilities (7.3%) (5.9%)
100.0% 100.0%
Source: Polar Capital.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202212
Manager’s Report
Investment Manager’s Report continued
Over the financial year to the end of 30 September 2022, the
Company delivered a NAV per share total return of 5.59%,
1.34% behind its benchmark, the MSCI All Country World/
Healthcare Total Return Index. The absolute performance
of the healthcare sector was positive, up 6.93% over the
reporting period, with the sector comfortably outperforming
the broader market, as tracked by the MSCI All Country
World Net Total Return Index (all figures above are in sterling
terms) which was down 4.04%. Despite being faced with a
cocktail of rising inflation, hawkish central banks and the war
in Ukraine, equity markets were remarkably resilient during
the first six months of the financial year. Unfortunately, that
resilience faded heavily in the latter half of the period as
inflationary and supply-chain pressures accelerated, economic
activity started to slow and the markets started to digest the
possibility of a recession.
Reflecting on performance, strong stock selection across the
market-capitalisation spectrum was offset by the negative
allocation effect of having a relative overweight position in
small and mid-capitalisation stocks. Distributors, managed
care, healthcare services and pharmaceuticals all performed
strongly over the period. Pharmaceuticals had a relatively
strong year, primarily driven by companies’ resilience to
inflationary pressure given their high gross and operating
margins, coupled with the essential nature of their products.
At the other end of the scale, the past 12 months have been
difficult for the healthcare supplies, life sciences tools and
services, equipment and facilities subsectors. The US-based
multinationals had the strain on their earnings of significant
upward pressure from the appreciation of the US dollar. The
struggles witnessed in the healthcare facilities subsector reflect
rising wage inflation coupled with volumes that have been
hampered by COVID-19-related staffing shortages.
As set out in last year’s annual report, the focus was very much
on three key investment themes that accelerated through
the COVID-19 crisis; disrupting the delivery of healthcare,
outsourcing and prevention, all of which remain relevant today.
The dynamism within the healthcare market has, however,
shifted our focus to areas we feel will be more relevant for the
year ahead. More specifically, delivery disruption, accelerating
utilisation and consolidation. Disrupting the delivery of
healthcare continues to be a critical component when it comes
to generating much-needed efficiencies, with recent momentum
likely to continue in the near and medium term. Increased
utilisation could be a significant revenue driver as the healthcare
industry works its way through the ever-expanding backlog
of patients who require medical attention. Last, but not least,
we expect the recent wave of consolidation in the industry to
continue as management teams look to use generally strong
company balance sheets to either expand their pipelines, access
innovative technologies and platforms or accelerate near-term
revenue and earnings momentum.
After a period of relative calm, US healthcare reform came
to prominence again in 2022 with a healthcare reconciliation
package signed into law in August 2022. Included within the
Inflation Reduction Act, the major healthcare provisions include
price negotiations for certain Medicare drugs towards the end
of the decade, mechanisms to control drug-pricing inflation and
caps on out-of-pocket spend for US seniors. Encouragingly, the
Act also extended premium subsidies to ensure ongoing access
to healthcare cover, a positive not just for US citizens but for
the pockets of the industry that benefit from either providing
healthcare insurance plans or from sustained utilisation. With
reform now very much in the rear-view mirror, investors can
focus their attention on a healthcare sector that is highly
innovative, possesses strong fundamentals, is attractively valued
and defensive. These are all extremely appealing characteristics
in the current, challenging macroeconomic environment.
Performance review
Over the financial year to the end of September 2022, the
overall healthcare sector comfortably outperformed the broader
market, with the MSCI All Country World/Healthcare Total
Return Index returning 6.93% in sterling terms, compared to a
decline in the broader equity market of 4.04%, as represented
by the MSCI All Country World Net Total Return Index. The
Company achieved a return on net assets of 5.59%, which
was 1.34% behind its benchmark, but significantly ahead of
more volatile areas of healthcare such as smaller stocks and
biotechnology. Global equity markets posted positive returns
in the first three months of the financial year, but a sustained
downtrend started in mid-January as investors grappled with
a deteriorating macroeconomic environment characterised by
persistent inflation, slowing growth and geopolitical tension.
The Company entered the financial year with approximately
6% net gearing and a large exposure to healthcare facilities,
managed care, healthcare distributors and healthcare
equipment and supplies, with the biggest underweight in
the pharmaceuticals sector and a smaller underweight in life
sciences tools and services. As the year progressed and the
macroeconomic picture became more challenging, the portfolio
was shifted to a more defensive position, with increased
exposure to pharmaceuticals, biotechnology and healthcare
facilities, and reduced allocation to healthcare equipment
and supplies. Healthcare equipment was the biggest positive
contributor to performance thanks to strong stock selection.
Biotechnology and managed care were also positive.
On the other hand, pharmaceuticals detracted the most due
to negative allocation and stock-picking. Solid selection in
healthcare facilities was not enough to offset the negative
allocation effect, while distributors suffered due to poor stock
selection. In summary, the underperformance relative to our
benchmark during the financial year was caused by adverse
allocation which marginally outstripped the positive contribution
from stock selection.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 13
Manager’s Report
From a market-capitalisation perspective, small and mid-
sized healthcare companies experienced a sharp downward
correction starting in early November 2021. For context, the
Russell 2000 Healthcare Index underperformed the S&P 500
Healthcare index by over 30%, in dollar terms, during the
financial year. Investors’ risk appetite deteriorated significantly
over the course of the period under review with inflation,
high interest rates, a slowing global economy and geopolitical
unrest the catalysts for a flight to safety. Consequently, given
the Company’s overexposure to small and mid-capitalisation
stocks, the allocation effect was negative, although this
was more than offset by strong stock selection. As for the
larger-company investments, to which the Company was
underweight relative to the benchmark, both allocation and
selection were negatives.
On a geographical basis, the largest positive contributors
were Asia Pacific ex-Japan, where both allocation and
selection contributed positively, and Japan, where allocation
was particularly favourable. Despite the good allocation
effect, adverse selection and currency effects meant both
Europe and North America detracted from performance.
The active management of gearing did not have a meaningful
contribution to performance.
Top 10 Relative Contributors (%)
Average
Stock
Weight
Active
Weight
Stock
Return
Stock
Return
vs BM
Total
Attri-
bution
Cytokinetics 2.72 2.72 63.37 56.44 1.33
Moderna 0.00 -0.86 -62.97 -69.90 1.19
Acadia Healthcare 2.44 2.44 47.72 40.79 0.92
Molina Healthcare 2.21 1.98 46.51 39.58 0.88
Daiichi Sankyo Co 1.20 0.62 26.49 19.56 0.83
arGEN-X BV 2.01 1.80 44.97 38.04 0.77
Intuitive Surgical 0.00 -1.28 -31.84 -38.77 0.60
Medtronic 0.00 -1.84 -22.37 -29.30 0.60
DexCom 0.64 0.09 -29.01 -35.94 0.56
Biohaven
Pharmaceutical Holding 1.32 1.32 31.15 24.22 0.53
Source: Polar Capital, as at 30 September 2022.
Positive contributors to performance for the financial year
included Cytokinetics, Moderna, Acadia Healthcare, Molina
Healthcare, and Daiichi Sankyo.
Cytokinetics is a biotechnology company focused on
developing drugs for cardiovascular and neuromuscular
diseases of impaired muscle function. The stock performed
strongly, due to the potential for the company’s differentiated
and possibly commercially attractive assets. Following positive
results from a Phase 3 clinical trial, Cytokinetics’ mecamtiv
mecarbil, a drug for heart failure with reduced ejection
fraction (HFrEF), is undergoing FDA review. An FDA Advisory
Committee is scheduled for early December and a decision
on its approval is expected in the first quarter of 2023.
Additionally, the company is continuing its trials for aficamten
in patients with obstructive hypertrophic cardiomyopathies
(oHCM); the approval of Bristol-Myer Squibb’s Camzyos
(mavacamten), which also targets the same disease, should
bode well for the prospect of aficamten.
The lack of exposure to Moderna, an mRNA vaccine
manufacturer that benefitted significantly from the COVID-19
pandemic, was a positive contributor. The stock dropped
considerably over the financial year as investors shifted
their focus to the broader utility of the mRNA technology
beyond COVID-19. Additionally, the stock was caught up in
a widespread sell-off of high-growth biotechnology names
whose terminal values have been eroded by rising interest rates
and a slowing funding environment.
Although Acadia Healthcare struggled in the first few months
of the financial year in the wake of the Omicron variant and a
tightening labour market, the company posted a solid set of
FY21 results coupled with FY22 guidance that provided a strong
sense of relief for investors. Strong execution continued in the
new year, with 1Q22 and 2Q22 results ahead of expectations.
Molina Healthcare, a managed care organisation, performed
extremely well on the back of strong execution and favourable
micro and macroeconomic factors. On the company-specific
side, utilisation remained subdued despite the drop in
COVID-19 cases, which meant the medical loss ratio
(a measure of revenue spent to provide care for members) was
tightly managed. Additionally, full financial-year outlook was
raised during the first two earnings releases in 2022 and the
company also gave a better than expected guidance for 2023.
We believe the share performance also reflected a generally
advantageous backdrop for managed care organisations,
which tend to benefit from higher interest rates and are less
affected by inflationary and supply-chain pressures.
Daiichi Sankyo, a Japanese pharmaceutical company with
a focus on oncology, experienced a strong upward rerating,
which reflected both increasing enthusiasm for recently
launched Enhertu, an antibody drug conjugate (ADC) for
the treatment of metastatic breast cancer, but also the rapid
pace of development into additional indications for the drug.
Further, the company had been subject to a litigation brought
forward by Seagen, alleging that Daiichi Sankyo’s ADCs
infringed a series of patents. When the ruling came out in
favour of the Japanese company, the overhang on the stock
was removed and the share price rose rapidly.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202214
Manager’s Report
Investment Manager’s Report continued
Bottom 10 Relative Contributors (%)
Average
Stock
Weight
Active
Weight
Stock
Return
Stock
Return
vs BM
Total
Attri-
bution
AbbVie 1.54 -1.75 49.94 43.01 -1.46
Avantor 2.51 2.26 -42.25 -49.18 -1.44
Eli Lilly & Co 0.09 -2.96 68.65 61.72 -1.34
Bio-Rad Laboratories 3.03 2.85 -32.61 -39.54 -1.24
Siemens
Healthineers AG
2.44 2.22 -19.35 -26.28 -1.00
Merck & Co 0.00 -2.83 41.88 34.95 -0.86
UCB 2.05 1.88 -25.00 -31.93 -0.83
Horizon Therapeutics 2.78 2.52 -31.91 -38.84 -0.74
Medley 0.79 0.79 -44.42 -51.35 -0.63
Tenet Healthcare Corp 1.48 1.48 -6.44 -13.37 -0.60
Source: Polar Capital, as at 30 September 2022.
Negative contributors to performance for the financial year
2022 included AbbVie, Avantor, Eli Lilly, Bio-Rad Laboratories,
and Siemens Healthineers.
For the majority of the financial year, the Company had
no holdings in either AbbVie or Eli Lilly. Both companies
benefitted from a market rotation away from high-growth,
smaller-capitalisation stocks, riskier assets towards more
stable, larger-capitalisation stocks with an ability to weather
an economic recession. The pharmaceutical majors fit squarely
into this camp. There were also stock-specific aspects that
explain the positive performance of AbbVie and Eli Lilly. The
former produced a series of solid sets of financial results that
were well received by the market, thanks to strong uptake
for rheumatology and dermatology drugs Skyrizi and Rinvoq.
Eli Lilly’s performance was a reflection of good execution
and increased interest for the potential of its diabetes and
obesity franchises given the exceptional results of Mounjaro
(tirzepatide) in decreasing blood sugar levels and body weight.
Avantor, a life sciences tools and services business, sold off
heavily on a disappointing 2Q22 update. The company cited
COVID-19 revenues rolling off, foreign exchange headwinds
and lower than expected contributions from recent acquisitions
MasterFlex and Ritter GmbH as the reasons for the weak set
of numbers. The strong derating was also a sign of investors’
lack of confidence in management’s ability to execute on deals
and manage investors’ expectations. On a more positive note,
the end markets for the life sciences tools and services industry
remain buoyant, especially in areas such as bioprocessing.
Like many other life sciences tools and services companies,
Bio-Rad Laboratories was dragged down by the general
market switch to less highly-rated companies. Despite the
subsector’s ability to pass higher input costs to end customers,
companies still had to contend with supply-chain disruption,
inflation and fears that the challenging environment for
access to capital for early-stage biopharmaceuticals will impact
drug development timelines. The stock also suffered from
the decline in value of its investment in Sartorius which was
rumoured to be on the lookout for M&A deals, a prospect
investors did not support.
Siemens Healthineers, a European medical technology
company with a strong presence in imaging, radiation oncology
and diagnostics, experienced a turbulent period of performance
following downgrades to its margin guidance for FY2022.
The company also pointed to lower margins for its diagnostics
division in the year ahead, making it even more ambitious to
reach its long-range targets. Supply-chain challenges, the rising
costs of materials and labour, and lockdowns in China were
the main explanations for the revised outlook. The market also
grew progressively more nervous about hospitals’ ability to
invest in large capital equipment projects, such as imaging or
radiation-oncology machines, during an economic downturn.
Healthcare: Momentum and conviction
building
The 2021 Annual Report focused on three key themes that we
believed were accelerating in a COVID-19 endemic world:
• Disrupting healthcare delivery and shifting utilisation to
lower-cost settings: This will be by far the most important
structural shift in healthcare for the next 10-20 years and the
enablers of this shift should enjoy significant growth.
• Outsourcing: A continuing theme with robust growth
across clinical trial outsourcing and contract manufacturing.
• Prevention: References diagnostics and vaccines, both
of which provide tremendous value to healthcare systems
as prevention is the most cost-effective way of delivering
healthcare. The impact of COVID-19 has highlighted the
value of diagnostics and vaccines.
We continue to believe the above themes will be relevant
for some time, but in a rapidly evolving environment the
following trends may have more relevance and momentum in
the near term:
• Healthcare delivery disruption accelerating including
the shift to value-based care: Not just driving patient
volumes through lower-cost settings, but coordinating
care to drive better outcomes.
• Utilisation: Working through the ever-growing backlog
of patients as healthcare systems globally learn to live
with COVID-19.
• Consolidation: Healthcare is highly fragmented and heavily
populated with companies that have robust cashflows and
strong balance sheets. M&A activity has increased of late and
is highly likely to continue on the same path.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 15
Manager’s Report
Accelerating healthcare delivery
disruption, utilisation and consolidation:
Key themes for the year ahead
Shifting patient volumes away from hospitals to lower-cost
outpatient settings such as ambulatory surgical centres (ASCs)
and the home are central cogs when it comes to generating
much-needed efficiencies in healthcare systems. ASCs are
outpatient healthcare facilities that offer same-day surgical
services, including diagnostic and preventive services. These
facilities offer cost-effective services and are more convenient
for consumers than more traditional hospital settings. The
number of procedures offered in ASCs is expanding and
already includes orthopaedics, ophthalmology, dermatology,
urology, gastroenterology and pain management. For context,
ASCs perform more than half of all US outpatient surgical
procedures and they can expect to see greater volumes as the
number of outpatient procedures is expected to increase by
an estimated 15% by 2028. Further, over the next 10 years,
surgeries are projected to grow 25% at ASCs and 18%
at both hospital outpatient departments and physicians’
offices, according to a report published by Sg2, a US-based
healthcare and hospital system consultancy. The combination
of material cost savings (an average gallbladder surgery costs
$12,000 when done at a hospital while the same procedure
costs $2,200 at an ASC) and patient convenience underpins
the medium-term future for an already accelerating trend.
Home health also adds a critical dimension to the idea that
the delivery of healthcare is being disrupted. Home health is
usually less expensive, more comfortable for patients and can
be just as effective as the care offered by hospitals and skilled
nursing facilities. If managed appropriately, home health can
also accelerate independence and self-sufficiency. In the US,
for example, Medicare covers a number of services including
skilled nursing care, physical therapy, social services and
medical supplies. Based on a survey of physicians who serve
predominantly Medicare fee-for-service (FFS) and Medicare
Advantage (MA) patients, it is estimated that up to $265bn
of care services for Medicare FFS and MA beneficiaries could
shift from traditional facilities to the home by 2025 without
a reduction in quality or access. That represents a three to
fourfold increase in the quantity of care being delivered at
home today for this population.
Value-based care (VBC) rewards healthcare providers for quality
of care via payment systems that incentivise high quality of
care from clinicians and healthcare organisations alike. The
potential benefit to patients comes via improved coordination
of care and engagement which in turn can drive more
essential diagnostics, reduced hospital readmissions and better
outcomes. If successful, the benefits to patients are obvious
but there are also benefits to the healthcare systems. An
effective VBC model could reduce costly hospital readmissions,
improve preventative care and bolster the health of the
general population. It all sounds sensible and effective but it
is the alignment of incentives that really makes VBC work.
Risk-sharing arrangements are key to ensuring providers reduce
waste and work hard to drive better outcomes.
Recent deal activity in the US adds even more conviction to
this idea that VBC will be an important growth engine for the
healthcare industry. In September 2022, UnitedHealth Group
agreed a 10-year partnership with Walmart with the specific
aim of driving VBC adoption for Walmart’s clinicians. Through
the partnership, UnitedHealth Group’s Optum division will
assist Walmart clinicians in delivering comprehensive VBC
through data analytics and decision support tools. Not only
will the initiative improve the provision of care, it will also go
some way to addressing the key issue of affordability.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202216
Manager’s Report
Investment Manager’s Report continued
Across the world there is a consensus that there is a growing
backlog of patients requiring medical attention, but it is the
size of the backlog, for example, and the precise shape of the
recovery curve that is tough to predict. The latest NHS figures
point to a record 6.84 million people waiting for treatment,
with 2.67 million of those having waited more than 18 weeks.
Perhaps even more worrying is the hidden backlog with cancer
targets continuing to be missed. Looking at the US, according
to a study published in the Annals of Surgery, hospitals lost an
estimated $22.3bn in revenue between March and May 2020,
some of which we believe will likely be, or has already been,
recaptured. On a more optimistic note, there is strong evidence
to suggest healthcare systems have learnt to adapt and have
been able to self-regulate, maintaining surgical procedure
volumes even during the COVID-19 surges. That evidence is
based on the observation that, despite a 48% drop in surgical
procedure volumes in the US immediately after the March
2020 lockdowns, surgical volumes returned to 2019 rates in
the vast majority of specialties, a rate maintained during the
COVID-19 winter surges.
The healthcare sector operates in the most fragmented of
all industries, with consolidation a major long-term driver of
efficiencies for companies that operate in different parts of
healthcare. Unlike other industries, few subsectors see a small
number of companies dominating markets, but the benefits of
such scale do matter in healthcare. Consolidation typically drives
margin enhancement and often revenue growth, both of which
are drivers of shareholder value. The most fragmented part
of healthcare is on the services side, particularly within health
insurance and all the different types of healthcare provider.
Most recently, M&A activity has been picking up between
large-capitalisation pharmaceutical and small/mid-capitalisation
biotechnology companies, with the former typically offering
significant premiums to acquire the latter. There are several
reasons for a pick-up in acquisitions. In 2020-21, following
the wider market lows in March 2020, the biotechnology
subsector enjoyed a strong run of outperformance and access
to capital was easy through IPOs and secondary offerings. As
such, small/mid-capitalisation biotechnology companies did
not need an exit strategy as they could easily access capital to
fund their research programmes. However, with the bursting
of the bubble in unprofitable companies, access to funds has
become much more challenging, particularly with the market
selloff in 2022. The resulting collapse in prices for small/mid-
capitalisation biotechnology stocks has created a much more
attractive environment for the larger companies to consider
M&A. Further, large pharmaceutical companies are looking
to bolster revenues in the years 2025-30 with patent expiries
set to impact growth. Pfizer, for example, has been explicit in
saying they want to acquire $25bn in revenues by the end of
the decade. In summary, there appears to be a clear rationale
for an acceleration in M&A. If this comes to fruition, the
innovation part of the Company’s portfolio should be the prime
beneficiary of potential deal flow.
Inflation Reduction Act: Is peak policy risk
behind us?
On 16 August 2022, the Inflation Reduction Act was signed
into law in the US. With regards to healthcare, there were two
main areas of focus: drug pricing reform and access to care.
As regards drug pricing, the Act includes several provisions
to lower prescription drug costs for those with Medicare and
reduce drug spending by the federal government:
• Selective drug price negotiation authority for the
US Department of Health & Human Services.
• Rebates on drug price increases greater than inflation.
• A $2,000 out-of-pocket cap for Medicare beneficiaries.
The Act also includes a provision to extend health insurance
subsidies to reduce monthly premium expenses for the next
three years. These subsidies, expanded via the American Rescue
Plan Act of 2021, were set to expire at the end of 2022.
So, what are the implications? This Act deals mainly with
Medicare, i.e. health insurance for the over 65’s. With
regards to drug pricing for Medicare, the planned negotiation
beginning in 2026 for a small number of products is only a
small negative for the industry as it will impact the value of
these products very close to their patent expiry. A positive is the
$2,000 out-of-pocket cap which will be a significant tailwind
for both patients and the industry given the implications for
enhanced affordability and increased volumes.
Focusing on access to care, had the subsidies to reduce
monthly insurance premium expenses expired, the Kaiser
Family Foundation estimated that 13 million people receiving
assistance for their marketplace insurance would have faced
significant increases in their monthly premiums. For people
who enrolled in the federal marketplace, Healthcare.gov,
premiums could have gone up by more than 50%. The
decision to extend the subsidies by an additional three years is
a clear positive for the healthcare insurance industry plus the
facilities and providers.
In summary, the Act is a modest positive for the broader
healthcare industry, especially if the drug pricing reforms
remain isolated to Medicare and there is no contagion into
the wider commercial setting. Further, and potentially more
importantly, we believe further legislation is unlikely. In essence,
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 17
Manager’s Report
the Act is a clearing event for the sector, potentially removing a
significant overhang.
Positioning and process: Constructive on
biotechnology, facilities and managed care
The sharp market correction towards the end of the financial
year, while frustrating, presented an opportunity to engage
with a number of really exciting investments which are a
direct play on the key themes of disruption and utilisation. As
at 30 September 2022, three of the largest overweight
subsector positionings were in biotechnology, healthcare
facilities and managed healthcare. Despite what feels
like an extremely challenging environment for early-stage
biotechnology investing, we remain constructive on the
sector. The industry 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. Drilling down into therapeutic categories,
oncology is a key area of focus and an area that has seen
an incredible amount of investment, innovation and, most
importantly, success. While not an exhaustive list, other areas
of interest include cardiovascular diseases, haemophilia,
respiratory disorders and obesity.
From a healthcare facilities perspective, the investments here
are biased towards businesses providing access to healthcare
services in the lowest-cost settings such as the home and
outpatient facilities or ASCs. The Company also has exposure
to behavioural health services, where we have sadly seen a
huge jump in demand due to the pandemic. The constructive
stance on managed care is based on a number of factors
including healthy, growing end markets (with Medicare
Advantage at the forefront), good earnings visibility and an
earnings tailwind from rising Treasury yields. As insurance
companies, managed care companies have large investment
portfolios that benefit from rising rates, creating a potential
tailwind to EPS growth.
Healthcare equipment is a subsector we have been constructive
on historically given the current innovation wave, the rising
demand for their products and services, and attractive
valuations relative to the anticipated growth opportunities.
As at the end of September, however, we were much
more cautious on healthcare equipment given the
difficult macroeconomic climate. Supply-chain challenges
coupled with rising input and freight costs have put pressure
on operating margins, plus the strength of the dollar has
created a material headwind for the near-term earnings profiles
of US companies with exposure to ex-US markets. Looking
ahead, however, we are optimistic that some of the supply-
chain constraints will ease and the ever-growing backlog of
patients will create a platform for accelerating top and bottom-
line growth.
Healthcare supplies is another subsector where we have adopted
a more cautious stance during the reporting period. Much of the
input pressure being experienced in the equipment subsector
is relevant for supplies but the consumer is also a critical factor.
Certain dental and ophthalmology end markets have a material
discretionary component, an uncomfortable backdrop given the
current macroeconomic climate.
Our shifting stance on pharmaceuticals is also worth
noting. Historically, we have adopted a material underweight
in pharmaceuticals relative to the benchmark, taking the
view that, collectively, they have fairly unexciting revenue
and earnings growth profiles. However, the essential nature
of their products coupled with relatively high gross and
operating margins, makes them very attractive investments at
a time when inflation is high, economic activity is slowing and
unemployment is rising. As such, we have reduced our relative
underweight versus the benchmark.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202218
Manager’s Report
-15 -10 -5 0 5 10
Apparel, Accessories & Luxury Goods
Biotechnology
Healthcare Facilities
Metal & Glass Containers
Managed Healthcare
Healthcare Supplies
Healthcare Technology
Healthcare Distributors
Healthcare Services
Life Sciences Tools & Services
Healthcare Equipment
Pharmaceuticals
-15 -10 -5 0 5 10 15
Apparel, Accessories & Luxury Goods
Biotechnology
Healthcare Facilities
Metal & Glass Containers
Managed Healthcare
Healthcare Supplies
Healthcare Technology
Healthcare Distributors
Healthcare Services
Life Sciences Tools & Services
Healthcare Equipment
Pharmaceuticals
30 September 2021
Subsector weightings relative to
benchmark
Source: Polar Capital.
Subsector weightings relative to benchmark
30 September 2022 30 September 2021
-15 -10 -5 0 5 10
Apparel, Accessories & Luxury Goods
Biotechnology
Healthcare Facilities
Metal & Glass Containers
Managed Healthcare
Healthcare Supplies
Healthcare Technology
Healthcare Distributors
Healthcare Services
Life Sciences Tools & Services
Healthcare Equipment
Pharmaceuticals
-15 -10 -5 0 5 10 15
Apparel, Accessories & Luxury Goods
Biotechnology
Healthcare Facilities
Metal & Glass Containers
Managed Healthcare
Healthcare Supplies
Healthcare Technology
Healthcare Distributors
Healthcare Services
Life Sciences Tools & Services
Healthcare Equipment
Pharmaceuticals
Source: Polar Capital.
Note: Sector exposure refers to the extent to which the Fund is overweight or underweight in each sector compared (relative) to the index (MSCI All Country World/Healthcare Total Return Index).
Geographic Exposure at 30 September 2022 30 September 2021
United States 72.3% 69.0%
Japan 6.9% 1.8%
Switzerland 6.4% 2.5%
United Kingdom 6.4% 7.3%
Denmark 4.3% 4.6%
Sweden 2.9% -
France 2.6% 6.2%
Netherlands 2.3% 5.2%
Germany 2.2% 2.7%
Ireland 1.0% 1.9%
Australia - 2.4%
Belgium - 2.3%
Other net liabilities (7.3%) (5.9%)
Total 100% 100%
Geographical Exposure at 2022
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Geographical Exposure at 2021
Sector Exposure at 2022
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Sector Exposure at 2021
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Geographical Exposure at 2022
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Geographical Exposure at 2021
Sector Exposure at 2022
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Sector Exposure at 2021
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Geographical Exposure
2022
2021
From a geographical perspective, the Company continues to have an overweight stance in Europe as well as North America. The biggest
change to the portfolio was moving Japan from being an underweight to an overweight via the addition of pharmaceutical stocks.
Source: Polar Capital.
Investment Manager’s Report continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 19
Manager’s Report
Sector Exposure at 30 September 2022 30 September 2021
Pharmaceuticals 31.3% 23.0%
Biotechnology 28.3% 14.8%
Managed Healthcare 13.1% 11.8%
Healthcare Equipment 12.1% 23.4%
Healthcare Facilities 7.4% 7.2%
Life Sciences Tools & Services 4.3% 5.4%
Healthcare Supplies 2.9% 6.3%
Metal & Glass Containers 2.4% 2.3%
Healthcare Services 2.1% 1.8%
Healthcare Distributors 1.9% 4.9%
Healthcare Technology 1.5% 2.3%
Apparel, Accessories & Luxury Goods - 2.7%
Other net liabilities (7.3%) (5.9%)
Total 100% 100%
Geographical Exposure at 2022
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Geographical Exposure at 2021
Sector Exposure at 2022
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Sector Exposure at 2021
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Geographical Exposure at 2022
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Other net liabilities
Belgium
Australia
Ireland
Germany
Netherlands
France
Sweden
Denmark
United Kingdom
Switzerland
Japan
United States
Geographical Exposure at 2021
Sector Exposure at 2022
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Sector Exposure at 2021
Other net liabilities
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Distributors
Healthcare Services
Metal & Glass Containers
Healthcare Supplies
Life Sciences Tools & Services
Healthcare Facilities
Healthcare Equipment
Managed Healthcare
Biotechnology
Pharmaceuticals
Sector Exposure
2022
2021
Source: Polar Capital.
While the previous charts 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 returns. 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
cash flow.
Zero Dividend Preference shares:
A vehicle for enhancing returns
In terms of a top-down strategy for the Company’s portfolio,
active decisions are made on market capitalisation, subsector
and geographical exposure, dependent on the current macro-
outlook of the team which is formulated with the aid of third-
party research and the monitoring of 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.
Net gearing
During the financial year, gearing has averaged 6%, but it has
been adjusted to reflect the risk outlook throughout the past
12 months. Net gearing was brought down from around 6%
to 4.5% in the first four months of the reporting period, on
the back of macroeconomic concerns. Over the remainder of
the year, gearing was increased as a more defensive positioning
of the portfolio was achieved with higher exposure to large-
capitalisation stocks. However, the sharp correction among the
small and mid-capitalisation universe offered an opportunity
to add new positions to the Innovation portfolio. We exited
the 2022 financial year with net gearing at 7.41%, a figure
that reflects a balance between our constructive stance on the
healthcare sector with more cautious posturing with regards
broader equity markets.
3.00%
4.25%
5.50%
6.75%
8.00%
Sept
2022
Aug
2022
Jul
2022
Jun
2022
May
2022
Apr
2022
Mar
2022
Feb
2022
Jan
2022
Dec
2021
Nov
2021
Oct
2021
Sept
2021
Source: Polar Capital, as at 30 September 2022.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202220
Manager’s Report
Outlook for healthcare: Macro and micro
stars are aligning
The healthcare industry continues to undergo material,
structural changes as it looks to use innovative products,
technologies and services to meet the ever-growing demands
of an ageing global population. It is those structural
changes that are creating some exciting and robust growth
opportunities. In the near-term, a substantial increase
in utilisation could be the catalyst for positive revenue
and earnings revisions as healthcare systems globally
work their way through ever-growing surgery backlogs.
Another positive, near-term dynamic is the disruption of
the delivery of healthcare as systems globally look to treat
in more cost-effective settings. The adoption of innovative
technologies is facilitating the shift of patient volumes from
the more traditional and more expensive hospital settings to
lower-cost facilities such as ASCs and the home. A trend that
inflected during the COVID-19 pandemic, we believe that
the momentum will continue for many years to come. Last,
but not least, we expect the recent wave of M&A activity to
continue as companies look to use their free cashflow and
balance sheets to inorganically complement internal assets.
Not only are the industry fundamentals in good health but
the macroeconomic and political environments are also
very supportive, not just for defensive stocks but also for
those that sit higher up the market-capitalisation scale, a
scenario that very much suits the larger-capitalisation focus
of the Company. A combination of rising inflation, slowing
economic activity and growing unemployment is creating a
constructive backdrop for defensive sectors, none more so
than healthcare. Importantly, if inflation persists and we enter
a more stagflationary environment, healthcare has shown
an ability, historically, to outperform the broader market
given the low earnings and share-price beta to economic
indicators, the essential nature of its products and services
and a relatively broad ability to absorb inflationary pressures
given the sector’s high gross and operating margins. Last, but
not least, we think the introduction of the Inflation Reduction
Act in the US has removed some, if not all, healthcare reform
uncertainty offering investors greater clarity on the near and
medium-term investment landscape.
Against a background of continued global economic
challenges, the outlook for the healthcare sector remains
robust. The demand for products and services is growing
significantly, innovation continues at a rapid pace and
valuations are attractive. The positive fundamental investment
drivers are currently matched with a macroeconomic
backdrop which is extremely supportive for the sector. The
healthcare sector has outperformed the broader market over
the last 12 months and with the recent healthcare reform
update having passed in the US as part of the Inflation
Reduction Act, we are anticipating a period of sustained
outperformance for the sector.
James Douglas and Gareth Powell
Co-Managers of the Polar Capital Global Healthcare Trust
9 December 2022
Investment Manager’s Report continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 21
Manager’s Report
Ten Largest Investments
As at 30 September
Ranking Market Value £'000 % of total net assets
2022 2021 Stock Sector Country 2022 2021 2022 2021
1 (1)
Johnson & Johnson
Pharmaceuticals United States 35,964 29,093 8.9% 7.5%
Johnson & Johnson is a global healthcare company that develops medical devices, pharmaceuticals, and consumer packaged goods.
2 (2)
Managed Healthcare United States 29,655 24,053 7.3% 6.2%
Unitedhealth is an American managed healthcare and insurance company working to build a modern, high-performing health
system through improved access, affordability, outcomes and experiences.
3 (-)
Biotechnology United States 24,932 - 6.2% -
AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals worldwide.
4 (3)
Pharmaceuticals United Kingdom 19,761 19,954 4.9% 5.2%
AstraZeneca is a global pharmaceutical company pushing the boundaries of science to deliver life-changing medicines.
5 (-)
Pharmaceuticals United States 16,997 - 4.2% -
Eli Lily is a US-based pharmaceutical company that manufactures and distributes pharmaceuticals primarily in the areas of diabetes,
oncology and auto-immune disorders.
6 (22)
Biotechnology United States 14,673 8,974 3.6% 2.3%
Cytokinetics, Incorporated, a late-stage biopharmaceutical company, focuses on discovering, developing, and commercializing muscle
activators and inhibitors as potential treatments for debilitating diseases.
7 (10)
Healthcare Equipment United States 14,092 10,810 3.5% 2.8%
Boston Scientific is a medical device company with a focus on non-invasive treatment – primarily of cardiovascular, respiratory,
neurological, digestive, urological and pelvic conditions.
8 (-)
Pharmaceuticals Switzerland 14,091 - 3.5% -
Novartis AG researches, develops, manufactures, and markets healthcare products worldwide. The company operates through two
segments, Innovative Medicines and Sandoz.
9 (-)
Managed Healthcare United States 13,908 - 3.4% -
Humana engages in the provision of health insurance services and operates through the following segments: Retail, Group and
Speciality and Healthcare Services.
10 (31)
Healthcare Supplies Switzerland 12,040 7,678 2.9% 2.0%
Alcon Inc., an eye care company, researches, develops, manufactures, distributes, and sells eye care products for eye care
professionals and their patients worldwide.
Total – 10 Largest Investments 196,113 48.4%
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 21
Manager’s Report
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202222
Manager’s Report
Full Investment Portfolio
As at 30 September
Ranking Market Value £’000 % of total net assets
2022 2021 Stock Sector Country 2022 2021 2022 2021
1 (1) Johnson & Johnson Pharmaceuticals United States 35,964 29,093 8.9% 7.5%
2 (2) UnitedHealth Managed Healthcare United States 29,655 24,053 7.3% 6.2%
3 (-) Abbvie Biotechnology United States 24,932 - 6.2% -
4 (3) AstraZeneca Pharmaceuticals United Kingdom 19,761 19,954 4.9% 5.2%
5 (-) Eli Lilly Pharmaceuticals United States 16,997 - 4.2% -
6 (22) Cytokinetics Biotechnology United States 14,673 8,974 3.6% 2.3%
7 (10) Boston Scientific Healthcare Equipment United States 14,092 10,810 3.5% 2.8%
8 (-) Novartis Pharmaceuticals Switzerland 14,091 - 3.5% -
9 (-) Humana Managed Healthcare United States 13,908 - 3.4% -
10 (31) Alcon Healthcare Supplies Switzerland 12,040 7,678 2.9% 2.0%
Top 10 investments 196,113 48.4%
11 (-) Biovitrum Biotechnology Sweden 11,758 - 2.9% -
12 (-) Daiichi Sankyo Pharmaceuticals Japan 11,459 - 2.9% -
13 (-) HCA Healthcare Facilities United States 10,872 - 2.7% -
14 (5) Sanofi Pharmaceuticals France 10,513 13,629 2.6% 3.5%
15 (34) Genmab Biotechnology Denmark 10,197 5,712 2.5% 1.5%
16 (19) Acadia Healthcare Healthcare Facilities United States 10,082 9,595 2.5% 2.5%
17 (27) Avantor Life Sciences Tools & Services United States 9,824 8,637 2.4% 2.2%
18 (-) DexCom Healthcare Equipment United States 9,812 - 2.4% -
19 (9) Horizon Therapeutics Biotechnology United States 9,723 10,910 2.4% 2.8%
20 (-) Astellas Pharma Pharmaceuticals Japan 9,701 - 2.4% -
Top 20 investments 300,054 74.1%
21 (-) Incyte Genomics Biotechnology United States 9,662 - 2.4% -
22 (24) AptarGroup Metal & Glass Containers United States 9,623 8,852 2.4% 2.3%
23 (16) Molina Healthcare Managed Healthcare United States 9,603 9,961 2.4% 2.6%
24 (17) ArgenX Biotechnology Netherlands 9,210 9,703 2.3% 2.5%
25 (-) Penumbra Healthcare Equipment United States 9,172 - 2.3% -
26 (-) Sartorius Healthcare Equipment Germany 9,070 - 2.2% -
27 (-) Seagen Biotechnology United States 8,886 - 2.2% -
28 (-) Option Care Health Healthcare Services United States 8,452 - 2.1% -
29 (-) United Therapeutics Biotechnology United States 8,060 - 2.0% -
30 (28) Bio-Rad Laboratories Life Sciences Tools & Services United States 7,879 8,439 1.9% 2.2%
Top 30 investments 389,671 96.3%
31 (-) Revance Therapeutics Pharmaceuticals United States 7,647 - 1.9% -
32 (-) Tenet Healthcare Healthcare Facilities United States 7,582 - 1.9% -
33 (40) Zealand Pharma Biotechnology Denmark 7,437 3,807 1.8% 1.0%
34 (35) Uniphar Healthcare Distributors Ireland 4,171 5,438 1.0% 1.4%
35 (42) Axonics Healthcare Equipment United States 4,018 2,180 1.0% 0.6%
36 (41) Ship Healthcare Healthcare Distributors Japan 3,503 2,882 0.9% 0.7%
37 (38) Intelligent Ultrasound Healthcare Technology United Kingdom 3,049 3,811 0.8% 1.0%
38 (39) LivaNova Healthcare Equipment United Kingdom 2,950 3,810 0.7% 1.0%
39 (36) Medley Healthcare Technology Japan 2,901 4,404 0.7% 1.1%
40 (-) Surgery Partners Healthcare Facilities United States 1,326 - 0.3% -
Top 40 investments 434,255 107.3%
41 (43) Quotient Healthcare Supplies Switzerland 164 2,123 - 0.5%
Total equities 434,419 107.3%
Other net liabilities (29,586) (7.3%)
Net assets
404,833 100.0%
Note - Sectors are from the GICS (Global Industry Classification Standard).
Environmental, Social and Governance
Environmental,
Social and
Governance
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 23
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202224
Environmental, Social and Governance
Corporate Responsibility for ESG
As an investment trust with a wholly non-executive,
independent Board of Directors we delegate the operational
aspects of running the Company to third parties, primarily
the Investment Manager. However, the ultimate responsibility
to shareholders lies with the Board. We recognise that this
includes elements of ESG and over recent years ESG has
become ever more important to investors, from a cost, risk
and impact perspective across all aspects of the Company.
As an investment trust we currently have relatively few
regulatory reporting requirements. We do however keep
abreast of the ESG landscape, and the Managers report their
assessment of the portfolio in ESG terms and the associated
operations of the management house, Polar Capital. Over
recent times the ESG dialogue with the Managers and third-
party providers has increased greatly; what it is, how it is
integrated and how it affects all elements of the business. We
recognise however that this is not a short journey, and we
have some way to go. We separate ESG into those areas that
we as a Board can have a direct impact on, and those areas
where we are reliant on others.
ESG and Third Party Service Providers
The Investment Manager (on behalf of all clients) receives
assurance on an annual basis that, where required, third
party service providers comply with the requirements of the
Modern Slavery Act and adhere to a zero-tolerance policy to
bribery and corruption. In light of the growing requirements
surrounding ESG, including Taskforce for Climate-Related
Financial Disclosures (“TCFD”), third party service providers
have been engaged in providing copies of their ESG, Diversity
and Inclusion, Stewardship and other related policies to the
Company. The Board will continue to monitor the practices
of service providers and seek to assure shareholders where
appropriate that suitable policies and procedures are in place
to effect positive change.
Corporate Responsibility
The Company’s core investment and administrative activities
are undertaken by its Investment Manager which seeks to
limit the use of non-renewable resources and reduce waste
where possible. The Investment Manager has a corporate
ESG policy, which is available in the document library of the
Company’s website, and wherever possible and appropriate
the parameters of such are considered and adopted by the
investment team in relation to the Company’s management
and portfolio construction. As detailed below, the Portfolio
Managers are required to have consideration of ESG factors
when reviewing new, continuing or exiting investments but
they are not required to take an investment decision solely on
the basis of ESG factors.
The Board monitors the Investment Manager’s approach
to ESG including policies for improvement of impact on
the environment, and they themselves take into account
ESG factors in the management of the Company. The
Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013 require companies listed on
the Main Market of the London Stock Exchange to report
on the greenhouse gas (‘GHG’) emissions for which they
are responsible. The Company is an investment trust, with
neither employees nor premises, nor has it any financial or
operational control of the assets which it owns. Consequently,
it has no GHG emissions to report from its operations
nor does it have responsibility for any other emissions.
Information on the GHG emissions of the Investment
Manager can be found within the ESG and Sustainability area
of their website www.polarcapital.co.uk.
Taskforce for Climate-Related Financial
Disclosures (“TCFD”)
The Company notes the TCFD recommendations on
climate-related financial disclosures. As stated above, the
Company is an investment trust with no employees, internal
operations or property. However, it is an asset owner and
therefore we will work to develop appropriate disclosures
about our portfolio. Information sources are developing
and consultations on reporting requirements are underway.
The Board will continue to work alongside its Investment
Manager to provide more information as it becomes
available. Polar Capital supports TCFD’s recommendations
and is in the process of applying the guidance to ensure
compliance going forward.
Diversity and Gender Reporting
The Board notes the targets published within the FCA policy,
Diversity and Inclusion on Company Boards and Executive
Committees (PS22/3), issued in April 2022.
For financial years commencing on or after 1 April 2022,
the policy requires under new Listing Rules 9.8.6R(9) and
14.3.33R(1), all UK listed companies, on a comply or explain
basis, to meet the following targets:
• At least 40% of the Board are women;
• At least one senior board position is held by a woman;
• At least one member of the Board is from a minority
ethnic background.
As a fully independent non-executive Board of Directors,
there are limited senior roles available in terms of the FCA’s
Diversity and Inclusion targets. The Board considers the
following roles are appropriate and sufficient for a Company
and Board of their size, Chair of the Board and Chair of the
Audit Committee. There are no executive positions within the
Company and as such no roles from which to appoint senior
roles on the Board.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 25
Environmental, Social and Governance
The Company has no employees and the Board is
comprised of one female and three male Independent
non-executive Directors. Lisa Arnold is Chair of the Board,
and so the Company currently meets the second criteria
outlined above. The Company does not currently meet
the other two criteria. The composition of the Board is
considered regularly to determine whether the needs of the
Company in terms of experience and areas of expertise are
met by the directors in office. The Board will certainly take
into account the FCA’s policy on Diversity and Inclusion in
any future recruitment process, but it does not currently
have any plans to change the composition of the Board.
Modern Slavery Act
As an investment company, the Company does not provide
goods or services in the normal course of business and does
not have any customers. Accordingly, the Company does not
consider that it falls within the scope of the Modern Slavery
Act 2015 and therefore does not meet the criteria requiring
it to produce a statement under such Act. The Company
considers its supply chains to be of low risk as its suppliers are
typically professional advisers.
A statement by the Manager under the Act has been published
on the Managers’ website at www.polarcapital.co.uk.
The Company has not adopted a policy on human rights as it
has no employees or operational control of its assets.
Anti-Bribery, Corruption and Tax Evasion
The Board has adopted a zero-tolerance policy (which is
available on the Company’s website) to bribery, corruption
and the facilitation of tax evasion in its business activities.
The Board uses the principles of the policies formulated and
implemented by the Investment Manager and expects the
same standard of zero-tolerance to be adopted by third-party
service providers. The Company has implemented a Conflicts
of Interest policy to which the Directors must adhere, in the
event of divergence between the Investment Manager’s policy
and the Company’s policy the Company’s policy shall prevail.
The Company is committed to acting with integrity and in the
interests of shareholders at all times.
Risk and Responsibility
The Board has a schedule of principal risks and uncertainties
and addresses how these are mitigated on pages 34 to 36;
additionally how the directors have undertaken their duties in
compliance with s172 of the Companies Act 2006 is provided
on pages 37 to 39.
Lisa Arnold
Chair
9 December 2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202226
Environmental, Social and Governance
Investment Perspective
The following section describes the approach that Polar
Capital LLP, as Investment Manager to the Company, takes
to ESG and how the policies and practices are applied to
the investments made, or considered, in connection with
managing the portfolio of the Company.
The terms ‘our’, ‘we’, ‘us’ relate to Polar Capital and
specifically the Polar Capital Healthcare team, on behalf of
Polar Capital Global Healthcare Trust (the Company).
Environmental, Social and Governance:
Focusing on sustainability
Sustainability is central to the team’s ESG philosophy.
Healthcare is a long-term, secular growth industry as an ageing
population around the world drives the demand and the need
for increased healthcare provision. In 2018, global healthcare
spending was $8.3trn, accounting for 10% of GDP. Sustainable
healthcare delivery for growing and ageing populations is
an important part of the United Nations 2030 Agenda for
Sustainable Development; specifically, SDG 3 is to “ensure
healthy lives and promote well-being for all at all ages.”
Sustainability Process
Although there is currently no official sustainability-related
regulation for UK investment trusts, the Investment
Management team aspires to follow the same rigorous
process required under Article 8 of the SFDR (Sustainable
Finance Disclosure Regulation). As the Investment Manager
we have a well-defined and disciplined process, using a
variety of different resources including financial reports,
sustainability reports and third-party data.
The following three-stage process is applied:
• exclusionary screening
• positive inclusion
• ongoing monitoring of ESG profile of investee companies
Exclusionary Screening
We perform an initial screening of the investment universe
against norms-based standards such as the UN Global
Compact, the UN Guiding Principles on Business and
Human Rights, and the International Labour Organisation’s
conventions.
Source: Polar Capital
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 27
Environmental, Social and Governance
Positive Inclusion
We ensure potential investments are aligned with at least one
or more of our overall core sustainability characteristics:
• improvement in clinical outcomes for patients through
innovation
• improvement in the affordability and accessibility of
healthcare services
• improvement in the efficiency of the delivery of healthcare
services
Ongoing Monitoring of the ESG Profile of
Investee Companies
We use in-house research and third-party reports to
continuously monitor the ESG profiles of the Company’s
holdings. Depending on the subsector each investee company
belongs to, a variety of key issues are assessed:
• Environmental: Carbon Emissions; Toxic Emissions and
Waste.
• Social: Labour Management; Human Capital
Development; Product Safety and Quality; Privacy and
Data Security; Access to Healthcare.
• Governance: Board Composition; Pay; Ownership;
Accounting; Business Ethics; Tax Transparency.
Although ongoing ESG analysis is an important part of our
process, we believe that engaging directly with companies on
their ESG philosophy, using internal and third-party reports,
is the most productive course of action we can take. Direct
interaction with companies is particularly important when we
believe there is a dislocation between our own assessment of
a company’s ESG credentials and that of 3rd parties’ reports.
Interactions are systematically logged in an internal database
as a matter of record. The Managers also have regular
interactions with Polar Capital’s Head of Sustainability.
James Douglas and Gareth Powell
Co-Managers of the Polar Capital Global Healthcare Trust
9 December 2022
Cytokinetics – A Case Study
Our continuous monitoring process highlighted Cytokinetics
as a company whose Social score had deteriorated, leading to
a potential downgrade in its MSCI ESG score from B to CCC.
MSCI flagged Human Capital Development and Access to
Healthcare as the two key Social issues where the company
scored poorly. The team therefore decided to engage with
the company to assess whether the MSCI score was a true
reflection of the company’s underlying ESG progress.
The team held a call with the company which revealed that
Cytokinetics had started to take the below actions with
respect to their Human Capital Development and Access to
Healthcare initiatives:
1. Formation of an internal committee with full Board
oversight to drive ESG matters;
2. Set out steps to improve diversity and inclusion both at
Board level and employee level;
3. Mapped out a strategy to improve access to their products
beyond developed markets;
4. Increased interactions with ESG rating agencies; and
5. Creation of a Sustainability and ESG report by 2023, with
3-5 years targets.
Following review, engagement and analysis, we concluded
that the poor MSCI score was driven by lack of disclosure
rather than lack of progress on the ESG front and the team
was thus satisfied with management’s focus and efforts
to progress their ESG initiatives and expand disclosure.
Consequently, we have retained Cytokinetics in our
investment portfolio.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202228
Environmental, Social and Governance
MSCI
ESG RATINGS
CCC B BB BBB A AA AAA
AAA
Portfolio Benchmark
Weighted Avg ESG Score 6.38 6.70
Adjustment
+ ESG Trend Positive 49.54% 52.28%
- ESG Trend Negative 5.43% 1.99%
- ESG Laggards 0.67% 1.43%
Adjustment Total 43.44% 48.86%
Score Adjustment 2.77 3.27
ESG Quality Score 9.15 9.97
ESG Rating AAA AAA
How the MSCI ESG Rating is calculated
Top 5 Rated Holdings
Security
Rating Change
Uniphar AA
UnitedHealth Group AA
AstraZeneca AA
Genmab AA
Astellas Pharma AA
ESG Rating distribution of fund holdings
27% of the fund’s holdings receive an MSCI ESG Rating of AAA
or AA (ESG Leaders) and 1% receive an MSCI ESG Rating of B or
CCC (ESG Laggards).
0
5
10
15
20
25
30
35
40
45
AAAAAABBBBBBCCCUnrated
27%
41%
25%
5%
1%1% 0%0%
Corporate governance
The fund’s weighted average percentage of independent board of
directors is 82.1%, and its weighted average percentage of women
on boards is 30.6%.
Vote Cast Statistics
Votes For
94.6%
Votes Against 4.5%
Votes Withheld 0.5%
Votes Abstain 0.2%
Votes Management say on pay* 0.2%
* represents a vote that does not fall into the above categorisations.
Voting Record
Category Number Percentage
Number of votable meetings 48
100.00%
Number of meetings voted 47
97.92%
Number of meetings with at least 1 vote
Against, Withhold or Abstain
15 31.25%
ESG Dashboard
The MSCI ESG Rating for funds is designed to measure the resiliency
of portfolios to long-term ESG risks and opportunities. The most
highly rated funds consist of issuers with leading or improving
management of key ESG risks. The ESG Rating is calculated as a
direct mapping of ESG Quality Scores to letter rating categories
(e.g. AAA = 8.6-10). The ESG Ratings range from leader (AAA, AA),
average (A, BBB, BB) to laggard (B, CCC). All charts provided below
are as at 30 September 2022 and have been sourced using MSCI
data and ESG metrics and ISS data.
Bottom 5 Rated Holdings
Security
Rating Change
Medley B
Bio-Rad Laboratories BB
Cytokinetics BB
Incyte Crop BBB
Axonics Modulation Technologie BBB
The change in ratings of each holding outlined above represents the
year on year movement to 30 September 2022.
Weighted average carbon intensity (tCO2e / $m sales)
The fund’s holdings have low carbon intensity, based on the
weighted average carbon emissions per USD million sales.
VERY HIGH HIGH MODERATE LOW VERY LOW
16.5
MSCI ESG metrics and carbon data based off fund holdings as at
30 September 2022, using MSCI’s latest available data. Carbon metrics
calculated using issuer EVIC, using Scope 1&2 emissions data (Source:
MSCI Climate Change Metrics – reported and estimated data).
Governance
Governance
A system of rules and
processes by which the
Company is governed
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 29
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202230
Governance
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
2022, the position of the Company at the year end and
a description of the principal risks and uncertainties.
Throughout the Strategic Report there are certain forward-
looking statements made by the Directors in good faith based
on the information available to them at the time of their
approval of this Report. Such statements should be treated
with caution due to inherent 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.
The 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
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 31
Governance
on the development and performance of the business during
the financial year, the outlook and potential risks to the
performance of the portfolio.
The Board
As the day-to-day management of the Company is
outsourced to service providers the Board’s focus at
each meeting is on investment performance, including
the outlook and strategy. The Board also considers the
management and provision of services received from third-
party service providers and the risks inherent in the various
matters reviewed and discussed. Further information on the
composition of the Board can be found on page 47.
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:
• 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. Further details of the loan
provided by the subsidiary are given on pages 78 and 79.
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
As the Company is an investment vehicle for shareholders,
the 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 Global Healthcare Trust plc • Annual Report and Financial Statements 202232
Governance
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.
Polar Capital provides a team of healthcare specialists and the
portfolio is co-managed by Dr 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.
Polar Capital provides a team of healthcare specialists and the
portfolio is co-managed by Dr 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.
Termination Arrangements
The IMA may be terminated by either party giving 12 months’
notice. The IMA may be terminated earlier by the Company
with immediate effect on the occurrence of certain events,
including: (i) if an order has been made or an effective
resolution passed for the liquidation of the Investment
Manager; (ii) if the Investment Manager ceases or threatens
to cease to carry on its business; (iii) where the Company
is required to do so by a relevant regulatory authority; (iv)
on the liquidation of the Company; or (v) subject to certain
conditions, where the Investment Manager commits a
material breach of the IMA.
In the event the IMA is terminated before the expiry of the
Company’s fixed life then, except in the event of termination
by the Company for certain specified causes, the base fee and
the performance fee will be calculated pro rata for the period
up to and including the date of termination.
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% 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 be entitled to a performance
fee. The performance fee was reset at the date of
reconstruction of the Company and will be paid in cash at
the end of the Company’s expected life (except in the case
of an earlier termination of the IMA). The performance fee
will be an amount equal to 10% of the excess total return
(based on the Adjusted Net Asset Value per ordinary share
at that time) over the total return of the benchmark plus
1.5% compounded annually on each anniversary of share
admission and adjusted for periods of less than 12 months.
In the event of a performance fee becoming payable on the
future portfolio realisation date, such fee would be subject
to a maximum amount of 3.5% of the terminal NAV. For the
purposes of calculating the performance fee, the Company’s
Adjusted Net Asset Value will be based on the Net Asset
Value adjusted by the amount of any dividends paid by the
Company deemed to have been reinvested on the date of
payment in ordinary shares at their Net Asset Value (on such
date) and the resulting amount added to the Company’s
Net Asset Value. If at the end of the Company’s expected
life the amount available for distribution to shareholders is
less than 215.9p per ordinary share, no performance fee will
be payable. If the amount is more than 215.9p per ordinary
share but payment of the performance fee in full would
reduce it below that level, then the performance fee will be
reduced such that shareholders receive exactly 215.9p per
share. No performance fee has been paid or accrued since
inception and up to 30 September 2022.
Strategic Report continued
Governance
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 33
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
NAV growth and relative
performance against the
Benchmark.
The Board reviews the performance of the portfolio in
detail and hears the views of the Investment Manager at
each meeting.
The Board also considers the value delivered to
shareholders through NAV growth and dividends paid.
As at 30 September 2022, the total net assets of
the Company amounted to £404,833,000 (2021:
£385,728,000).
The Company’s NAV total return, over the year ended
30 September 2022, was 5.59% while the Benchmark
Index over the same period decreased to 6.93%. 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 60.79% and the benchmark was 64.05%.
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 2022 totalling 2.10p
per share (2021: two dividends totalling 2.00p 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 ordinary share price to
the NAV per ordinary share
with the aim of reduced
discount volatility for
shareholders.
The Board receives regular information on the
composition of the share register including trading
patterns and discount/premium levels of the Company’s
ordinary shares. The Board discusses and authorises the
issue or buy back of shares when appropriate.
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 overall benefit
to shareholders of any actions. The market liquidity is
also considered when authorising the issue or buy back
of shares when appropriate market conditions prevail.
A daily NAV per share, calculated in accordance with the
AIC guidelines is issued to the London Stock Exchange.
The discount of the ordinary share price to the NAV per
ordinary share at the year ended 30 September 2022
was 5.6% (2021: 9.5%).
During the year ended 30 September 2022, no new
shares were issued or bought back.
The number of shares in issue, as at the year end was
124,149,256 of which 2,879,256 were held in treasury.
The total voting rights of the Company are 121,270,000
shares.
To qualify and continue to
meet the requirements for
sections 1158 and 1159 of
the Corporation Tax Act
2010 (‘investment trust
status’).
The Board receives regular financial information which
discloses the current and projected financial position
of the Company against each of the tests set out in
sections 1158 and 1159.
The Company was granted investment trust status
annually up to 1 October 2014 and is deemed to be
granted such status for each subsequent year subject
to 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 2022 and believe that
they will continue to be met.
To ensure the efficient
operation of the Company
by monitoring the services
provided by third party
suppliers, including the
Investment Manager, and
controlling ongoing charges.
The Board considers annually the services provided by the
Investment Manager, both investment and administrative,
and reviews on a cycle the provision of services from third
parties including the costs of their services.
The annual operating expenses are reviewed and any
non-recurring project related expenditure approved by the
Board.
The Board has received, and considered satisfactory,
the internal controls report of the Investment Manager
and other key suppliers including the contingency
arrangements to facilitate the ongoing operations of the
Company in the event of withdrawal or failure of services.
The ongoing charges for the year ended 30 September
2022 were 0.84%, compared to 0.83% the previous year.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202234
Governance
Strategic Report continued
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 uncertainty surrounding inflation, recession and rising interest rates coupled with the invasion
of Ukraine by Russia and the longer term impact this may have on the market and 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 on pages 55
and 56 of the Report of the Audit Committee.
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.
Risk Cycle
Monitoring
and Review
Identify Risk
Analyse Risk
Build Risk
Strategy
Manage Risks
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 35
Governance
Portfolio Management
Investment Performance Gearing
Description
Breach of Investment policy, Investment Manager unable to deliver the
Investment Objective leading to poor performance against the benchmark or
market/industry average.
Assessment
Unchanged from previous year.
Mitigation
The Board seeks to mitigate the impact of such risks through the regular
reporting and monitoring of the Company’s investment performance against
its 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.
Description
Inability to repay ZDP loan and inappropriate use of derivatives.
Assessment
Unchanged from previous year.
Mitigation
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.
Discount/Premium Trading
Description
Persistent discount in excess of Board or Shareholder acceptable levels.
Assessment
Decreased from previous year.
Mitigation
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 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 narrowed during the year under review and as at
30 September 2022, the discount of the ordinary share price to the NAV per
ordinary share was 5.6% (2021: 9.5%). 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.
Description
Execution of unauthorised trade/dealing error. Error or breach may cause
regulatory investigation leading to fines, reputational damage and risk to
investment trust status.
Assessment
Unchanged from previous year.
Mitigation
Investment limits and restrictions are encoded into the dealing and operations
systems of the Investment Manager and various oversight functions are
undertaken to ensure there is early warning of any potential issue of
compliance or regulatory matters.
Principal Risks and Uncertainties
Management of risks through Mitigation & Controls
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202236
Governance
Operational Risk
Service Failure Cyber Risk
Description
Failure in services provided by the Investment Manager, Custodian, Depositary
or other service providers; Accounting, Financial or Custody Errors resulting in
regulatory investigation or financial loss, failure of trade settlement, potential
loss of Shareholder assets and investment trust status.
Assessment
Unchanged from previous year.
Mitigation
The Board carries out an annual review of internal control reports from
suppliers which includes cyber protocols and disaster recovery procedures. Due
diligence and service reviews are undertaken with third-party service providers
including the Custodian and Depositary.
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.
Description
Cyber-attack causing disruption to or failure of operational and accounting
systems and processes provided by the Investment Manager creating an
unexpected event and/or adverse impact on personnel or the portfolio.
Assessment
Unchanged from previous year.
Mitigation
The number, severity and success rate of cyberattacks have increased considerably
over recent years. However, controls are in place and the Board 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 Shareholder Communications
Description
Loss of Investment Manager or other key management professionals. Impact
on investor confidence leading to widening of the discount and/or poor
performance creating a period of uncertainty and potential termination of the
Investment Management Agreement.
Assessment
Unchanged from previous year.
Mitigation
The strength and depth of investment team provides comfort that there is not
over-reliance on one person with alternative portfolio managers available to
act if needed. For each key business process roles, responsibilities and reporting
lines are clear and unambiguous. Key personnel are incentivised by equity
participation in the investment management company.
Description
Failure to effectively communicate significant events to the shareholder and
investor base.
Assessment
Unchanged from previous year.
Mitigation
Polar Capital Sales Team and the Corporate Broker provide periodic reports to 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.
Description
Non-compliance with statutes, regulations and disclosure requirements, 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
overseas legislation affecting UK companies including MiFID II and the GDPR.
Not complying with accounting standards could result is a suspension
of listing or loss of investment trust status, reputational damage and
Shareholder activism.
Further risks arise from not keeping abreast of changes in legislation and
regulations which have in recent years been substantial.
Assessment
Unchanged from previous year.
Mitigation
The Board monitors regulatory change with the assistance of the Investment
Manager, Company Secretary and external professional suppliers and
implements necessary changes should they be required.
The Board receives regulatory reports for discussion and, if required,
considers the need for any remedial action. In addition, as an investment
company, the Company is required to comply with a framework of tax laws,
regulation and company law.
The Board keeps abreast of third party service provider internal controls processes
to ensure requirements are met in accordance with regulatory requirements.
Description
Financial loss due to unexpected natural disaster or other unpredictable event
disrupting the ability to operate or significant exposure to the economic 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.
Fluctuations in stock markets and currency exchange rates could be
advantageous or disadvantageous to the Company and its performance.
Disruption to trading platforms and support services.
Assessment
Unchanged from previous year.
Mitigation
The Board regularly discusses global geopolitical issues and general economic
conditions and developments.
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 healthcare investing
any less desirable. The longer term effects of inflation, recession and the war in
Ukraine 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.
The Company through the Investment Manager, has a disaster recovery plan in place.
Regulatory Risk Economic And Market Risk
Strategic Report continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 37
Governance
The statutory duties of the Directors are listed in s171-177 of the Companies Act 2006. 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 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 2pm on Thursday 9 February 2023 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. To enable all shareholders to hear the Managers’
presentation, this year a pre-recorded presentation reviewing the year past and the outlook for 2022-2023
will be uploaded to the Company’s website ahead of the 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 [email protected] stating the subject matter as PCGH-AGM.
The investment manager gives a presentation and 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 Board without using the Manager or Company
Secretary as a conduit. The Chair or other Directors are available to shareholders who wish to raise matters either
in person or in writing. The Chair and Directors may be contacted through the registered office of the Company.
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 enabling 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.
Section 172 of the Companies Act 2006
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202238
Governance
Section 172 of the Companies Act 2006 continued
Stakeholder Group How we engage with them
Shareholders
Continued
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.
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
During the year under review, the Board continued to develop its approach to ESG and engages with the
Investment manager to better understand how ESG has been further integrated into the investment and decision-
making process. The Board also receives information on how ESG affects Polar Capital as a business and the
healthcare team in particular. Please see pages 26 to 28 of the ESG Report for further information.
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 they invest.
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 47 company meetings over the year ended 30 September 2022, with 5.8%
of all votes being against management and 31% 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
Investment Manager’s report on pages 11 to 20.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 39
Governance
Stakeholder Group How we engage with them
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.
Prior to AGMs, the Company engages with these agencies to fact check their advisory reports and clarify any areas
or topics that the agency requests. 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.
Outcomes and strategic decisions during the year
The Directors are aware of the voting policies of proxy adviser agencies. The Nomination Committee considers the
time commitment required of Directors and the Board considers each Director’s independence on an ongoing basis.
The Board have confirmed that all Directors remain independent and able to commit sufficient time in fulfilling their
duties, including those listed on s172 of the Companies Act. Accordingly, all Directors are standing for re-election
at the Company’s AGM. Further information has been provided where appropriate in each directors biography on
pages 6 and 7.
The AIC
The Company is a member of the AIC and has also supported lobbying activities such as the consultations on the
2019 AIC Code, the 2021 BEIS Restoring Trust in Audit and Corporate Governance and the FCA’s 2021 consultation
on Diversity and Inclusion on Company Boards. The Directors also cast votes in the AIC Board Elections each year
and regularly attend AIC events and seminars.
Approved by the Board on 9 December 2022
By order of the Board
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
Company Secretary
9 December 2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 40
Governance
Report of the Directors
The Directors, who are listed on pages 6 and 7, present
their annual report together with their Report on Corporate
Governance, and the Audited Consolidated Financial Statements
for the year ended 30 September 2022. In addition, the
attention of shareholders is drawn to the Strategic Report
Section (Chair’s Statement, the Investment Manager’s Report,
Strategic Report, and the ESG and Section 172 Statements)
which provides further commentary on the activities and outlook
for the Company.
Introduction and Status
The Company is incorporated in England and Wales as
a public limited company and is domiciled in the United
The Company seeks to continue to operate as an investment
trust in accordance with sections 1158 and 1159 of the
Corporation Tax Act 2010 (as amended by section 42(2) of
the Finance Act 2011). As an approved investment trust the
close company provisions do not apply. The Directors, under
advice, expect the affairs of the Company to continue to
satisfy the conditions of an investment trust.
As an investment trust the Company’s ordinary shares
are excluded from the FCA’s restrictions which apply to
nonmainstream investment products. The Company conducts
its affairs and intends to do so for the foreseeable future so
that the exclusion continues to apply. The Company’s ordinary
shares are eligible for inclusion in a stocks and shares ISA.
Life of the Company
In the absence of any prior proposals, the Articles of
Association of the Company require the Directors to put
forward at the first Annual General Meeting following
1 March 2025 a special resolution to place the Company into
voluntary liquidation. The voting on that resolution will be
enhanced such that, provided any single vote is cast in favour,
the resolution will be passed.
The subsidiary, PCGH ZDP Plc, has a fixed life and the
Directors of the subsidiary are required to convene a general
meeting on or before 19 June 2024 (unless varied by the
holders of the Zero Dividend Preference shares) to propose a
resolution to wind up the subsidiary.
Capital structure
• Issued Share Capital
The Company’s share capital is divided into ordinary shares of
25p each. At the year end, there were 124,149,256 ordinary
shares in issue (2021: 124,149,256 ordinary shares), of which
2,879,256 (2021: 2,879,256) were held in treasury by the
Company. During the year to 30 September 2022, no new
shares were issued from or bought back into treasury.
Further information on transferability and the voting rights
attached to these shares can be found in the shareholder
information page 102.
•
Powers to Issue Ordinary Shares and Make
Market Purchases of Ordinary Shares
The Board was granted authority by shareholders at the AGM
in February 2022 to allot equity securities up to a nominal
value of £3,031,750, representing approximately 10 per cent.
of the Company’s issued share capital, and to issue those
shares for cash without offering those shares to shareholders
in accordance with their statutory pre-emption rights. New
ordinary shares will not be allotted and issued at below the
NAV per share after taking into account the costs of issue.
Any re-issue of shares from treasury will follow institutional
guidelines; it is not anticipated that such shares would be
re-issued below NAV.
The Board also obtained shareholder authority at the AGM
in February 2022 to make market purchases of up to
18,178,373 ordinary shares of the Company for cancellation
or holding as treasury shares in accordance with the terms
and conditions set out in the shareholder resolution.
These authorities will expire at the AGM to be held in
February 2023. Renewal of these authorities will be sought at
that AGM.
Dividends
The Company changed its dividend policy following the
change in strategy and reconstruction of the portfolio to
more closely focus on growth, approved in June 2017. The
Company’s policy is an aim to pay two interim dividends in
February and August each year. These interim dividends will
not necessarily be of equal amounts. Details of the dividends
paid and proposed are set out in Note 11 on page 85.
Shareholders should recognise that circumstances may arise
when it is necessary to reduce the level of dividend payment
or equally there may be instances when the level of dividend
must be increased in order to comply with sections 1158 and
1159 of the Corporation Tax Act 2010. Where this would
result in paying a dividend beyond the Board’s intended policy
a ‘special dividend’ will be declared and paid. In accordance
with best practice, the Directors will be proposing a resolution
to approve the Company’s dividend policy at the AGM to be
held in February 2023.
Directors
In accordance with the Company’s adopted practices detailed
on page 48 of the Report on Corporate Governance, all
Directors will retire and offer themselves for re-election at the
AGM of the Company to be held in February 2023. Having
undertaken a Board Evaluation process and discussed the areas
of expertise required to run the Company, the Board have
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 41
Governance
confirmed their support and rationale for each Directors’ re-election. The Directors believe that they have a balance of experience,
expertise and diversity and that they work well together and that each brings multiple qualities to the Board. The Board rationale
for re-appointment of each Director is given on pages 6 and 7 and in the letter accompanying the Notice of AGM.
Annual General Meeting (‘AGM’)
The Company’s AGM will be held at 2pm on Thursday 9 February 2023. Please see page 101 for further information on the
resolutions to be proposed.
Major Interests in Ordinary Shares
As at the year end of 30 September 2022, the Company had received notifications from the following shareholders in respect of
their own and their clients’ interests in the voting rights of the Company:
Shareholder Type of Holding Number of Shares
% of Voting
Rights*
Rathbone Brothers plc Indirect 14,515,492 11.97
Investec Wealth & Investment Ltd Direct 13,294,180 10.96
1607 Capital Partners Indirect 12,069,633 9.95
Allspring Investments Indirect 6,522,743 5.38
City of London Direct 6,265,289 5.17
Charles Stanley Indirect 6,106,096 5.04
Brewin Dolphin Limited Indirect 6,039,197 4.98
Canaccord Genuity Group Indirect 5,872,733 4.84
Cheviot Asset Management Limited Direct 4,805,275 3.96
Schroders plc Indirect Below 5% Below 5%
Since the year end and up to the date of this report, the Company has been notified of the following:
Shareholder Type of Holding Number of Shares
% of Voting
Rights*
Investec Wealth & Investment Ltd Direct 12,124,488 10.00
City of London Direct 6,019,216 4.96
* The above percentages are calculated by applying the shareholdings as notified to the issued share capital at 9 December 2022 of 121,270,000 ordinary shares being all the issued ordinary
shares excluding those held in treasury where voting rights are suspended.
Listing Rule 9.8.4
Listing Rule 9.8.4 requires the Company to include certain
further information in relation to the Group and Company
which is not otherwise disclosed. The Directors confirm there
are no additional disclosures to be made pursuant to this rule.
By order of the Board
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
Company Secretary
9 December 2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 42
Governance
Corporate Governance Framework
The following diagram demonstrates the governance framework within which the Group is managed. The Directors are
ultimately accountable to the Company and its shareholders for the Group’s affairs and are therefore responsible for the
governance of the Group. The Group and Company has no employees and relies on third parties to administer the Group and
Company and to provide investment management services.
Report on Corporate Governance
Year ended 30 September 2022
Shareholders
Board of Directors
Chair: Lisa Arnold
Audit
Committee
Management
Engagement Committee
Nomination
Committee
Remuneration
Committee
Third Party
Service Providers
Investment Manager
and AIFM
Chair: Neal Ransome
Members: all independent
NEDs.
Chair: Neal Ransome
Members: all independent
NEDs
Functions of the
Nomination Committee
are carried out by the
Board as a whole.
Functions of the
Remuneration Committee
are carried out by the
Board as a whole.
The Financial Reporting Council (FRC) has endorsed the Association of Investment Companies (‘AIC’) Code of Corporate
Governance (the ‘AIC Code’) for AIC Member Companies to report against in relation to their corporate governance provisions.
The AIC Code addresses the relevant principles set out in the FRC UK Code as well as additional principles and recommendations
on issues that are specific to investment trust companies.
The FRC has confirmed that by following the AIC Code, boards of investment companies (including those structured as
investment trusts) will meet their obligations under FCA Listing Rule 9.8.6. As an externally managed investment company many
provisions of the FRC UK Code are not relevant, including those relating to the roles of chief executive, executive directors’
remuneration, statement of gas emissions and the requirement to have an internal audit function.
In addition, there are provisions within the FRC UK Code which the Board has chosen to depart from in favour of following the
AIC Code, such as the Company’s formal Chair Tenure Policy which allows the Chair to continue in role in excess of 9 years. See
page 48 for more information.
Statement of Compliance and Application of the AIC Code’s Principles
The Board has considered the Principles and Provisions of the 2019 AIC Code of Corporate Governance (AIC Code). The AIC
Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting
out additional Provisions on issues that are of specific relevance to the Company. The Board considers that reporting against
the Principles and Provisions of the AIC Code, which has been endorsed by the FRC provides more relevant information to
shareholders.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 43
Governance
The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them relevant for investment companies.
The Board believes that the Company’s current practices are consistent in all material respects in applying the principles and
complying with the provisions of the AIC Code. The Board will continue to observe the principles and recommendations set out
in the AIC Code.
The AIC Code’s principles and provisions are structured into five sections: Board leadership and purpose; division of
responsibilities; composition, succession and evaluation; audit, risk and internal control; and remuneration. The Company’s
application of the principles and compliance with the provisions of each section is detailed on pages 43 to 50.
Purpose
The purpose of the Group, comprising the Company and the wholly owned subsidiary PCGH ZDP Plc, is to provide a vehicle for
investors in which assets are invested across a diversified global portfolio of healthcare stocks which aim to deliver long term
capital growth to shareholders. The purpose is achieved through the Investment Objective and policy incorporating parameters
to ensure excessive risk is not undertaken.
The Investment Policy seeks to generate capital growth by investing in a global portfolio of healthcare stocks. The 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. As an externally managed investment trust, the culture of the
Company is a consequence of the Board’s diversity, decisions and behaviours which are aligned with the values and behaviours
of the Investment Manager, interaction between the two and engagement with the Company’s stakeholders. The Board
monitors this culture, including the policies and practices it implements to maintain it.
Board Leadership
In promoting the long-term sustainable success of the Company, the performance of the Company’s portfolio is constantly
reviewed in pursuit of value generation for shareholders by achievement of the Investment Objective. Investment management
fees are reviewed periodically, with the last change occurring with effect from 1 October 2020. The Investment Manager
is entitled to a management fee at the rate of 0.75% per annum of the lower of the Group market capitalisation and the
Company’s adjusted net asset value. The Company’s performance over the previous ten years can be found on page 3 and how
the Board views its duties is considered in the s172 statement on pages 37 to 39. The Board’s engagement with shareholders
and stakeholders and how it contributes to strategic decision making is also discussed within the s172 statement. Participation
from both groups is encouraged and the Board can be contacted through the Company Secretary. The Company’s service
providers are subject to periodic site visits and attend service review and other meetings throughout the year, ensuring effective
engagement. Fulfilling the Investment Objective and the Company’s performance is the focus of the Board’s discussions.
The Board’s effectiveness, including how it promotes the long-term sustainable success of the Company, is reviewed annually.
The process and outcomes of the Board evaluation are detailed on page 48.
Role, Responsibilities and Committees of the Board
The Board has delegated to the Audit Committee and the Management Engagement Committee specific remits for
consideration and recommendation but the final responsibility in these areas remains with the Board. The Board determined
that due to its size, and the fact that all the Directors are non-executive and independent, the functions of the nomination
committee and remuneration committee would be carried out by the full Board. The Board creates ad hoc committees from time
to time to enact policies or actions agreed in principle by the whole Board.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 44
Governance
The number of formal meetings of the Board and its Committees held during the year ended 30 September 2022 and the
attendance of individual Directors are shown below.
Board
Audit
Committee
Management
Engagement 2022 AGM
Number of Meetings 5 3 1 1
Lisa Arnold 5 3 1 1
Andrew Fleming 5 3 1 1
Neal Ransome 5 3 1 1
Jeremy Whitley 5 3 1
–*
* Non-attendance due to COVID-19 restrictions.
Service Provider Performance Evaluation Process
Investment Manager
The Board has contractually delegated the management of the portfolio to the Manager. It is the Manager’s sole responsibility
to take decisions as to the purchase and sale of individual investments other than unquoted investments where the Board is
consulted. The Manager has responsibility for asset allocation and sector selection within the guidelines established and regularly
reviewed by the Board.
The Manager is responsible for providing or procuring accountancy services, company secretarial and administrative services
including the monitoring of third-party suppliers who are directly appointed by the Company. The Manager also ensures that
all Directors receive in a timely manner all relevant management, regulatory and financial information. Representatives of the
Investment Manager attend all Board meetings in a variety of capacities including investment management, compliance, risk and
marketing, enabling the Directors to probe further on matters of concern or seek clarification on certain issues.
The whole Board reviews the performance of the Investment Manager in all service disciplines and, at each Board meeting, the
Company’s performance against the market and a peer group of funds with a similar Investment Objective is reviewed. The
investment team provided by the Investment Manager has long experience of investment in the healthcare sector. In addition,
the Investment Manager has other investment resources which support the investment team and have experience in managing
and administering other investment trust companies.
The Board and Investment Manager work in a collaborative manner and the Chair encourages open discussion and debate.
Report of the Management Engagement Committee
The Management Engagement Committee comprises all the independent non-executive Directors under the Chairmanship of
Neal Ransome, and meets at least once a year and at such other times as may be necessary. The Management Engagement
Committee reviews the performance and activities of the Investment Manager and considers the terms of the investment
management agreement (“IMA”) and other services and resources supplied by the Investment Manager, prior to making its
recommendation to the Board on whether the retention of the Investment Manager is in the interests of shareholders.
During the year ended 30 September 2022 the Management Engagement Committee met once to carry out the detailed review
of the Investment Manager and consider its continued appointment for the next financial year ending 30 September 2023. During
the year, the Board reviewed its fee arrangements with the Manager taking into consideration the performance of the Manager in
managing the assets of the Company, the performance of the Company in both absolute and relative terms against its benchmark
since launch and since reconstruction in June 2017. No change to the fee arrangements were proposed for the year under
review or the year ahead. Under the terms of the IMA, the Investment Manager is 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 at the rate of 0.75% per annum based on the lower of the market capitalisation and adjusted net asset value. This
fee was agreed with effect from 1 October 2020.
The review of the Investment Manager also considered the strength of the investment team, depth of other resources provided by the
Manager and quality of the services provided or procured by the Manager including shareholder communications, company secretarial,
accounting and administration. The Board, through the work of the Management Engagement Committee, has concluded that it is in
the best interests of shareholders as a whole that the appointment of Polar Capital LLP as Investment Manager is continued.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued
Report on Corporate Governance continued
Year ended 30 September 2022
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 45
Governance
The Company uses a variety of performance measures when monitoring the performance of the portfolio managed by the
Investment Manager. These measures are considered to be Alternative Performance Measures under the ESMA guidelines and
are described further on pages 97 to 98.
Other Suppliers
The Board also monitors directly or through the Manager the performance of its other key service providers.
• The Board has directly appointed HSBC Bank Plc as Depositary and Panmure Gordon as Corporate Broker. The Depositary
reports quarterly and makes an annual presentation to the Board. The Corporate Broker provides reports to each Board
meeting and joins the Board on request, and at least every six months, to discuss markets and other issues.
• The Registrar, Equiniti Limited, is directly appointed by the Board and the performance of their duties is monitored and
reported on by the Company Secretary.
• Other suppliers such as printers, website services and PR agents are monitored by the Company Secretary and each supplier
reports to the Board as and when deemed necessary.
Report of the Audit Committee
The Audit Committee comprises all the independent non-executive Directors under the Chairmanship of Neal Ransome. The
Committee has formal terms of reference which clearly define its responsibilities and duties. A separate report of the work of
the Audit Committee over the year is set out on pages 51 to 57. A review of the Audit Committee is included separately in the
annual board evaluation process.
Report of the Remuneration Committee
As mentioned above, the role of the Remuneration Committee is undertaken by the full Board. The Directors’ Remuneration
Report including the processes undertaken when reviewing remuneration can be found on pages 58 to 62.
Chair
The Chair is responsible for the leadership of the Board and works with the Company Secretary for setting the Board’s meeting
agendas and for balancing the issues presented to each meeting. Open and honest debate is encouraged at each Board meeting
and the Chair keeps in touch with both the Company Secretary and other Directors between Board meetings. Lisa Arnold was
appointed to the Board in 2018 and appointed as Chair in February 2020. The Chair was independent on appointment and
continues to meet the criteria for independence. The Board considers the competence and independence of the Directors on an
annual basis. Under the Company’s Chair Tenure Policy, having been appointed following time spent as an NED, the Chair may
remain on the Board for up to twelve years.
Senior Independent Director
Due to the size and structure of the Board it is considered unnecessary to identify a senior independent non-executive director.
The Board considers that all Directors have different qualities and areas of expertise on which they may lead where issues arise
and to whom concerns may be conveyed.
Board Responsibilities
The Board currently comprises four non-executive Directors who are all considered to be independent. The Board considers
that its overall composition is adequate for the effective governance of the Company. No Director has any former or present
connection with the Investment Manager. A formal schedule of matters specifically reserved for decision by the full Board
has been defined and a procedure has been adopted for Directors, in the furtherance of their duties, to take independent
professional advice at the expense of the Company. No professional advice has been independently sought during the year.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 46
Governance
Company Secretary
The Directors have access to the advice and services of the Company Secretary which is provided in compliance with the IMA
through Polar Capital Secretarial Services Limited. An appointed representative, Tracey Lago, is responsible to the Board for
ensuring that Board procedures are followed, and that applicable rules and regulations are complied with. The Board and
Investment Manager operate in a supportive, co-operative and open environment. The Board acknowledges that PIRC (Pensions
and Investment Research Consultants Limited, an independent corporate governance and shareholder advisory consultancy)
has recently changed its voting guidelines to recommend voting against the laying of the Annual Report at an AGM where
the Investment Manager provides company secretarial services to the Company. However, the Board believes that the benefits
gained by utilising the services of a Company Secretary provided by the Investment Manager significantly outweigh the potential
for a conflict of interest perceived by PIRC. The Company Secretary is provided to the Company as an independent service and
the appointed representative acts as an officer of the Company and not an employee of the Investment Manager when working
with the Board and the Company.
Meetings
The Board has a schedule of regular meetings through the year and meets at additional times as required. During the year, Board
and Committee meetings were held to deal with the ongoing stewardship of the Company and other matters including the
setting and monitoring of investment strategy and performance, review of the Financial Statements, ESG and considering any
shareholder feedback. The level of the ordinary share price discount or premium to the Net Asset Value are kept under review
along with matters affecting the industry and the evaluation of third-party service providers. The Board is also responsible for
considering, reviewing and implementing appropriate policies in respect of regulatory changes that impact the Company.
The full investment strategy was revised during the reconstruction exercise undertaken in early 2017 which re-launched the
Company with a revised investment strategy in June 2017. The Board continues to consider the Company’s strategy and its
relevance to the market and shareholders as a whole at each Board meeting and at least one Board meeting per year includes
an in-depth focus on strategy. Through this process the Board supervises the management of the investment portfolio, the work
of the Investment Manager, the risks to which the Company is exposed and their mitigation, and the quality of services received
by the Company.
As reflected in the table on page 44 the Board formally met five times during the year. In addition to the formal meetings,
the Board met on an informal ad-hoc basis as and when deemed necessary to discuss relevant matters and put in place any
responses deemed appropriate.
Delegated Responsibilities
The Board has delegated to each of the Audit and Management Engagement Committees specific remits for consideration
and recommendation, as detailed within the terms of reference which are available on the Company’s website, but the final
responsibility in these areas remains with the Board. The Chair of the Audit Committee attends the AGM to deal with questions
relating to the Annual Report and Financial Statements. Attendance at each of these meetings is disclosed in the table on
page 44.
Directors’ Professional Development
When new Directors are appointed, they are offered an induction course provided by the Investment Manager. Directors are
welcome to visit the Manager at any time to receive an update on any aspect of interest or a refresher on the Manager’s
operations both generally and those which are specific to the Company. Directors are also provided on a regular basis with key
information on the Company’s policies, regulatory and statutory obligations and internal controls. Changes affecting Directors’
responsibilities are advised to the Board as they arise. Directors may also participate in professional and industry seminars and
may use the Manager’s online compliance training resources to ensure they maintain their knowledge.
Conflicts of Interest
Directors have a duty to avoid a situation in which they have a conflict of interest or a possible conflict with the interests of the
Company. The Company’s Articles contain provisions to permit the Board to authorise acceptable conflicts or potential conflicts.
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) continued
Report on Corporate Governance continued
Year ended 30 September 2022
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 47
Governance
The Board has in place a policy to govern situations where a potential conflict of interest may arise, for example where a Director
is also a Director of a company in which the Company invests or may invest. Where a conflict situation arises, the conflicted
Director is excluded from any discussions or decisions relating to the matter of conflict.
Each Director has provided the Company with a statement of all conflicts of interest and potential conflicts of interest, which
have been approved by the Board and recorded in a register. The Conflicts Register is reviewed at every Board meeting and
the Directors are reminded of their obligations for disclosure. No Director has declared receipt of any benefits other than their
emoluments and associated expenses in their capacity as a Director of the Company.
The Board as part of its year-end review has considered the full register of conflicts, any conditions imposed on such conflicts or
potential conflicts and the operation of the notification and authorisation process. It concluded that the process has operated
effectively since its introduction. There were no contracts subsisting during or at the end of the year in which a Director is or
was interested and which is or was significant in relation to the Company’s business or to the Director. All the Directors were
considered independent of the Investment Manager and had no relationship or conflicts which were likely to affect their
judgement.
The Directors’ interests in the ordinary shares of the Company are set out on page 61 of the Directors’ Remuneration Report.
Composition and Diversity
The Board is responsible to shareholders for the overall management of the Company’s affairs. For the full year under review
there were four non-executive Directors. Each Director has different qualities and areas of expertise on which they may lead
should issues arise. The Board has a policy to consider diversity and seeks to follow the diversity recommendations of the
Hampton-Alexander and Parker Reviews, amongst other factors; consideration is given to all forms of diversity in order to
balance both the expertise on, and the structure of, the Board as a whole. The Board notes the requirements of the FCA
Diversity and Inclusion Policy published in April 2022, reportable for financial years commencing on or after 1 April 2022,
and, whilst the Board does not meet the gender requirements (being a minimum of 40% female Board members) or ethnicity
requirements (at least one non-white ethnic minority Board member), it does have at least one senior female appointment who
is currently Chair of the Board.
The Board will have regard to the diversity recommendations of the FCA policy on Diversity and Inclusion, amongst other factors,
when making future appointments and will provide full disclosures in next year’s annual report as required under the FCA’s
policy. The Board as the Nomination Committee met in October 2022 and considered the near-term recruitment needs of the
Board. Having considered a variety of factors, the Committee concluded that at the present time, the Board worked efficiently
and had the requisite skill sets to lead the Company effectively. Noting the requirement for greater diversity, the Committee
concluded that, with a fixed life, the appropriate time for recruitment would be shortly before or after any reconstruction plans.
In support of increasing diversity and expanding the pool of potential NED candidates of the future, the Committee and in turn
the Board, concluded that they would consider the appointment of a Board Apprentice for the next financial year.
The Board as the Nomination Committee considered the contribution and performance of each Director as part of the Director
and Board performance evaluation. The Board believes that the Directors demonstrate a breadth of experience across the
investment and financial services industry and exposure to the healthcare sector. Each Director effectively contributes to
the operation of the Board and demonstrates independent views on a range of subjects. All the Directors were considered
independent of the Investment Manager and had no relationship or conflicts which were likely to affect their judgement.
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) continued
COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 48
Governance
Succession
The Board has determined that due to the fixed life of the Company there is no need for a formal policy on the length of service
for Directors. The reconstruction approved by shareholders in June 2017 extended the life of the Company for a further seven
years. Once the reconstruction was completed the Company’s original board was replaced in two phases, a process which
completed in December 2019. Following the completion of this process the Board considers that its overall composition is
well placed for the effective governance of the Company. No formal succession plans have therefore been developed beyond
the fixed life of the Company. It is anticipated that the process of board succession would be reassessed as part of any future
reconstruction plans.
Evaluation
The evaluation of the Board, its Committees and individual Directors is carried out annually. The process involves the use of
a written questionnaire to assess the balance of skills, experience, knowledge, independence and effectiveness of the Board,
including how the Directors interact as a unit on the Board. The responses to the questionnaire are reviewed and discussed
individually with the Chair where appropriate and by the full Board and, should it be deemed necessary, additional reporting
measures or operations would be put in place. The review of the Chair’ s performance is conducted by the Board led by the
Chair of the Audit Committee. The Chair of the Board did not participate in this discussion.
In carrying out these evaluations, each Director is assessed on their relevant experience, their strengths and weaknesses in
relation to the overall requirements of the Board and their commitment to the Company in terms of time by regular attendance
and participation at Board meetings. The process is constructed to assess the contribution of individual Directors to the overall
operation of the Board and its Committees. The Board, through the work of the Nomination Committee, has determined that
each Director standing for re-election continues to offer relevant experience, effectively contributes to the operation of the
Board and has demonstrated independent views on a range of subjects. The Committee is satisfied that the structure, mix of
skills and operation of the Board continue to be effective and relevant for the Company.
Performance and Re-election
In accordance with the Company’s adopted practices, all Directors will retire and offer themselves for re-election at the AGM of
the Company to be held in February 2023. Having undertaken a Board Evaluation process and discussed the areas of expertise
required to run the Company, the Board have confirmed their support and rationale for each Directors’ re-election. The Directors
believe that they have a balance of experience, expertise and sufficient diversity and that they work well together, each director
brings multiple qualities and areas of expertise to the Board. The Board rationale for re-appointment of each Director is given on
pages 6 and 7 and in the letter accompanying the Notice of AGM.
Chair Tenure Policy
The Board considers that in the circumstances of an investment company, where corporate knowledge and continuity can
add value, there may be merit in appointing one of its members to the Chair. In addition, there may be circumstances where
succession plans are disrupted such that an internal candidate with some years’ existing experience is the most appropriate
candidate for the Chair. In other circumstances an external candidate may be more appropriate.
As per provision 24 of the AIC Code, the Board’s policy is that the maximum Board tenure for its Chair is up to 12 years (where
up to 9 years of this could be served as a non-executive Director). The Board believes that due to the staggered nature of the
appointment dates of existing Directors, and the expectation that Directors, unless assuming the role of Chair or there being
unforeseen circumstances, will retire from the Board after nine years of service, there will be regular refreshment of the Board.
COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28) continued
Report on Corporate Governance continued
Year ended 30 September 2022
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 49
Governance
Internal Controls
The Board has overall responsibility for the Group and Company’s system of internal control, for reviewing its effectiveness
and ensuring that risk management and control processes are embedded in the Company’s day- to -day operations which are
operated or overseen by the Investment Manager.
The Investment Manager has an internal control framework to provide reasonable but not absolute assurance on the
effectiveness of the internal controls operated on behalf of its clients. The Manager is authorised and regulated by the Financial
Conduct Authority and its compliance department monitors the Company’s compliance with the various rules and regulations
applicable to it including the FCA’s rules, AIFMD, MiFID II and GDPR, for example.
The Board, through the Audit Committee, has established a process for identifying, evaluating, monitoring and managing any
principal risks faced by the Company. This is documented through the use of a Risk Map which is subject to regular review by
the Audit Committee and accords with the Guidance on Risk Management, Internal Control and Related Financial and Business
Reporting issued in September 2014 by the Financial Reporting Council. The controls are embedded within the business and aim
to ensure that identified risks are managed and systems are in place to report on such risks. The internal controls seek to ensure
the assets of the Group and Company are safeguarded, proper accounting records are maintained, and the financial information
used by the Group and Company and for publication is reliable. Controls covering the risks identified, including financial,
operational, compliance and risk management controls, are monitored by a series of regular reports covering investment
performance, attribution analysis, reports from various third parties and from the Investment Manager.
As the Company has no employees and its operational functions are carried out by third parties, the Audit Committee does not
consider it necessary for the Company to establish its own internal audit function.
Contracts with suppliers are entered into after full and proper consideration by the Board of the quality and cost of the services
offered, including the control systems in operation in so far as they relate to the affairs of the Company.
Operation of Internal Controls
The process was active throughout the year and up to the date of approval of this Annual Report. However, such a system is
designed to manage rather than eliminate risks of failure to achieve the Company’s business objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Board, in assessing the effectiveness of the Group and the Company’s internal controls has, through the Audit Committee,
received formal reports on the policies and procedures in operation. The reports also include results of tests, with details of any
known internal control failures from the Investment Manager for its financial year ended 31 March 2022. For the Group and
Company’s year under review, no material errors or control failures had been identified. The Manager has subsequently provided
confirmation that there has been no material change to the control environment up to the date of signing these Financial
Statements.
The Manager has delegated the provision of accounting, portfolio valuation and trade processing to HSBC Securities Services but
remains responsible to the Company for these functions and provides the Board with information on these services.
Based on the work of the Audit Committee and the reviews of the reports received by the Audit Committee on behalf of the
Board, the Board has concluded that there were no material control failures during the year and up to the date of this report.
AUDIT, RISK AND INTERNAL CONTROL (PRINCIPLES M-O, PROVISIONS 29-36)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 50
Governance
Due to the fully independent non-executive Board comprising four Directors, the Board has deemed it appropriate for the full
Board to fulfil the role of the Remuneration Committee. The Board, acting as the Committee, meets at least annually and is
responsible for consideration and recommendations in relation to Directors’ remuneration.
The remuneration of the Directors is reviewed on an annual basis but will not necessarily lead to a change in remuneration
level awarded. Industry guidance, peer investment trust companies’ remuneration, the work undertaken by the Board in the
prior year along with plans for the current year and the overall regulatory environment are all considered when reviewing
remuneration.
Remuneration levels are set to attract candidates of high calibre to the Board. The Company’s remuneration policy will be put
to shareholders for approval once again at the AGM in February 2023, the policy is detailed within the Directors’ Remuneration
Report on page 59 and explains how the policy is designed to support strategy and promote long-term sustainable success.
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
Company Secretary
9 December 2022
REMUNERATION (PRINCIPLES P-R, PROVISIONS 37-42)
Report on Corporate Governance continued
Year ended 30 September 2022
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 51
Governance
I am pleased to present my Report to you as Chair of the Audit Committee.
The Committee has written terms of reference which are available to view on
the Company’s website, www.polarcapitalglobalhealthcaretrust.co.uk
The Committee comprises all the Directors and the Board
is satisfied that the Committee has sufficient recent and
relevant financial experience and has competence relevant to
the sector in which the Company operates to discharge its
functions effectively. The experience of the members of the
Committee can be assessed from the Directors’ biographies
set out on pages 6 and 7. I am a chartered accountant
and a former partner and head of the pharmaceutical and
healthcare M&A practice of PricewaterhouseCoopers LLP
(‘PwC’). I hold the ICAEW’s FCA, BFP and CF qualifications
and am therefore deemed to have appropriate experience
and expertise to carry out the role of Chair of the Audit
Committee.
During the year the Audit Committee met three times, with
all members of the Committee attending each meeting.
Matters Considered during the Financial
Year Ended 30 September 2022:
During the year the Audit Committee considered a variety of
matters, including:
Audit Regulation
While the Committee has not had to consider any new
material regulations in the year under review, it does regularly
review guidance and determine how to apply any relevant
best practice to the Company. The Committee continues
to review the outcomes of the FRC’s annual Audit Quality
Reviews and discusses the findings with the Auditors.
As reported last year, the Committee is aware of the
extensive proposals outlined by the Department of Business,
Enterprise, Industry and Skills consultation (“BEIS”) which
seek to strengthen the UK’s audit and corporate governance
framework. The outcomes of the consultation process were
published on 31 May 2022 and are expected to progress
through primary and secondary legislation from early 2023.
The Committee will continue to monitor the detail of and
implement any primary legislation arising from the reforms
and will consider any suggested guidance from BEIS for
good practice. The Committee will report on any changes
made in the respective Annual Report following the changes
being made.
Audit Committee
Report
Neal Ransome
Chair of the Audit Committee
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 52
Governance
Audit Committee Report continued
Annual External Audit
• the scope of the annual audit and agreement with the
Auditors of the key areas of focus;
• the reports from the Auditors concerning their audit of
the annual Financial Statements of the Company;
• the performance of the Auditors and the level of fees
charged for their services;
• the independence and objectivity of the Auditors;
• the appointment of the Auditors;
• the policy for non-audit services which may be provided
by the Auditors in line with the FRC guidance; and
• the extent of the non-audit services, the quality of such
work and the fees.
Internal Audit
• the potential need for an internal audit function, which
we continue to conclude is unnecessary for an externally
managed investment trust.
Accounting Policies and related matters
• the appropriateness and any changes to the accounting
policies of the Company including any judgements
required by such policies and the reasonableness of
such. During the year the Committee ensured that the
accounting policies as set out on pages 77 to 81 were
applied consistently throughout the year. During the year
there were no changes to currently adopted policies and
no new UK-adopted international accounting standards
(“UK-adopted IAS”) or amendments to UK-adopted
IAS which had any significant impact on the Company’s
Financial Statements.
• the financial disclosures contained in the Annual Report
and Half Year Report to shareholders.
• the going concern statement, longer-term viability
statement and the requirement that the Annual Report
and Financial Statements, when taken, as a whole are fair,
balanced and understandable.
• With effect from this financial year (ended 30 September
2022), the Company is required to prepare consolidated
accounts prepared in accordance with UK-adopted IAS
and publish its annual Financial Statements in a common
electronic format.
The Company’s Subsidiary, PCGH ZDP Plc
• the Audit Committee also considers the Financial
Statements and audit requirements of the Company’s
wholly owned subsidiary, PCGH ZDP Plc. Accounting
standard IFRS9 specifies how an entity should classify and
measure financial assets, liabilities and some contracts.
PCGH ZDP Plc has advanced a loan to the Company
which falls within the scope of this accounting standard.
As required by IFRS9, an impairment review has been
conducted to assess the possibility of the Company
defaulting on its liability to PCGH ZDP Plc. It has been
concluded that the possibility of default is negligible,
and that accordingly no adjustment is required to the
carrying value of the loan in the Financial Statements of
PCGH ZDP Plc. A note on this matter has been included
in the Financial Statements of PCGH ZDP Plc. The liability
to PCGH ZDP Plc is the equivalent of the redemption
value of the ZDP Shares being 122.99p per ZDP Share
and becomes payable on 19 June 2024. The Company’s
minimum asset cover required to fulfil the loan covenant is
1.8x. During the year under review the lowest asset cover
available at month end was 10.4x and the highest was
12.5x.
Investment Matters
• the investment management process, including
confirmation of the existence and ownership of
investments through the review of quarterly Depositary
Reports and meeting with the Depositary in relation to
the safeguarding of the Company’s assets. No errors have
been reported during the year under review.
Internal Controls and Risk
• the Risk Map covering the identification of new and
emerging risks, adjustments to existing risks and the
mitigation and controls in place to manage those risks; and
• reports from the Investment Manager and the Investment
Manager’s external Auditors on the effectiveness of the
system of internal financial controls including the Risk Map.
Dividend Policy
• the Committee considered the Company’s Dividend
Policy as approved by shareholders at the Annual General
Meeting held in February 2022 and recommended to the
Board that it continue in force. The Dividend Policy will be
proposed for approval by shareholders at the Company’s
AGM to be held in February 2023. The Company’s focus
remains on capital growth, and 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.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 53
Governance
Consideration of the Half Year Report and
Financial Statements
• prior to publication, the Committee considered and
reviewed the Half Year Report and Financial Statements,
which were not audited, to ensure that they were
prepared on a basis consistent with the accounting
policies used in the Annual Report and Financial
Statements for the year ended 30 September 2021.
Consideration of the Annual Report and
Financial Statements
• the Committee performed this role through monitoring
the integrity of the Financial Statements of the Company
and the system of accounting to ensure compliance with
the relevant and appropriate accounting standards. The
scope of the audit was agreed in advance with a focus
on areas of audit risk and the appropriate level of audit
materiality.
• the Auditors reported to the Committee on the results of
the audit work and highlighted any issues which the audit
work had discovered, or the Committee had previously
identified as significant or material in the context of the
Financial Statements. Following a comprehensive review
process the Audit Committee presented its conclusions to
the Board.
Significant Matters in Relation to the Financial
Statements for the Year Ended 30 September
2022
• in addition to the matters considered by the Committee
informing its opinions on going concern and longer-term
viability (described below) and in concluding that the
Annual Report and Financial Statements, when taken
as a whole, are fair, balanced and understandable, the
Committee also considered the following matters in
relation to the Financial Statements:
Significant Matter How the Issue was Addressed
Valuation, existence and ownership of
investments
The valuation is carried out in accordance with the accounting policies of the
Company as described in note 2(g). The Depositary has reported on its work and
safe keeping of the Company’s investments and a report from the Depositary is
provided on the Company’s website: www.polarcapitalglobalhealthcaretrust.co.uk
Compliance with s1159 and s1159 of
the Corporation Tax Act 2010
Consideration of compliance with the requirements of investment trust status is
carried out at each Board meeting throughout the year.
Stability and financial sustainability of
the subsidiary in relation to structural
gearing provided to the parent company
The ZDP shares issued by the subsidiary are traded and maintain a standard listing
on the London Stock Exchange. The valuation of the subsidiary is monitored
regularly by the Board and the subsidiary is subject to an independent audit by the
Auditors.
There were no adverse matters brought to the Audit
Committee’s attention in respect of the 2022 audit which
were material or significant, or which should be brought to
shareholders’ attention.
Conclusions in Respect of the Annual Report
and Financial Statements
In order to reach the conclusion that the Annual Report
and Financial Statements when taken as a whole are fair,
balanced and understandable, the Board has requested that
the Committee advise on whether it considers these criteria
satisfied. In so doing the Committee has considered the
following:
• the ongoing comprehensive control framework around
the production of the Annual Report, including the
verification processes in place to deal with the factual
content;
• the extensive levels of review undertaken in the
production process, by the Investment Manager and
the Committee;
• the internal control environment as operated by the
Investment Manager and other suppliers including any
checks and balances within those systems; and
• the unqualified audit report from the Auditors confirming
their work based on substantive testing of the Financial
Statements.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 54
Governance
Audit Committee Report continued
As a result of the work performed, the Committee has
concluded that the Annual Report and Financial Statements
for the year ended 30 September 2022, taken as a whole,
are fair, balanced and understandable and provide the
information necessary for shareholders to assess the
Company’s performance, business model and strategy, and it
has reported on these findings and provided such conclusion
to the Board.
External Auditors
Appointment of Auditors, Fees and Tenure
The Committee considers by way of meetings and reports,
the appointment, remuneration and work of the Auditors.
PwC (or the ‘Auditors’) have provided audit services to the
Company from its incorporation in 2010 and to the Group
since 2017. Following a formal and competitive tender
process in 2020, PwC were reappointed as the Company’s
auditors. The re-appointment of PwC as Auditors to the
Company has been submitted annually for shareholder
approval and will be submitted once again at the AGM to be
held in February 2023, together with a separate Resolution
to authorise the Directors to set the remuneration of the
Auditors. In accordance with current legislation, the Company
is required to instigate an audit tender process at least every
10 years and will be required to change its auditors after a
maximum of 20 years’ engagement.
The Auditors are invited to all Committee meetings and
receives copies of all relevant papers and meeting minutes.
As part of the year end audit, the Committee considered
and re-confirmed the level of fees pre-agreed and payable to
the Auditor bearing in mind the nature of the audit and the
quality of services received. The fees paid to PwC in respect of
the audit of the annual Financial Statements of the Company
amounted to £41,525 (2021: £38,000). The fees paid to
PwC in respect of the audit of the Financial Statements of
the Company’s wholly owned subsidiary, PCGH ZDP Plc,
were £6,875 (2021: £6,250). The year-on-year increase,
whilst unwelcome, is in line with increases experienced
across the investment trust sector in the current and recent
years. Audit firms generally have increased the fees that they
charge to investment trusts in order to reflect the increased
level of work that they have been required to perform, and
the increased risk that they perceive, in the context of more
rigorous and robust levels of audit scrutiny and regulation.
Effectiveness of Audit Process
The Committee, on behalf of the Board, is responsible for
overseeing the relationship with the Auditors including
ensuring the quality and effectiveness of the audit.
The Audit Committee monitored and evaluated the
effectiveness of the Auditors and any changes in the terms
of their appointment based on an assessment of their
performance, qualification, knowledge, expertise and
resources. The Auditor’s independence was also considered
along with other factors such as audit planning and
interpretations of accounting standards. This evaluation
has been carried out throughout the year by meetings held
with the Auditors, by review of the audit process and by
comments from the Investment Manager and others involved
in the audit process. Based on its review the Audit Committee
concluded that the Auditors remained independent and
continued to act in an independent manner. The Auditors
are provided with an opportunity to address the Committee
without the Investment Manager present to raise any
concerns or discuss any matters relating to the audit work
and the cooperation of the Investment Manager and others
in providing information and the quality of that information
including the timeliness in responding to audit requests.
Non-audit Work
The Audit Committee’s policy for the provision of non-audit
services by the Auditors is to ensure that there is a clear
separation of audit work and non-audit work and that
the cost of any non-audit work is justified and is not
disproportionate to the audit fees, to the extent that the
independence of the Auditors would be compromised. The
Audit Committee’s policy on the provision of non-audit
services by the Auditors is available on the Company’s
website. The policy is produced in line with the FRC Ethical
Standards (updated in March 2020) and any non-audit
services are required to be pre-approved by the Audit
Committee. In both the year under review and the prior year,
no non-audit services were provided by the Auditors.
Overview of Risk and Internal Controls
The Board has ultimate responsibility for the management
of risk throughout the Company and has asked the Audit
Committee to assist in maintaining an effective internal
control environment.
The Company maintains a Risk Map which seeks to identify,
monitor and control principal risks as well as identifying
emerging risks. The Committee has continued to review
the Risk Map to identify the principal and emerging risks
facing the business including those that might threaten its
business model, future performance, liquidity and reputation.
Alongside this, the Committee considered the likelihood,
impact, mitigating factors and controls to reduce the impact
of such risks as described on pages 34 and 36. This process
was carried out throughout the year and is the means by
which the Risk Map is monitored and kept relevant by
reflecting any changes to the source and level of risks facing
the Company. The Committee has met to discuss and assess
emerging risks and where appropriate recommends changes
to the Risk Map. The Committee will actively continue to
monitor the system of internal controls through the regular
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 55
Governance
review of the Risk Map and the internal control environment
in order to provide assurance that they continue to operate as
intended.
As part of the year end processes the Audit Committee
also undertook a review of the effectiveness of the system
of internal controls considering any issues that had arisen
during the course of the year. The Committee acknowledges
that the Company is reliant on the systems utilised by
external suppliers. Representatives of the Investment
Manager reported to the Committee on the system of
internal controls that is in place for the performance of the
Investment Manager’s duties under the IMA. The Committee
and the Manager also received presentations and internal
control reports from other key suppliers on the quality and
effectiveness of the services provided to the Company.
In addition, the Manager also conducted a virtual due
diligence site visit with HSBC where they received thorough
presentations from representatives covering the work of the
Operations, Risk Administration and Accounting Teams, in
addition to the Custodian and Depositary. No matters of
concern with any areas of service were raised at any of the
meetings or on reviewing the internal controls reports.
The Audit Committee has also discussed with the Investment
Manager their policies on whistleblowing, cyber security,
antibribery and the Modern Slavery Act and is satisfied
that the Investment Manager has controls and monitoring
processes to implement their policies across the main
contractors which supply goods and services to the
Investment Manager and to the Company. The Company
has adopted an Anti-Corruption policy which incorporates
Anti-Bribery, Anti-Slavery and the Corporate Criminal Offence
of Tax Evasion. In addition to this the Company has issued a
data privacy notice in relation to the General Data Protection
Regulation. All such policies can be found on the Company’s
website www.polarcapitalglobalhealthcaretrust.co.uk.
The Audit Committee also considered the policy and controls
used by the Investment Manager surrounding the use of
brokerage commissions generated from transactions in the
Company’s portfolio and the obtaining of best execution on
all transactions. There were no issues of concern arising from
the reviews of or within the internal controls environment the
Company relied upon during the course of the year ended
30 September 2022 and up to the date of this report.
Geopolitical Events
This time last year we were reporting on the effect of the
COVID-19 pandemic on the portfolio and market disruption
in general. Thankfully we now appear to be seeing the last
signs of COVID-19 as a pandemic and the first signs of it
becoming something that we should all continue to be aware
of and live with as carefully as we can. Focus has shifted as
we now watch the impact of the Ukraine war, escalating
energy prices, supply chain shortages, rising interest rates
and inflation. The consequences of these events can be
seen globally and the associated market volatility has had
an impact on the Company’s portfolio performance. Further
details can be found in the Investment Manger’s Report on
pages 11 to 20. The Committee will continue to monitor
the impact of these and other events which appear in our
assessment of risk and the ability of the Company to achieve
its investment objective.
The Committee has regularly reviewed the operational
resilience of its various service providers in connection with
the mitigation of the business risks posed by geopolitical
events. Many of the external service providers have continued
to utilise the hybrid working model after such a successful
business transition to fully remote working during the
pandemic. The Committee is pleased to confirm that all
service providers have continued to demonstrate their ability
to provide services to the expected level, with no breaks in
the services provided or significant operational failures.
Going Concern and Longer-term Viability
Going Concern
At the request of the Board, the Audit Committee has
considered the ability of the Company to adopt the going
concern basis for the preparation of the Financial Statements.
The Committee has considered the financial position of
the Company, its cashflows and its liquidity position. The
Committee has also considered any material uncertainties and
events that might cast significant doubt upon the Company’s
ability to continue as a going concern. The Audit Committee
has considered:
• the ability of the Company to liquidate its portfolio to
meet any liabilities as they fall due;
• the level of budgeted expenses and the exposure to
currency and credit risk; and
• the factors impacting the forthcoming year as set out
in the Strategic Report Section and comprising the
Chair’s Statement, the Investment Manager’s Report
and the Strategic Review. The financial position of the
Company and its cash flows and liquidity position are
described in the Strategic Report and the Financial
Statements. Note 26 to the Financial Statements includes
the Company’s policies and process for managing its
capital, its financial risk management objectives, details of
financial instruments and hedging activities. Exposure to
credit risk and liquidity risk are also disclosed.
The Committee is mindful of the uncertainty surrounding the
Ukraine war, escalating energy prices, supply chain shortages,
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 56
Governance
Audit Committee Report continued
rising interest rates and inflation, and the longer-term impact
these factors may have on the market and global economy
and will continue to keep this under review. Based on the
information provided to the Committee and its assessment
of the financial position of the Company, the Committee has
recommended that a going concern basis should be adopted
by the Board for the preparation of the Financial Statements
for the year ended 30 September 2022.
Longer-term Viability
The Board has also asked the Audit Committee to address
the requirement that a longer-term viability statement be
provided to shareholders. This statement should take account
of the Company’s financial position, the principal risks as set
out on pages 34 to 36 together with the mitigating factors
which are assumed to operate appropriately so that the Board
may state that they have a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment.
The Committee considered the Company’s longer-term
viability, with reference to the FRC’s Guidance on Risk
Management, Internal Control and Related Financial and
Business Reporting, and concluded that the Board may state
its reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment.
To provide this assessment, the Audit Committee has
considered the Company’s financial position as described
above including its ability to liquidate its portfolio and meet
its expenses as they fall due:
• the portfolio comprises investments traded on major
international stock exchanges, and there is a spread
of investments by market capitalisation of company.
Approximately 97% of the portfolio as at 30 September
2022 could be liquidated within seven trading days and
there is no expectation that the nature of the investments
held within the portfolio will be materially different in future;
• the expenses of the Company are predictable and modest
in comparison with the assets of the Company and there
are no capital commitments foreseen which would alter
that position; and
• the Company has no employees and consequently has no
employment-related liabilities or responsibilities.
The Audit Committee has also had regard to the following
assumptions in considering the Company’s longer-term
viability:
• healthcare will continue to be an investable sector of the
international stock markets and investors will still wish to
have an exposure to such investments;
• closed ended investment trusts will continue to be wanted
by investors;
• regulation will not increase to a level that makes the
running of the Company uneconomical in comparison to
other competitor products;
• should the performance of the Company be less than
the Board deems acceptable it has appropriate powers to
replace the Investment Manager; and
• there will be no material or significant changes in the
principal risks and uncertainties.
Stress Testing
In addition to the above, stress testing was undertaken in
determining the Company’s longer-term viability and the
appropriateness of preparing the Financial Statements on
a going concern basis. In conducting the stress tests, the
Company’s principal risks were grouped into three buckets
according to their post mitigation scores and, where possible,
material values were attached to the key risks materialising
and evaluated to assess the effect of this on the Company’s
ability to continue as a going concern and its viability over a
five-year period.
The stress tests also used a variety of falling parameters to
demonstrate the impact on the Company’s share price and
NAV. Stress testing was also applied to assess the Company’s
ability to meet its liability to its subsidiary, PCGH ZDP Plc.
This liability is the equivalent of the redemption value of
the ZDP Shares being 122.99p per ZDP Share and becomes
payable on 19 June 2024. The Company’s minimum asset
cover required to fulfil the loan covenant is 1.8x. The average
asset cover for the period under review was 11.1x and at the
Company’s year-end was 11.2x. The results of the stress testing
demonstrated the impact on the NAV and reaffirmed the
Company’s ability to be able to meet its liability to PCGH ZDP
Plc as it falls due.
The Audit Committee also notes that, in the absence of any
prior proposals, the Company’s Articles of Association require
the Directors to put forward at the first AGM following
1 March 2025 a resolution to place the Company into
liquidation. The voting on that resolution will be enhanced
such that, provided any single vote is cast in favour, the
resolution will be passed. Based on these considerations
the Audit Committee has recommended to the Board that
a statement may be made on the Company’s longer-term
viability to continue its operations and meet its expenses and
liabilities as they fall due until the liquidation vote at the first
AGM following 1 March 2025.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 57
Governance
Effectiveness of the Audit Committee
The services provided to the Board by the Audit Committee
are reviewed within the Annual Board Evaluation, including
consideration of actions undertaken by the Audit Committee
with the Investment Manager and Auditors to ensure an
appropriate audit process is undertaken. I am pleased to
confirm that the evaluation result was positive and no matters
of concern or requirements for change were highlighted. The
Committee continually seeks to improve its effectiveness and
follow best practice guidance from the FRC and other bodies.
Neal Ransome
Chair of the Audit Committee
9 December 2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 58
Governance
Directors’ Remuneration Report
Introduction
This report is submitted in accordance with the Large and Medium-Sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended) (the ‘Regulations’) and the Listing Rules of the Financial Conduct Authority in respect of the year
ended 30 September 2022. It has been audited where indicated.
Chair’s Report
The Board has determined that due to its size, and the fact that all the Directors are non-executive and independent, the
functions normally carried out by a remuneration committee will be performed by the full Board.
Shareholders approved the current Directors’ Remuneration Policy by way of an ordinary resolution passed at the AGM held on
26 February 2020. Such policy came into effect on 1 October 2020 and shall remain in force until 30 September 2023:
Company’s Policy on Directors’ Remuneration effective until 30 September 2023
How policy supports strategy and promotes
long-term sustainable success Operation
The Board consists entirely of non-executive Directors, who
meet regularly to deal with the Company’s affairs.
The intention is that fees payable reflect the time spent by
them individually and collectively, be of a level appropriate
to their responsibilities and be in line with market practice,
sufficient to enable candidates of high calibre to be recruited
and retained.
The Company’s policy in relation to fees is to offer only a
fixed basic fee in line with equivalent roles within the sector
with additional fees for the roles of Chair of the Company
and Chair of the Audit Committee. As the Company is an
investment trust and all the Directors are non-executive, it
is considered inappropriate to have any long-term incentive
schemes or benefits.
In accordance with article 98(2) of the Company’s Articles
of Association, any Director who performs, or undertakes
to perform, services which the Directors consider go beyond
the ordinary duties of a Director may be paid such additional
remuneration (whether by way of fixed sum, bonus,
commission, participation in profits or otherwise) as the
Directors may determine.
Non-executive Directors have formal letters of appointment
which contain the responsibilities and obligations of the
Directors in relation to undertaking their role and managing
conflicts of interest; their remuneration is determined by the
Board within the limits set by the Articles of Association.
Directors are not entitled to payment for loss of office and
do not receive any bonus, nor do they participate in any
long-term incentive schemes or pension schemes. All fees are
paid in cash, monthly in arrears, to the Director concerned.
Rates are reviewed annually but the review will not necessarily
result in any change to rates. Non-executive Directors are
subject to annual re-election by shareholders.
There are no performance conditions relating to
non-executive Directors fees.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 59
Governance
As the current Remuneration Policy will expire on 30 September 2023, the Company is required to seek shareholder approval
for a Remuneration Policy that can remain in operation for the next three-year period (unless proposed for change within such
period). The Policy being proposed is unchanged from that which was approved in 2020 and if approved by shareholders, the
Remuneration Policy will remain in force until 30 September 2026.
Company’s Policy on Directors’ Remuneration – to come into force on 1 October 2023
(subject to shareholder approval):
How policy supports strategy and promotes
long-term sustainable success Operation
The Board consists entirely of non-executive Directors, who
meet regularly to deal with the Company’s affairs.
The intention is that fees payable reflect the time spent by
them individually and collectively, be of a level appropriate
to their responsibilities and be in line with market practice,
sufficient to enable candidates of high calibre to be recruited
and retained.
The Company’s policy in relation to fees is to offer only a
fixed basic fee in line with equivalent roles within the sector
with additional fees for the roles of Chair of the Company
and Chair of the Audit Committee. As the Company is an
investment trust and all the Directors are non-executive, it
is considered inappropriate to have any long-term incentive
schemes or benefits.
In accordance with article 98(2) of the Company’s Articles
of Association, any Director who performs, or undertakes
to perform, services which the Directors consider go beyond
the ordinary duties of a Director may be paid such additional
remuneration (whether by way of fixed sum, bonus,
commission, participation in profits or otherwise) as the
Directors may determine.
Non-executive Directors have formal letters of appointment
which contain the responsibilities and obligations of the
Directors in relation to undertaking their role and managing
conflicts of interest; their remuneration is determined by the
Board within the limits set by the Articles of Association.
Directors are not entitled to payment for loss of office and
do not receive any bonus, nor do they participate in any
long-term incentive schemes or pension schemes. All fees are
paid in cash, monthly in arrears, to the Director concerned.
Rates are reviewed annually but the review will not necessarily
result in any change to rates. Non-executive Directors are
subject to annual re-election by shareholders.
There are no performance conditions relating to
non-executive Directors fees.
As per previous AGM resolutions, shareholders will be asked to consider a non-binding vote for the approval of the following
Directors’ Remuneration Implementation Report, which reports on how the Remuneration Policy has operated during the year
ended 30 September 2022.
The result of the shareholder votes on the Directors’ Remuneration Policy and the latest Implementation Report were as follows:
Implementation Report
for the
Year ended
30 September 2021
Remuneration Policy
for the three
years ended
30 September 2023
Approved at AGM on
11 February 2022
Approved at AGM on
26 February 2020
Votes for 99.99% 99.99%
Votes against 0% 0%
Votes abstained 0.01% 0.01%
The Board considers this level of support from shareholders a positive endorsement of both its Remuneration Policy and the policy
implementation. There has been no communication from shareholders regarding any aspect of the Directors’ remuneration.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 60
Governance
Directors’ Remuneration Report continued
Implementation Report
Directors’ Remuneration Paid for the Year Ended 30 September 2022
Annual Fees Review
The review of Directors’ fees is carried out on an annual basis and involves consideration of the time and commitment required
of the Directors, including any significant increase in requirements due to regulatory or other changes. For comparative purposes
the remuneration awarded to directors of similar companies and general market data is also considered. While such a review will
not necessarily result in any change to the rates the Committee believes that it is important that these reviews happen annually.
The appointment of an external remuneration consultant was considered unnecessary. No Director is involved in deciding their
own remuneration and all Directors exercise independent judgement and discretion when considering fees.
In October 2022, the Committee carried out a review of Directors’ remuneration which included a selection of peer comparisons
and external reports including the Nurole Compensation Report and the Trust Associates 2022 Fee Review. Consideration was
also given to movements in the consumer price index (CPI) which had increased by 10.1% since the last change in Directors’
fees in October 2021. The Committee resolved to implement the following increases with effect from 1 October 2022:
• The annual fee for the Chair has been increased from £41,000pa to £43,000pa, representing a 4.9% increase.
• The annual fee for a non-executive Director has been increased from £29,500pa to £31,000, representing a 5.1% increase.
• The additional supplement for the Chair of the Audit Committee has been increased from £5,500 to £5,750, representing a
4.5% increase.
In accordance with the shareholder Rights Directive, the Board confirms that there were no variable pay awards made to the
Directors and there were no deferral periods or share based pay equivalents. The annual percentage change in remuneration in
respect of the five financial years prior to the current year in respect of each Director role is as follows:
Financial year to:
30 Sept
2017
30 Sept
2018
30 Sept
2019
30 Sept
2020
30 Sept
2021
30 Sept
2022
Chair 0% 5.7% 0% 5.4% 0% 5.1%
Non-executive Director 0% 6% 0% 5.7% 0% 5.4%
Chair of the Audit Committee 0% 0% 0% 10.0% 0% 0%
Expenses
The Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of
their duties and attendance at Board and General Meetings. In certain circumstances, under HMRC rules, travel and other out of
pocket expenses reimbursed to the Directors may be considered as taxable benefits. The taxable expenses comprise of expenses
incurred by the Directors attending Board and other meetings held in London. Such expenses are paid to the Directors grossed
up for taxation and shown in the taxable column of the Directors remuneration table.
Letters of Appointment
In accordance with recommended practice, the Directors do not have service agreements but instead each Director has received
a letter setting out the terms of their appointment under which they provide their services to the Company. A Director may
resign by giving one month’s notice in writing to the Board at any time. The Directors are not entitled to payment for loss of
office.
New Directors are appointed and elected with the expectation that they will serve for a period of at least three years. In
accordance with the Articles of Association any new Director is required to stand for election at the first AGM following their
appointment, and in accordance with good corporate governance practice all Directors shall stand for re-election every year
following their first election by shareholders. While it is encouraged, there is no requirement for Directors to hold shares in the
Company or Group.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 61
Governance
Directors’ and Officers’ Liability Insurance
Directors’ and Officers’ liability insurance cover is held by the Company in respect of the Directors. The Company has, to the
extent permitted by law and the Company’s Articles of Association, provided each Director with a Deed of Indemnity which,
subject to the provisions of the Articles of Association and s234 of the Companies Act 2006, qualifying third party indemnity
provisions, indemnifies the Director in respect of costs which they may incur relating to the defence of any proceedings brought
against them arising out of their position as Directors (excluding criminal and regulatory penalties). Directors’ legal costs may be
funded up-front provided they reimburse the Company if the individual is convicted or, in an action brought by the Company,
judgment is given against them. These provisions were in force during the year and remain in force at the date of this report.
Remuneration (Audited)
In the year under review the Directors’ fees were paid at the following annual rates, the Chair £41,000; other Directors £29,500
with the Chair of the Audit Committee receiving an extra £5,500 supplement for performing that additional role.
Year ended 30 September 2022 Year ended 30 September 2021
Director Fixed fee
Taxable
expenses
Total
remuneration Fixed fee
Taxable
expenses
Total
remuneration
Lisa Arnold £41,000 – £41,000 £39,000 – £39,000
(Chair)
Neal Ransome £35,000 – £35,000 £33,500 – £33,500
(Chair of the Audit and Management Engagement
Committees)
Andrew Fleming £29,500 – £29,500 £28,000 – £28,000
Jeremy Whitley £29,500 £795 £30,295 £28,000 – £28,000
TOTAL* £135,000 £795 £135,795 £128,500 – £128,500
*See note 8 on page 83
No pension or other contributions were paid by the Company during the year to any of the Directors. Consequently, the figures
shown above comprise the single total remuneration figure for each Director in relation to the Group.
Directors’ Share Interests (Audited)
The interests of Directors in the ordinary shares of the Company on 30 September 2022 (and 2021):
2022 2021
Lisa Arnold 20,000 20,000
Andrew Fleming 10,000 10,000
Neal Ransome 10,073 10,073
Jeremy Whitley 20,000 20,000
There have been no changes in these interests between the end of the financial year and 9 December 2022. None of the
Directors hold shares in the subsidiary company PCGH ZDP Plc.
Performance
The Regulations require a line graph to be included in the Directors’ Remuneration Report showing the total shareholder
return for each of the financial years in the relevant period. Each annual graph is required to increase by one year until the
maximum relevant period of ten years is reached; thereafter the relevant period will continue to be ten years. The Company was
incorporated on 12 May 2010 and commenced trading on 15 June 2010, the performance comparison is therefore shown for
the period of 10 years from 1 October 2012 to 30 September 2022.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 62
Governance
Performance comparison
50
100
150
200
250
300
350
400
Sep
2022
Mar
2022
Sep
2021
Mar
2021
Sep
2020
Mar
2020
Sep
2019
Mar
2019
Sep
2018
Mar
2018
Sep
2017
Mar
2017
Sep
2016
Mar
2016
Sep
2015
Mar
2015
Sep
2014
Mar
2014
Sep
2013
Mar
2013
Sep
2012
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at 30 September 2012)
Company reconstruction 20 June 2017
Ordinary Share Price (TR)
The MSCI ACWI Healthcare Index (total return in sterling with dividends reinvested) is used as the comparator because, as a
market capitalisation weighted index, the Board considers that it is the most appropriate single market index.
Relative Importance of Spend on Pay
Under the Regulations, the Directors’ Remuneration Report must set out in a graphical or tabular form that shows in respect
of the relevant financial year and the immediately preceding financial year the actual expenditure of the company, and the
difference in spend between those years, on remuneration paid to or receivable by all employees of the group; and distributions
to shareholders by way of dividend and share buyback; and any other significant distributions and payments or other uses of
profit or cash-flow deemed by the Directors to assist in understanding the relative importance of spend on pay.
The Company has no employees and while the Directors do not consider that the comparison of Directors’ remuneration with
distributions to shareholders as a meaningful measure of the Company’s overall performance having regard to the Company’s
objective of capital growth, for comparison purposes the table below compares Directors’ fee with the level of dividends paid
out, profit after tax and the cost of share buy backs undertaken by the Company.
Change
2022
£’000
2021
£’000
£’000 %
Directors’ total remuneration 136 129 7 5%
Dividends paid or declared in respect of
the financial year
2,426 2,426 – –
Profit on ordinary activities after tax 21,531 63,021 (41,490) (66%)
Approved by the Board, and confirmed as a true reflection of the major decisions made by the Board acting in the capacity of a
remuneration committee, in relation to the remuneration of the Directors including any changes made on 9 December 2022.
Lisa Arnold
Chair
Directors’ Remuneration Report continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 63
Governance
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 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 accounts,
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
9 December 2022
Statement of Directors’
Responsibilities
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 64
Governance
Report on the audit of the financial statements
Opinion
In our opinion, Polar Capital Global Healthcare Trust plc’s group financial statements and company financial statements (the
“financial statements”):
• give a true and fair view of the state of the group’s and of the company’s affairs as at 30 September 2022 and of the group’s
and company’s profit and the group’s and company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”),
which comprise: the Group and Company Balance Sheets as at 30 September 2022; the Group Statement of Comprehensive
Income, the Group and Company Cash Flow Statements, and the Group and Company Statements of Changes in Equity for the
year then ended; and the Notes to the Financial Statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Independent Auditors’ Report to the
Members of Polar Capital Global
Healthcare Trust plc
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 65
Governance
Our audit approach
Overview
Audit scope
• The Group is an Investment Trust Company and engages Polar Capital LLP (the “Manager”) to manage its assets.
• We conducted our audit of the financial statements using information from HSBC Securities Services (the “Administrator”)
to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.
• We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the
third parties referred to above, the accounting processes and controls, and the industry in which the Company operates.
• We obtained an understanding of the control environment in place at both the Manager and the Administrator and adopted
a fully substantive testing approach using reports obtained from the Administrator.
Key audit matters
• Valuation and existence of investments (group and parent)
• Income from investments (group and parent)
Materiality
• Overall group materiality: £4,040,000 (2021: £3,850,000) based on 1% of net assets.
• Overall company materiality: £4,040,000 (2021: £3,850,000) based on 1% of net assets.
• Performance materiality: £3,030,000 (2021: £2,887,500) (group) and £3,030,000 (2021: £2,887,500) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy;
the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments
we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 66
Governance
Independent Auditors’ Report continued
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments (group and parent)
Refer to the Accounting Policies and Notes to the Financial
Statements.
The investment portfolio at the year-end comprised listed equity
investments valued at £434.42m.
We focused on the valuation and existence of investments because
investments represent the principal element of the net asset value as
disclosed in the Balance Sheets in the financial statements.
We also focussed on the accounting policy for the valuation of
investments held at fair value through profit or loss as incorrect
application could indicate a misstatement in the valuation of
investments.
We tested the valuation of the listed equity investments by agreeing
the prices used in the valuation to independent third party sources.
We tested the existence of the investment portfolio by agreeing
investment holdings to an independent confirmation obtained from
the custodian, HSBC Bank plc.
We assessed the accounting policy for investments held at fair value
through profit or loss for compliance with accounting standards and
performed testing to check that investments are accounted for in
accordance with the stated accounting policy.
We did not identify any material matters to report.
Income from investments (group and parent)
Refer to the Accounting Policies and Notes to the Financial
Statements.
ISAs (UK) presume there is a risk of fraud in income recognition
because of the pressure management may feel to achieve a certain
objective. In this instance, we consider that ‘income’ refers to all the
Company’s income streams, both revenue and capital (including gains
and losses on investments). We focused this risk on the accuracy and
occurrence of gains/losses on investments and occurrence, accuracy
and completeness of dividend income and its presentation in the
Income Statement as set out in the requirements of The Association
of Investment Companies’ Statement of Recommended Practice (the
“AIC SORP”).
We assessed the accounting policy for income recognition for
compliance with accounting standards and the AIC SORP and
perform testing to confirm that the income from investments has
been accounted for in accordance with the stated accounting policy
and did not identify any issues.
We understood and assessed the design and implementation of key
controls surrounding income recognition.
Capital gains and losses on investments
The gains and losses on investments held at fair value comprise of
realised and unrealised gains and losses.
For unrealised gains and losses, we have tested the valuation of
the portfolio at the year-end (see above), together with testing the
reconciliation of opening and closing investments, thereby we have
assessed the accuracy of the gains and losses recorded. We have also
verified the occurrence of the gains and losses through our testing of
the existence of investments, as noted above.
For realised gains and losses, we tested a sample of disposal proceeds
by agreeing the proceeds to bank statements, in order to verify the
occurrence of the gain and loss. We re-performed the calculation of a
sample of realised gains and losses in order to assess the accuracy of
the gains and losses recorded.
No material misstatements were identified from this testing.
Dividend income
To test the accuracy of dividend income, we tested a sample of
dividend receipts by agreeing the dividend rates from all investments
to independent third party sources.
To test for completeness, we tested that the appropriate dividends
had been received in the year by reference to independent data of
dividends declared for all listed investments during the year.
We tested the occurrence assertion by testing that all dividends
recorded in the year had been declared in the market by investment
holdings, and we traced a sample of dividends received to bank
statements.
We also tested the allocation and presentation of dividend income
between the revenue and capital return columns of the Statement of
Comprehensive Income in line with the requirements set out in the
AIC SORP by determining reasons behind dividend distributions.
No material misstatements were identified from this testing.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 67
Governance
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
The Group and Company’s accounting is delegated to the Administrator who maintains the Group and Company’s accounting
records and who has implemented controls over those accounting records. We obtained our audit evidence from substantive
tests. However, as per of our risk assessment, we understood and assessed the internal controls in place at both the Manager
and the Administrator to the extent relevant to our audit. This assessment of the operating and accounting structure in place at
both organisations involved obtaining and analysing the relevant control-reports issued by the independent service auditor of
the Manager and the Administrator in accordance with generally accepted assurance standards for such work. Following this
assessment, we applied professional judgement to determine the extent of testing required over each balance in the financial
statements.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and company, the accounting processes and controls, and
the industry in which the group and company operate.
In planning our audit, we made enquiries of the Directors to understand the extent of the potential impact of climate change
risk on the Group and Company’s financial statements.
The Directors concluded that the impact on the measurement and disclosures within the financial statements is not material
because the Company’s investment portfolio is made up of level 1 quoted securities which are valued at fair value based on
market prices. We found this to be consistent with our understanding of the Company’s investment activities.
We also considered the consistency of the Climate change disclosures included in the Strategic Report with the financial
statements and our knowledge from our audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – group Financial statements – company
Overall materiality £4,040,000 (2021: £3,850,000). £4,040,000 (2021: £3,850,000).
How we determined it 1% of net assets 1% of net assets
Rationale for benchmark applied We believe that net assets is the primary
measure used by the shareholders in
assessing the performance of the entity,
and is a generally accepted auditing
benchmark. This benchmark provides an
appropriate and consistent year on year
basis for our audit.
We believe that net assets is the primary
measure used by the shareholders in
assessing the performance of the entity,
and is a generally accepted auditing
benchmark. This benchmark provides an
appropriate and consistent year on year
basis for our audit. While performing
our work, we applied the lower
threshold of £3,830,000 being the
component materiality level allocated to
the Company for the purposes of the
audit of the Group financial statements.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £376,000 and £3,830,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 68
Governance
Independent Auditors’ Report continued
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £3,030,000
(2021: £2,887,500) for the group financial statements and £3,030,000 (2021: £2,887,500) for the company financial
statements.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £202,000
(group audit) (2021: £192,000) and £202,000 (company audit) (2021: £192,000) as well as misstatements below those amounts
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern
basis of accounting included:
• evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats, including the
ongoing impact of COVID-19, rising inflation, Russia’s Invasion of Ukraine, and the subsequent economic uncertainty;
• evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available
information and our understanding of the business and assessed the potential impact on the financial statements;
• reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected
operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and
oversight of key third-party service providers;
• assessing the premium/discount at which the Company’s share price trades compared to the net asset value per share; and
• assessing the implication of significant reductions in net assets as a result of market performance on the ongoing ability of
the Company to operate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and
the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does
not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 69
Governance
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Report of the Directors for the year ended 30 September 2022 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other
information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and
we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial
statements;
• The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers
and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in
operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group and Company was substantially less in
scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering
whether the statement is consistent with the financial statements and our knowledge and understanding of the group and
company and their environment obtained in the course of the audit.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 70
Governance
Independent Auditors’ Report continued
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the
audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the group’s and company’s position, performance, business
model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems;
and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s
compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the
Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also 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.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that
have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined
that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital
gains) or to increase net asset value, and management bias in accounting estimates. Audit procedures performed by the
engagement team included:
• discussions with the Manager and Audit Committee, including consideration of known or suspected instances of non-
compliance with laws and regulation and fraud where applicable;
• reviewing relevant committee meeting minutes, including those of the Board and Audit Committee;
• review of financial statement disclosures to underlying supporting documentation;
• identifying and testing manual journal entries posted by the Administrator during the preparation of the financial
statements; and
• designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 71
Governance
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we
will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.
org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received
from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 12 May 2010 to audit the
financial statements for the year ended 30 September 2011 and subsequent financial periods. The period of total uninterrupted
engagement is 12 years, covering the years ended 30 September 2011 to 30 September 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements
form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance
over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.
Kevin Rollo (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 December 2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 72
Governance
Financial
Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 72
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 73
Statement of Comprehensive Income
For the year ended 30 September 2022
Group Group
Year ended 30 September 2022 Year ended 30 September 2021
Note
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Investment income 3 4,427 – 4,427 3,685 – 3,685
Other operating income 4 26 – 26 – – –
Gains on investments held at fair value 5 – 22,985 22,985 – 64,165 64,165
Other currency losses 6 – (610 ) (610 ) – (144 ) (144 )
Total income 4,453 22,375 26,828 3,685 64,021 67,706
Expenses
Investment management fee 7 (602 ) (2,406 ) (3,008 ) (518 ) (2,070 ) (2,588 )
Other administrative expenses 8 (599 ) (59 ) (658 ) (553 ) (59 ) (612 )
Total expenses (1,201 ) (2,465 ) (3,666 ) (1,071 ) (2,129 ) (3,200 )
Profit before finance costs and tax 3,252 19,910 23,162 2,614 61,892 64,506
Finance costs 9 – (1,096 ) (1,096 ) – (1,064 ) (1,064 )
Profit before tax 3,252 18,814 22,066 2,614 60,828 63,442
Tax 10 (535 ) – (535 ) (421 ) – (421 )
Net profit for the year and total
comprehensive income
Earnings per Ordinary share (pence) 12 2.24 15.51 17.75 1.81 50.16 51.97
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 on pages 77 to 96 form part of these Financial Statements.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 74
Statements of Changes in Equity
For the year ended 30 September 2022
Group and Company
Year ended 30 September 2022
Called
up share
capital
Capital
redemp-
tion
reserve
Share
premium
reserve
Special
distri-
butable
reserve
Capital
reserves
Revenue
reserve
Total
Equity
Note £'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
Transactions with owners,
recorded directly to equity:
Equity dividends paid 11 – – – – – (2,426 ) (2,426 )
Total equity at 30 September 2022 31,037 6,575 80,685 3,672 280,791 2,073 404,833
Group and Company
Year ended 30 September 2021
Called
up share
capital
Capital
redemp-
tion
reserve
Share
premium
reserve
Special
distri-
butable
reserve
Capital
reserves
Revenue
reserve
Total
Equity
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
Total equity at 1 October 2020 31,037 6,575 80,685 3,672 201,149 2,015 325,133
Total comprehensive income:
Profit for the year ended
30 September 2021
Transactions with owners,
recorded directly to equity:
Equity dividends paid 11 – – – – – (2,426 ) (2,426 )
Total equity at 30 September 2021 31,037 6,575 80,685 3,672 261,977 1,782 385,728
The notes on pages 77 to 96 form part of these Financial Statements.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 75
Balance Sheets
As at 30 September 2022
Notes
Group Company
30 September
2022
£’000
30 September
2021
£’000
30 September
2022
£’000
30 September
2021
£’000
Non-current assets
Investments held at fair value 13 434,419 408,561 434,419 408,561
Investment in subsidiary 13 – – 50 50
Current assets
Receivables 14 233 2,300 233 2,300
Overseas tax recoverable 666 572 666 572
Cash and cash equivalents 24 7,546 13,718 7,496 13,668
Total assets 442,864 425,151 442,864 425,151
Current liabilities
Payables 15 (470 ) (2,956 ) (470) (2,956)
(470 ) (2,956 ) (470) (2,956)
Non-current liabilities
Zero dividend preference shares 16 (37,561 ) (36,467 ) – –
Loan from subsidiary – – (37,561) (36,467)
Total liabilities (38,031 ) (39,423 ) (38,031) (39,423)
Net assets 404,833 385,728 404,833 385,728
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 21 280,791 261,977 280,791 261,977
Revenue reserve 22 2,073 1,782 2,073 1,782
Total equity 404,833 385,728 404,833 385,728
Net asset value per Ordinary share (pence) 23 333.83 318.07 333.83 318.07
Net asset value per ZDP share (pence) 23 116.91 113.50 – –
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 £21,531,000 (2021: £63,021,000).
The Financial Statements on pages 73 to 96 were approved and authorised for issue by the Board of Directors on 9 December 2022
and signed on its behalf by
Lisa Arnold
Chair
The notes on pages 77 to 96 form part of these Financial Statements.
Registered number 7251471
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 76
Cash Flow Statements
For the year ended 30 September 2022
Note
Group and Company
Year ended
30 September
2022
£’000
Year ended
30 September
2021
£’000
Cash flows from operating activities
Profit before finance costs and tax 23,162 64,506
Adjustment for non-cash items:
Gains on investments held at fair value through profit or loss (22,985 ) (64,165 )
Adjusted profit before tax 177 341
Adjustments for:
Purchases of investments, including transaction costs (480,136 ) (626,164 )
Sales of investments, including transaction costs 476,716 625,115
Decrease/(increase) in receivables 27 (108 )
Increase/(decrease) in payables 101 (479 )
Overseas tax deducted at source (629 ) (404 )
Net cash used in operating activities (3,744 ) (1,699 )
Cash flows from financing activities
Interest paid (2 ) (2 )
Equity dividends paid 11 (2,426 ) (2,426 )
Net cash used in financing activities (2,428 ) (2,428 )
Net decrease in cash and cash equivalents (6,172 ) (4,127 )
Cash and cash equivalents at the beginning of the year 13,718 17,845
Cash and cash equivalents at the end of the year 24 7,546 13,718
The notes on pages 77 to 96 form part of these Financial Statements.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 77
Notes to the Financial Statements
For the year ended 30 September 2022
1 GENERAL INFORMATION
The consolidated Financial Statements for the year ended 30 September 2022 comprise the Financial Statements of the
Company and it’s 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”).
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 2022 are shown in the balance sheet on page 75. As at
30 September 2022 the Group and Company’s total assets exceeded its total liabilities by a multiple of over 11. 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 on page 30 and these securities are readily realisable. The Directors have considered a detailed assessment
of the Group and Company’s ability to meets 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. In addition to the assessment, the Group
and Company carried out stress testing which used a variety of falling parameters to demonstrate the effects of 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 has 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 accounts.
(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.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202278
Notes to the Financial Statements continued
For the year ended 30 September 2022
2 ACCOUNTING POLICIES continued
(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.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 79
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 2022. 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 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.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202280
Notes to the Financial Statements continued
For the year ended 30 September 2022
2 ACCOUNTING POLICIES continued
(g) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS continued
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.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 81
(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 ESTIMATE 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) The following new or amended standards became effective for the current annual reporting period and the
adoption of the standards and interpretations have not had a material impact on the Financial Statements of
the Group and Company.
Standards & Interpretations
Effective for periods
commencing on or after
IFRS 9, IAS 39, IFRS 7, IFRS
16 and IFRS 4: Interest Rate
Benchmark Reform – phase 2
(amended)
IBOR Reform - Phase 2 addresses issues that might affect financial
reporting during the reform of an interest rate benchmark, including the
effects of changes to contractual cash flows or hedging relationships
arising from the replacement of an interest rate benchmark with an
alternative benchmark rate.
The Phase 2 amendments apply only to changes required by the
interest rate benchmark reform to financial instruments and hedging
relationships.
1 January 2021
ii) At the date of authorisation of the Group and Company’s Financial Statements, there were no 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:
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.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202282
Notes to the Financial Statements continued
For the year ended 30 September 2022
3 INVESTMENT INCOME
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Revenue:
UK Dividend income 472 430
Overseas Dividend income 3,955 3,255
Total investment income allocated to revenue 4,427 3,685
4 OTHER OPERATING INCOME
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Bank interest 26 –
Total other operating income 26 –
5 GAINS ON INVESTMENTS HELD AT FAIR VALUE
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Net gains on disposal of investments at historic cost 18,524 56,156
Less fair value adjustments in earlier years (11,626) (10,661)
Gains based on carrying value at previous balance sheet date 6,898 45,495
Valuation gains on investments held during the year 16,087 18,670
22,985 64,165
6 OTHER CURRENCY LOSSES
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Exchange losses on currency balances (610) (144)
7 INVESTMENT MANAGEMENT FEE
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Management fee
– charged to revenue 602 518
– charged to capital 2,406 2,070
Investment management fee payable to Polar Capital LLP. 3,008 2,588
Management fees are allocated 20% to revenue and 80% to capital. Details of the fee arrangements are given in the Strategic
Report in page 32.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 83
8 OTHER ADMINISTRATIVE EXPENSES (INCLUDING VAT WHERE APPROPRIATE)
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Directors' fees
1
136 129
Directors' NIC 14 12
Auditors’ remuneration
2
: For audit of the Group and Company Financial Statements 48 44
Depositary fee 23 24
Registrar fee 30 30
Custody and other bank charges 37 35
UKLA and LSE listing fees
3
3 50
Legal & professional fees
4
6 (7)
AIC fees 21 19
Directors' and officers’ liability insurance 16 12
Corporate broker’s fee 25 25
Marketing expenses
5
43 18
Research costs - allocated to revenue
6
15 15
Shareholder communications 22 14
HSBC administration fee 158 131
Other expenses 2 2
Total other administrative expenses allocated to revenue 599 553
Research cost - allocated to capital
6
59 59
Total other administrative expenses 658 612
1 Full disclosure is given in the Directors’ Remuneration Report on page 61.
2 2022 includes £6,875 (2021: £6,250) paid to the Auditor for the audit of PCGH ZDP Plc.
3 Reflects write off of PCCH ZDP FCA fee accrual which no longer applies.
4 2021 includes the reversal of unused prior year accruals.
5 Includes marketing expenses payable to Polar Capital LLP of £22,500 (2021: £12,600).
6 Research costs (which applied from 3 January 2018) payable by the Company relate solely to specialist healthcare research and are capped at US $81,772 (£74,000) (2021: US $147,721
(£110,000)) with the cost of general non-specialist research and any amounts exceeding the agreed cap being absorbed by Polar Capital. Any adjustments to the prior year’s budget versus
actual spend is included in the current period. These costs are allocated 20% to revenue and 80% to capital and are included in the ongoing charges calculation.
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 2022 was 0.84% (2021: 0.83%). See Alternative Performance
Measures on pages 97 and 98.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202284
Notes to the Financial Statements continued
For the year ended 30 September 2022
9 FINANCE COSTS
Year ended 30 September 2022 Year ended 30 September 2021
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Interest on overdrafts – 2 2 – 2 2
Appropriation to ZDP shares – 1,094 1,094 – 1,062 1,062
Total finance costs – 1,096 1,096 – 1,064 1,064
10 TAXATION
Year ended 30 September 2022 Year ended 30 September 2021
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
a) Analysis of tax charge for the year:
Overseas tax 535 – 535 421 – 421
Total tax for the year (see note 10b) 535 – 535 421 – 421
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 3,252 18,814 22,066 2,614 60,828 63,442
Tax at the UK corporation tax rate of 19% (2021: 19%) 617 3,575 4,192 496 11,557 12,053
Tax effect of non-taxable dividends (841) – (841) (700) – (700)
Gains on investments that are not taxable – (4,251) (4,251) – (12,164) (12,164)
Unrelieved current period expenses and deficits 224 468 692 204 405 609
Overseas tax suffered 535 – 535 421 – 421
Expenses not allowable – 208 208 – 202 202
Total tax for the year (see note 10a) 535 – 535 421 – 421
c) Factors that may affect future tax charges:
The Company has an unrecognised deferred tax asset of £6,334,000 (2021: £5,423,000). The deferred tax asset is based on a
prospective corporation tax rate of 25% (2021: 25%). The Finance Act 2021 received Royal Assent on 10 June 2021 and the
rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset.
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.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 85
11 AMOUNTS RECOGNISED AS DISTRIBUTIONS TO ORDINARY SHAREHOLDERS IN THE YEAR
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 revenue available for distribution by way of dividend for the year is £2,717,000 (2021: £2,193,000).
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
Dividends paid in the year ended 30 September 2021
Payment date No of shares Pence per share
Year ended
30 September
2021
£’000
26 February 2021 121,270,000 1.00p 1,213
31 August 2021 121,270,000 1.00p 1,213
2,426
The total dividends payable in respect of the financial year ended 30 September 2021, 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
2021
£’000
31 August 2021 121,270,000 1.00p 1,213
28 February 2022 121,270,000 1.00p 1,213
2,426
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.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202286
Notes to the Financial Statements continued
For the year ended 30 September 2022
12 EARNINGS PER ORDINARY SHARE
Year ended 30 September 2022 Year ended 30 September 2021
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) 2,717 18,814 21,531 2,193 60,828 63,021
Weighted average Ordinary shares in issue during
the year
121,270,000 121,270,000 121,270,000 121,270,000 121,270,000 121,270,000
Basic - Ordinary shares (pence) 2.24 15.51 17.75 1.81 50.16 51.97
As at 30 September 2022 there were no potentially dilutive shares in issue.
13 INVESTMENTS HELD AT FAIR VALUE
(a) Investments held at fair value through profit or loss
30 September 2022
£’000
30 September 2021
£’000
Opening book cost 380,123 321,976
Opening investment holding gains 28,438 20,428
Opening fair value 408,561 342,404
Analysis of transactions made during the year
Purchases at cost 477,549 626,217
Sales proceeds received (474,676) (624,225)
Gains on investments held at fair value 22,985 64,165
Closing fair value 434,419 408,561
Closing book cost 401,521 380,123
Closing investment holding gains 32,898 28,438
Closing fair value 434,419 408,561
The Company received £474,676,000 (2021: £624,225,000) from disposal of investments in the year. The book cost of these
investments when they were purchased were £456,152,000 (2021: £568,069,000). 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 2022
£’000
30 September 2021
£’000
On acquisition 310 442
On disposal 224 256
534 698
(b) Fair value hierarchy
30 September 2022
£’000
30 September 2021
£’000
Level 1 assets 434,419 408,561
Valuation at the end of the year 434,419 408,561
All Level 1 assets are traded on a recognised Stock Exchange.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 87
(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 RECEIVABLES
30 September 2022
£’000
30 September 2021
£’000
Sales for future settlement – 2,040
Accrued income 205 252
VAT recoverable 8 –
Prepayments 20 8
233 2,300
15 PAYABLES
30 September 2022
£’000
30 September 2021
£’000
Purchases for future settlement – 2,587
Accruals 470 369
470 2,956
16 ZERO DIVIDEND PREFERENCE SHARES (‘ZDP SHARES’)
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 36,467 35,405
Capital growth of ZDP shares 1,094 1,062
At 30 September 2022 37,561 36,467
Further details on the ZDP shares are set out in the Additional Information on page 102.
17 CALLED UP SHARE CAPITAL
(i) Ordinary shares - Allotted, Called up and Fully paid:
30 September 2022
£’000
30 September 2021
£’000
Ordinary shares of nominal value 25p each:
Opening balance of 121,270,000 (2021: 121,270,000) 30,317 30,317
Allotted, Called up and Fully paid: 121,270,000 (2021: 121,270,000)
Ordinary shares of 25p 30,317 30,317
2,879,256 (2021: 2,879,256) Ordinary shares, held in treasury 720 720
At 30 September 2022 31,037 31,037
No Ordinary shares were repurchased or issued during the year (2021: nil).
The Ordinary shares held in treasury have no voting rights and are not entitled to dividends.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202288
Notes to the Financial Statements continued
For the year ended 30 September 2022
17 CALLED UP SHARE CAPITAL continued
(ii) Subsidiary company (for information purposes)
30 September 2022
£’000
30 September 2021
£’000
ZDP shares - Allotted, Called up and Fully paid:
ZDP shares of nominal value 1p each:
Opening balance of 32,128,437 ZDP shares (2021: 32,128,437) 32,128 32,128
Allotted, Called up and Fully paid: 32,128,437 (2021: 32,128,437) ZDP shares of 1p 32,128 32,128
At 30 September 2022 32,128 32,128
18 CAPITAL REDEMPTION RESERVE
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 6,575 6,575
At 30 September 2022 6,575 6,575
The Capital Redemption reserve was created following the Company’s reconstruction tender offer shares, where shares were
repurchased and cancelled in 2017. This reserve is not distributable.
19 SHARE PREMIUM RESERVE
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 80,685 80,685
At 30 September 2022 80,685 80,685
This reserve is not distributable
20 SPECIAL DISTRIBUTABLE RESERVE
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 3,672 3,672
At 30 September 2022 3,672 3,672
The special distributable reserve was created following approval from the Court, received on 18 August 2010, to cancel that
share premium account from the initial share offering.
Surpluses to the credit of the special distributable reserve can be used to purchase the Group and Company’s own shares.
In addition the Group and Company may use this reserve for the payment of dividends.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 89
21 CAPITAL RESERVES
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 261,977 201,149
Net gains on disposal of investments 6,898 45,495
Valuation gains on investments held during the year 16,087 18,670
Exchange losses on currency balances (610) (144)
Overdraft interest allocated to capital (2) (2)
Research costs allocated to capital (59) (59)
Investment management fee allocated to capital (2,406) (2,070)
Capital contribution to ZDP entitlement (201) (191)
ZDP appropriation (893) (871)
At 30 September 2022 280,791 261,977
The balance on the capital reserve represents a profit of £32,898,000 (2021: £28,438,000) on investments held and a profit of
£247,893,000 (2021: £233,539,000) on investments sold.
The balance on investments held comprises holding gains on investments (which may be deemed to be realised and other
amounts, which are unrealised. An analysis has not been made between the amounts that are realised (and may be distributed or
used to repurchase the Group and Company’s shares) and those that are unrealised.
The balance on investments sold are realised distributable capital reserves which may be used to repurchase the Group and
Company’s shares or be distributed as dividends subject to meeting the definition of qualifying consideration as noted in Note 2(m).
22 REVENUE RESERVE
30 September 2022
£’000
30 September 2021
£’000
At 1 October 2021 1,782 2,015
Revenue profit 2,717 2,193
Interim dividends paid (2,426) (2,426)
At 30 September 2022 2,073 1,782
The revenue reserve may be distributed or used to repurchase the Group and Company’s shares (subject to being a positive balance).
23 NET ASSET VALUE PER SHARE
(i) Ordinary shares
30 September 2022 30 September 2021
Net assets attributable to Ordinary shareholders (£'000) 404,833 385,728
Ordinary shares in issue at end of year 121,270,000 121,270,000
Net asset value per Ordinary share (pence) 333.83 318.07
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 2022 there were no potentially dilutive shares in issue.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202290
Notes to the Financial Statements continued
For the year ended 30 September 2022
23 NET ASSET VALUE PER SHARE continued
(ii) Subsidiary company (for information purposes)
ZDP shares
30 September 2022 30 September 2021
Calculated entitlement of ZDP shareholders (£) £37,560,975 £36,466,967
ZDP shares in issue at the end of the year 32,128,437 32,128,437
Net asset value per ZDP share (pence) 116.91 113.50
24 CASH AND CASH EQUIVALENTS
30 September 2022
£’000
30 September 2021
£’000
Cash at bank 7,496 13,668
Company cash and cash equivalents 7,496 13,668
Cash held at subsidiary 50 50
Group cash and cash equivalents 7,546 13,718
25 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 LLP (“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 2022 were £3,008,000 (2021: £2,588,000) of which £259,000 (2021: £239,000) was outstanding at the year-end.
In addition, the total research cost in respect of the year ended 30 September 2022 was £74,000 (2021: £114,000). As at the
year end, £54,800 (2021: £18,700) was outstanding. Refer to note 8 on page 83 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 £136,000 (2021: £129,000) to the Directors and the Remuneration Report including Directors’ shareholdings
and movements within the year is set out on page 61.
26 FINANCIAL INSTRUMENTS
RISK MANAGEMENT POLICIES AND PROCEDURES FOR THE GROUP AND COMPANY
The Group and Company invests in equities and other financial instruments for the long term to further the investment objective
set out on page 30. This exposes the Group and Company to a range of financial risks that could impact on the assets or
performance of the Group and Company.
The main risks arising from the Group and Company’s pursuit of its investment objective are market risk, liquidity risk and credit
risk and the Directors’ approach to the management of them is set out below.
The Group and Company’s exposure to financial instruments can comprise:
– Equity and non-equity shares and fixed interest securities which may be held in the investment portfolio in accordance with
the Investment Objective.
– Bank overdrafts, the main purpose of which is to raise finance for the Group and Company’s operations.
– Cash, liquid resources and short-term receivables and payables that arise directly from the Group and Company’s
operations.
– Derivative transactions which the Group and Company enters into may include equity or index options, index futures
contracts, and forward foreign exchange contracts.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 91
The purpose of these is to manage the market price risks and foreign exchange risks arising from the Group and Company’s
investment activities.
The overall management of the risks is determined by the Board and its approach to each risk identified is set out below. The
Board and the Investment Manager co-ordinate the risk management and the Investment Manager assesses the exposure to
market risk when making each investment decision.
(a) Market Risk
Market risk comprises three types of risk: market price risk (see note 26(a)(i)), currency risk (see note 26(a)(ii)), and interest rate
risk (see note 26(a)(iii)).
(i) Market Price Risk
The Group and Company is an investment company and as such its performance is dependent on its valuation of its
investments. Consequently, market price risk is the most significant risk that the Group and Company faces.
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Group and Company’s
operations.
It represents the potential loss the Group and Company might suffer through holding market positions in the face of price
movements.
A detailed breakdown of the investment portfolio is given on page 22. Investments are valued in accordance with the
accounting policies as stated in Note 2(g).
At the year end, the Group and Company did not hold any derivative instruments (2021: nil).
Management of the risk
In order to manage this risk it is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to
reduce both the statistical risk and the risk arising from factors specific to a particular healthcare sub sector. The allocation of
assets to international markets, together with stock selection covering small, medium and large companies, and the use of index
options, are other factors which act to reduce price risk. The Investment Manager actively monitors market prices throughout
the year and reports to the Board which meets regularly in order to consider investment strategy.
Market price risks exposure
The Group and Company’s exposure to changes in market prices at 30 September on its investments was as follows:
30 September 2022
£’000
30 September 2021
£’000
Non-current asset investments at fair value through profit or loss 434,419 408,561
434,419 408,561
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and the value of shareholders’ funds to an
increase or decrease of 15% (2021: 15%) in the fair values of the Group and Company’s investments. This level of change is
considered to be reasonably possible based on observation of current market conditions and historic trends.
The sensitivity analysis is based on the Group and Company’s investments at each balance sheet date, with all other variables
held constant.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202292
Notes to the Financial Statements continued
For the year ended 30 September 2022
26 FINANCIAL INSTRUMENTS continued
(a) Market Risk continued
Market price risk sensitivity continued
30 September 2022 30 September 2021
Increase in
fair value
£’000
Decrease in
fair value
£’000
Increase in
fair value
£’000
Decrease in
fair value
£’000
Statement of Comprehensive Income - profit after tax
Revenue return (97) 97 (103) 103
Capital return 64,772 (64,772) 60,867 (60,867)
Change to the profit after tax for the year 64,675 (64,675) 60,764 (60,764)
Change to equity attributable to shareholders 64,675 (64,675) 60,764 (60,764)
(ii) Currency Risk
The Group and Company’s total return and net assets can be significantly affected by currency translation movements as the
majority of the Group and Company’s assets and revenue are denominated in currencies other than sterling.
Management of the risk
The Investment Manager mitigates risks through an international spread of investments.
Settlement risk on investment trades is managed through short term hedging.
Foreign currency exposure
The table below shows, by currency, the split of the Group and Company’s monetary assets, liabilities and investments that are
priced in currencies other than sterling.
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Monetary Assets:
Cash and short term receivables
Swiss francs 460 394
Euros 241 214
Japanese yen 172 –
US dollars 129 4,240
Danish krone 101 98
Australian dollar – 66
Monetary Liabilities:
Other payables
US dollars – (2,587)
Foreign currency exposure on net monetary items 1,103 2,425
Non-Monetary Items:
Investments at fair value through profit or loss that are equities
US dollars 295,559 273,938
Euros 32,964 68,537
Japanese yen 27,564 7,286
Swiss francs 26,130 7,678
Danish krone 17,635 17,509
Swedish krona 11,758 –
Australian dollar – 9,158
Total net foreign currency exposure 412,713 386,531
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 93
During the financial year, movements against sterling in the five major currencies noted above were:
• US dollar appreciated by 17.2% (2021: depreciated by 4.3%),
• Euro appreciated by 2.1% (2021: depreciated by 5.5%),
• Japanese yen depreciated by 7.4% (2021: depreciated by 10.3%).
• Swiss franc appreciated by 12.7% (2021: depreciated by 5.9%),
• Danish krone appreciated by 2.0% (2021: depreciated by 5.4%).
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit after tax for the year and the value of equity attributable to
shareholders in regard to the financial assets and financial liabilities and the exchange rates for the £/US dollar, £/Euros,
£/Japanese yen, £/Danish krone, £/Swiss francs and £/Australian dollar.
Based on the year end position, if sterling had depreciated by a further 20% (2021: 15%) against the currencies shown, this
would have the following effect:
Year ended 30 September 2022
£’000
US dollars Euro Japanese yen Swiss francs Danish krone
Statement of Comprehensive Income -
profit after tax
Revenue return 32 60 43 115 25
Capital return 73,890 8,241 6,891 6,533 4,409
Change to the profit after tax for the
year and to equity attributable to
shareholders 73,922 8,301 6,934 6,648 4,434
Year ended 30 September 2021
£’000
US dollars Euro Danish krone Australian dollar Swiss francs
Statement of Comprehensive Income -
profit after tax
Revenue return 47 38 17 12 70
Capital return 48,586 12,095 3,090 1,616 1,355
Change to the profit after tax for the
year and to equity attributable to
shareholders 48,633 12,133 3,107 1,628 1,425
Based on the year end position, if sterling had appreciated by a further 20% (2021: 15%) against the currencies shown, this
would have the following effect:
Year ended 30 September 2022
£’000
US dollars Euro Japanese yen Swiss francs Danish krone
Statement of Comprehensive Income -
profit after tax
Revenue return (22) (40) (29) (77) (17)
Capital return (49,260) (5,494) (4,594) (4,355) (2,939)
Change to the profit after tax for the
year and to equity attributable to
shareholders (49,282) (5,534) (4,623) (4,432) (2,956)
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202294
Notes to the Financial Statements continued
For the year ended 30 September 2022
26 FINANCIAL INSTRUMENTS continued
(a) Market Risk continued
Foreign currency sensitivity continued
Year ended 30 September 2021
£’000
US dollars Euro Danish krone Australian dollar Swiss francs
Statement of Comprehensive Income -
profit after tax
Revenue return (35) (28) (13) (9) (51)
Capital return (35,911) (8,940) (2,284) (1,195) (1,001)
Change to the profit after tax for the
year and to equity attributable to
shareholders (35,946) (8,968) (2,297) (1,204) (1,052)
In the opinion of the Directors, while these are regarded as reasonable estimates, neither of the above sensitivity analyses are
representative of the year as a whole since the level of exposure changes frequently as part of the currency risk management
process used to meet the Group’s objectives.
(iii) Interest Rate Risk
Although the majority of the Group and Company’s financial assets are equity shares which pay dividends, not interest, the
Group and Company will be affected by interest rate changes as interest is earned on any cash balances and paid on any
overdrawn balances.
Given the interest rate risk exposure noted below, the impact of any interest rate change is not considered to be significant and
as such, no sensitivity analysis has been provided. Interest rate changes will also have an impact on the valuation of equities,
although this forms part of price risk, which has already been considered separately above.
Management of the risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions.
Derivative contracts are not used to hedge against the exposure to interest rate risk.
Interest rate exposure
At the year-end, financial assets and liabilities exposed to floating interest rates were as follows:
Year ended
30 September 2022
£’000
Year ended
30 September 2021
£’000
Cash at bank 7,496 13,668
Cash held at subsidiary 50 50
7,546 13,718
The above year-end amounts may not be representative of the exposure to interest rates in the year ahead since the level of
cash held during the year will be affected by the strategy being followed in response to the Board’s and Manager’s perception of
market prospects and the investment opportunities available at any particular time.
(b) Liquidity Risk
Liquidity risk is the possibility of failure of the Group and Company to realise sufficient assets to meet its financial liabilities.
Management of the risk
The Group and Company’s assets mainly comprise readily realisable securities which may be sold to meet funding requirements
as necessary.
Financial Statements
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 95
Liquidity risk exposure
At 30 September the financial liabilities comprised:
30 September 2022
£’000
30 September 2021
£’000
Due within 1 month:
Other creditors and accruals 470 2,956
Due in more than 1 year:
ZDP's entitlement 37,561 36,467
38,031 39,423
The ZDP shares have a planned repayment date of 19 June 2024 in the amount of £39,514,000.
(c) Credit Risk
Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of
investments or to repay deposits.
Management of the risk
The Group and Company manages credit risk by using brokers from a database of approved brokers and by dealing through
Polar Capital. All cash balances are held with approved counterparties.
HSBC Bank plc is the custodian of the Group and Company’s assets. The Group and Company’s assets are segregated from
HSBC’s own trading assets and are therefore protected in the event that HSBC were to cease trading.
These arrangements were in place throughout the current and prior year.
Credit risk exposure
The maximum exposure to credit risk at 30 September 2022 was £7,751,000 (2021: £13,970,000) comprising:
30 September 2022
£’000
30 September 2021
£’000
Accrued Income 205 252
Cash at bank 7,546 13,718
7,751 13,970
All of the above financial assets are current, their fair values are considered to be the same as the values shown and the
likelihood of a material credit default is considered low. None of the Group and Company’s assets are past due or impaired.
All deposits were placed with banks that had a rating of A or higher.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202296
Notes to the Financial Statements continued
For the year ended 30 September 2022
26 FINANCIAL INSTRUMENTS continued
(d) Capital Management Policies and Procedures
The Group and Company’s capital, or equity, is represented by its net assets which amounted to £404,833,000 as at 30 September
2022 (2021: £385,728,000), which are managed to achieve the Group’s and Company’s investment objective set out on page 30.
The Board monitors and reviews the broad structure of the Group’s and Company’s capital on an ongoing basis. This review includes:
(i) the need to issue or buy back equity shares for cancellation, which takes account of the difference between the net asset value
per share and the share price (i.e. the level of share price discount or premium); and
(ii) the determination of dividend payments.
The Group and Company is subject to externally imposed capital requirements through the Companies Act with respect to its status
as a public company. In addition, in order to pay dividends out of profits available for distribution by way of dividend, the Group and
Company has to be able to meet one of two capital restriction tests imposed on investments by company law.
These requirements are unchanged since the previous year end and the Group and Company has complied with them and no
breaches have taken place during the year under review.
27 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.
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 97
Shareholder Information
In assessing the performance of the Company, the Investment Manager and the Directors use the following APMs which are not
defined in accounting standards or law but are considered to be known industry metrics:
Net Asset Value (NAV) and NAV per share
The NAV is the value attributed to the underlying assets of the Company less the liabilities, presented either on a per share or
total basis.
The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV
per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold
by an investor. See Note 23 on page 89 for detailed calculations. The NAV per Ordinary share is published daily.
NAV Total Return (APM)
The NAV total return shows how the net asset value has performed over a period of time taking into account both capital
returns and dividends paid to shareholders. NAV total return is calculated as the change in NAV from the start of the period,
assuming that dividends paid to shareholders are reinvested on the payment date in Ordinary shares at their net asset value.
Year ended
30 September 2022
Year ended
30 September 2021
Opening NAV per share a 318.07p 268.11p
Closing NAV per share b 333.83p 318.07p
Dividend reinvestment factor c 1.00609 1.006997
Adjusted closing NAV per share d = b*c 335.86p 320.30p
NAV total return for the year (d / a)-1 5.59% 19.46%
NAV Total Return Since Restructuring (APM)
NAV total return since restructuring is calculated as the change in NAV from the date of reconstruction on 20 June 2017,
assuming that dividends paid to shareholders are reinvested on the payment date in Ordinary shares at their net asset value.
Year ended
30 September 2022
Year ended
30 September 2021
NAV per share at reconstruction a 215.85p 215.85p
Closing NAV per share b 333.83p 318.07p
Dividend reinvestment factor c 1.039646 1.033409
Adjusted closing NAV per share d = b*c 347.07p 328.70p
NAV total return since reconstruction (d / a)-1 60.79% 52.28%
Share Price Total Return (APM)
Share price total return shows how the share price has performed over a period of time. It assumes that dividends paid to
shareholders are reinvested in the shares at the time the shares are quoted ex-dividend.
Year ended
30 September 2022
Year ended
30 September 2021
Opening share price a 288.00p 233.00p
Closing share price b 315.00p 288.00p
Dividend reinvestment factor c 1.006720 1.007605
Adjusted closing share price d = b*c 317.12p 290.19p
Share price total return for the year (d / a)-1 10.11% 24.55%
Alternative Performance Measures
(APMs)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 98
Shareholder Information
(Discount)/Premium (APM)
A description of the difference between the share price and the net asset value per share usually expressed as a percentage (%)
of the net asset value per share. If the share price is higher than the NAV per share the result is a premium. If the share price is
lower than the NAV per share, the shares are trading at a discount.
30 September 2022 30 September 2021
Closing share price a 315.00p 288.00p
Closing NAV per share b 333.83p 318.07p
Discount per Ordinary share (a / b)-1 5.64% 9.45%
Ongoing Charges (APM)
Ongoing charges are calculated in accordance with AIC guidance by taking the Company’s annual ongoing charges, excluding
performance fees and exceptional items, if any, and expressing them as a percentage of the average daily net asset value of the
Company over the year.
Ongoing charges include all regular operating expenses of the Company. Transaction costs, interest payments, tax and
nonrecurring expenses are excluded from the calculation as are the costs incurred in relation to share issues and share buybacks.
Where a performance fee is paid or is payable, a second ongoing charge is provided, calculated on the same basis as the above
but incorporating the amount of performance fee due or paid.
Year ended
30 September 2022
Year ended
30 September 2021
Investment Management (Note 7) £3,008,000 £2,588,000
Other Administrative Expenses (Note 8) £658,000 £612,000
a £3,666,000 £3,200,000
Average daily net asset value b £433,884,000 £384,905,000
Ongoing Charges a / b x 100 0.84% 0.83%
Performance fee c – –
d = a+c £3,666,000 £3,200,000
Ongoing charges including performance fee d / b x 100 0.84% 0.83%
Net Gearing (APM)
Gearing is calculated in line with AIC guidelines and represents net gearing, i.e. total assets less cash and cash equivalents
divided by net assets. The total assets are calculated by adding back the structural gearing which is the ZDP value. Cash and cash
equivalents are cash and purchases and sales for future settlement outstanding at the year end.
30 September 2022 30 September 2021
Net assets a £404,833,000 £385,728,000
ZDP loan value (Note 16) b £37,561,000 £36,467,000
Total assets c = (a+b) £442,394,000 £422,195,000
Cash and cash equivalents (including amounts awaiting settlement) d £7,546,000 £13,171,000
Net gearing ((c-d)/a) -1 7.41% 6.04%
Alternative Performance Measures (APMs) continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 99
Shareholder Information
AAF Report A report prepared in accordance with the Audit and Assurance Faculty guidance issued by the Institute
of Chartered Accountants in England and Wales. Utilised within the review of internal controls.
AGM The Annual General Meeting of the Company, to be held at 2.00 pm on Thursday, 9 February 2023 at the
office of the manager, Polar Capital, 16 Palace Street, London SW1E 5JD.
AIC Association of Investment Companies, the industry body for closed ended investment companies.
AIFM Alternative Investment Fund Manager – Polar Capital LLP.
AIFMD Alternative Investment Fund Managers Directive. Issued by the European Parliament in 2012 and 2013,
the Directive requires that, while the Board of Directors of an Investment Trust remains fully responsible
for all aspects of the Company’s strategy, operations and compliance with regulations, all alternative
investment Funds (‘AIFs’) in the European Union, must appoint a Depositary and an Alternative
Investment Fund Manager (‘AIFM’). The Company’s AIFM is Polar Capital LLP.
Benchmark The Benchmark is the MSCI ACWI/Healthcare Index (total return in sterling with dividends reinvested).
Closed-ended
Investment
Company
An Investment Company with a fixed issued ordinary share capital, the shares of which are traded on
an exchange at a price not necessarily related to the net asset value of the company and which can
only be issued or bought back by the company in certain circumstances.
Custodian The Custodian is HSBC Bank plc, a financial institution responsible for safeguarding, worldwide, the
listed securities and certain cash assets of the Group and Company, as well as the income arising
therefrom, through provision of custodial, settlement and associated services.
Depositary The Depositary is also HSBC Bank plc. Under AIFMD rules the Company must appoint a Depositary
whose duties in respect of investments, cash and similar assets include: safekeeping; verification of
ownership and valuation; and cash monitoring. Under the AIFMD rules, the Depositary has strict
liability for the loss of the Group and Company’s financial assets in respect of which it has safe-keeping
duties. The Depositary’s oversight duties will include but are not limited to share buybacks, dividend
payments and adherence to investment limits.
Derivative A contract between two or more parties, the value of which fluctuates in accordance with the value of
an underlying security. Examples of derivatives are Put and Call Options, Swap contracts, Futures and
Contracts for Difference. A derivative can be an asset or a liability and is a form of gearing because it
can increase the economic exposure to shareholders.
ESEF European Single Electronic Format is the requirement whereby reports are prepared and filed in XHTML
format. The requirement applied with effect from 1 January 2021 to all issuers in UK (or EU) regulated
markets. In addition, for issuers preparing consolidated annual accounts in accordance with IFRS, the
XHTML file requires tagging under the IFRS taxonomy.
ESMA The European Securities and Markets Authority is an independent EU authority whose purpose is to
improve investor protection and promote stable, orderly financial markets.
IFRS International Financial Reporting Standards; comprised of standards and interpretations approved
by the International Accounting Standards Board (IASB) and the International Financial Reporting
Committee (IFRC), including interpretations issued by the IFRS Interpretations Committee.
Investment
Company
Section 833 of the Companies Act 2006. An Investment Company is defined as a company which
invests its funds in shares, land or other assets with the aim of spreading investment risk.
Glossary of Terms
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022100
Shareholder Information
Investment
Manager /
Manager
Polar Capital LLP is the Investment Manager. Mr Gareth Powell and Dr James Douglas together have
delegated responsibility for the creation of the portfolio of investments subject to various parameters
set by the Board of Directors. The responsibilities of the Investment Manager and the fees payable are
set out in the Strategic Report and the Directors’ Report.
Investment Trust
taxation status
Section 1158 of the Corporation Tax Act 2010. UK Corporation Tax law allows an Investment
Company (referred to in Tax law as an Investment Trust) to be exempted from tax on its profits realised
on investment transactions, provided it complies with certain rules. These are similar to Section 833
above but further require that the Company must be listed on a regulated stock exchange and that it
cannot retain more than 15% of income received. The Directors’ Report contains confirmation of the
Company’s compliance with this law and its consequent exemption from taxation on capital gains.
MiFID II Markets in Financial Instruments Directive, applicable from 3 January 2018.
Non-executive
Director
The Group and Company are managed by a Board of Directors who are appointed by letter rather
than a contract of employment. Neither the Group nor Company has any executive Directors.
Remuneration of the non-executive Directors is set out in the Directors’ Remuneration Report while the
duties of the Board and the various Committees are set out in the Corporate Governance Statement.
An example of the letter of appointment is available on the Company’s website.
PRIIPS The Packaged Retail and Insurance-based Investment Products regulations which came into force on
1 January 2018 in the UK and EU. The regulations require generic pre-sale disclosure of investment
‘product’ costs, risks and certain other matters.
PwC The Group and Company’s Auditors are PricewaterhouseCoopers LLP, represented by Kevin Rollo, Partner.
SORP The Statement of Recommended Practice. The Financial Statements of the Group and Company are
drawn up in accordance with the Investment Trust SORP issued by the AIC.
ZDP Zero Dividend Preference shares are preference shares which carry no entitlement to dividends, but
which carry the right, on a fixed date, to the repayment of capital and a fixed rate of return in priority
to any capital payment to the holders of ordinary shares.
Glossary of Terms continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 101
Shareholder Information
2023 Annual General Meeting (“AGM”)
The Company’s AGM will be held at 2pm on Thursday
9 February 2023 at 16 Palace Street, London, SW1E 5JD.
Further information including the full text of the resolutions
to be proposed at the AGM and an explanation of each
resolution is contained in the Notice of AGM which has been
posted to shareholders and is available on the Company’s
website.
Shareholders will have the option to ask questions at the
meeting but are also encouraged to send any questions
ahead of the AGM to the Board via the Company Secretary at
[email protected] stating the subject matter as PCGH-
AGM. We will endeavour to answer relevant questions at the
meeting or on the Company’s website as appropriate.
For ease of reference and understanding a brief explanation of
the resolutions and the structure of the AGM is given below.
Resolution 1 relates to the statutory requirement of every
company to lay before shareholders the Annual Report and
Financial Statements, i.e. this document. The Annual Report
has been prepared and approved by the Board of Directors
and audited by the externally appointed auditors. The
document will be filed at Companies House once published
to shareholders. The Annual Report sets out the Company’s
business strategy, governance structure and procedures as
well as the financial accounts for the financial year under
review.
Resolutions 2 and 3, in compliance with the Large and
Medium-Sized Companies and Groups (Accounts and Reports)
(Amendment) Regulation 2013 (the ‘Regulations’), The
Companies (Directors’ Remuneration Policy and Directors’
Remuneration Report) Regulations 2019 and the Listing
Rules of the Financial Conduct Authority, the Company is
required on a three-yearly basis to provide shareholders
with the opportunity to vote on the Company’s Directors’
Remuneration Policy. Resolution 2 seeks shareholder approval
to renew the forward-looking Remuneration Policy which
lasts for up to three years. The current Policy was approved
by shareholders at the 2020 AGM and will expire on 30
September 2023 unless renewed. The Policy being presented
for renewal is unchanged from the current Policy and will
expire on 30 September 2026 or upon the reconstruction of
the Company.
In addition to this, on an annual basis, shareholders are
presented with the Directors’ Remuneration Implementation
Report which looks back at the year under review and advises
how the Remuneration Policy was applied. Resolution 3
therefore, is the annual advisory vote of shareholders on
the Remuneration Implementation Report. The Directors’
Remuneration Report is presented on pages 60 to 62.
Resolutions 4 to 7 relate to the annual re-election of
directors. In line with good corporate governance the tenure
policy of directors is nine years, with the exception of the
Board’s Chair tenure policy which allows the Chair to remain
in role for up to twelve years in certain circumstances. It is
recommended that directors stand for re-election on an
annual basis in order to give shareholders the opportunity to
vote on each Director. Having undergone a Board Evaluation
process, as described on page 48, the Directors have provided
a rationale for their support for the reappointment of each
director on pages 6 and 7 and within the Notice of AGM.
Resolutions 8 and 9 relate to the statutory appointment or
reappointment of the Company’s external auditors and the
Directors’ authority to determine their remuneration. Further
information is provided in the Audit Committee Report on page 54.
Resolution 10 relates to the Company’s dividend policy.
Following the Company’s reconstruction in 2017, which
included a change to the Company’s strategy from income and
growth to growth alone, the adopted dividend policy has been
and remains that dividends will be paid bi-annually in February
and August.
Resolutions 11 to 13 relate to potential changes in the
share capital. Resolution 11 authorises the Directors to allot (i.e.
sell) ordinary shares, whether these be newly created shares or
shares held in the Company’s treasury account which have been
previously bought back in the market. Once allotted the shares are
listed on the London Stock Exchange and have the same rights
as any other ordinary shares of the Company. Resolution 12 is
proposed in connection with 11 and allows the Directors to allot
the shares without pre-emption rights. Under the Companies Act,
all shareholders have the right of pre-emption which means that
the Company must offer existing shareholders an opportunity to
buy the company’s shares before they are offered to third parties;
being a listed company with many shareholders, the Directors ask
to disapply the pre-emption rights which means they are able to
offer and allot the shares to specific shareholders or in specific
ways to the market, noting that such allotments would be at a
premium to the net asset value (NAV) per share and therefore
accretive (i.e. positive) to overall shareholder value. While all
shareholders can trade the ordinary shares of the Company on
the open market there are times when a shareholder would like
to acquire greater amounts of shares than are available in the
market and might approach the Company through the corporate
broker to obtain shares. In a similar but opposite scenario,
resolution 13 provides the Directors’ the ability to buy back (i.e.
purchase) shares of the Company in the market. Depending on
the market environment, and various other factors, the shares of
the Company may trade at a discount to NAV. When this is the
case the Company may step in and buy back shares in an effort to
reduce the discount. Each of these authorities require shareholder
approval and are regular resolutions proposed to each AGM. Each
authority remains in place for 12 months or until the limits have
been reached.
Corporate Information - AGM
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022102
Shareholder Information
Share Capital, Voting Rights and
Transferability
The Company’s share capital is divided into ordinary shares of
25p each. At the year end, there were 124,149,256 ordinary
shares in issue (2021: 124,149,256 ordinary shares), of which
2,879,256 (2021: 2,879,256) were held in treasury by the
Company. During the year to 30 September 2022, no new
shares were issued from or bought back into treasury.
Ordinary shares carry voting rights which are exercised on a
show of hands at a meeting, where each shareholder has one
vote, or on a poll, where each share has one vote. Ordinary
shares held in treasury carry no voting rights. Arrangements
for the casting of proxy votes are provided when a notice of
meeting is issued.
Any shares in the Company may be held in uncertificated form
and, subject to the Articles, title to uncertificated shares may be
transferred by means of a relevant system. Further information
can be found in the Articles of Association available on the
Company’s website www.polarcapitalglobalhealthcaretrust.co.uk.
The Company is not aware of arrangements to restrict the
votes or transferability of its shares.
History and Structure
The Company was incorporated as Polar Capital Global
Healthcare Growth and Income Trust plc on 12 May 2010.
On 15 June 2010 the Company issued 89,000,000 ordinary
shares of 25p each and 17,800,000 subscription shares of
1p each which were admitted to trading on the Main Market
of the London Stock Exchange. The original subscription
price for each ordinary share was £1 and the Net Asset Value
(NAV) per share on 15 June 2010 was 98p (after launch
costs). The subscription share rights expired on 31 January
2014, following the issue of 17,800,000 ordinary shares.
The subscription shares were subsequently cancelled.
On 20 June 2017 the Company was reconstructed and the
name was changed to Polar Capital Global Healthcare Trust
plc. As part of the reconstruction, a 100% tender offer
was made to shareholders of which 21.8% was accepted
resulting in 26,299,042 ordinary shares being bought back
by the Company; the Company also offered new ordinary
shares in the form of an issue and placing which resulted in
27,798,298 new ordinary shares being created. As part of
the reconstruction and change of investment strategy, the
Company created a wholly owned subsidiary, PCGH ZDP Plc
(the ‘subsidiary’) (together with the Company, the ‘Group’)
which was created to provide structural gearing to the
Company through the placing of Zero Dividend Preference
shares (‘ZDP shares’). The subsidiary was incorporated on
30 March 2017 and issued 50,000 ordinary shares of £1 each
which were subscribed by the Company and fully paid up.
On 19 June 2017 the subsidiary issued 32,128,437 ZDP shares
at 100p each. These ZDP shares have a standard listing on the
London Stock Exchange.
Each ZDP share is entitled to 122.99p on 19 June 2024 on
the winding up of the subsidiary. The proceeds of the ZDP
Share issue were advanced to the Company under the terms
of a loan agreement for investment by the Company in
accordance with its Investment Policy.
Following the reconstruction and in the absence of any prior
proposals, the Articles of Association require the Directors to
put forward at the first Annual General Meeting to be held
after 1 March 2025, a resolution for the voluntary winding
up of the Company and the appointment of a liquidator.
Members voting in favour, whether in person or by proxy,
shall collectively have sufficient votes, irrespective of number,
to pass the resolution.
Company Website
http://www.polarcapitalglobalhealthcaretrust.co.uk
The Investment Manager maintains a website on behalf of
the Company which provides a wide range of information on
the Company, monthly factsheets issued by the Investment
Manager and copies of announcements, including the annual
and half year reports when issued.
Information on the Company can also be obtained from
various other sources including:
• www.theaic.co.uk
• www.ft.com/markets
• www.londonstockexchange.co.uk
Capital Gains Tax
Information on Capital Gains Tax (‘CGT’) is available on the HM
Revenue & Customs website www.hmrc.gov.uk/cgt/index.
When shares are disposed of a capital gain may result if the
disposal proceeds exceed the sum of the base cost of the
shares sold and any other allowable deductions such as share
dealing costs. The exercise of subscription shares into ordinary
shares should not have given rise to a capital gain, however a
capital gain may arise on the eventual disposal of those shares.
The calculations required to compute capital gains may be
complex and depend on personal circumstances. Shareholders
are advised to consult their personal financial advisor for
further information regarding a possible tax liability in respect
of their shareholdings.
Corporate Information - Other
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 103
Shareholder Information
Further information on the subscription shares is provided
in the subscription share section below. The Company was
launched on 15 June 2010 with the issue of ordinary shares
at £1 per share with subscription shares attached (on a one
for five basis).
Subscription Shares Tax Implications
The base ‘cost’ for UK tax purposes of the subscription
shares is a proportion of the issue price paid for the ordinary
shares to which the subscription shares were attached. The
apportionment is made by reference to the respective market
values of the ordinary shares and subscription shares at the
close of business on 15 June 2010, the day the ordinary and
subscription shares were admitted to trading. The market
value for UK tax purposes of the Company’s ordinary shares
and subscription shares on such date were as follows:
Ordinary Shares 101.0p Subscription Shares 14.875p
If you have exercised the subscription rights attaching to
your subscription shares, the resulting ordinary shares are
treated for UK tax purposes as the ‘same’ asset as the
subscription shares in respect of which the subscription rights
are exercised. The base ‘cost’ for UK tax purposes of the
resulting ordinary shares will be the base cost attributed to
the exercised subscription shares, increased by the amount of
subscription monies paid.
Statement by the Depositary
The statement of the Depositary’s responsibilities in respect
of the Company and its report to shareholders for the year
ended 30 September 2022 is available on the Company’s
website. The Depositary, having carried out such procedures
as it considered necessary, was satisfied that in all material
respects the Company was managed in accordance with the
applicable FCA rules and AIFMD.
Statement By The AIFM
The statement by the AIFM in respect of matters to be
disclosed to investors for the year ended 30 September 2022
is available on the Company’s website.
Share Price and Net Asset Value
The Company’s Net Asset Value (NAV) is normally released daily,
on the next working day, following the calculation date, to the
London Stock Exchange. The mid-market price of the ordinary
shares is published daily in the Financial Times in the Companies
and Markets section under the heading ‘Investment Companies’.
Share price information is also available from The London Stock
Exchange website: www.londonstockexchange.co.uk
Electronic Communications
If you hold your shares in your own name you can choose
to receive communications from the Company in electronic
format. This method reduces cost, is environmentally friendly
and, for many, is convenient.
If you would like to take advantage of Electronic
Communications, please visit our registrar’s website at
www.shareview.co.uk. You will need your Shareholder
Reference Number. If you agree to the terms and
conditions, in future, on the day that documents are sent to
shareholders by post you will receive an e-mail providing the
website address where the documents can be viewed and
downloaded. Paper copies will still be available on request.
Nominee shareholders
Where notification has been provided in advance
the Company will arrange for copies of shareholder
communications to be provided to the operators of nominee
accounts. Nominee service providers are encouraged to advise
investors that they may attend general meetings when invited
by the Chair.
Disability Act
Copies of this Annual Report and Financial Statements or
other documents issued by the Company are available from
the Company Secretary. If needed, copies can be made
available in a variety of formats, either Braille or on audio
tape or larger type as appropriate.
You can contact our Registrars, Equiniti Limited, who have
installed textphones to allow speech and hearing-impaired
people who have their own textphone to contact them
directly by ringing 0870 600 3950 without the need for
an intermediate operator. Specially trained operators are
available during normal business hours to answer queries
via this service. Alternatively, if you prefer to go through a
‘typetalk’ operator (provided by the Royal National Institute
for the Deaf), you should dial 18001 followed by the number
you wish to dial.
Investing
The ordinary shares of the Company are listed and traded on
the London Stock Exchange. Investors may purchase shares
through their stockbroker, bank or other financial intermediary.
There are a variety of ways to invest in the Company. However,
this will largely depend upon whether you would like financial
advice or are happy to make your own investment decisions.
Investing Risks
Investors should be aware of the following risks when
considering investing in the shares of Polar Capital Global
Healthcare Trust plc:
Past performance is not a guide to future performance.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022104
Shareholder Information
Please remember that any investment in the shares of Polar
Capital Global Healthcare Trust plc either directly or through
a savings scheme or ISA carries the risk that the value of your
investment and any income from them may go down as well
as up due to the fluctuations of the share price, the market
and interest rates. This risk may result in an investor not getting
back their original amount invested.
As the shares in an investment trust are traded on a stock
market, the share price will fluctuate in accordance with
supply and demand and may not reflect the underlying net
asset value of the shares. Where the share price is less than
the underlying value of the assets, the difference is known
as the ‘discount’. For these reasons, investors may not get
back the original amount invested. Although the Company’s
Financial Statements are denominated in sterling, it may invest
in stocks and shares that are denominated in currencies other
than sterling. To the extent that it does so, asset values may
be affected by movements in exchange rates. As a result, the
value of your investment may rise or fall with movements in
exchange rates.
Polar Capital Global Healthcare Trust plc is allowed to borrow
against its assets and this may increase losses triggered by
a falling market. The Company may increase or decrease its
borrowing levels to suit market conditions. If you are in any
doubt as to the suitability of a plan or any investment available
within a plan, please take professional advice.
Polar Capital Global Healthcare Trust plc is an investment
trust and as such its ordinary shares are excluded from the
FCA’s restrictions which apply to non-mainstream investment
products. The Company conducts its affairs and intends
to continue to do so for the foreseeable future so that the
exclusion continues to apply.
If you are investing through a savings plan, ISA or other
investment arrangement it is important that you read the key
features documents and understand the risks associated with
investing in the shares of the Company. If you are in any doubt
as to the suitability of a plan or any investment available within
a plan, please take professional advice.
Tax rates and reliefs change from time to time and may affect
the value of your investment.
For those investors who would like advice:
Private Client Stockbrokers – Investors with a large lump
sum to invest may want to contact a private client stockbroker.
They will manage a portfolio of shares on behalf of a private
investor and will offer a personalised service to meet an
individual’s particular needs. A list of private client stockbrokers
is available from The Personal Investment Management &
Financial Advice Association (PIMFA) at www.pimfa.co.uk
Financial Advisers – Financial Advisers who wish to purchase
shares for their clients can also do so via a growing number
of platforms that offer investment trusts including AJ Bell,
Interactive Investor, Ascentric, Embark, Nucleus, Raymond
James, Seven IM and Transact. For investors looking to find a
financial adviser, please visit www.unbiased.co.uk
For those investors who are happy to make
their own investment decisions:
Online Stockbroking Services – There are a number of real
time execution only stockbroker services which allow private
investors to trade online for themselves, manage a portfolio
and buy UK listed shares. Online stockbroking services include
AJ Bell, Barclays Stockbrokers, Charles Stanley, Fidelity, Halifax
Share Dealing, interactive investor and Hargreaves Lansdown.
As an investor holding shares through one of these platforms,
you are entitled to attend and vote at company general
meetings. For example, interactive investor allow you to vote
your shares at no extra cost through your account and new
customers are automatically signed up to the voting and
information service, which enables you to receive shareholder
materials and vote on decisions directly affecting your UK-
registered shareholdings. Please visit the AIC’s pages below for
further information:
https://www.theaic.co.uk/how-to-attend-an-AGM
https://www.theaic.co.uk/availability-on-platforms/how-to-
vote-your-shares
Share Dealing Services
The Company has also made arrangements with its share
registrars, Equiniti Limited, for investors to buy and sell shares
through the Shareview.co.uk service.
For telephone sales call 0345 603 7037 (or +44 121 415 7560)
between 8.30am and 4.30pm for dealing and up to 6.00pm
for enquiries, Monday to Friday. For Internet sales log on to
www.shareview.co.uk/dealing
Forward-Looking Statements
Certain statements included in this 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.
Corporate Information - Other continued
Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 105
Shareholder Information
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, you should have regard to the principal
risks and uncertainties included in the Strategic Report within
this Annual Report.
No part of this Annual Report 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 any
investment decision.
The Company undertakes no obligation to update any
forward-looking statements.
Boiler Room Scams
Shareholders of Polar Capital Global Healthcare Trust plc may
receive unsolicited phone calls or correspondence concerning
investment matters. These are typically from overseas based
‘brokers’ who target UK shareholders, offering to sell them
what often turn out to be worthless or high risk shares in
U.S. or UK investments or offering to act on the shareholder’s
behalf on the payment of a retainer or similar in a spurious
corporate event. These operations are commonly known as
‘boiler rooms’. These ‘brokers’ can be very persistent and
extremely persuasive.
It is not just the novice investor that has been duped in this
way; many of the victims had been successfully investing for
several years. Shareholders are advised to be very wary of any
unsolicited advice, offers to buy shares at a discount or offers
of free company reports.
If you have been contacted by an unauthorised firm regarding
your shares the FCA would like to hear from you. You can
report an unauthorised firm using the FCA helpline on
0845 606 1234 or 0800 111 6768 or by visiting their website,
which also has other useful information, at www.fca.org.uk
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• If the calls persist, hang up
If you deal with an unauthorised firm, you will not be
eligible to receive payment under the Financial Services
Compensation Scheme.
More detailed information on this or similar activity can be
found on the FCA website.
How to avoid investment and pension scams
Y
contacting our Consumer Helpline on
0800 111 6768 or using our reporting form
using the link below.
If you’ve lost money in a scam, contact
Action Fraud on 0300 123 2040 or
www.actionfraud.police.uk
Scammers usually cold call, but contact
can also come by email, post, word of mouth
investment out of the blue, chances are it’s
a high risk investment or a scam.
Check the FCA Warning List
Use the FCA Warning List to check the risks
of a potential investment – you can also search
our authorisation.
Get impartial advice before investing – don’t use
Be ScamSmart and visit
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Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022106
Shareholder Information
Company Registration Number
7251471 (Registered in England)
The Company is an investment company as defined under
Section 833 of the Companies Act 2006.
Directors
Lisa Arnold (Chair)
Neal Ransome (Audit Committee Chair)
Andrew Fleming
Jeremy Whitley
Registered Office and Contact Address
for Directors
Investment Manager and AIFM
Polar Capital LLP
16 Palace Street
London
SW1E 5JD
Authorised and regulated by the Financial Conduct Authority.
Telephone: 020 7227 2700
Website: www.polarcapital.co.uk
Portfolio Co-Managers
Dr. James Douglas
Mr. Gareth Powell
Company Secretary
Polar Capital Secretarial Services Limited
Represented by Tracey Lago, FCG
Depositary, Bankers and Custodian
HSBC Bank Plc
8 Canada Square
London
E14 5HQ
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Solicitors
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London
EC2A 2HS
Stockbrokers
Panmure Gordon & Co
One New Change
London
EC4M 9AF
Identification Codes
Ordinary shares
SEDOL: B6832P1
ISIN: GB00B6832P16
TICKER: PCGH
GIIN: ID3ME4.99999.SL.826
LEI: 549300YV7J2TWLE7PV84
Registrar
Shareholders who have their shares registered in their own
name, not through a share savings scheme or ISA, can
contact the registrars with any queries on their holding. Post,
telephone and Internet contact details are given below.
In correspondence you should refer to Polar Capital Global
Healthcare Trust plc, stating clearly the registered name and
address and, if available, the full account number.
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Shareholder helpline: 0800 313 4922
(or +44 121 415 7047 from overseas)
Contact Information
Contents
Overview
Your Business at a Glance 1
Highlights 2
Performance 3
Chair’s Statement 4
Board of Directors 6
Investment Team 8
Manager’s Report
Investment Manager’s Report 11
Ten Largest Investments 21
Full Investment Portfolio 22
Environmental, Social and Governance
Corporate Responsibility for ESG 24
Investment Perspective 26
ESG Dashboard 28
Governance
Strategic Report 30
Section 172 of the Companies Act 2006 37
Report of the Directors 40
Report on Corporate Governance 42
Audit Committee Report 51
Directors’ Remuneration Report 58
Statement of Directors’ Responsibilities 63
Independent Auditors’ Report 64
Financial Statements and Notes
Statement of Comprehensive Income 73
Statements of Changes in Equity 74
Balance Sheets 75
Cash Flow Statements 76
Notes to the Financial Statements 77
Shareholder Information
Alternative Performance Measures (APMs) 97
Glossary of Terms 99
Corporate Information – AGM 101
Corporate Information – Other 102
Contact Information 106
Purpose
The purpose of the Group, comprising
the Company and the wholly owned
subsidiary PCGH ZDP Plc, is to provide
a vehicle for investors in which assets
are invested across a diversified global
portfolio of healthcare stocks which aim
to deliver long term capital growth to
Shareholders. The purpose is achieved
through implementation of the
Investment Objective and investment
policies incorporating parameters to
ensure excessive risk is not undertaken.
Investment Objective
The generation of capital growth
through investments in a global
portfolio of healthcare stocks.
See more at: polarcapitalhealthcaretrust.co.uk
We were delighted to be awarded
winner of the Biotech and Healthcare
specialist sector at the Investment Week
- Investment Company of the Year
Awards in November 2022.
Designed and printed by Perivan 264615
This document is printed on Galerie Satin,
a paper sourced from well managed,
responsible, FSC® certified forests and
other controlled sources. The pulp used in
this product is bleached using an elemental
chlorine free (ECF) process.
Annual Report and Financial Statements for the year ended 30 September 2022
Polar Capital Global Healthcare Trust plc
2022 Annual Report and Financial Statements for the year ended 30 September 2022