Polar Capital Technology Trust plc Annual Report & Financial Statements for the year ended 30 April 2023 ## Polar Capital Technology Trust plc ## Artificial Intelligence sparks into life ### Annual Report & Financial Statements ### For the year ended 30 April 2023 # Contents ## Overview | Our Business at a Glance | BC | | --- | --- | | Financial Highlights | 1 | | Performance | 3 | | Chair's Statement* | 4 | | Financial Performance Review | 6 | | Board of Directors | 8 | | Technology Investment Team | 10 | ## Manager's Report | Investment Manager's Report* | 14 | | --- | --- | | Investment Manager's Core Themes | 28 | | Portfolio Review | 31 | ## Environment, Social and Governance Report ("ESG") | ESG – Corporate Perspective* | 40 | | --- | --- | | ESG – Investment Perspective* | 42 | | ESG Dashboard | 51 | ## Corporate Governance | Strategic Report* | 54 | | --- | --- | | Section 172 Statement* | 66 | | Report of the Directors | 72 | | Report on Corporate Governance | 74 | | Audit Committee Report* | 80 | | Directors' Remuneration Report | 85 | | Report of the Nomination Committee | 90 | | Management Engagement Committee Report | 92 | | Statement of Directors' Responsibilities | 93 | | Independent Auditor's Report | 94 | ## Financial Statements | Statement of Comprehensive Income | 100 | | --- | --- | | Statement of Changes in Equity | 101 | | Balance Sheet | 102 | | Cash Flow Statement | 103 | | Notes to the Financial Statements | 104 | ## Shareholder Information | Alternative Performance Measures (APMs) | 128 | | --- | --- | | Glossary of Terms | 130 | | Corporate Information – AGM | 133 | | Corporate Information – Other | 136 | | Contact Information | BC | # Our Business at a Glance ## Purpose The purpose of the Company is to provide a vehicle in which investment is spread across a diversified portfolio of technology companies which aim to deliver long-term capital growth to shareholders. The purpose is achieved through the Investment Objective and by applying the investment policy incorporating parameters to ensure excessive risk is not undertaken. ## Investment Objective The Investment Objective is to maximise long-term capital growth through investing in a diversified portfolio of technology companies around the world. The investment policy and investment guidelines are set out in full in the Strategic Report on pages 54 to 56. ## Management's Structure The Company is an investment trust led by an experienced Board of Independent non-executive Directors with extensive knowledge of investment matters, and the regulatory and legal framework within which your Company operates. The role of the Board is to provide oversight of the Company's activities and to seek to ensure that the appropriate financial resources and controls are in place to deliver the Investment Objective and manage the risks associated with such activities. The Directors have appointed various third-party suppliers to provide a range of services including investment management, depositary and administrative services to the Company. Polar Capital LLP has been the appointed Investment Manager and AIFM throughout the year. Ben Rogoff, the appointed portfolio manager, has been responsible for the Company's portfolio since 1 May 2006 and is supported by Deputy Fund Manager, Alastair Unwin and a team of technology specialists. Polar Capital LLP is authorised and regulated by the Financial Conduct Authority. * These narrative statements form part of the Strategic Report section as required under The Companies Act 2006. Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information # Financial Highlights Year ended 30 April 2023 Net Assets Per Ordinary Share Total Return¹ -2.8% Benchmark Total Return² +2.9% Share Price Total Return¹ -4.9% 2022: -7.7% 2022: -0.9% 2022: -13.7% ¹ Alternative Performance Measure, see pages 128 to 129 ² Dow Jones Global Technology Index (total return, Sterling adjusted), with the removal of relevant withholding taxes. See page 130 for further details. # Key Contents | Chair's Statement | 4 | | --- | --- | | Investment Manager's Report | 14 | | Investment Manager's Core Themes | 28 | | Environmental, Social and Governance | 40 | | Audit Committee Report | 80 | | Financial Statements | 100 | | Information for Shareholders | 133 | ![img-0.jpeg](img-0.jpeg) AGM: 7 September 2023 at 2:30pm See the separate Notice of AGM also available on our website. ![img-1.jpeg](img-1.jpeg) www.polarcapitaltechnologytrust.co.uk 1 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Financial Highlights continued ### Financial Summary Change % As at | | | 30 April 2023 | | | As at | Year Ended | | Year Ended | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 30 April 2022 | | | 2023 | | 2022 | | Total net assets £2,828,141,000 £3,050,985,000 (7.3%) | | | | | | | | | (10.5%) | | Net Asset Value (NAV) per ordinary share 2239.48p 2305.13p (2.8%) | | | | | | | | | (7.7%) | | | 1 | | | | | | | | (0.9%) | | Benchmark | | | 3604.43 3504.44 2.9% | | | | | | | | Price per ordinary share 1940.00p 2040.00p (4.9%) | | | | | | | | | (13.7%) | Discount of ordinary share price (13.4%) (11.5%) 2 to the NAV per ordinary share 3 (3.1%) Ordinary shares in issue 126,285,544 132,356,426 (4.6%) Ordinary shares held in treasury 11,029,456 4,958,574 122.4% 543.8% ### Key Data For the year to 30 April 2023 Local Currency Sterling Adjusted % % 1 Benchmark Dow Jones Global Technology Index (TR) 3.0 2.9 Other Indices over the year (total return) FTSE World 3.4 3.4 FTSE All-Share 6.1 S&P 500 Composite 2.7 2.7 Nikkei 225 10.0 4.9 Eurostoxx 600 7.3 12.3 ### Exchange Rates As at 30 April 2023 2022 US$ to £ 1.2569 1.2555 Japanese Yen to £ 171.15 162.66 Euro to £ 1.1385 1.1901 ### Expenses For the year to 30 April 2023 2022 2 Ongoing charges ratio 0.81% 0.84% 2 Ongoing charges ratio including performance fee 0.81% 0.84% Data supplied by Polar Capital LLP and HSBC Securities Services. 1 Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal of relevant withholding taxes). See page 130 for further details. 2 Alternative Performance Measure see pages 128 to 129. 3 The issued share capital on 13 July 2023 (latest practicable date) was 137,315,000 ordinary shares of which 12,258,825 were held in treasury. 2 www.polarcapitaltechnologytrust.co.uk Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information # Performance ## 10 Year Performance Graph ![img-2.jpeg](img-2.jpeg) ## Historic Performance | As at 30 April | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Net Assets (£m) | 528.8 | 606.6 | 793.0 | 801.3 | 1,252.5 | 1,551.6 | 1,935.6 | 2,308.6 | 3,408.8 | 3,051.0 | 2,828.1 | | Share price (pence) | 398.5 | 442.0 | 592.0 | 566.0 | 947.0 | 1,148.0 | 1,354.0 | 1,774.0 | 2,364.0 | 2,040.0 | 1,940.0 | | NAV per share (pence) | 412.4 | 458.4 | 599.2 | 605.5 | 945.4 | 1,159.7 | 1,446.4 | 1,715.6 | 2,496.4 | 2,305.1 | 2,239.5 | | **Indices of Growth^{1}** | | | | | | | | | | | | | Share price | 100.0 | 110.9 | 148.6 | 142.0 | 237.6 | 288.1 | 339.8 | 445.2 | 593.2 | 511.9 | 486.8 | | NAV per share | 100.0 | 111.2 | 145.3 | 146.8 | 229.2 | 281.2 | 350.7 | 416.0 | 605.3 | 559.0 | 543.0 | | Dow Jones Global Technology Index^{2} | 100.0 | 113.1 | 146.4 | 146.2 | 224.3 | 262.5 | 318.8 | 376.5 | 551.0 | 546.3 | 561.8 | The Company commenced trading on 16 December 1996 and the share price on the first day was 96.0p per share and the NAV per share was 97.5p. 1 Rebased to 100 at 30 April 2013 2 Dow Jones Global Technology Index (total return, Sterling adjusted) with the removal of relevant withholding taxes. All data sourced from Polar Capital LLP. www.polarcapitaltechnologytrust.co.uk 3 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Chair's Statement *This report forms part of the Strategic report section* ![img-3.jpeg](img-3.jpeg) **Catherine Cripps** ## Introduction Dear Shareholder, On behalf of myself and the Board I am pleased to share with you the Annual Report of the Company for the year to 30 April 2023. This is my first full year Chair Statement following my appointment as Chair in September 2022. The year under review and in particular the period since my appointment as Chair, has been a tumultuous one for markets, with the post-COVID settling down period, the continuation of the Russia-Ukraine war and the sizeable hikes in interest rates as the central banks sought somewhat belatedly to tackle the surge in inflationary pressures causing a global cost of living crisis. This has also had a resultant negative impact on long-duration assets such as technology stocks. To add to these, on the day of my appointment we sadly marked the passing of Queen Elizabeth II and of course more recently we celebrated the coronation of our newest monarch, King Charles III. ## Performance The Manager's report is provided on pages 14 to 27 and gives an overview of the year past and the outlook for the near future. Over the year under review, your Company's net asset value (NAV) per share fell from 2305.13p to 2239.48p, a decrease of 2.8%, while the Benchmark increased 2.9% in Sterling terms over the same period. I would like to be reporting more positive performance numbers, but generally markets have not been constructive and technology in particular has suffered in the post-Covid reset and high interest rate environment. Furthermore, our underweighting of "mega-cap" technology stocks which now dominate the index and which continue to lead the sector was a significant factor in our underperformance relative to the benchmark. That said, the Company has performed well against its technology investment trust peer group. We believe that there are interesting and exciting times ahead for our sector, particularly in the field of Artificial Intelligence ("AI") and this is discussed further in the Manager's Report. ## Discount Management The Board actively monitors the discount at which the Company's ordinary shares trade in relation to the Company's underlying NAV and, whilst the Board does not have a formal discount policy or a fixed target level for all times and circumstances, it will continue to exercise its discretion to buy back shares at a discount. Equally, should fortunes change, the Board will also use discretion to issue shares at a premium as has been done in the past. The intent when buying back shares is to seek to reduce the volatility of the share price, to add a small amount to NAV per share and to address significant imbalances in the supply and demand for shares. We have continued to buy back stock regularly, repurchasing a total of 6,070,882 shares in the year under review at an average price of 1932.28 pence per share and an average discount of 11.95%. Following the year end and up to 13 July 2023, the Company has bought back a further 1,229,369 shares. While purchase levels have been relatively low on an individual transaction basis, we should note that this activity does not preclude the Manager determining that a more significant amount than usual on any one day should be purchased. Such a decision may be influenced by, in the Manager's view, there being a particular investment opportunity best accessed through buying shares in the Company rather than buying individual securities. ## Board Composition Outside of my appointment as Chair on the retirement of Sarah Bates after 12-years, there have been no other changes to the membership of the Board during the financial year under review. Biographical details of all Directors are available on the Company's website and are provided on pages 8 and 9. 4 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information The Board is aware of the FCA’s Diversity and Inclusion with the Manager, we have seen how ESG considerations Policy and notes that its current composition meets two of have been integrated into the overall house style, the the three ‘comply or explain’ targets with three of the six technology team investment approach and decision making members being female and two of the three senior positions as well as the methodology behind this. As a Board, we being occupied by females. However we do not meet the believe that the Manager is best placed to integrate ESG recommended ethnicity requirements. While there are no factors into the investment decision-making process, with immediate plans to recruit to the Board, the Board has put the Board providing oversight and challenge, to ensure that in place a succession plan based on the recommended nine- the process is being executed as expected. This challenge year tenure of Directors. It is a priority of the Board to be is undertaken through regular reporting and engagement able to meet all aspects of the FCA’s Diversity policy as part with the Manager. The Board receives tailored ESG related of these future succession plans. Of paramount importance information including the ratings of investee companies and is having the correct mix of skills around the table, diversity is able to use this as a tool to inform discussions with the of thought and a constructive culture that engenders lively Manager during Board meetings. As at 30 April 2023, based discussion. When we next select our recruitment consultant on MSCI ESG ratings, the portfolio and the benchmark were to assist us with a director search we will set parameters that both rated A. ensure potential candidates are sourced from a broad pool The Board also receives regular updates on the progress such that the Board can consider candidates with minority that has been made on the corporate side of Polar Capital’s ethnic backgrounds, especially at the final round of the business. Please refer to the ESG Report on pages 40 to 51 recruitment process. Further information is provided in the which incorporates both the investment and corporate Nomination Committee Report on page 90. approaches. ### Annual General Meeting ### Outlook We are pleased to confirm that the Company’s AGM will be Given the recent breakthroughs in Artificial Intelligence held on 7 September 2023 at 2:30pm. We have considered (“AI”), we remain positive on the outlook and the future feedback from the prior few years AGM’s and analysed the of technology, despite a challenging macro backdrop. We attendance levels pre, during and post-COVID. Due to the look forward to the investment opportunities this brings previous lack of take up for the option of attendance on-line for the sector, which looks well placed to benefit from AI we are opting this year to hold an in-person only meeting disruption. and will not be providing a hybrid attendance option. We have also considered comments from shareholders on Finally, the Board is delighted to welcome Alastair (Ali) cost and location, and have this year decided to move the Unwin formally as Deputy Fund Manager following his meeting to a central City base. We will therefore be using recent promotion within Polar Capital. Ali joined the Polar the auditorium at the offices of Herbert Smith Freehills, Capital Technology team in 2019, has worked closely with Exchange House, Primrose Street, London, EC2A 2EG. We Ben Rogoff since joining the team and has been a regular look forward to welcoming shareholders to the meeting presenter to the Board. This appointment formalises the who will receive a presentation from the Manager and his involvement that Ali has on the portfolio and the Board are team and shareholders will also have the opportunity to ask pleased to support this move. Ben and Ali are supported questions and meet the Board; light refreshments will again by an experienced technology team who have significant be available following the meeting. experience of investing in the sector. Shareholders will have the opportunity to meet and talk with Ali, along with other The notice of AGM will shortly be provided to shareholders members of the technology team at the AGM. 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 Catherine Cripps the Shareholder Information section on pages 133 to 134 as Chair well as the Notice of AGM. 18 July 2023 ### Environmental, Social and Governance (ESG) We continue to keep abreast of ESG developments and changes in the landscape. Through regular engagement www.polarcapitaltechnologytrust.co.uk 5 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Financial Performance Review For the year ended 30 April 2023 The NAV per share declined to 2239.48p as at 30 April 2023 from 2305.13p at the start of the year. The Company's NAV per share total return for the period was a loss of 2.8% and finished the year with a total net assets of £2,828.1m. The Investment Manager's Report on pages 14 to 27 sets out in detail the performance of the Company for the financial year. The chart on the following page shows in greater detail the movement in total net assets for the year. ## Total Return The Company generates returns from both capital growth (capital return) and dividend income received (revenue return). The total return from the portfolio for the year was a loss of £105.2m (2022: £258.6m loss), of which there was a £98.3m loss (2022: £241.9m loss) from capital and a £6.9m loss (2022: £16.7m loss) on our income account which offsets all expenses against dividend income. Full details of the total return can be found in the Statement of Comprehensive Income on page 100. We choose as a matter of policy not to allocate our expenses between capital and income, (any performance fee is the only expense allocated to capital). The Company's allocation of expenses is described in Note 2(d) on page 105 and the allocation methodology is considered on an annual basis, no change to the policy is recommended (2022: no change). The total net losses per share were 81.28p (2022: net losses of 191.61p per share). The total net losses per share was made up of 75.98p from capital return and a loss of 5.30p from revenue return. ## Capital Return The investment portfolio was valued at £2,640.2m (2022: £2,811.1m) at the year end 30 April 2023. The investment portfolio delivered a realised loss on disposals of £190.5m (2022: £121.2m loss) and valuation gains on investment of £83.7m (2022: £132.5m loss) for the year ended 30 April 2023. The Company's valuation approach is described in Note 2 (f) on pages 105 and 106. The derivative gains of £0.03m (2022: £5.8m loss) represent the call and put options which are used to facilitate efficient portfolio management. Full details of the derivatives are set out in the Investment Managers Report on pages 14 to 27 and Note 6 on page 109. ## Revenue Return The total investment income of £16.2m (2022: £15.87m) represents dividend income derived from listed investments. The investment income, excluding any one-off special dividends, increased by 0.7% for the year and this was driven by changes in holdings, dividend rates, and FX rate changes as the Company's revenue is generally denominated in currencies other than Sterling. The increase in interest rates which started at the end of the 2022 financial year has continued. This led banks and Money Market Funds (MMF) to make higher interest income payments. As a result, during the year under review, the Company received other operating income of £3.8m (2022: £0.031m) which was derived from bank interest and MMF interest. It should be noted, however, that the MMF is held primarily as a cash diversification factor rather than an income generating investment. As stated above, as a matter of policy, all expenses (excluding the performance fee) are charged to revenue and as a result, expenses normally exceed the income received in any given year. As has been the case for many years, the revenue reserve therefore remains negative. The Company historically has not paid dividends given the nature of its focus on longer-term capital growth. The Board reviews this stance on a periodic basis. ## Expenses The total expenses for the year under review amounted to £24.7m (2022: £30.6m) and include investment management fees of £21.9m (2022: £28.3m), administrative expenses of £1.2m (2022: £1.3m) and finance costs of £1.6m (2022: £1.0m). The Company's operating expenses comprise predominantly variable costs, such as management, depositary and custody fees which increase and decrease based on the net asset value. Other expenses remained at a similar level to the last year. The finance costs increased slightly due to the increase in interest rates. As noted in last year's Annual Report, the agreement which was made with Polar Capital to amend the base management fee tier levels came into effect from 1 May 2022, and this resulted in a 8.7% reduction in management fees for the year when compared to the prior management tiers calculation. There was no performance fee accrued at the year ended 30 April 2023 (2022: £nil). ## Ongoing Charges Ongoing Charges Ratio (OCR) is a measure of the ongoing operating costs of the Company. It is calculated in line with the AIC recommended methodology, represents the total expenses of the Company, excluding finance costs, and is expressed as a percentage of the average daily net asset value during the year. The OCR demonstrates to Shareholders the annual percentage reduction in NAV as a result of recurring operational expenses, that is, the expected cost of managing the portfolio. Whilst based on historical information, the OCR provides an indication of the likely level of costs that will be incurred in managing the Company in the future. The OCR for the year to 30 April 2023 was 0.81% (2022: 6 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### 0.84%). The OCR including the performance fee for the Gearing year to 30 April 2023 was the same as no performance The Company can use gearing for investment purposes fee was accrued at the year end. As noted above under as stated on page 56. In September 2022, the Company expenses, the reduction in the OCR is mainly due to the entered into replacement contracts with ING Bank N. V for reduction in management fee tier levels which came into two, two-year fixed rate term loans (JPY 3.8bn and US$36m). effect from 1 May 2022, and the change in the net asset These loans replaced the previously held two-year loans of value during the year under review. See Alternative JPY 3.8bn and US$36m which expired on 30 September Performance Measures on pages 128 to 129. 2022. Both loans fall due for repayment on 30 September 2024. The repayment of both loans, totalling approximately ### Cash and Cash Equivalents £50.8m (2022: £52.0m), would equate to less than 2% of As in the prior years, the Company’s cash level the Company’s NAV as at 30 April 2023. remained relatively high, closing the year with £239.1m ### (2022: £311.4m). As noted above, as part of the Foreign Exchange Company’s cash diversification strategy, the Company The majority of the Company’s assets and revenue has taken a cautious approach and has chosen to invest are denominated in currencies other than Sterling and 50% of its USD cash balance into a USD Treasury Money are impacted by foreign exchange movements. As at the Market Fund. As at 30 April 2023, the Company held the year ended the other currency gains of £8.4m represents BlackRock Institutional Cash Series – US Treasury Fund with the exchange gains on currency balances of £7.2m and a market value at year end of £90.4m (2022: £92.0m). net gains on translation of loan balances of £1.2m. The Company’s total return and net assets can be affected ### Portfolio Turnover by the currency translation and movements in foreign Portfolio turnover (purchases and sales divided by two) exchange. Note 27 (a) (ii) on pages 119 to 122, analyses the totalled £2,268.9m equating to 77% for the year to currency risk and the management of such risks. 30 April 2023 (2022: 84%) of average net assets over the Catherine Cripps year. Details of the investment strategy and portfolio are given Chair in the Investment Manager’s Review on pages 14 to 27. 18 July 2023 ### Contributors to the movement in total net assets for the year to 30 April 2023 3,300 3,200 83.7 3,500 | | 3,100 | 3,051.0 | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 3,400 | | | | | | 20.0 | | | | | 3,000 | | | 0.0 | 8.4 | | | | | | | | -190.5 | | | | -24.7 | -2.1 | 2,900 2,828.1 -117.7 2,800 2,700 £ million 2,600 2,500 | Total net | Valuation | Losses on | Gains on | | Other | Total income Total expenses Tax Ordinary | | | Total net | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | assets at | gains on | disposal of | derivatives | | currency | | | shares | assets at | | 30 April 2022 | investments | investments | | | exchange | | | repurchased | 30 April 2023 | | | | | | | gains | | | into treasury | | | | | | | Increase | | Decrease | Total | | | www.polarcapitaltechnologytrust.co.uk 7 7 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Board of Directors ### Catherine Cripps Tim Cruttenden Charlotta Ginman Charles Park Independent Independent Independent Independent Non-Executive Chair Non-Executive Director Non-Executive Director and Non-executive Director and Senior Independent Chair of the Audit Committee Appointed to the Board in Appointed to the Board in Director (“SID”) September 2021 and as Chair in Appointed to the Board in January 2018. September 2022. February 2015 and as Audit Chair Appointed to the Board in Skills and Experience March 2017 and as SID and Chair in September 2015. Skills and Experience Charles has over 25 years of of the Remuneration Committee Catherine is a qualified Chartered Skills and Experience specialist investment experience in July 2020. | Accountant who has in excess | | Charlotta qualified as a Chartered | and was a co-founder of Findlay | | --- | --- | --- | --- | | of 30 years’ senior investment | Skills and Experience | Accountant at Ernst & Young | Park Partners, an investment firm | | industry experience in a number | Tim is currently Chief Executive | before spending a career in | specialising in quoted American | | of trading, risk management and | Officer of VenCap International | investment banking and commercial | equity investments. Prior to this, | | investing roles including Investment | plc having been with the company | organisations, principally in technology | he was a US fund manager at Hill | | Director and Head of Research at | in various positions since 1994. | related businesses. She held senior | Samuel Asset Management. | | GAM. Previously, Catherine was | VenCap invests in venture capital | roles with JP Morgan, Deutsche Bank, | | | non-executive director of CQS | | | Other Appointments | | | funds in the US, Asia and Europe, | UBS and the Nokia Corporation. | | | Management Limited, Merian | | | NED of North American Income | with a primary focus on early stage Global Investors and Nuclear Other Appointments Trust plc and Evenlode Investments. technology companies. Liabilities Fund. NED and AC Chair of Pacific PCT Share Interests | | Other Appointments | Assets Trust plc and Gamma | | | --- | --- | --- | --- | | Other Appointments | | | 1,840 | | | NED, Chrysalis Investments Limited. | Communications plc, SID and AC | | | NED and Board Risk Committee | | Chair of Keywords Studios plc, SID | | Annual Remuneration Chair of Goldman Sachs International PCT Share Interests of Unicorn AIM VCT PLC and NED and Goldman Sachs International 1,000 Financial - year ended 2023 of Boku Inc. Bank and Member of the Audit £33,000 Committees. NED of Maniyar Capital Annual Remuneration PCT Share Interests Rationale for re-election Advisors and Pool Re. Financial - year ended 2023 4,941 Charles has extensive equity £37,200 | PCT Share Interests | | Annual Remuneration | investment experience and brings | | --- | --- | --- | --- | | | Rationale for re-election | | to the Board current and active | | 481 | | Financial - year ended 2023 | | | | Tim has extensive technology | | knowledge of the industry from a | £40,000 Annual Remuneration private equity investment different, value based investment experience and brings an Rationale for re-election approach which contributes to Financial - year ended 2023 alternative investment perspective Charlotta has recent and relevant Board and Manager discussions. £47,737 | | to discussions on the portfolio. | financial and investment expertise | He also brings his understanding | | --- | --- | --- | --- | | Rationale for re-election | The Board and Manager value the | with a strong accounting background | of investment management firms, | | Catherine joined the Board in 2021 | investment debates at meetings | which enables her to perform | fees and the private client wealth | | | | in-depth analyses of the Company’s | management sector to Board | | and assumed the role of Chair in | particularly where Tim focusses on | | | | | | Financial Statements in conjunction | discussions. He has helped the | | September 2022. She brings to | new themes and they welcome the | | | | | | with the external service providers. | Board by bringing perspectives | | the Board a wealth of investment | continued contribution from him. | | | | | | Charlotta actively works with Polar | from elsewhere to give context and | industry experience following Capital and the Auditors to ensure a a number of roles including insight into investment markets. He smooth year-end process and audit. Investment Director and Head of has also brought his interest in ESG She has brought her considerable Research at GAM International. issues to our discussions. experience of audit, governance and Since taking on the role of related regulatory matters as they | the Chair, Catherine has been | apply to the Company. Charlotta | | --- | --- | | proactive in engaging and building | will hand over the Chair of the | | relationships with the Manager | Audit Committee to Jane Pearce on | | and continues the strong link with | 31 October 2023 but will remain | | Polar Capital, she has demonstrated | on the Board as a non-executive | | effective leadership skills. | Director. | Where there might be concern of over-boarding, as three of Charlotta’s roles are with investment companies that typically have only five Board meetings a year and the other companies are all AIM listed, with less regulatory burden than a premium listing, Charlotta has sufficient time to devote to each of her roles. 8 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Company Secretarial & ### Fund Accounting (Provided by Polar Capital LLP) ### Jane Pearce Stephen White Independent Non-executive Independent Non-Executive Director and Audit Director Chair Elect. Appointed to the Board in Appointed to the Board in January 2018. September 2021. Skills and Experience ### Tracey Lago, FCG Skills and Experience Stephen qualified as a Chartered Accountant at PwC before starting a Deputy Group Company Secretary & Jane is an experienced | non-executive director and | career in investment management. | Head of Investment Trust Secretariat | | --- | --- | --- | | Chartered Accountant with | He has more than 35 years’ | | | over 20 years’ financial markets | investment experience, most notably | | | experience. She has a number | as Head of European Equities at | | | of years’ experience as a | F&C Asset Management, where he | | | Technology Equity Analyst and | was manager of F&C Eurotrust plc | | | as an Equity Strategist at leading | and deputy manager of The F&C | | | investment banks including Lehman | Investment Trust plc, and as Head of | | | Brothers and Nomura International. | European and US equities at British | | Steel Pension Fund. Other Appointments | NED and AC Member of Shires | Other Appointments | | | --- | --- | --- | | Income plc. NED of Morgan Stanley | NED and Chair of Brown Advisory US | | | Bank International Limited, Morgan | Smaller Companies Trust plc. NED | | | Stanley & Co International plc | and AC Chair of BlackRock Frontiers | | | and Morgan Stanley International | Investment Trust plc and NED of | | | Limited. | Henderson EuroTrust plc. | | | PCT Share Interests | PCT Share Interests | | | | 10,000 | Jumoke Kupoluyi, ACG | 930 Annual Remuneration Investment Trust Company Secretary Annual Remuneration Financial - year ended 2023 Financial - year ended 2023 £33,000 £33,00 Rationale for re-election Rationale for re-election Stephen has many years of Jane is an experienced non-executive investment and financial experience director and Chartered Accountant including as an investment company with over 20 years’ financial manager, which he brings to the markets experience including as a Board. He has been particularly technology equity research analyst. interested in our Manager’s individual She is a keen participant in meetings stock holdings and has encouraged often bringing a new perspective helpful debate. He also has wide to discussions. Jane will assume experience of the institutional and the role of Chair of the Audit investment company sector, of its Committee on 31 October 2023 fees, clients and approaches. He also ahead of the retirement of holds other audit committee chair Charlotta Ginman from the Board in positions which bring extra support September 2024. to our Audit committee. ### Mala Krishnasamy, FCCA Investment Trust Fund Accountant www.polarcapitaltechnologytrust.co.uk 9 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Technology Investment Team ### Ben Rogoff Nick Evans Xuesong Zhao Partner Partner Partner Lead Manager Ben has been a technology specialist for 27 years. Nick joined Polar Capital in 2007 and has Focus areas: Semiconductors, Asia, He has been lead manager of Polar Capital 25 years’ experience as a technology specialist. He Internet, Industrial Automation and Technology Trust plc since 2006, and is a Fund has been lead manager of the Polar Capital Global Artificial Intelligence Manager of the Polar Capital Global Technology Technology Fund since January 2008 and is also Fund and Polar Capital Automation and Artificial a fund manager on the Polar Capital Technology Xuesong joined Polar Capital in 2012 and has Intelligence Fund. Prior to joining Polar Capital, Trust and Polar Capital Automation and Artificial 15 years’ investment experience. He is a lead he began his career in fund management at Intelligence Fund. manager of the Polar Capital Automation and CMI, as a global technology analyst. He moved Artificial Intelligence Fund and is a fund manager to Aberdeen Fund Managers in 1998 where he Nick has a degree in Economics and Business on the Polar Capital Technology Trust and Polar spent four years as a senior technology manager. Economics from Hull University, has completed Capital Global Technology Fund. Xuesong holds Ben has a BA (Hons) in Modern History from all levels of the ASIP, and is a member of the CFA an MSc in Finance from Imperial College of St Catherine’s College, Oxford. Institute. Science & Technology, a BA in Economics from Peking University and is also a CFA Charterholder. | Alastair Unwin | Fatima Iu | Paul Johnson | | --- | --- | --- | | Deputy Fund Manager | Fund Manager | Investment Analyst | | Focus areas: Software, Internet, | Focus areas: Cybersecurity, 5G, Clean | Focus areas: Automotive (EV/AV), video | | Fintech / Payments | Energy and Medtech | gaming and 3D printing | | Alastair joined Polar Capital in June 2019 and | Fatima joined Polar Capital in 2006 and has | Paul joined Polar Capital in 2012 and has 10 years’ | | has 12 years’ investment experience. Prior to | 16 years’ investment experience. She is a fund | investment experience. Prior to joining Polar | | joining Polar Capital, Alastair co-managed the | manager on the Polar Capital Global Technology | Capital Paul helped manage a private investment | | Arbrook American Equities Fund. Between 2014 | Fund, Polar Capital Technology Trust and Polar | fund between 2010 and 2012. Paul holds a BA in | | and 2018 he launched and then managed the | Capital Automation and Artificial Intelligence | History and Politics and a Masters in History from | | Neptune Global Technology Fund and managed | Fund. Fatima holds an MSc in Chemistry with | Keele University. Paul is also a CFA Charterholder. | | the Neptune US Opportunities Fund. Alastair has a | Medicinal Chemistry from Imperial College of | | | BA (1st Class Hons) in History from Trinity College, | Science & Technology in London. She is also a | | | Cambridge and is a CFA Charterholder. | CFA Charterholder. | | 10 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Experience breakdown (years) ### Nick Williams Investment Analyst 28 Focus areas: Artificial Intelligence, 27 Healthcare and Clean Energy Nick joined Polar Capital in June 2019 as an analyst on the Polar Capital Technology team and has 7 years’ investment experience. Prior to joining Polar Capital, Nick worked at Neptune Investment Management as the Assistant Fund Manager on the US Opportunities Fund. Prior to that he 74 worked in academia at the University of Oxford. Nick holds an MChem in Chemistry from Wadham College, University of Oxford. Ben Rogoff Fund Managers (x4) Investment Analysts (x3) The team collectively manage £6.7bn in assets £274.9m £2.8bn ### Patrick Stuff Investment Analyst Focus area: Artificial Intelligence and £3.6bn Industrial After graduating from the University of Warwick with a BSc in Economics, Patrick joined Polar Polar Capital Technology Trust Capital as an Operations Executive, where Polar Capital Global Technology Fund he provided operational support to all fund Automation and Artificial Intelligence Fund management teams at Polar, including the Technology team. During this time Patrick As at 30 April 2023 successfully passed all three levels of the CFA program first time, and subsequently, after a successful 8 months seconded to the technology team, Patrick joined on a full-time basis in May 2021 as an investment analyst with a focus on AI and Industrial companies. Patrick has 6 year’s investment experience. www.polarcapitaltechnologytrust.co.uk 11 ## Manager’s Report Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Investment Manager's Report This report forms part of the Strategic report section ![img-4.jpeg](img-4.jpeg) Ben Rogoff Partner, Technology ## Market Review As discussed in our last Annual Report, we believe 2022 is best understood as the year 'risk was repriced' as central banks moved forcefully to rein in the economy, defend their credibility and prevent inflation expectations becoming unanchored. Proving anything but 'transitory', inflation continued to surprise to the upside taking global risk-free rates with it. In the US, consumer price inflation (CPI) averaged 8.0% during the calendar year, while the +9.1% reading in June was the largest year-on-year (y/y) monthly gain since 1981. The inflation shock was hardly unique to the US, with soaring energy and food prices, labour markets with more jobs than available workers and the release of pent-up demand combining to create the most inflationary backdrop globally for 40 years. For the full year, global inflation averaged 8.8% compared to pre-pandemic levels of around 3.5%. As a result of this persistent inflation, 2022 was also a year of unprecedented interest rate rises, after an oddly slow start by central banks. In the US, the Federal Reserve (Fed, the US central bank) embarked on the steepest set of rate hikes in 40 years as rates were raised by 450 basis points (bps), including four 750ps hikes, in addition to the resumption of quantitative tightening (QT) whereby the Fed reduces its monetary reserves to 'tighten' its balance sheet. Futures markets at the start of 2022 had priced in expectations for Fed Funds (the key benchmark rate targeted by the Fed) to be at c1% by June 2023; by year end, this figure had risen to c5%. In Europe, the decade-long experiment with negative interest rates ended as the European Central Bank (ECB) raised rates by 250bps despite a high likelihood of recession. Most other major markets experienced tightening in excess of 200bps. Sharply higher risk-free rates weighed heavily on asset prices, not least bonds which experienced their worst calendar year returns since at least the 1970s, the Bloomberg US Aggregate Float-Adjusted Index losing 13.1%. This theme was painfully echoed in equity markets – the longer the duration, the worse the return. Ten-year US Treasuries suffered their worst annual performance since 1788 while record government bond losses were recorded in Japan, Europe, and the UK with drawdowns of 16.2%, 22% and c32% respectively. Having stood at $10mn in January 2022, the global stock of negative-yielding bonds had fallen to essentially zero by calendar year end. Higher sovereign yields weighed heavily on global equities, which also had to contend with elevated recession risk and negative earnings revisions. During the calendar year, 2yr-10yr Treasury yields fell to their most negative spread (where 2-year yields are higher than 10-year yields) in more than 40 years. Aggregate earnings estimates for companies in the S&P 500 Index in 2023 fell from $245 to around $230, while 2024 forecasts fell to c$250, essentially losing a year of growth. As measured by the MSCI All-Country World Index (ACWI), global equities fell by -18.4%, in dollar terms, their worst showing since 2008. The S&P 500 Index (-19.4%) also posted its biggest fall since 2008 and its seventh worst year since 1926. The unusual correlation between bond and equity markets, courtesy of inflation, meant that 2022 will probably be remembered for being the first year that both the S&P 500 (equities) and 10-year US Treasuries (bonds) each registered losses of more than 10% on a total return basis. It was also the worst year for combined total returns of stocks and bonds since 1982. A bad year for US equities proved a calamity for growth stocks which suffered their worst year compared to value stocks since 2000. Helped by energy's record year (+59%) versus the broader market, the Morningstar US Value Index fell just c1% while the Morningstar US Growth Index plunged by c37%. 14 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information Equities started strongly in 2023 as extreme pessimism and bearish positioning were challenged by disinflationary data, weaker energy prices and sharply lower real rates, as well as a better than feared Q4 company earnings season and a momentum / short squeeze. European equities and 60/40 portfolios recorded their best start to a year since at least 1987, while the tech-heavy NASDAQ Composite Index enjoyed its strongest year-to-date performance since 2001. However, sentiment turned more negative in February as a slew of strong economic data for January challenged the excitement that the interest rate tightening cycle was largely complete. Investment grade global bond markets gave back their year-to-date gains, while corresponding equity market weakness has seen US indices either approach or break 50-day moving averages as positioning and sentiment tailwinds came to an end and stocks began to fall on bad news or weak earnings reports. The collapse of Signature Bank and then Silicon Valley Bank (SVB) in March provided the most significant casualties of aggressive Fed tightening. In order to prevent contagion, the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) announced that all deposits of SVB and Signature Bank would be insured, solving the immediate risk to deposit holders, and helping to stem rapid withdrawals which totalled $42bn in just four hours at peak. However, concerns remained that these bank failures were emblematic of wider issues in the banking sector, prompting extreme bond volatility and a 'flight to safety' with US 2-year yields falling by 130bps in just eight trading days. Credit Suisse fell soon afterwards, when actions by the Swiss central bank failed to stem client outflows and counterparty de-risking. UBS Group agreed to buy the 166-year-old lender for 3bn Swiss francs (40% of its market value) in a historic government-brokered deal aimed at containing the crisis. ### Technology Review In addition to the pressures felt by the broader market, technology stocks also had to contend with the further unwinding of perceived 'Covid winners' which weighed on the sector's relative growth and its companies' valuations. However, marked outperformance by the sector giants during early 2023 left the technology sector (represented by the Dow Jones Global Technology Index) modestly ahead of the broader market (MSCI ACWI) for our full fiscal year to 30 April 2023, the Dow Jones Global Technology Index returning +2.7% and the MSCI ACWI +2.1% respectively, both in sterling terms. However, overall index returns contrasted with those enjoyed by the average stock, especially during 2022, when just 30% of technology stocks outperformed. For the 2022 calendar year (two-thirds of which fell within our past fiscal year), the Dow Jones Industrial Average (DJIA) outpaced the NASDAQ Composite Index by more than 2,400bps, the greatest divergence between the two since 2000. During this period, value significantly outperformed, outpacing the most expensive quintile of technology stocks by 35% in 2022. Perceived defensive businesses such as Hewlett Packard Enterprise (+17%), IBM (+24%) and Oracle (+7%) sidestepped the massive de-rating of growth stocks that all but wiped out the EV/sales valuation premium normally enjoyed by next-generation software stocks over legacy incumbents, making it another challenging year for growth-oriented technology investors, us included. As in 2021, the greatest weakness was reserved for the longest duration assets with limited valuation support. Tesla fell an incredible 65% during 2022, commensurate with the decline experienced by MSCI Ukraine and Bitcoin, revealing extreme cross-correlation. Weakness in category leaders like Tesla presaged a collapse in 'second liners' such as would-be electric vehicle (EV) makers Rivian (-82%) and Lucid (-82%). The ARK Innovation fund fell a further 63% in 2022 after declining 23% in 2021. Thankfully – and something we have highlighted for the past two years – the most pain was felt beyond listed equities as bubbles in cryptocurrency, non-fungible tokens (NFTs) and Special Purpose Acquisition Companies (SPACs) were destroyed. Cryptocurrencies plunged in 2022, led by Solana (-94%), Cardano (-81%) and Ethereum (-68%) leading to many industry bankruptcies before engulfing FTX and Sam Bankman-Fried. PCTT does not invest in either SPACs or cryptocurrencies. Thankfully the technology sector's fortunes reversed with the arrival of the new calendar year, covering the final four months of our fiscal year, during which our benchmark advanced +16.9% as compared to the MSCI ACWI's +4.7% gain. This was driven by better-than-expected macroeconomic data which prompted optimism around e-commerce and digital advertising growth against low expectations, while Artificial Intelligence ('AI') provided a new growth outlet to many semiconductor companies given the calculation (compute)-intensive nature of large language model (LLM – see more below) training and inference. However, this period also saw extraordinary outperformance of large-cap companies, as measured by the Russell 1000 Technology Index, which delivered +22% while small-caps as measured by the Russell 2000 Technology Index, fell 1.9%, both in sterling terms. Mega-cap technology stock performance has been even more pronounced, benefitting from a 'flight to quality' amid the www.polarcapitaltechnologytrust.co.uk 15 ![img-5.jpeg](img-5.jpeg) Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Investment Manager's Report continued collapse of SVB, money flowing from the financials and energy sectors and excitement about and desire for AI exposure. At the technology subsector level, AI enthusiasm proved an important driver for semiconductors, the Philadelphia Stock Exchange Semiconductor Index (SOX) returning +4.2%. This was impressive given weakness in other end markets including smartphones and PCs. Earlier widespread semiconductor shortages and price increases scared customers who then scrambled to modify procurement policies to secure supply at the expense of inventory discipline, resulting in a severe inventory correction. Auto and industrial markets were more stable and datacentre spending remained relatively resilient as the large cloud providers continue to invest in anticipation of a compute-intensive AI future. These trends, together with further evidence of 'semiconductor sovereignty' (epitomised by the $280bn CHIPS and Science Act) saw wafer fabrication equipment (WFE) spending surpass $100bn for the first time. Despite enthusiasm about AI, there was a significant slowdown in cloud revenue growth as customers optimised spend following the pandemic-induced acceleration. Aggregate cloud revenue growth slowed by 400-500bps per quarter from +36% in Q2'22 and +31% in Q3 before falling to +26% and +21% in Q4 and Q1 respectively. This was a disappointment despite the public cloud's vast scale at >$170bn annualised revenue run rate. The slowdown in cloud revenues reflected a broader slowdown within software, especially at Software as a Service (SaaS) companies. During the year, many software companies highlighted greater deal scrutiny, longer sales cycles, deal compression and in later months found it more difficult to expand seat counts as customers retrenched. While the Bloomberg Americas Software Index returned 4%, this largely reflected strong returns from legacy players with limited growth profiles but generally strong pricing power and undermending valuation multiples. Microsoft also delivered strong returns (+11.8%) as Azure continued to grow well and customers consolidated spend on the largest platforms. Conversely, diminished risk appetite and a higher interest rate environment presaged a material valuation reset in the higher growth parts of the sector which saw the Goldman Sachs Expensive Software basket return -27%. In the internet sector, echoes of the pandemic period continued to impact results, from still-slowing gross merchandise value (GMV) growth at many e-commerce companies, inventory issues at retailers and an ongoing travel and entertainment spending boom, as consumer spending continued to shift from goods to services. The NASDAQ Internet Index returned +1.0% during the fiscal year with a material divergence between mega-cap and smaller-cap constituents. # Portfolio Performance The Company underperformed its benchmark with the net asset value (NAV) per share falling -2.8% during the fiscal year versus an increase of 2.9% for the Dow Jones Global Technology Index. The Company's share price fell by -4.9%, reflecting the additional impact of the discount widening from 11.5% to 13.4% during the period. We continue to monitor the discount and the Company bought back 6.07 million shares during the fiscal year, at an average discount of 12% to NAV. The greatest headwind to the Company's relative performance was the dominance of large-cap technology stocks which we are structurally underweight. The Russell 1000 Technology Index (large cap) returned +5.5%, while the small-cap Russell 2000 Technology Index declined -13.8%, in sterling terms, with divergence becoming more accentuated into the end of the fiscal year following the collapse of SVB. Mega-cap outperformance was even more striking as Goldman Sachs' equal-weighted index of the six largest technology stocks returned +10.2% during the fiscal year and +16.3% since the end of February 2023. Within the growth part of the technology market, the divergence in performance was even more stark. The Russell 1000 Growth Technology Index returned +6.3% while the Russell 2000 Growth Technology Index returned -14.4% during the fiscal year. Unsurprisingly, mega-cap technology companies were responsible for some of the largest individual detractors to the Company's relative performance versus the benchmark. This included large absolute but relative underweight positions in Meta Platforms, Microsoft and Apple. Underweight positions in the largest five index names were responsible for a little more than a fifth of underperformance, with a larger portion of underperformance due to compression of next generation valuations. During the latter half of 2022 we looked to cautiously rebuild the Company's exposure to next-generation software companies following significant valuation compression. This proved premature and was responsible for several of our largest detractors that included CrowdStrike (-40%), CloudFlare (-45%), Atlassian (-34%) and GitLab (-37%). Software proved our biggest detractor at the subsector level as a period of extreme multiple derating was followed by softer 2023 guidance as growth slowed and customers looked to optimise their cloud and software spending post-Covid. Less expensive software 16 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information companies fared little better as our positions in Elastic in 2022, and c10bps lower than it estimated in January. (-25%), Five9 (-41%), CyberArk (-21%) and Tenable The slowdown continues to reflect sharply higher central (-33%) all contributed negatively to relative performance. bank rates necessary to combat inflation as well as the There were also a number of genuine disappointments conflict in Ukraine. While growth may be bottoming out which impacted performance despite their modest (aided by lower energy prices, robust private consumption, position sizes, including Snap (-69%), Bill.com (-55%), and ongoing fiscal support), recent turmoil in the financial Square (-39%) and Kornit Digital (-72%). sector following the collapse of several US regional banks is a reminder that recovery is unlikely to be straightforward. In terms of positives, our growth semiconductor positions made a strong positive contribution given ongoing strength in data centre demand and enthusiasm around AI. This included Lattice Semiconductor (+66%), Monolithic Power Systems (+18%), eMemory Technology (+36%), Advanced Micro Devices (+5%) and the impact of our zero-weight position in Intel (-29%), which made up c1% of our benchmark. Leading networking company Arista Networks (+39%) also benefitted from robust hyperscale data centre spending. Strong automotive demand and an inflection in electronic vehicle (“EV”) adoption helped power semiconductor holdings Infineon Technologies (+26%) and ON Semiconductor (+38%). Semiconductor capital equipment players KLA Tencor (+21%) and Disco (+40%) also delivered solid returns. Given the weak performance of most major technology subsectors (especially beyond the largest companies), a number of positive contributors to our relative performance came from peripheral areas including public sector technology, MedTech and FinTech. They included Axon Enterprise (+88%), Intuitive Surgical (+26%), Dexcom (+19%) and Wise (+39%). We are never happy when we underperform our benchmark, even during periods when growth stocks are deeply out of favour. However, we are heartened by the fact that according to Lipper data, the performance of the Company versus the broader technology peer group remains first or second quartile over almost every period which suggests that the challenge posed by a highly concentrated benchmark firing on most cylinders is being widely felt. ### Market Outlook Last year we observed how risk was being repriced as the range of potential macroeconomic outcomes had The end of China’s zero-Covid policy has already seen become unusually wide. Valuations were elevated, emerging markets accelerate, led by China and India earnings numbers at risk and early hopes that inflation which are forecast to grow 5.2% and 5.9% respectively would subside proved sadly complacent. Twelve months this year. In contrast, growth in advanced economies is and 350bps of US rate hikes later, the range of potential expected to slow to just 1.3% (2022: 2.7%). Risks to this outcomes appears narrower. Tightening has weighed on outlook appear skewed to the downside while inflation, growth expectations: in its May update, the IMF forecast expected to fall to 5.6% this year and 3.7% in 2024, is global growth of 2.8% in 2023, a moderation from 3.4% likely to continue to dictate the tenor of monetary policy. www.polarcapitaltechnologytrust.co.uk 17 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Investment Manager's Report continued The good news for the market outlook is that **most of the world's major central banks appear substantially through their rate tightening cycles**. At the beginning of 2022, Fed Funds were near zero with futures markets pricing in c70bps of rate hikes. Ten-year US Treasury yields were 1.5% while real rates were negative. A little more than a year later and following 500bps of rate hikes, the **Fed had begun to signal** that the current rate-tightening cycle might be over. However, recent central bank rhetoric and/or action has become incrementally hawkish, dampening earlier hopes of a more benign interest rate environment. With the Fed remaining 'data dependent', we are hopeful that rate expectations will moderate given our view that **peak inflation is behind us**. At the February Fed press conference, Fed Chair Jerome Powell unexpectedly declared it was 'most welcome to be able to say that we are now in disinflation'. While he offered many caveats, Powell mentioned disinflation 15 times during the press conference. While subsequent data has been mixed, headline inflation almost certainly peaked last summer. Others also appear to be past peak inflation with c84% of countries expected to have lower headline CPI in 2023 than in 2022. A key contributor to headline disinflation has been sharply lower energy prices, as well as falling goods prices as supply bottlenecks improve. Without question, the faster-than-expected adjustment in commodity prices to the shock from Russia's invasion of Ukraine represents the most constructive market development during the past year. In Dollar terms, crude oil has fallen by c.40% since its June highs while natural gas prices (having risen to 18x their pre-crisis level) have fallen precipitously, although they remain significantly higher than before Russia began preparing to invade Ukraine. The combination of a fortuitously warm winter, an impasse in Ukraine and conservation measures recently saw EU consumption of natural gas fall 25% below the 2017-21 average. Although both core and service inflation remain uncomfortably high, policymakers will likely be encouraged by falling headline prices that may help reduce wage pressure by feeding into lower wage demands that are typically informed by headline rates. Inflation expectations also remain well-anchored, with market expectations of US inflation 5-10 years out still around 2.5%, less than half the current level. Policymakers may also regard recent bank failures as evidence that the long and variable lag associated with significant monetary tightening is beginning to show up, with US regional bank turmoil acting like a further rate hike transmitted through the credit creation channel. According to the ECB, the negative impact on inflation will increase from 0.2% in 2022 to 1.2% this year before rising to 1.8% in 2024. Likewise, excess savings, which have acted as a buffer for consumption, have also been significantly depleted. In the US, an estimated $1.6trn of the $2.5trn in Covid-related stimulus savings have been spent while the personal saving rate is at its lowest in more than 60 years (except for July 2005). These factors may end up proving Powell right on disinflation, stock returns have been strong following a peak in inflation as long as a severe recession is avoided. Since 1948, the S&P 500 has averaged a 59.2% price gain five years post-peak inflation, including the negative 2008 and 1973-74 experiences. While we do not anticipate a severe downturn, US recession risk remains elevated as indicated by the spread between two-year and 10-year Treasury yields. However, this remains at odds with a US economy that, despite record monetary tightening, still grew 1.1% y/y during Q1, supported by an incredibly robust labour market, sharply lower energy prices and 'remarkably resilient' consumer spending. While we expect the backdrop to remain choppy, first-quarter reporting season has been better-than-expected as 54% of S&P 500 firms have beaten consensus earnings expectations by more than one standard deviation of analyst estimates versus a historical average of 46%, according to Goldman Sachs. The downward slope of earnings per share (EPS) revisions has also continued to improve, which could suggest the steepest of the estimate cuts are behind us. This apparent contradiction is in part explained by the fact that GDP is measured in real terms while earnings estimates are nominal. As such, inflation – which has been supportive for (nominal) corporate revenues – continues to represent a greater risk to valuations (via a higher discount rate/ lower multiple) than to corporate earnings, although cost pressures have seen S&P net margins slip to 11.2% in Q4'22 from 12.4% in Q4'21. Against a more persistent inflationary backdrop and a good start for markets this calendar year, **valuations appear relatively full**, with the S&P 500 trading at 18.8x forward earnings (2022: 19x). This leaves US stocks trading a little above both the five (18.6x) and 10-year (17.4x) averages. Having previously lent on past data that compares inflation to average PE ratios, history suggests there is further valuation downside (to c.15x PE) should inflation remain above 4%, and considerably more with inflation above 6% (c.11x). However, significantly lower valuation ranges may be more appropriate during periods 18 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information S&P 500 Info Tech Forward PE (1992 – Present) +4 SD S&P 500 Information Technology Sector Forward P/E Source: S&P Capital (Qand MSCl. Inc. (GICS) +3 SD +2 SD +1 SD Mean -1 SD Ratio of S&P 500 Info Tech Forward PE (1992 – Present) 2.6 Ratio of S&P 500 Information Technology Sector Forward P/E to S&P 500 Forward P/E +5 SD | 2.4 | | Source: S&P Capital IQ and MSCI, Inc. (GICS) | | --- | --- | --- | | 2.2 | +4 SD | | | 2.0 | +3 SD | | 1.8 +2 SD 1.6 1.4 +1 SD 1.2 Mean 1.0 -1 SD 0.8 0.6 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Ned Davis Research where central banks are less able to curtail inflation hope the Fed is able to recalibrate price expectations (as with the 1970s’ oil crisis) or when policymakers without causing an economic dislocation. With no choose to de-emphasise it. For now, central banks remain post-1950 precedent, economists are naturally dismissive, highly credible and longer-term inflation expectations but as Fed Governor Philip Jefferson, put it, “history is well-anchored. Inevitably, equities will have to contend useful, but it can only tell us so much, particularly in with greater competition from bonds and cash than situations without historical precedent”. Supply-chain during the era of ‘free money’, when long-term rates disruptions are improving, the labour participation rate averaged 2.3%. However, over the medium term is recovering, and Fed credibility is high. While 1970s we can envisage many scenarios where equities throwbacks make good copy (“another winter of outperform bonds but very few where the opposite discontent”), the US became a net exporter of energy in is true. That said, we remain cautious of assets that are 2019 and union membership in the US stands at a third 50 +4 SD illiquid, complex, or dependent on access to capital. of its 1960 peak. Even if the US cannot avoid a recession, S&P 500 Information Technology Sector Forward P/E 45 Source: S&P Capital (Qand MSCl. Inc. (GICS) it does not have to be a disaster, just as a loss does not +3 SD Upside risk will likely depend on the worst of inflation 40 have to be total. With investors said to be facing “the 35 being behind us and recession being avoided. A Fed +2 SD worst backdrop for equities in over 40 years”, a mild 30 pause suggests that significantly tighter monetary policy +1 SD recession may not prove too bitter a pill. Also, absent a 25 has begun to bite. This is evident not just in the banking 20 recession, markets may have bottomed in October 2022. Mean sector but also in waning consumer confidence, CEO 15 -1 SD sentiment, housing affordability and the availability of If ‘immaculate disinflation’ seems fanciful, consider the 10 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 credit. However, should the Fed prove able to becalm post WWII period when a temporary malalignment of the labour market without causing a major spike in demand and supply saw CPI leap from 1.7% in February 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 unemployment, the most widely forecast recession in 1946 to a peak of 19.7% in March 1947, before history might still be averted. While history suggests this plunging to zero in 1949 with no lasting impact on is unlikely, there is little that is ‘normal’ about the current inflation expectations. Pent-up demand was part sated, cycle – the Fed has tightened substantially over the past part choked by a modest Fed-induced recession while 50 15 months without any significant impact on the labour supply recovered as factories retooled from armaments 45 market while price inflation has declined. This unusual to consumer goods. If this sounds oddly familiar, consider 40 35 combination – coined ‘immaculate disinflation’ – offers how the rejection (or resignation) of ‘victorious’ pandemic 30 25 www.polarcapitaltechnologytrust.co.uk 19 20 15 10 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2.6 Ratio of S&P 500 Information Technology Sector Forward P/E to S&P 500 Forward P/E +5 SD | 2.4 | | Source: S&P Capital IQ and MSCI, Inc. (GICS) | | --- | --- | --- | | 2.2 | +4 SD | | | 2.0 | +3 SD | | 1.8 +2 SD 1.6 1.4 +1 SD 1.2 Mean 1.0 -1 SD 0.8 0.6 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Investment Manager's Report continued leaders – Ardern, Conte, Johnson, Merkel, Sturgeon, and Trump – is also reminiscent of Churchill and De Gaulle's post-war experiences. ### Market Risks Except for Covid (which has diminished further as a risk, thanks to a high level of immunity and lack of a new variant), many of the key challenges posed to equities are unchanged from last year. The principal risk faced by most risk assets is **inflation** with central banks focused on preventing relative price changes becoming entrenched. However, calibrating monetary policy to prevent "transitions from low to high inflation regimes" is extremely challenging. Thankfully, the Fed's preferred measure – the personal consumption expenditures (PCE) price index – has fallen back to 4.4%, from a high of 7% in June 2022. However, services inflation and wage growth remain at levels incompatible with central bank inflation targets. Services inflation will not be easy to resolve due to post-pandemic pent-up demand and the fact that it has averaged c3.3% growth per annum between 1982-2021. It will also be made more difficult by an extremely tight US labour market with unemployment recently at its lowest in over 50 years (3.4%) and only 0.6 unemployed people available for every job opening. Although a weaker economy should help, the market remains desynchronised with sectors such as healthcare and leisure still operating with fewer people than pre-Covid. Should inflation fail to return to old ranges, policymakers may adopt much more restrictive policy or admit defeat and accept that the post-pandemic world is likely to experience persistent higher levels of inflation. This scenario envisages many of the same medium-term inflationary headwinds we discussed last year: greener but more expensive energy, deglobalisation and supply-chain fragmentation. These (and others, such as the loss of the peace dividend) may be incompatible with present inflation targets that are "too low for such a world and yet hard to revise given [the risk to] central bank credibility". However, we remain relatively sanguine about inflation given **potential productivity gains** that have yet to manifest themselves (especially related to AI) that could offset some of these potential inflationary headwinds. We are also encouraged by the fact that high and persistent US inflation is rare, especially outside war. While the overarching need for central banks to remain credible means monetary policy will remain data dependent, the **risk of policy error** is magnified by the potential shift from a low to high inflation regime. The Fed will also wish to avoid a repeat of the 1962-66 cycle when aggressive easing in late 1966 was followed by "a decade of engrained inflation". If so, rates might stay higher for longer, with the first rate cut arriving later than the typical 7-9 months after the last hike. As such, **recession risk** remains elevated; the economy might 'slow dance' into recession, as in 2000, or a 'no landing' scenario might force the Fed into inducing a recession to bring inflation down. If history is any guide, markets may retest lows if recession is not avoided. According to Ned Davis Research, the broader market takes a median of 5.3 months to reach its nadir following the official declaration of a recession by the National Bureau of Economic Research (NBER). Meanwhile the average recessionary bear market has seen the market fall by c33% over 17 months. Recent financial sector stress has highlighted the **liquidity risk** associated with unwinding record monetary and fiscal pandemic stimulus. While we are hopeful that recent bank failures have been contained, they – together with the earlier cryptocurrency collapse and disfunction last year in the UK pension market – are salient reminders of the systemic risk posed by continued withdrawal of liquidity. Likewise, the **geopolitical risk** remains heightened too. While **Ukraine** no longer dominates the headlines, war remains a key determinant of the ongoing energy/cost of living crisis while continuing to pose myriad risks. Despite both sides threatening major new offensives, our base case assumes the current 'impasse' in Ukraine persists as neither side looks capable of winning the conflict nor acceding to peace terms this year. While there remains a very serious risk of escalation, the conflict has remained relatively well contained even as the rhetoric has flared up on occasion. For now, stalemate ahead of a 'frozen conflict' (as per Korea) rather than a negotiated peace, looks the most likely outcome. Beyond Ukraine, other key geopolitical risks include **US-Sino relations** with the downing of three Chinese spy balloons over US airspace earlier this year reminding us of the risk associated with rising nationalism in both countries. In the US, this has taken the form of economic policy designed to frustrate Chinese technological progress with recent export controls aimed at denying Chinese access to advanced semiconductors representing a notable escalation. While anti-China rhetoric is likely to remain heightened ahead of US presidential elections, we remain hopeful that further decoupling need not end in acrimonious divorce. However, industrial policy is clearly back in vogue, evidenced by greater subsidies, export restrictions and content requirements such as the Inflation Reduction Act, which collectively may unwind some of the benefits of post-war globalisation. 20 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Finally, there are a number of tail risks. These include a current ebullience reflects understandable excitement new deadlier Covid variant, a faltering Chinese recovery around AI, the recent recovery in valuations may leave or a particularly cold winter that might reignite energy the sector vulnerable to near-term setbacks. However, prices. Iran also represents an elevated tail risk with downside risk associated with full valuations should be a number of factors – domestic repression, nuclear considered alongside actual progress made in AI, which advances, military support for Russia and a Netanyahu- we believe represents a key moment for the technology led government in Israel – increasing the likelihood of sector. It is also worth recalling that during the dot.com confrontation this year. period, the technology sector traded well in excess of twice the market multiple. ### Technology Outlook No valuation premium for next-generation Earnings outlook stocks Having only increased 0.5% in 2022, worldwide IT While aggregate sector valuations have fully recovered, spending is expected to reach $4.6trn this calendar next-generation stocks, particularly within software, year, representing an increase of 5.5%, in dollar terms. have not. Last year we referenced that valuations were However, this relatively sanguine forecast captures recent in “price discovery mode” but the correction proved far dollar weakness; constant currency growth is likely to more dramatic than we anticipated. What began as an prove considerably weaker. For 2023, the technology overdue reset has seen software valuations fall back to sector is expected to deliver revenue and earnings growth c.6.3x forward EV/sales having peaked at c.14.8x in late of 1.4% and 0.8% respectively. Although this compares 2020. According to KeyBanc, this leaves them 25% below unfavourably with the market, which is forecast to grow the trailing five year average (8.4x) and broadly in line with revenues and earnings 2.4% and 1.1% respectively, the ten-year average (6.6x). This has also recently left next- the technology sector is expected to revert to more generation software stocks trading at a small discount to typical above-market growth in 2024 with revenues legacy ones on a forward EV/sales metric. and earnings progress currently pegged at 8.7% and 16.3% y/y. Technology sector progress will likely be driven Software: Cloud vs. legacy valuations EV/ by macroeconomic conditions; net profit margins remain trailing 12-month revenue multiples a key focus for earnings as they remain above long-term averages, despite having fallen back to 22.6% from 26% last year. After two years of strength, recent dollar weakness represents a potential tailwind for technology estimates given the sector’s international exposure of 58% (the highest of any sector) versus 40% for the market. Valuation 20x The forward price to earnings (P/E – comparing a company’s share price to its annual net profits) of the technology sector continued to contract during the 15x past year. A year ago, valuations had fallen back to 24x forward P/E, having earlier made cycle highs of 10x 25x c28x ahead of the Fed pivot in November 2021. Since EV/ trailing 12 month sales then, valuations have continued to compress against a backdrop of higher risk-free rates and greater economic 5x uncertainty, with technology stocks ending the year at c19x forward P/E. However, the calendar year to date | surge in large-cap technology stocks (against a backdrop | 0x | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Feb | Nov | Aug | Jun | Mar | Dec | Oct | Jul | Apr | Feb | Nov | Sep | Jun | Mar | Jan | Oct | Jul | May | | of falling estimates) has seen valuations recover to 27.1x | 10 | 10 | 11 | 12 | 13 | 13 | 14 | 15 | 16 | 17 | 17 | 18 | 19 | 20 | 21 | 21 | 22 | 23 | | at the time of writing, ahead of both five (22.4x) and | | | | | | | Legacy Cloud | | | | | | | | | | | | Source: KeyBanc 10-year (19.2x) averages. The premium enjoyed by the sector has also expanded during 2023 with technology stocks today trading at 1.4x the market multiple in excess of the post-bubble range of between 0.9-1.3x. While www.polarcapitaltechnologytrust.co.uk 21 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Investment Manager's Report continued ### What pandemic? The current situation is highly unusual, reflecting a challenging investment backdrop as well post-pandemic 'demand normalisation' with many of the vestiges of the pandemic period being swept away. Reopening has not just challenged 'new' pandemic categories such as home fitness and telehealth; it has also hurt existing ones such as online dating and videogaming, while more durable segments such as e-commerce and payments have had to contend with decelerating demand and/or increased competition. In more mature markets, earlier working from home ('WFH')-related strength has been followed by exceptionally weak demand. This is most evident in the PC market where an extraordinary 2021 was followed by a dismal 2022 as units shipped declined by the most year-on-year since Gartner began tracking PC data. This dynamic has also played a part in slower cloud and associated software demand as customers moved to optimise their spending having earlier migrated aggressively to the cloud. The impact on cloud spending demonstrates the breadth of readjustment and why it has been so difficult to avoid the miasma of post-Covid demand normalisation. ### Risk/reward much improved We hope the largest part of any next-generation valuation reset is behind us. In the absence of a recession, it is highly likely we have already seen the valuation lows. While the absence of strategic M&A remains something of a headscratcher, we are encouraged by **private equity (PE) activity** that has picked up significantly, with Avalara, Coupa, Duck Creek and ForgeRock all being taken private in recent months. These take-private transactions were consummated between 6.9-8.9x Enterprise Value/ next 12 months sales – well in excess of where most software stocks trade today. As the recent (and competitive) bid for Software AG attests, we expect private equity to remain very active, providing software valuations with something of a floor. Private equity is said to have c$2bn of 'dry powder' available while Thoma Bravo (an investor in more than 420 technology companies over two decades) raised $32bn across PE funds last year. In January, founder Orlando Bravo revealed that despite the large fund raise, the selloff in software stocks meant the opportunity to buy assets was 'many, many, many, many, many multiples of that'. ### Adopting a slower growth playbook In the meantime, companies are borrowing from the so-called 'PE playbook' by recalibrating their businesses to account for slower growth and earlier disruption-related exuberance. The pivot towards profitability is evident from widespread workforce reductions within the technology sector that have intensified during 2023, with activist investors such as Starboard helping drive the focus on greater cost discipline. Epitomised by restructuring at Salesforce (which announced a 10% headcount reduction and increased operating margin targets), the unwinding of erroneous extrapolation of pandemic-related demand has seen layoffs move from growth-challenged companies to high-flyers like Confluent and HubSpot. Cost-cutting initiatives have shown positive early results: the median software company operating margin has expanded by nine percentage points over the past three quarters, according to Goldman Sachs. Nonetheless, revenue growth is slowing just as it did in the recessions of 1990, 2002 and 2009 as well as during the 2016 deflationary echo. While macroeconomics will likely dictate the magnitude of the current slowdown, the good news is the best companies should still grow, just as the median SaaS company grew 18% in 2009 while, in 2002, median maintenance/subscription revenue growth was 14%. Salesforce was still able to grow revenues 21% in 2009 – impressive given the prevailing macroeconomic conditions – and therein lies the even better news which is that **growth slowdowns should help us identify more than our fair share of next-cycle winners**. After all, there is nothing like an ordeal to test strength. In 2009, each of Baidu, Google, MercadoLibre, and Salesforce.com were able to grow through a financial crisis before becoming multi-baggers during the following cycle. ### Artificial Intelligence While the macroeconomic backdrop remains highly uncertain, Chief Information Officer (CIO) spending priorities still align well with many of our key themes such as digital transformation (software), cloud and cybersecurity. The portfolio also has several additional core themes including connectivity/5G, digital advertising/e-commerce and EV/energy transition as well as secondary/emerging themes such as fintech/payments. However – as the theme of this year's Annual Report attests – 2023 belongs to **Artificial Intelligence (AI)**. We have been excited about the potential of AI for many years, highlighting the remarkable progress the technology has made in narrow fields. This was led by Google's *DeepMind* acquisition which achieved 'superhuman' ability in games such as Go (2016) and Chess (2017) before solving one of the grand challenges in biology during 2021 when *AlphaFold* was able to predict 3D models of protein 22 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information structures described at the time as “the most important especially those regarding bias and the potential for it to achievement in AI ever”. “industrialise plagiarism”. While eventual regulation of AI seems inevitable, the industry would likely welcome That lasted until ChatGPT used a transformer model trained the introduction of legislative guardrails. However, this on 175Tb of text to generate human-like responses to will not be straightforward; rather than a restrictive set seemingly any question. Able to take on different personas, of regulations applied suddenly, we believe regulation write poems or programming code, even offer opinions, may follow a ‘governance by accident’ approach that has ChatGPT is already the first AI to “viably compete with underpinned the development of the airline industry; if humans”. This is likely to prove a pivotal moment for aviation is any guide, it is possible that by reducing risk, AI with Microsoft’s $10bn investment in ChatGPT maker regulation actually accelerates the adoption of AI, rather OpenAI best understood as one of the ‘opening shots’ in than stymies its progress. an AI war that has just commenced. We have long argued that the semiconductor industry looks well positioned, As such, the focus on regulation – so soon after the advent with McKinsey arguing this sector might capture as much of generative AI – might say more about investor fatigue as 40-50% of the value associated with AI. This view was around ‘technology disruption’ than it does about the seemingly supported following recent record-breaking risk regulation poses to the development of this nascent July quarter guidance from chipmaker Nvidia that was industry. This is understandable, following a period that more than 50% ahead of consensus driven by AI-related has witnessed more than its fair share of investment strength. On the earnings call, CEO Jensen Huang spoke hyperbole, much of which was catalysed by the pandemic. to a $1trn opportunity over ten years to replace CPU-based In contrast with blockchain and the metaverse – early infrastructure with more efficient, accelerated computing stage technologies in search of a problem – artificial based around GPU architectures as generative AI becomes intelligence might be “the most profound technology the “primary workload of most of the world’s data centres”. humanity is working on”. From a historical perspective, Nvidia stock rose 24% on the day, despite having already generative AI could prove another key moment in human gained 109% on a year-to-date basis prior to the report. history when codification and dissemination of Computational Requirements for Training Transformers knowledge is accelerated. In the ancient world, these included the development of writing systems (such as Megatron-Turing NLG 530B cuneiform and hieroglyphics) around 3500-3000 BCE, as 1,000,000,000 GPT-3 well as advanced mathematics and philosophy in Ancient Greece from the eight century BCE onwards. Libraries, 100,000,000 historical record-keeping, and translation of ancient texts GPT-2 10,000,000 were other key developments in the codification and Megatron Wav2Vec 2.0 preservation of knowledge, aided by breakthroughs that XLNet 1,000,000 enabled information to be stored (e.g., papyrus, paper), retrieved (e.g., cataloguing systems, encyclopaedia) InceptionV3 100,000 BERT Large and distributed (e.g., libraries, printing press). Advances GPT-1 Resnet in science, technology and communication during the Seg250g Transformer 10,000 ResNeXt ELMo Modern Era have “led to the codification of knowledge on VGG-19 an unprecedented scale” epitomised by the Internet which 1,000 AlexNet has facilitated knowledge sharing and democratised access 100 to information in a manner that has changed the world. 10,000,000,000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: https://blogs.nvidia.com/blog/2022/03/25/what-is-a-transformer- Generative AI offers similar- if not greater - promise. Built model/ using ‘foundation’ models which contain “expansive Of course, there are myriad risks associated with AI, neural networks inspired by the billions of neurons many of which are beyond the scope of this report. connected in the human brain”, generative AI applications However, the fact that ChatGPT makes mistakes (so- are able to process extremely large and varied sets of called ‘hallucinations’) is not one of them; most disruptive unstructured data and perform more than one task. This technologies begin as ‘good enough’ and trading allows them to “augment human creativity, automate accuracy for speed worked wonders for the telegraph, labour-intensive tasks and generate novel solutions to Encyclopaedia Britannica, and the biro. Moral and legal complex problems”. They can also understand natural questions posed by AI are more difficult to dismiss, language which means that generative AI could “change Training Compute (petaFLOPS) www.polarcapitaltechnologytrust.co.uk 23 All Al Models Excluding Transformers: 8x / 2yrs Transformer Al Models: 275x / 2yrs Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Investment Manager’s Report continued the anatomy of work” by automating activities that only requiring an internet connection and a smartphone. today account for as much as 60-70% of employees’ These low barriers to adoption have already supported time. However, in contrast with historic patterns of an unprecedented rate with ChatGPT taking just 2.5 technology automation, disruption is expected to be months to reach 100m users, as compared to Instagram disproportionately felt by knowledge workers. While which took 2.5 years (in itself extraordinary). Another Goldman Sachs estimate that more than 300m jobs major difference between AI and prior technology shifts is could be at risk, we remain optimistic that humans will the astonishing speed of AI improvement. This is most graduate to higher value work just as 60% of workers evident when comparing the capability of two OpenAI today are employed in occupations that did not exist in large language models (LLMs) – GPT-4 (the latest version) 1940. Furthermore, McKinsey forecast that generative AI and the earlier GPT-3.5 (ChatGPT) released approximately could deliver $2.6-4.4trn annually to global GDP driven a year apart. While GPT-3.5 was trained on 175bn by productivity gains that could be as high as 3.3% parameters (akin to internal variables the model learns per annum when generative AI is combined with other during its training phase), the newer GPT-4 may have technologies. This would be remarkable given current been trained on as many as 170trn. In addition, GPT-4 labour market tightness, ageing Western populations and also has a much larger context window – 25,000 words below-average productivity growth achieved during the vs. c.3,000 for its predecessor – which means it is able to past twenty years. retain far more information from earlier conversations. Aside from its “mastery of natural language”, GPT-4 “can Artificial intelligence also has the potential to become solve novel and difficult tasks that span mathematics, a transformative ‘general purpose technology’ (GPT) coding, vision, medicine, law, psychology and more, which -like electricity, steel, and the internet – may without needing any special prompting”. In all of these “reshape economies, drive innovation and create new tasks, model performance is “strikingly close to human- opportunities”. If so, history suggests that bold, early level performance”, evidenced by consistently high exam predictions about AI may prove extremely conservative. scores across a diverse range of disciplines (see chart). Not just because humans struggle with non-linear change (an observation that has long informed our investment The improvements in GPT-4 have been so remarkable that approach) but also because as yet unknown technology Microsoft recently posited in a whitepaper (‘Sparks of improvements subsequently transform the opportunity artificial general intelligence (“AGI”)) that the LLM “could set. If early applications for steel were predictable (e.g., reasonably be viewed as an early version of AGI system”. bridges, ships, rails), later and significantly larger market The concept of AGI was popularised in the early 2000s opportunities represented by skyscrapers, cars and home to differentiate between ‘narrow AI’ being developed appliances could not be known in 1855 when Bessemer at the time and “broader notions of intelligence”. Until perfected his steelmaking process. The same was true recently, AGI remained a popular science fiction topic and for aviation when the jet engine (and other avionic long-term aspirational goal within AI. That is until the developments) transformed the cost and safety profile of range and depth of GPT-4’s capabilities “challenge(d) our flight, resulting in passenger traffic growth compounding understanding of learning and cognition” with the model by more than 10% per year between 1950-1970 and said to “exhibit many traits of intelligence”. Naysayers helping travel and tourism become one of the world’s argue that large language models do not ‘understand’ largest sectors. More recently, the confluence of internet, concepts and are merely adept at ‘improvising on the fly’. cloud and smartphone has presaged widespread disruption However, like Microsoft, we believe the question is moot. and exponential change well beyond late 1990s predictions After all, one might ask “how much more there is to true that were only able to peer into a near and incomplete understanding than ‘on-the-fly’ improvisation?”. future that was yet to feature Google, AWS, and iPhones. Today, the app economy is worth c.$63trn, more than 60x times greater than the value of the handset market in 2007, the year that Apple introduced the iPhone. The impact of generative AI is likely to be felt more rapidly than either the internet or the smartphone. In part, this reflects the role that both earlier pervasive technologies will play as AI-enablers with access to ChatGPT (and other natural language ‘chat’ interfaces) 24 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information GPT-4 Outperforms GPT-3.5 across multiple (making sweeping legislation unlikely) and the fact that the largest US technology companies represent the exams 100% vanguard in the emerging AI battleground with China. However, deteriorating US-Sino relations represent a more significant threat to supply chains, especially in 80% semiconductors. For now, the Chinese appear able to work around US legislation, suggesting it is more for 60% domestic consumption ahead of elections, but if this is the beginning of a new economic cold war, then Taiwan – responsible for producing c90% of leading-edge 40% semiconductors – represents a critical fault line while a meaningful escalation of tensions could weigh materially 20% on a large part of our portfolio. Potential regulation could also stymie the explosive 0% AP Calculus BC AMC 12 Codeforces Rating AP English Literature AMC 10 Uniform Bar Exam AP English Language AP Chemistry GRE Quantitative AP Physics 2 USABO Semifinal 2020 AP Macroeconomics AP Statistics LSAT GRE Writing A Microeconomics AP Biology GRE Verbal AP World History SAT Math AP US History AP US Government AP Psychology AP Art History SAT EBRW AP Environmental Science growth of Generative AI which has been a key driver of technology returns during 2023. Conversely, further excitement about Generative AI might result in large-cap technology stocks perceived as AI beneficiaries and GPT 3.5 GPT 4 (no vision) GPT 4 safe havens continuing to ‘crowd-out’ small-cap companies. We must also acknowledge the risk posed Source: GPT3.5 vs 4 = Microsoft White Paper, ‘Sparks of Artificial General Intelligence’ to all companies: should it become a general purpose technology (GPT) as we suspect, history suggests there ### Technology Risks will be far more losers than winners from today’s group of companies within and beyond the technology sector. As ever, there are multiple risks to our constructive medium-term view. Many of these relate to Concentration risk macroeconomics, particularly recession and inflation, In addition to market and sector-specific risks, it would be that are covered elsewhere in this report. As previously remiss of us not to remind our shareholders once again highlighted, there remain downside risks to technology about the concentration risk both within the Company spending should CEO confidence meaningfully deteriorate. and the market-cap-weighted index around which we Similarly, earnings estimates are likely to remain subject construct the portfolio. At the year end our three largest to macroeconomic turbulence; while cost-cutting has holdings – Apple, Microsoft, and Alphabet – represented ameliorated downward revisions to date, technology c27% and c41.9% of our NAV and benchmark (Dow margins may be at risk should things worsen materially. Jones Global Technology Index) respectively. Last year, Likewise, a weaker macroeconomic environment might see when these three positions accounted for 29.3% of the current semiconductor downturn extend, resulting in NAV and 40.7% our benchmark respectively, we argued delayed industry recovery and/or result in a disappointing that concentration risk was justified because they were recovery trajectory for cloud spending which would unique, non-fungible assets that captured the zeitgeist weigh on cloud-related sentiment. of this technology cycle. Following another year of sustained outperformance from these stocks, as well as Valuation is another key risk because the recent surge in several other outsized benchmark positions including technology stocks has seen aggregate sector valuations Nvidia, we are pleased to have retained large absolute revisit their pandemic highs. While next-generation positions in them all even if their dominance of our valuations have already been meaningfully reset, a benchmark has meaningfully contributed to our relative steeper yield curve may delay any recovery in longer- underperformance. duration valuations. We remain comfortable with the strategy of moving to As in previous years, regulation remains a key risk too, materially underweight positions in the largest index although we are comforted by a divided Congress constituents should we become concerned about their Estimated percentile lower bound (among test takers) www.polarcapitaltechnologytrust.co.uk 25 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Investment Manager’s Report continued ### growth or return prospects, or should we find more Conclusion attractive risk/reward profiles elsewhere in the market. Market conditions in early 2023 lend support to a wide However, this position is complicated by the fact that range of potential outcomes, both good and bad. concentration today does not obviously reflect outlandish Macroeconomics will likely continue to lead the market in valuations as per the late 1990s; the top 10 positions the near term, although the primary debate has shifted in the benchmark recently accounted for c55% of somewhat to the timing and magnitude of a recession constituent market capitalisation and an estimated 53% and its impact on revenue and earnings estimates, of net income in calendar year 2023. Likewise, Apple rather than the extent of the central bank response may have made headlines recently when its market-cap required to deal with inflation, as dominated last year. exceeded that of the Russell 2000 (small-cap) Index, but However, the relative performance of the technology remarkably Apple also generates similar profits as those sector – particularly after a strong run – may continue to 2,000 companies combined. The emergence of AI also take its cue from real rates – a good reminder that we plays well into mega-caps given the significant scale are not out of the inflation woods yet, and the need to (reach; data; cost) likely required to be competitive. remain pragmatic (and highly liquid) in terms of portfolio Unlike many of our competitors that are limited to a positioning. While we typically avoid ‘value’ technology maximum 10% in any individual position, PCT is able stocks, we do own companies able to pass on inflation to to hold up to a full benchmark weight subject to a the consumer should it remain stubbornly high, even if maximum limit of 15%. While this gives us more room for this is not our base case. manoeuvre – and fewer excuses for underperformance There are two principal reasons for being more – we rarely exceed 10% in individual stocks, and when constructive on technology this year: more attractive we do, it is often via a smaller equity position held in risk/reward and the rapid adoption of artificial combination with a slither of call options designed to intelligence. Despite continued near-term ameliorate upside risk in exchange for a modest premium. macroeconomic uncertainty and the likelihood of Having been very clear with shareholders that we do further estimate cuts, the explosion of interest in AI not invest in certain types of stock (including private, has been a powerful reminder of why we remain so value and those likely to require capital) perhaps this is excited about our sector over the medium term. We a good opportunity to make it equally clear that we are also know that market narratives can change quickly unlikely to hold individual positions much above 10% should macroeconomic headwinds and/or exogenous even when they are as unique as Apple and Microsoft. risks subside. Furthermore, the risk/reward from current If this sounds at odds with our ‘benchmark-aware’ levels appears better: next-generation valuations have approach, it is worth recalling that this approach has returned to much more attractive levels, as previously risk reduction at its core. It has helped us avoid hubris, discussed. Before the recent move higher, growth internet appropriately size overweight positions while helping valuations had reached multi-year lows, on an EV/NTM ensure the portfolio reflects the best the index has to EBITDA basis, just as software growth-adjusted EV/sales offer. However, benchmark concentration has begun multiples sat at 10-year lows. According to Morgan to create a tension between managing absolute Stanley, at the beginning of 2023 80% of their software and relative risk. As stewards of your capital as well sector coverage was trading below 8.6x EV/forward sales as technology investors, we find it very difficult to argue - the median private equity takeout multiple since 2013. we are reducing risk by making the portfolio ever more The semiconductor sector (SOX) had also meaningfully concentrated. While this may come at the expense of raw derated, by more than -40% from its recent highs at performance and greater relative variance, we believe a year end, against an average cycle decline of -26% over diversified portfolio of growth stocks and themes capable the past seven years. Positioning has improved too, of outperformance, but also constructed to withstand although investor pessimism towards technology at investment setbacks will prove superior over the medium the start of the calendar year has been ameliorated by term, particularly on a risk-adjusted basis. its relative stability amid travails within US banking, combined with AI-related excitement. 26 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information The combination of better than expected first-quarter results and a ‘flight to safety’ (away from financials in favour of cash-generative mega-cap technology companies) has meant five technology stocks have driven almost two-thirds of the S&P 500’s return year-to-date. An index made up of Apple, Amazon, Microsoft, Meta Platforms and Google has returned +31% versus the other 495 S&P 500 constituents’ +3% return. For the calendar year, only 30% of S&P 500 companies have outperformed the market, a level not seen on a full calendar year basis since 1998 (28%) and 1999 (32%). Within technology, limited breadth is apparent by the remarkable year-to-date spread between large and small-cap technology performance (+26%) as well as the difference between the market-cap weighted NASDAQ 100 Index and an equally-weighted version of it, which at +11% is the widest spread seen over any 4.5 month period during the past 18 years. While we expect the market to broaden, we cannot help but share the market’s excitement about the AI opportunity which – at present – is most easily accessed via mega-cap stocks primarily within the semiconductor and cloud computing subsectors. After decades of unrealised hopes around artificial intelligence, we believe that generative AI is likely to prove the technology’s so-called ‘iPhone moment’, the new user interface that sparks mass adoption. Other AI models will come, compete, and possibly surpass ChatGPT but it represents the first “hands- on introduction to how powerful modern AI has got”. It has stunned consumers, investors, and companies alike; the risk and opportunity it poses to established market shares, consumer behaviour and existing profit pools has ignited a powerful wave of AI spending. Inevitably there will be technology casualties from AI disruption, while investors will have to navigate periods when narrative and fundamentals diverge. However, the “era of generative AI is just beginning” and our sector has front row seats for what is likely to be one of the most disruptive performances of our investment lifetimes. Ben Rogoff & Ali Unwin Polar Capital Technology Trust 18 July 2023 www.polarcapitaltechnologytrust.co.uk 27 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Investment Manager’s Core Themes ### Cloud Infrastructure / Cybersecurity Connectivity & 5G/IOT Cloud spending has decelerated as customers optimised The smartphone market is mature but Apple’s position atop their spend following rapid growth during covid, but the it looks unchallengeable. While the excitement around 5G emergence of AI could provide another long-term growth has diminished, the infrastructure build out is very much driver given the enormous amount of compute required to still in progress, with slower US spending offset by rapid train large language models. growth in India and other emerging markets. The internet of things (IOT) continues to expand, there are hopes AI We’re excited about… could supercharge both adoption and utility. The industry continues to deliver solid growth even as customers digest some pull forward of digital We’re excited about… transformation spending, with the three dominant vendors Apple’s historic success in bringing new technological (Amazon, Microsoft, and Google) are still growing >20% at breakthroughs to the mass affluent market should position a >$170bn combined revenue run rate. Excitement around it well for the coming wave of AI-based innovation. As the AI continues to support cloud capital spending growth, services consumers continue to access via their primary with much of the value of early AI adoption captured by device become more valuable, so should consumers’ the dominant semiconductor providers including NVIDIA willingness to pay Apple for access to the mobile web and AMD. Overall cloud revenues expected to increase 4x ecosystem also move higher. by 2030 to >$1.35trn, assuming incremental cloud revenue AI could breathe new life into trends such as digital twins added can still grow at a 25% Compounded Annual and drive an inflection in adoption. Digital twins exist in Growth Rate (CAGR). This would take the cloud’s share of many industries including healthcare, automotive, industrial, overall IT spending from c17% in 2022 to c36% by 2030. commerce and manufacturing but are under-utilised, Cloud computing must also be secure, which has supported with the adoption rate between 8-10%. AI could enable cybersecurity growth trends and remains at the top of Chief digital twins to become ’smart’ and autonomous, essential Information Officers’ priority lists. to analyse vast amounts of real-time data produced by connected sensors. Simulations are used by designers to Current holdings observe ‘What if?’ scenarios, but AI-powered digital twins Amazon.com, Microsoft, Alphabet, Arista Networks, are virtual environments that can interact with and update Advanced Micro Devices, Nvidia, Palo Alto Networks, in real time and massively increase their functionality. CrowdStrike Representing 30.4% of NAV at 30 April 2023 Current holdings Apple, Qualcomm, Taiwan Semiconductor, Lattice Semiconductor, ASML Representing 17% of NAV at 30 April 2023 28 www.polarcapitaltechnologytrust.co.uk Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information ![img-6.jpeg](img-6.jpeg) ![img-7.jpeg](img-7.jpeg) ### Digital Advertising / Ecommerce Digital advertising and ecommerce channels captured an outsized portion of share from traditional channels during the pandemic. However, as the world began to reopen, e-commerce growth rates declined sharply against very challenging Covid comparators – even dipping below trend and further compounded by a switch in consumer spending from goods to services spending. #### We're excited about... E-commerce has several structural tailwinds which should continue to support a low double-digit growth CAGR through 2030. Bernstein estimate an 11.5% CAGR in the US through 2030 to reach 26% online penetration as a total percentage of retail sales, and a global CAGR of 13% to reach 22%. The e-commerce proposition continues to evolve to offer more value to consumers and producers alike including new models such as on-demand delivery, low-cost direct-to-consumer Chinese players, pre-used marketplaces, and new modalities like social commerce. The Covid overbuild will pay an 'infrastructure dividend' as volumes catch up to capacity and per-unit delivery economics continue to improve. Digital advertising appears more mature with penetration at more than 60% (some estimate as high as 70%) and close to 50% ex-search. Retail media (likened to paying for shelf-space in the physical world) and linear TV advertising still present new market opportunities sized at >$100bn each. Going forward, the market will become more cyclical and more closely tied to overall advertising budget growth but will benefit from a cyclical upturn. Depressed valuation multiples and highly cash-generative business models offer the possibility of strong stock performance when cyclical trends inflict or secular headwinds (IDFA, TikTok) abate. #### Current holdings Alphabet, Amazon.com, Meta Platforms, MercadoLibre, Shopify, Alibaba, Airbnb Representing 14% of NAV at 30 April 2023 ### Software & Digital Transformation According to Gartner, enterprise software had grown at an 11% 10-year CAGR to reach c$600bn, made up 16% of total IT spending in 2020 and is expected to continue to grow at a similar rate to reach 25% of IT spending by 2030. Net new cloud workloads and on-premise workload migrations have delivered higher net new cloud revenue every year for a decade. #### We're excited about... We agree with Microsoft CEO Satya Nadella's estimate that technology spending as a percentage of GDP could double in the next ten years as the digital transformation imperative continues to drive change. We can already see the increasing importance of software as a percentage of GDP as software private fixed investment increased from $68bn in 1995 to $578bn in 2022, increasing from 0.83% of GDP to 2.3%, using the Bureau of Economic Analysis's data. The digital transformation market has been sized at $595bn in 2022 and is projected to grow at a 21% CAGR through 2027 to exceed c$1.5bn. The proliferation of product-led growth (PLG) software models has been driven by the convergence of several major technological and business trends. This model uses the software product itself is the primary sales vehicle to attract, monetize and retain customers, relying on customers self-serving to land small and then expand virally over time. Given the relatively low cost of incremental sales, this business model may even be an improvement to the outstanding economic model software companies already enjoy at scale. #### Current holdings Microsoft, HubSpot, ServiceNow, Workday, Atlassian, Salesforce Representing 17% of NAV at 30 April 2023 www.polancapitaltechnologytrust.co.uk 29 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Investment Manager’s Core Themes continued ### Data Economy & Artificial Intelligence Mobility & EV / Energy Transition Recent AI breakthroughs following Google’s invention of Automotive sales have been impacted by supply-chain the transformer model (2017) and the development of disruption, particularly microcontrollers and power large language models have led to an inflection point in AI semiconductors. However, there were also signs of capabilities as their performance scales with the number weakening demand as the year progressed, driven by of parameters. The launch of ChatGPT in November 2022 macroeconomic headwinds including high inflation and provided the catalyst for their widespread adoption and the interest rates. The long-term themes – electrification; ‘iPhone moment’ as the innovative natural language user autonomy; mobility – continue to play out. interface drove rapid adoption. We’re excited about… We’re excited about… Electric vehicle (EV) adoption has inflected globally: the AI is set to be the next major secular technology trend International Energy Agency (IEA) expects electric vehicles driving the sector’s growth. The early beneficiaries largely to reach 18% of vehicles on the road in 2023, up from reside in the technology stack which powers the training 4% in 2020.This has been driven by a combination and inference operations of large language models, of government support/regulation, new product particularly semiconductors. Given the extraordinary scale introductions (automakers have committed over a half a and technical expertise required, the vast majority of large trillion dollars to the EV transition) and consumer interest. language model training activity has so far taken place in This also represents a very large market expansion for the public cloud. The quantity and quality of data on which semiconductors (especially power semiconductors) as a models are trained makes a material difference to their typical EV has >2x as much semiconductor content than performance, so there may be large growth opportunities a comparable internal combustion engine (ICE) vehicle. for infrastructure software companies whose products Low-level ADAS (advanced driver assistance systems), such can help with the collection and management of vast as automatic emergency braking, reached 42% penetration datasets. We are hugely excited about the potential for and industry observers still expect level 4/5 vehicles to enter AI to become a general purpose technology (GPT) around the market in the 2025-30 timeframe. The passing of the which ‘everything’ is reimagined, as was the case with Inflation Reduction Act (IRA) was a watershed moment for earlier GPTs such as the steam engine, electricity and, more long-term cleantech funding and a key growth driver for recently, the internet. the EV sector, expanding the $7,500 tax credit to EV buyers and up to $45 per kWh of credit for producers of battery Current holdings cells/modules if a sufficient percentage of the materials/ Nvidia, Monolithic Power Systems, Advanced Micro manufacturing are done in the US. Devices, Pure Storage, Snowflake, MongoDB, Samsung Electronics Current holdings Tesla, BYD, ON Semiconductor, Analog Devices, Infineon Representing 14.2% of NAV at 30 April 2023 Technologies, Enphase Energy Representing 4.8% of NAV at 30 April 2023 30 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## Portfolio Review ### Performance Attribution Movement in net asset value (total return) per share Over the year to 30 April 2023 the Net Asset Value per share fell by 2.84% compared to the increase in total return provided by the Benchmark of 2.85%. The below table breaks down the Company’s absolute one year return into market impact, active management and other factors. % % Pence per share NAV per share at 30 April 2022 2305.13 Market Impact Benchmark performance (Sterling adjusted) 2.85 Active Management Stock Allocation Effect~ -4.84 Stock Trading and Timing Effect~ -0.22 -5.06 Other factors Liquidity/gearing Effect 0.18 Ongoing charges -0.81 -0.63 Performance of NAV -2.84 -65.65 NAV per share at 30 April 2023 2239.48 ~ Stock allocation effect refers to the portion of the total relative performance which is attributable to being overweight or underweight in a security. Please refer to the Performance Attribution by Investment below for further details. Stock Trading and Timing effect refers to the portion of the total relative performance which is attributable to the different returns from a security in the fund and in the benchmark over the same period of time. Refer to Investment Manager’s Report on pages 14 to 27 for further information. Performance Attribution by Investment The top ten relative contributors and the bottom ten relative detractors from performance over the year to 30 April 2023. | | | | | | | Lattice Semiconductor | | | | | | | | | | 0.51 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | | | Arista Networks | | | | | | | | 0.44 | | | | | | | | | | | | Intel* | | | | | 0.35 | | | | | | | | | | | | KLA-Tencor | | | | | 0.26 | | | | | | | | | | | | | MercadoLibre | | | | | 0.25 | | | | | | | | | | | | | Alphabet** | | | | 0.23 | | | | | | | | | | | | | Axon Enterprise | | | | 0.20 | | | | | | | | | | | | | eMemory Technology | | | | | 0.19 | | | | | | | | | | | | | | Disco Corporation | | | | 0.18 | | | | | | | | | | | | Monolithic Power Systems | | | | | | 0.18 | | | | | | | | | | | -0.27 | | | | | | Elastic | | | | | | | | | | | -0.33 | | | | | | | Atlassian | | | | | | | | | | | -0.33 | | | | | | | Marvell Technology | | | | | | | | | | | -0.33 | | | | | | | GitLab | | | | | | | | | | | -0.33 | | | | | | | Amazon.com | | | | | | | | | | -0.36 | | | | | | | | Cloudflare | | | | | | | | | -0.39 | | | | | | | | | Microsoft** | | | | | | | | | -0.39 | | | | | | | | | Snap* | | | | | | | | -0.53 | | | | | | | | | | Meta Platforms** | | | | | | | | -0.54 | | | | | | | | | | CrowdStrike | | | | | | | -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 % All of the above companies were held during the year to 30 April 2023. All data sourced from Polar Capital LLP *not held at the year ended 30 April 2023/**underweight position relative to the Benchmark. www.polarcapitaltechnologytrust.co.uk 31 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Portfolio Review continued ### Breakdown of investments by region as at 30 April 2023 72.8 US & Canada 74.2 | Asia Pacific | | | 10.4 | | --- | --- | --- | --- | | (ex-Japan) | | | 10.2 | | | Other | 6.6 | | | Net Assets | | 7.9 | | 4.4 Japan 3.4 | | Europe | 3.9 | | | --- | --- | --- | --- | | (inc - UK) | | 2.9 | | | Middle East | | 1.2 | | | | & Africa | 1.4 | | | | | 0.7 | 2023 | | Latin America | | 0.0 | | 2022 0 10 20 30 40 50 60 70 80 % ### Performance attribution by region* year to 30 April 2023 | | Asia Pacific (ex-Japan) | | | | | 0.64 | | --- | --- | --- | --- | --- | --- | --- | | | | Latin America | | | 0.20 | | | | Liquidity/gearing effect | | | | 0.18 | | | | | | -0.02 | Japan | | | | | | -0.24 | | Europe (inc-UK) | | | | | | -0.38 | | Middle East & Africa | | | | -5.28 | | | | US & Canada | | | -6.00 -5.00 -4.00 -3.00 -2.00 -1.00 0.00 1.00 % ### Market capitalisation of underlying investments as at 30 April 2023 Market Capitalisation 0.4 2023 <$1bn 0.3 2022 | Market Capitalisation | | | 7.5 | | | | --- | --- | --- | --- | --- | --- | | | $1bn-$10bn | | 11.7 | | | | Market Capitalisation | | | | | 92.1 | | | | >$10bn | | 88.0 | | 0 10 20 30 40 50 60 70 80 90 100 % ### Performance attribution by market capitalisation* year to 30 April 2023 | | | | Liquidity/gearing effect | | 0.18 | | --- | --- | --- | --- | --- | --- | | | | | | Small Cap (<$1bn) | 0.05 | | -6.41 -6.41 | | | | | | | | | -1.90 | | | Mid Cap (>$1bn - $10bn) | | | -3.22 | | | | Large Cap (>$10bn) | -3.50 -3.00 -2.50 -2.00 -1.50 -1.00 -0.50 0.00 0.50 % * This represents the gross return of the fund minus the benchmark return. This reflects the attribution effect where the fund’s return is compared to the benchmark return (excluding ongoing charges of 0.81%). 32 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Classification of Investments* as at 30 April 2023 Benchmark | | North | | | | Asia Pacific | | | Total | Total | Weightings as | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | America (inc. | | | | | (inc. Middle | | | 30 April | 30 April | | at 30 April | | | Latin America) | | | Europe | | | East) | | 2023 | 2022 | | | 2023 | | | | % | | % | | | % | % | % | | | % | Software 22.7 0.1 1.3 24.1 27.6 29.0 Semiconductors & Semiconductor Equipment 15.9 3.3 4.8 24.0 22.4 22.6 Technology Hardware, Storage & Peripherals 10.4 - 3.0 13.4 14.6 21.5 Interactive Media & Services 9.8 - 1.9 11.7 14.0 15.0 IT Services 3.8 - 0.2 4.0 2.3 5.2 Broadline Retail 2.5 - 0.8 3.3 - 1.5 Financial Services 2.7 0.4 0.2 3.3 - 0.1 Electronic Equipment, Instruments & Components 0.1 - 1.3 1.4 1.6 0.5 Communications Equipment 1.4 - - 1.4 1.5 2.6 Hotels, Restaurants & Leisure 0.7 - 0.5 1.2 - 0.5 Automobiles 0.5 - 0.6 1.1 1.6 - Entertainment 1.0 - - 1.0 1.2 0.6 Healthcare Equipment & Supplies 0.5 - 0.5 1.0 0.6 - Ground Transportation 0.9 - - 0.9 - - Machinery - - 0.9 0.9 0.7 - Healthcare Technology 0.4 - - 0.4 - 0.2 Aerospace & Defence 0.2 - - 0.2 0.7 - Electrical Equipment - 0.1 - 0.1 0.4 - Internet & Direct Marketing Retail - - - - 2.9 - Total investments (£2,640,177,000) 73.5 3.9 16.0 93.4 92.1 Other net assets (excluding loans) 6.4 0.9 1.1 8.4 9.6 Loans (1.0) - (0.8) (1.8) (1.7) Grand total (net assets of £2,828,141,000) 78.9 4.8 16.3 100.0 - At 30 April 2022 (net assets of £3,050,985,000) 79.3 5.2 15.5 - 100.0 * The classifications are derived from the Benchmark as far as possible. The categorisation of each investment is shown in the portfolio available on the Company’s website. Where a dash is shown for the Benchmark it means that the sector is not represented in the Benchmark. Not all sectors of the Benchmark are shown, only those in which the Company has an investment at the financial year end. www.polarcapitaltechnologytrust.co.uk 33 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 Portfolio Review continued Top 10 Investments as at 30 April 2023 | | 2022 | 2021 | 2020 | 2019 | 2018 | | --- | --- | --- | --- | --- | --- | | **Microsoft** Held since 2007 | 1 (1) | 302,791 | 336,977 | 10.7 | 11.0 | | Rounded in 1975, the company is the largest software company in the world and has built a dominant franchise in desktop software through its ubiquitous Windows operating system. Office productivity software and Azure Cloud computing service. | | | | | | | Held since 2007 | 2 (2) | 284,199 | 305,244 | 10.0 | 10.1 | | Apple is a leading supplier of personal computers, smartphones, tablets and accessories such as AirPods that feature or integrate with the company's proprietary OS X operating system. Other services include AppleTV, Apple Music and its subscription-based iCloud storage. | | | | | | | Held since 2003 | 3 (3) | 174,388 | 249,058 | 6.2 | 8.2 | | As the parent company of Google, the company is the dominant provider of Internet search, online advertising, web applications and tools and its Android (mobile OS) combined with Chrome (browser) and Google Maps have enabled it to maintain its market leadership during the mobile internet transition. | | | | | | | Held since 2003 | 4 (4) | 130,855 | 95,065 | 4.6 | 3.1 | | NVIDIA is a US Fabless semiconductor company with leading market share in graphics processors (GPUs) used in gaming, professional visualization, data centre and automotive. Supported by its CUDA programming model, the company's GPUs are critical components in Artificial Intelligence (AI) platforms helping to train neural networks. | | | | | | | **AMD** Held since 2016 | 5 (5) | 94,299 | 86,045 | 3.3 | 2.8 | | Advanced Micro Devices is an American semiconductor company that develops computer processors and related technologies for business and consumer markets. | | | | | | | **SAMSUNG ELECTRONICS** Held since 2016 | 6 (6) | 83,894 | 82,312 | 3.0 | 2.7 | | A manufacturer of a wide array of products ranging from components to finished products for both consumer electronics and industrial end markets. The company is particularly renowned for its high global market share in the fields of memory semiconductors (HANDiDRAW), LCD displays, and mobile smartphones/tablets. | | | | | | | Held since 2007 | 7 (11) | 82,047 | 54,509 | 2.9 | 1.8 | | Meta is the world's dominant social networking company. It also owns Instagram, a photo and video sharing social networking service and the instant messaging service WhatsApp among other products and services. | | | | | | | Held since 2001 | 8 (7) | 61,421 | 82,012 | 2.2 | 2.7 | | Taiwan Semiconductor engages in the manufacture and sale of integrated circuits and wafer semiconductor devices. Its chips are used in personal computers and peripheral products; information applications; wired and wireless communications systems products; automotive and industrial equipment including consumer electronics such as digital video compact disc player, digital television, game consoles, and digital cameras. | | | | | | | **servicenow** Held since 2001 | 9 (10) | 51,884 | 56,280 | 1.8 | 1.8 | | ServiceNow is an American software company that develops a cloud computing platform to help companies manage digital workflows for enterprise operations. | | | | | | | **ASML** Held since 2001 | 10 (8) | 49,941 | 59,248 | 1.8 | 1.9 | | ASML manufacture complex lithography machines which chipmakers use to produce integrated circuits, or computer chips and provide chipmakers with hardware, software and services to mass produce patterns on silicon through lithography. | | | | | | | **Total** | | **1,315,719** | | **46.5** | | 34 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Full Portfolio | | | Value of holding % of net assets Value of holding % of net assets | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Ranking Ranking | | 30 April | 30 April | 30 April | | 30 April | | | | | 2023 | 2022 | 2023 | | 2022 | | | | Stock Sector Region | £’000 | £’000 | | % | | %2023 2022 | 1 (1) Microsoft Software North America 302,791 336,977 10.7 11.0 2 (2) Apple Technology Hardware, Storage & Peripherals North America 284,199 305,244 10.0 10.1 3 (3) Alphabet Interactive Media & Services North America 174,388 249,058 6.2 8.2 4 (4) Nvidia Semiconductors & Semiconductor Equipment North America 130,855 95,065 4.6 3.1 5 (5) Advanced Micro Devices Semiconductors & Semiconductor Equipment North America 94,299 86,045 3.3 2.8 6 (6) Samsung Electronics Technology Hardware, Storage & Peripherals Asia Pacific 83,894 82,312 3.0 2.7 7 (11) Meta Platforms Interactive Media & Services North America 82,047 54,509 2.9 1.8 8 (7) Taiwan Semiconductor Semiconductors & Semiconductor Equipment Asia Pacific 61,421 82,012 2.2 2.7 9 (10) ServiceNow Software North America 51,884 56,280 1.8 1.8 10 (8) ASML Semiconductors & Semiconductor Equipment Europe 49,941 59,248 1.8 1.9 Top 10 investments 1,315,719 46.5 11 (9) Amazon.com Broadline Retail North America 46,756 57,558 1.7 1.9 12 (17) HubSpot Software North America 45,203 38,675 1.6 1.3 13 (13) Arista Networks Communications Equipment North America 38,201 44,318 1.4 1.5 14 (16) CrowdStrike Software North America 36,041 39,441 1.3 1.3 15 (14) Tencent Interactive Media & Services Asia Pacific 35,666 43,880 1.3 1.4 16 (15) KLA-Tencor Semiconductors & Semiconductor Equipment North America 35,072 39,816 1.2 1.3 17 (24) Mastercard Financial Services North America 34,908 26,330 1.2 0.9 18 (41) Palo Alto Networks Software North America 34,847 18,479 1.2 0.6 19 (-) Analog Devices Semiconductors & Semiconductor Equipment North America 33,975 - 1.2 - 20 (77) Infineon Technologies Semiconductors & Semiconductor Equipment Europe 33,792 6,891 1.2 0.2 Top 20 investments 1,690,180 59.8 21 (60) Workday Software North America 33,429 11,557 1.2 0.4 22 (38) Visa Financial Services North America 33,156 19,629 1.2 0.6 23 (21) Qualcomm Semiconductors & Semiconductor Equipment North America 32,525 32,622 1.1 1.0 Monolithic Power 24 (35) Semiconductors & Semiconductor Equipment North America 32,453 20,305 1.1 0.7 Systems 25 (45) Cloudflare IT Services North America 29,973 15,864 1.0 0.5 26 (51) Shopify IT Services North America 29,497 13,251 1.0 0.4 27 (42) Salesforce.com Software North America 27,910 18,315 1.0 0.6 28 (49) Snowflake IT Services North America 27,622 13,973 1.0 0.5 29 (80) Disco Corporation Semiconductors & Semiconductor Equipment Asia Pacific 26,960 6,256 1.0 0.2 30 (-) Uber Technologies Ground Transportation North America 25,788 - 0.9 - Top 30 investments 1,989,493 70.3 www.polarcapitaltechnologytrust.co.uk 35 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Portfolio Review continued ### Full Portfolio continued Value of holding % of net assets | Ranking | | 30 April | 30 April | 30 April | | 30 April | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | 2022 | 2023 | | 2022 | | | | Stock Sector Region | £’000 | £’000 | | % | | %2023 2022 | 31 (34) CyberArk Software Software Asia Pacific 24,330 21,721 0.9 0.7 32 (73) Keyence Electronic Equipment, Instruments & Components Asia Pacific 23,561 8,251 0.8 0.3 33 (28) Tokyo Electron Semiconductors & Semiconductor Equipment Asia Pacific 23,016 23,889 0.8 0.8 34 (40) Alibaba Broadline Retail Asia Pacific 22,333 18,888 0.8 0.6 35 (50) MongoDB IT Services North America 22,107 13,343 0.8 0.5 36 (-) MercadoLibre Broadline Retail North America 20,965 - 0.8 - 37 (26) Lattice Semiconductor Semiconductors & Semiconductor Equipment North America 20,572 24,788 0.7 0.8 38 (-) Dynatrace Software North America 19,644 - 0.7 - 39 (47) ON Semiconductor Semiconductors & Semiconductor Equipment North America 19,534 14,451 0.7 0.5 40 (37) Airbnb Hotels, Restaurants & Leisure North America 19,073 19,708 0.7 0.7 Top 40 investments 2,204,628 78.0 41 (-) Confluent Software North America 18,140 - 0.6 - 42 (72) Roblox Entertainment North America 17,444 8,655 0.6 0.3 43 (-) Baidu Interactive Media & Services Asia Pacific 16,616 - 0.6 - 44 (32) BYD Automobiles Asia Pacific 15,976 23,080 0.6 0.7 45 (-) Trip.Com Hotels, Restaurants & Leisure Asia Pacific 15,415 - 0.5 - 46 (-) Pinterest Interactive Media & Services North America 15,134 - 0.5 - 47 (56) eMemory Technology Semiconductors & Semiconductor Equipment Asia Pacific 14,524 12,388 0.5 0.4 48 (71) Hoya Healthcare Equipment & Supplies Asia Pacific 14,264 8,746 0.5 0.3 49 (18) Marvell Technology Semiconductors & Semiconductor Equipment North America 13,879 38,601 0.5 1.2 50 (23) Tesla Motors Automobiles North America 13,358 26,891 0.5 0.9 Top 50 investments 2,359,378 83.4 51 (-) Intuitive Surgical Healthcare Equipment & Supplies North America 13,230 - 0.5 - 52 (44) Smartsheet Software North America 13,018 16,414 0.5 0.5 53 (78) Harmonic Drive Systems Machinery Asia Pacific 12,777 6,430 0.5 0.2 54 (64) Paycom Software Software North America 12,567 10,780 0.4 0.3 55 (-) Adyen Financial Services Europe 12,348 - 0.4 - 56 (66) Atlassian Software Asia Pacific 12,039 9,414 0.4 0.3 57 (39) E Ink Electronic Equipment, Instruments & Components Asia Pacific 12,028 19,235 0.4 0.6 58 (68) Kinaxis Software North America 11,909 9,169 0.4 0.3 59 (36) Pure Storage Technology Hardware, Storage & Peripherals North America 10,694 19,712 0.4 0.7 60 (83) Intuit Software North America 10,538 5,521 0.4 0.2 Top 60 investments 2,480,526 87.7 36 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Value of holding % of net assets | Ranking | | 30 April | 30 April | 30 April | | 30 April | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | 2022 | 2023 | | 2022 | | | | Stock Sector Region | £’000 | £’000 | | % | | %2023 2022 | 61 (-) Veeva Systems Healthcare Technology North America 10,390 - 0.4 - 62 (-) Activision Entertainment North America 10,372 - 0.4 - 63 (58) SiTime Semiconductors & Semiconductor Equipment North America 9,912 11,860 0.4 0.4 64 (-) ASM International Semiconductors & Semiconductor Equipment Europe 9,614 - 0.3 - 65 (-) Flywire Financial Services North America 9,503 - 0.3 - 66 (30) Elastic Software North America 9,134 23,453 0.3 0.8 67 (55) SolarEdge Technologies Semiconductors & Semiconductor Equipment Asia Pacific 8,976 12,519 0.3 0.4 68 (-) Enphase Energy Semiconductors & Semiconductor Equipment North America 8,577 - 0.3 - 69 (-) First Solar Semiconductors & Semiconductor Equipment North America 7,708 - 0.3 - 70 (-) Teradyne Semiconductors & Semiconductor Equipment North America 7,012 - 0.2 - Top 70 investments 2,571,724 90.9 Fuji Machine 71 (75) Machinery Asia Pacific 5,680 7,403 0.2 0.2 Manufacturing 72 (48) TripAdvisor Interactive Media & Services North America 5,535 14,362 0.2 0.5 73 (-) Nabtesco Machinery Asia Pacific 5,533 - 0.2 - 74 (33) Axon Enterprise Aerospace & defence North America 5,357 21,985 0.2 0.7 75 (-) GMO Payment Gateway Financial Services Asia Pacific 5,224 - 0.2 - 76 (92) Zuken IT Services Asia Pacific 5,187 3,081 0.2 0.1 77 (-) Freshworks Software North America 4,659 - 0.2 - 78 (46) Power Integrations Semiconductors & Semiconductor Equipment North America 4,388 14,930 0.2 0.5 79 (-) GitLab Software North America 4,063 - 0.2 - 80 (-) Darktrace Software Europe 4,039 - 0.1 - Top 80 investments 2,621,389 92.8 81 (90) Impinj Semiconductors & Semiconductor Equipment North America 4,012 3,417 0.1 0.1 82 (-) Braze Software North America 3,668 - 0.1 - 83 (-) Cognex Electronic Equipment, Instruments & Components North America 3,471 - 0.1 - 84 (93) Seeing Machines Electronic Equipment, Instruments & Components Asia Pacific 3,265 2,894 0.1 0.1 85 (59) Ceres Power Electrical Equipment Europe 2,703 11,569 0.1 0.4 86 (-) HashiCorp Software North America 1,668 - 0.1 - Cermetek 87 (96) Electronic Equipment, Instruments & Components North America 1 1 - - Microelectronics Total equities 2,640,177 93.4 Other net assets 187,964 6.6 Total net assets 2,828,141 100.0 Note: Asia Pacific includes Middle East and North America includes Latin America. www.polarcapitaltechnologytrust.co.uk 37 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Environmental, Social and Governance ## Environmental, Social and Governance Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## ESG – Corporate Perspective This report forms part of the Strategic report section As an investment trust with a wholly non-executive, Company’s management and portfolio construction. independent Board of Directors we delegate the As aforementioned, the Portfolio Managers are required operational aspects of running the Company to third to consider ESG factors when reviewing new, continuing parties, primarily the Investment Manager. However, the or exiting investments but they are not required to take an ultimate responsibility to stakeholders lies with the Board. investment decision solely on the basis of ESG factors. We recognise that this includes elements of ESG and over The Board monitors the Investment Manager’s approach recent years ESG has become ever more important to to ESG including policies for improving their impact on investors, from a cost, risk and impact perspective across all the environment, and they themselves take into account aspects of the Company. We recognise however that this is ESG factors in the management of the Company. The not a short journey and there is some way to go. Companies Act 2006 (Strategic Report and Directors’ Investment trust companies, like Polar Capital Technology Reports) Regulations 2013 require companies listed on Trust plc currently have relatively few ESG specific the Main Market of the London Stock Exchange to report regulatory reporting requirements but we strive to be on the greenhouse gas (GHG) emissions for which they cognisant of best practice as we pursue a long-term are responsible. The Company is an investment trust, and sustainable future for the Company. The Board has with neither employees nor premises, nor has it any continued to develop its understanding of sustainability financial or operational control of the assets which it and ESG more generally, sharing their stance with the owns. Consequently, it has no GHG emissions to report Investment Manager, Polar Capital. The ESG dialogue from its operations nor does it have responsibility for any with the Managers and third-party providers has increased other emissions. Information on the GHG emissions of the greatly; what it is, how it is integrated and how it affects Investment Manager can be found within the ESG and all elements of the business. On pages 14 to 27 the Sustainability area of their website. Investment Manager reports their assessment of the ### portfolio in ESG terms and the associated operations of Taskforce for Climate-Related Financial ### the management house, Polar Capital. Below, we separate Disclosures (TCFD) ESG into those areas that we as a Board can have a direct The Company notes the TCFD recommendations on impact on, and those areas where we are reliant on others. climate-related financial disclosures. As stated above, the Company is an investment trust with no employees, ### ESG and third-party service providers internal operations or property. However, it is an asset The Investment Manager (on behalf of all clients) receives owner and therefore we will work to develop appropriate assurance on an annual basis that, where required, third- disclosures about our portfolio. Information sources are party service providers comply with the requirements of developing and consultations on reporting requirements the Modern Slavery Act and adhere to a zero-tolerance are underway. The Board will continue to work alongside policy to bribery and corruption. In light of the growing its Investment Manager to provide more information requirements surrounding ESG, including TCFD, third party as it becomes available. Polar Capital supports TCFD’s service providers have been engaged in providing copies recommendations and is in the process of applying the of their ESG, diversity and inclusion, stewardship and other guidance to ensure compliance going forward. related policies to the Company. The Board will continue ### to monitor the practices of service providers and seek to Diversity Policy and Gender Reporting assure shareholders where appropriate that suitable policies The Company has no employees and the Board is and procedures are in place to effect positive change. comprised of three female and three male independent non-executive Directors. The Board recognises the ### Corporate responsibility importance and the benefits of diversity in its membership The Company’s core investment and administrative and seeks to ensure that its structure, size and composition, activities are undertaken by its Investment Manager which including the skills, knowledge, gender, ethnicity and aims to limit the use of non-renewable resources and experience of Directors, is sufficient for the effective reduce waste where possible. The Investment Manager has direction and control of the Company. a corporate ESG policy, which is available in the document The Board is mindful of the importance of having a suitably library of the Company’s website, and wherever possible mapped board succession and renewal process in line with and appropriate the parameters of such are considered corporate governance best practice and the Nomination and adopted by the investment team in relation to the 40 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Committee keeps succession planning under review. The Risk and Responsibility Board has put in place a succession plan based on the The Board has a schedule of principal risks and uncertainties recommended nine-year tenure of Directors. The Board will and addresses how these are mitigated on pages 62 to 65; continue to consider the benefits of diversity throughout additionally how the directors have undertaken their duties any recruitment process, especially when compiling in compliance with s172 of the Companies Act 2006 is a shortlist of candidates and selecting individuals for provided on pages 66 to 71. interview in order to ensure a wide group of candidates. The Board has taken care to take account of this when developing job specifications and in the use of head- Catherine Cripps hunters who demonstrate an ability to widen the pool of Chair candidates. We are acutely aware that not doing so could mean we do not attract candidates who support the Board 18 July 2023 as a whole to function as best it can. The Board’s Diversity Policy is discussed further in the Corporate Governance Report on page 78. The Company has not adopted a policy on human rights as it has no employees or operational control of its assets. ### 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 the 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 their website. ### 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. www.polarcapitaltechnologytrust.co.uk 41 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## ESG – Investment Perspective The following report describes the approach Polar Capital Some parts of the process have worked very well, for LLP, as Investment Manager to the Company, takes to example our focus on governance and remuneration ESG and how the policies and practices are applied to practices has helped the team identify companies with the investments made, or considered, in connection with the potential for earnings surprises and multiple rerating managing the portfolio of the Company. as many software and internet companies became more attuned to investors’ desire for a more even balance of The terms ‘our’, ‘we’, ‘us’ relate to Polar Capital and profitability and growth. This has not necessarily been specifically the Polar Capital Technology team, on behalf of a question of identifying companies with the ‘best’ Polar Capital Technology Trust (the Company). governance, but rather those with the potential for the biggest change in their remuneration policies and hiring ### Polar Capital’s approach to ESG practices and made up part of our investment thesis The Polar Capital Technology team continue to enhance in previously heavily loss-making companies including their approach to ESG, but the primary aim remains Confluent, Freshworks and Monday.com. The ESG process unchanged: to consider the wide range of ESG risks has also prompted incremental company interactions that prevalent in the technology sector while still reflecting the would have been less likely without it, including direct enormous opportunities for technology companies to help conversations with investee company board directors, solve existential environment and social challenges such as including at Smartsheet. climate change and financial inclusion. Other aspects require further attention. Some investee Our ESG approach focuses on the ESG issues and factors companies have been unreceptive to engagement we believe are most material to the portfolio and the attempts; others have engaged but offered little detail planet and seeks to combine our sector domain expertise beyond their publicly stated commitments. Finally, it is with rigorous external research and oversight. We engage inevitable that the process feels less relevant for positions with companies on ESG matters where it can add value held for a shorter period of time. to our investment process and/or where we can use our influence to support positive change. In terms of the next stage of ESG process enhancement, extraordinary recent advances in Artificial Intelligence ### Evaluating and Enhancing our ESG Process (AI) bring new and complex ESG challenges. Existing ESG Last year’s annual report offered detailed ESG disclosure tools and frameworks appear insufficient on their own to and discussion of our ESG process. We continue to address these. enhance the process, for example introducing pre-trade ESG checks for new positions (see further details below) and greater use of research tools which can augment ESG-related research including AI-powered research tool Alphasense and expert network transcript service Tegus. The services of our in-house ESG consultant remain invaluable as the Team continues to develop its knowledge and experience in ESG analysis. 42 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Integrating ESG into our investment process Exclusions At a high level, the distinction between the characteristics is The Company adheres to formal exclusions on all companies as follows: that are linked to the production and/or marketing of • Access to technology and communications controversial weapons (cluster munitions; anti-personnel infrastructure. This includes companies whose mines; depleted uranium). We may also choose to exclude products and services provide technology, companies in certain subsectors that, in our or the Board’s communications, clean technology, and data security belief, may have a negative impact on the planet and global infrastructure to promote inclusive and sustainable population by virtue of their business activities and those industrialisation and foster innovation. This may companies in breach of sustainability principles or widely- include cloud computing (cloud providers, networking accepted behavioural norms including, but not limited to, equipment providers, semiconductor companies, the United Nations (UN) Global Compact, the UN Guiding semiconductor capital equipment companies, Principles on Business and Human Rights, the International infrastructure software); clean technology (power Labour Organisation’s conventions and the Organisation semiconductors, renewable technology); data security for Economic Co-Operation and Development’s Guidelines (cybersecurity, encryption, anti-fraud technology). for Multinational Enterprises. Any such exclusions are discussed with the Board and are reassessed annually. Where • Increasing business productivity and efficiency. a company does not demonstrate adequate and timely This includes companies that contribute to responsible progress towards re-aligning with these standards, we may economic growth through products and services choose to divest from the company, taking into account the that enable increases in workforce productivity, liquidity of the holding. new business formation and more efficient use of resources. This may include application software, online Alignment advertising, e-commerce, data management, artificial To assess the portfolio’s potential to have a positive intelligence, and automation. impact on the planet and global population, we want to • Empowering individuals. This includes companies reflect the role technology companies can play in bringing whose products and services enhance the wellbeing about positive environmental and social outcomes. The and lives of individuals through innovative platforms environmental and social characteristics with which the and services that support social empowerment, Company aligns reflect the wide scope of technology improved communication, broader access to commerce, adoption in the world today and portfolio companies’ roles lifelong learning, training, and inclusion. This may in supporting (1) access to technology and communications include social networking, smart phones and their infrastructure, (2) increasing business productivity and supply chain, online services, health technology, efficiency, and (3) empowering individuals. educational technology, financial technology, and consumer internet. www.polarcapitaltechnologytrust.co.uk 43 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### ESG – Investment Perspective continued ### ESG analysis When considering a prospective new position, a review of As a team, we use a combination of third-party research a company’s ESG risk factors is undertaken. In particular, and our own proprietary work to carry out ESG analysis we assess whether there are any material controversies, at the company level. We have also found a third-party legal proceedings, regulatory issues, data breaches, or assessment and scoring approach useful as an independent other ESG risk factors that may either constitute a norms- check on a company’s ESG profile. MSCI ESG ratings based violation or otherwise create a potential risk to the and research aims to measure a company’s resilience investment case. In addition to the controversy reporting to long-term, financially relevant ESG risks by scoring a provided by MSCI ESG Manager, wherever possible, we company’s exposure to, and management of, the material reference primary sources such as regulatory filings (for ESG risks and opportunities in its industry (‘Key Issues’), example, 10-K, 20-F, Annual Report, 10-Q), company relative to the company’s peers. ESG or Sustainability Reports, governmental websites, (for example, US Department of Justice). The limitations of MSCI’s approach can include issues around In terms of the impact on a company, typically, an ESG data accuracy and timeliness, inappropriate peer groups and issue might present as a potential one-off liability such as a failure to consider fully the context around ESG issues. a fine or settlement, reputational damage which impacts More significantly, MSCI does not always reflect the most the valuation multiple, or in the worst case, an on-going material ESG risks and opportunities a company may face impact on the company’s business model through higher when considered through the lens of our domain knowledge costs, raised capital expenditure, or necessity to increase and industry experience. We therefore believe it is important prices. Our initial assessment is vigilant to all these concerns to continue to undertake our own proprietary ESG work as well as documenting where engagement on ESG issues when assessing companies, and this work must be led by may be required in order to better understand an issue the investment team with oversight and support from Polar or attempt to effect change in corporate behaviour in the Capital’s Risk and Sustainability teams. interests of other stakeholders. Part 1: Investigate and assess third-party research An assessment of good governance is also made, taking We use third-party ESG analysis reports as a useful into account, among other factors, management structure, ‘first pass’ for company-level analysis as part of a wider employee relations, staff and executive remuneration, assessment. We investigate areas where an individual and tax compliance. As an example, some investee company scores poorly, check the information used to companies, especially in Asian jurisdictions, may not have make sure the score is accurate and timely, and take a view independent Board majorities and we evaluate whether on the materiality of the issue or controversy. we should vote against the continuation of such a Board structure. Alternatively, many technology companies that We also use this initial assessment as one basis for generate a profit, can report a tax rate that is well below engagement if we believe doing so can help us better statutory rates of corporate taxation, and it is important to understand the issue, or we can influence the company to investigate the rationale for these differences - is it caused mitigate it. Many clients and other stakeholders also view by the use of accumulated tax losses or tax credits, for the Company’s ESG profile through the lens of an external example. provider, often MSCI, so it is important we can understand and explain what drives this. Technology companies and governance Governance issues are a fundamental consideration when Part 2: Proprietary research investing in the technology sector. Many technology Where appropriate, we conduct our own proprietary companies operate with different governance structures research to assess material sustainability issues not and practices, including limited minority shareholder captured by third-party assessments, often for reasons of voting rights, above-average share dilution and option methodology or scope, making use of company filings, issuance, non-independent boards and, at times, excessive sustainability reports, sell-side research, news reports and management remuneration. We believe it is important other sources. This helps us assess any material limitations to scrutinise companies on their individual merits and in the data or information relied upon for third-party recognise the trade-offs between shareholder rights and assessments and allows us to assess companies not covered the importance of backing management’s long-term by third-party providers (such as companies new to the vision and allowing the company to compete effectively public market). in the marketplace. For example, it may be necessary for 44 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information a company to issue an elevated level of shares to attract responsible investment process. The teams will vote by and retain scarce talent in a fast-growing area to support balancing the best interests of the company concerned its growth, but such issuance would be excessive should over the long term, in conjunction with maximising the the company’s growth not materialise. We consider the value of investments managed by each team. Each ballot impact of share-based compensation on free cash flow, resolution is actively reviewed and assessed especially and the makeup and integrity of the Board of Directors where ISS recommends voting against management. A as a check on management decisions, especially around record is kept of when and why the team votes against dilutive M&A and strategic investments. The Trust has either ISS or management. A summary of the voting record invested in many founder-led companies since its inception, is given within the ESG dashboard on page 51. and we will continue to use our domain expertise to judge ### the appropriateness and materiality of each company’s Monitoring and oversight governance arrangements and activities. The portfolio’s ESG characteristics are reviewed in detail every four months in the investment oversight meetings ### Stewardship with Polar Capital’s Chief Investment Officer, Chief Risk Engagement: At a high level we engage where it is useful Officer, and Head of Sustainability. Oversight covers the and can add value to our investment process and/or where portfolio’s ESG profile and scoring using third-party data we can use our influence to support positive change. We methodology, climate risk assessment and norms and decide where to engage based on our ESG analysis and we controversies screening, the analysis of which is the starting record the results of these engagements. We meet with a point for discussion in oversight meetings. In addition, the large number of companies regularly given the size of our PCTT Board reviews a dashboard of key ESG metrics at team and typically have many opportunities to raise issues each of the 5 annual board meetings. with them. These more informal engagements are recorded Climate risk assessment data includes an assessment in our research database, Tamale, alongside company of the portfolio relative to the benchmark on metrics meeting and valuation work. We also undertake a small including carbon footprint, carbon intensity of the number of more ESG-led engagements with companies portfolio stocks and weighted average carbon intensity. where ESG issues have become more material, or we It also highlights key high-emissions sectors of allocation believe our engagement may effect positive change. within the portfolio. Key high-emitting stocks, stocks Whilst we do not formally consider Principal Adverse with exposure to potential stranded assets and climate Impacts (PAIs) as defined by EU legislation as it is not in risk management of the companies are highlighted. The scope of the European Sustainable Finance Disclosure portfolio is monitored for controversies using third-party Regulation (SFDR), we are aware when a prospective norms and controversies research, which evaluates ESG holding may flag against certain PAIs, for example for a controversies’ severity and impact. It is also assessed, in high carbon footprint, or a lack of Board gender diversity. line with the aforementioned exclusions process, against These flags help inform where further engagement or more alignment with the UN’s Global Compact (UNGC), the intensive monitoring may be necessary. UN’s Guiding Principles on Business and Human Rights, the International Labour Organisation’s conventions and the ### Voting Organisation for Economic Cooperation and Development’s The team takes its voting responsibilities very seriously Guidelines for Multinational Enterprises. The team use and will consider all resolutions proposed at an investee MSCI ESG Norms and Controversies research to provide company’s AGM or other special meeting. The team uses deeper insight into companies however, given differing the ISS Benchmark Proxy Voting Guidelines as a starting methodologies, tolerances, and assessments of company point for all research and recommendations regarding behaviour, we retain discretion over the assessment of proxy voting. These recommendations are underpinned third-party conclusions on a case-by-case basis. The team by four key principles of accountability, stewardship, also incorporates an additional layer of oversight using an independence, and transparency to promote long-term in-house consultant with expertise in ESG. The purpose of shareholder value creation and risk mitigation through the additional layer of oversight is to ensure the team have the support of responsible global corporate governance a detailed understanding of the mechanics of changes in practices. However, each investment team is the final third-party ESG scores at both the company and portfolio decision-maker on proxy voting and will vote in line level, assist with more detailed ESG analysis and to ensure with the principles of their investment philosophy and the ESG integration process is being adhered to. www.polarcapitaltechnologytrust.co.uk 45 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### ESG – Investment Perspective continued ### Reporting Reporting forms an important part of our ESG approach given its role in allowing investors and other stakeholders to evaluate our activities and progress. The Board receives an ESG dashboard as part of the regular board packs which includes metrics regarding the portfolio’s MSCI ESG fund score, the worst-scoring underlying holdings across E, S and G metrics, the portfolio’s carbon footprint and the portfolio’s exposure to clean technology solutions. The dashboard also has an analysis of the team’s proxy voting activities over the most recent period. A similar dashboard is provided on page 51. The ESG profile of the portfolio is assessed independently by MSCI using their ESG Manager Fund Ratings system. At the time of last year’s Annual Report, the fund rating was AAA, but since then there has been a change by MSCI in their methodology. Previously, the rating was comprised of the weighted average ESG score of assessed holdings with an adjustment factor added to take account of holdings that have been upgraded or downgraded, and those with very low scores - deemed ‘laggards’. Now, the fund rating is based only on the weighted average ESG score of each assessed holding. There is no longer an adjustment factor which many users felt had created excessive volatility in fund scores and ratings. This has resulted in a fall in the rating for most funds that invest in technology stocks, given many technology companies had benefitted from positive momentum in their ESG scores as they improved ESG practices and disclosures. Indeed, the shift of Apple from being a positive to negative momentum driver on its own pushed many funds from AAA to A. The MSCI fund rating is also now A, although the weighted average ESG score is broadly comparable to that of last year. Over the year, the weighted average score of the fund declined slightly from 6.74 to 6.62, whilst that of the benchmark also fell slightly from 6.89 to 6.88. The slip in the Fund’s score is attributed primarily to the purchase of some new names that score modestly below the Fund’s average score. We do not manage the portfolio to maintain a particular relative or absolute MSCI ESG rating. 46 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Spotlight On Cloudflare government websites to improve their security and reliability Building a better internet and defending Ukraine and foster trust in the digital aspect of the electoral process. Cloudflare’s stated mission is “to help build a better internet” Cloudflare for Campaigns brings a suite of security products which is more secure and reliable. The internet represents to smaller campaigns who might otherwise be unable to critical digital infrastructure without which the flow of afford them. Campaign websites are often attacked which information, economic activity and social interaction would be can undermine voters’ ability to make informed decisions and catastrophically impaired. This makes protecting it and those interfere with fundraising efforts. that use it vital, and Cloudflare plays a major role in this effort. Cloudflare’s Free plan allows millions of customers to secure Election season highlights their websites, applications and data at no cost, providing Here are a few findings from the three months leading up critical secure access to technology and communications to the election. These are made possible by our preemptive infrastructure. This is also a greener alternative as Analysys campaign discovery and machine learning algorithms. Mason found Cloudflare’s Web Application Firewall (WAF) generated c90% less carbon than on-premise appliances. Cloudflare processed over 20 million emails for campaigns More recently, Cloudflare has been a key member of the group and stopped around 150K phishing attacks. of companies working to maintain Ukrainians’ access to the We saw more than 10,000 emails sent that were using internet and help defend it from persistent cyber attacks at no the names of candidates without their permission. cost. This includes a number of services to protect Ukrainian government and key infrastructure, as well as the “.ua” top- The office of one Senate incumbent received an average level domain and 130 other Ukrainian government domains. of 35 malicious emails every day. Cloudflare also protects 79 non-profit organisations in Ukraine including those helping refugees, documenting war crimes, and sharing information. It is a testament to the speed of Cloudflare’s response and the quality of their technology, along with others, that the barrage of Russian Distributed Denial of Service (DDOS) and other cyber attacks have failed to take down critical Ukrainian infrastructure. This was a major concern when the invasion started. Cloudflare also runs Project Galileo, which helps keep vulnerable sites online by offering free cybersecurity services for companies in the arts, human rights, civil society, journalism, or democracy. This is in addition to their Athenian Project which provides free cybersecurity services to US state and local “I want to mention Cloudflare because they reached out to us proactively and offered help. We took their help and we relied on them immensely and I really want to express my gratitude to the leadership and the team there.” Dmitry Kohmanyuk, www.polarcapitaltechnologytrust.co.uk 47 .ua TLD strategist in Heise Online interview, 3/24/22 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### ESG – Investment Perspective continued ### Spotlight on ServiceNow Make the world work better for everyone ServiceNow provides a software platform which optimises business processes on a single unified platform to digitize an entire business. This allows companies to deliver digital experiences that make work flow more efficiently by connecting people, processes and systems together to enable organisations to better serve all stakeholders and increase business productivity. 7,700 enterprise customers use ServiceNow’s platform to drive their digital transformation initiatives, including 85% of the Fortune 500. ServiceNow’s software platform is increasingly being used by customers to embed and strengthen sustainability in the own operations. This includes digitising physical workflows and automating manual processes, powering engagement with employees and customers and ServiceNow’s platform is increasingly being used for ESG goal setting, data collection and reporting. This should help improve the quality and increase the volume of organisations’ ESG data – something we continue to advocate for. There is also significant demand for process and SERVICENOW SOLUTIONSINTRO & ESG STRATEGY ENVIRONMENT SOCIAL GOVERNANCE DATA data governance as companies need to remain SERVICENOW SOLUTIONSINTRO & ESG STRATEGY ENVIRONMENT SOCIAL GOVERNANCE DATA That’s why we’re developing integrated solutions that cut compliant with more onerous regulations and across enterprise silos and ecosystems—solutions that As we progress on our own ESG journey, address our customers’ biggest issues (and the issues meet their customer expectations. For example, ### Laying the foundation for ESG activation we’re building systems to help customers their customers, employees, and investors care about). ServiceNow has invested in a new solution to turn ESG strategy into action. Together, These solutions help mitigate risk, control costs, and even grow the top line. We’re not reinventing the wheel. We’re we create value for business, society, ensure European Union customers’ data is only and the planet. taking the power of the Now Platform and the solutions Our integrated ESG solution, ESG Command Center, our customers have come to trust and rely on, and we’re handled within EU borders. launched in October 2021. It brings together an all-new enhancing them to address environmental, social, and ESG Management product and our Integrated Risk governance needs. Management and Strategic Portfolio Management ServiceNow has also released new ‘ESG Command solutions—along with our partner ecosystem. This Center’ product to help customers achieve their solution, together with our existing and custom-built workflows and apps, gives organizations the range of ESG goals and recognise ESG’s connection tools they need to turn their ESG strategies into action. ### Building connections that turn ESG strategy Learn more about our ESG solutions. to long-term value creation. In less than four ### into action months, the number of customer conversations By keeping data and ideas flowing across value chains and providing engaging and productive where ESG is addressed has increased tenfold. digital experiences, the Now Platform unites the people, processes, and systems that make work happen in the right way for the benefit of everyone. Customers are elevating their own ESG initiatives with better data collection, process monitoring The power of ServiceNow solutions to address ESG and automated reporting. A closer look at ESG Command Center Strategy, management, governance, and reporting Our ESG Command Center solution helps organizations at every level of maturity integrate their ESG initiatives—from setting goals and collecting data to auditing activities and tracking and disclosing performance. This solution allows customers to plan, manage, govern, and report on ESG initiatives in every part of the organization. Environmental Social Governance ServiceNow products for ESG use cases ServiceNow ESG ServiceNow Strategic ServiceNow Integrated Management Portfolio Management Risk Management Creator Workflows for industry and customer-specific needs | Helps companies document material | | | Helps organizations build and | Incorporates ESG considerations | | | --- | --- | --- | --- | --- | --- | | topics, create goals and metrics, | | | maintain their ESG roadmap through | and data into enterprise-wide risk | | | track performance, collect and | | ServiceNow Store integrations, content, and partner-built apps | strategy, planning, and budgeting | and compliance management by | | | validate audit-ready data, and | | | tools. Companies can track costs and | offering core governance capabilities, | | | create metric disclosures that align | 48 48 | | resources, gain visibility into their ESG | advanced risk assessments, continuous | www.polarcapitaltechnologytrust.co.uk | | with major ESG reporting frameworks. | | | investments, and improve the scale | monitoring, artificial intelligence (AI), | | Now Platform and impact of their ESG efforts. audits, privacy, automation, and analytics for better decision-making and business performance. External data sources SERVICENOW GLOBAL IMPACT REPORT 2022 15 SERVICENOW GLOBAL IMPACT REPORT 2022 16 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Spotlight on Shopify 12 countries found 62% of consumers are “unwilling to The future of commerce has more voices, compromise on sustainability” and 54% are already making not fewer. sustainable purchases by choosing retailers that offer zero- Shopify’s mission is to “make commerce better for emission shipping, for example. 82% of merchants believe everyone” and help people achieve independence by there is a strong correlation between sustainability and making it easier to start, run, and grow a business. The improved business performance. 45% of consumers report company aims to empower individuals, lower the barriers they are willing to pay a premium if it leads to a reduction to commerce and level the playing field for entrepreneurs in their carbon footprint. Shopify itself is carbon-neutral and of all ages and backgrounds to compete with larger provides merchants with tools to enable this including the businesses. Shopify Planet app, which allows carbon neutral shipping on all orders and automatically calculates the cost. Shopify has a merchant education and equitable entrepreneurship programs are designed to improve accessibility, instil an innovation mindset, and empower business owners to thrive. This is in addition to the Shopify Open Learning programme which helps students to create their own Shopify stores. There are currently more than 2m million merchants on Shopify and more than 5m jobs have been created by Shopify merchants and partners. Sustainability is also an increasingly important driver of consumer choices. A Shopify survey across >24,000 consumers and >9,000 business executives across www.polarcapitaltechnologytrust.co.uk 49 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### ESG – Investment Perspective continued Polar Capital is working to incorporate the ### Regulation / Polar Initiatives recommendations of the TCFD into its Governance, As a UK listed entity, the Company is currently subject to Strategy and Risk Management frameworks, and will limited direct ESG regulation and reporting requirements, provide on TCFD reporting in the coming year. but we are mindful that over the coming year, the UK’s FCA will introduce a package of measures aimed at Polar Capital has joined the Institutional Investors Group clamping down on greenwashing. This includes sustainable on Climate Change (IIGCC), the European membership investment labels, disclosure requirements and restrictions body for investor collaboration on climate change. The on the use of sustainability-related terms in product IIGCC’s mission is to support and enable the investment naming and marketing. These Sustainability Disclosure community in driving significant and real progress by 2030 Requirements (SDR) are still in development following towards a net zero and resilient future. The IIGCC is the key significant feedback received during the consultation. The organisation in developing the Net Zero Asset Managers Policy Statement is likely to be published in September Initiative and NZ Investment Framework, which is used 2023, with the anti-greenwashing rule coming into force by asset managers to develop net zero commitments and immediately, followed by the disclosure requirements targets. 12 months later. Polar Capital is considering its position regarding making However, we are cognisant of their broad aims and a net zero commitment that covers financed emissions recommendations from HM Treasury to the FCA which or joining an organisation such as the Net Zero Asset among other economic aspirations include Climate Change Managers Initiative. While we have not yet made such a objectives; specifically the UK Government’s commitment commitment, we continue to develop our capability to to achieve a net-zero economy by 2050 under the Climate evaluate our funds’ holdings using the IIGCC Paris Aligned Change Act 2008. Investment Initiative Net Zero Framework and hope that membership of the IIGCC will help us develop our own net Of most relevance for Polar Capital is the introduction of the zero strategy and support engagement on climate change Task force on Climate-related Financial Disclosures (TCFD), transition within our portfolios. developed by the Financial Stability Board (FSB) to provide guidance for corporates and investors on key information that companies should disclose to support investors. The FCA has now adopted the TCFD guidance to introduce Alastair Unwin mandatory climate-related reporting for asset managers Deputy Fund Manager in the UK, implemented in a phased approach depending Polar Capital on size of the asset manager. Polar Capital falls within the 18 July 2023 second phase of reporting (with AUM between £5-50bn) in scope of the FCA’s TCFD requirements from January 2023, requiring our first full TCFD report by June 2024. 50 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## ESG Dashboard ## MSCI ## A ## ESG RATINGS Portfolio Weighted Average ESG Score / Quality Score 6.62 CCC B BB BBB A AA AAA Letter Rating A Corporate governance MSCI Distribution of Ratings The weighted average percentage of independent board of 36% of the fund’s weighted portfolio holdings receive an MSCI directors in the portfolio’s investee companies is 77.9%, and the ESG Rating of AAA or AA (ESG Leaders) and 5% receive an MSCI weighted average percentage of women on boards is 30.8%. ESG Rating of B or CCC (ESG Laggards). 40 77.9% 35 30% 30 25 23% 22% 20 15 13% 30.8% 10 6% 5 3% 2% 1% 0 AAAAAABBBBBBCCCUnrated Board Gender DiversityBoard Independence 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. 25.1 VERY HIGH HIGH MODERATE LOW VERY LOW | Bottom 5 Rated Holdings | Top 5 Rated Holdings | | --- | --- | | Security Rating Change | Security Rating Change | | Zuken CCC | Hoya AAA | | Meta Platforms CCC | Kinaxis Inc AAA | | SiTime B | ASML AAA | | Harmonic Drive Systems B | Workday AAA | | eMemory Technology B | Microsoft AAA | | Source: MSCI | Source: MSCI | | Voting Record | Vote cast statistics | | | | --- | --- | --- | --- | | Category Number Percentage | | Number of votes FOR | 74.6% | | | | Number of votes against | 10.2% | Number of votable meetings 108 Number of votes withhold 6.6% Number of meetings voted 107 99.1% Number of votes on management 8.4% say on pay Number of meetings with at least 1 vote Against, Withhold or Abstain 57 52.8% Number of votes abstain 0.19% Number of votes on MSOP Source: MSCI, ISS Source: MSCI, ISS Number of votes WITHHOLD Number of votes ABSTAIN www.polarcapitaltechnologytrust.co.uk 51 Number of votes AGAINST Number of votes FOR LAGGARD AVERAGE LEADER ## Corporate Governance Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Strategic Report This report forms part of the Strategic report section ### This report has been provided in accordance with The Investment Objective and Policy Companies Act 2006 (Strategic Report and Directors’ While observing the Dow Jones Global Technology Report) Regulations 2013. The aim of this report is to Index (total return, Sterling adjusted, with the removal provide information to shareholders on the Company’s of relevant withholding taxes) as the Benchmark against strategy and the potential for such to succeed, including which NAV performance is measured, shareholders should a fair review of the Company’s performance during the be aware that the portfolio is actively managed and is year ended 30 April 2023, the position of the Company not designed to track any particular benchmark index or at the year end and a description of the principal risks and market. The performance of the portfolio can vary from the uncertainties, including both economic and business risk Benchmark performance, at times considerably. factors underlying any such forward-looking information. Over recent decades the technology industry has been one ### Business Model and Regulatory of the most vibrant, dynamic and rapidly growing segments of the global economy. Technology companies offer the ### Requirements potential for substantially faster earnings growth than the The Company’s business model follows that of an broader market. externally managed investment trust providing shareholders with access to an actively managed portfolio of technology Investments are selected for their potential shareholder shares selected on a worldwide basis. returns, not on the basis of technology for its own sake. The Investment Manager believes in rigorous fundamental The Company is designated as an Alternative Investment analysis and focuses on: Fund (‘AIF’) under the Alternative Investment Fund Management Directive (‘AIFMD’) and, as required by the • management quality; Directive, has contracted with Polar Capital LLP to act as • the identification of new growth markets; the Alternative Investment Fund Manager (‘AIFM’) and Investment Manager (or ‘Manager’) and HSBC Bank Plc to • the globalisation of major technology trends; and act as the Depositary. • exploiting international valuation anomalies and sector Both the AIFM and the Depositary have responsibilities volatility. under AIFMD for ensuring that the assets of the Company Changes to Investment Policy are managed in accordance with the Investment Policy and Any material change to the Investment Policy will require are held in safe custody. The Board remains responsible for the approval of the shareholders by way of an ordinary setting the investment strategy and operational guidelines resolution at a general meeting. The Company will as well as meeting the requirements of the FCA’s Listing promptly issue an announcement to inform shareholders Rules and the Companies Act 2006. and the public of any change to its Investment Policy. The AIFMD requires certain information to be made No changes to the Investment Policy are presently available to investors in AIFs before they invest and requires anticipated. 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, leverage, 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. 54 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Investment Strategy Guidelines and Board Market Parameters With current and foreseeable investment conditions, the ### Limits Portfolio will be invested in accordance with the Investment The Board has established guidelines for the Investment Objective and Policy across worldwide markets, generally Manager in pursuing the Investment Policy. The Board within the following ranges: uses these guidelines to monitor the portfolio’s exposure • North America up to 85%. to different geographical markets, sub-sectors within technology and the spread of investments across different • Europe up to 40%. market capitalisations. • Japan and Asia up to 55%. These guidelines are kept under review as cyclical changes • Rest of the world up to 10%. in markets and new technologies will bring certain sub-sectors or companies of a particular size or market The Board has set specific upper exposure limits for certain capitalisation into or out of favour. countries where they believe there may be an elevated risk. As reported last year, the Company does not hold stocks in Asset Allocation Russia and has no intention of doing so in the near future. Technology may be defined as the application of scientific knowledge for practical purposes and technology The Company will at all times invest and manage its assets companies are defined accordingly. While this offers a very in a manner that is consistent with spreading investment broad and dynamic investing universe and covers many risk and invests in a Portfolio comprised primarily of different companies, the portfolio of the Company (the international quoted equities which is diversified across ‘Portfolio’) is focused on companies which use technology both regions and sectors. or which develop and supply technological solutions Investment Limits as a core part of their business models. This includes In applying the Policy, the Company will satisfy the areas as diverse as information, media, communications, following investment restrictions: environmental, healthcare, finance, e-commerce and renewable energy, as well as the more obvious applications • The Company’s interest in any one company will not such as computing and associated industries. exceed 10% of the gross assets of the Company, save where the Benchmark weighting of any investee The Board has agreed a set of parameters which seek to company in the Company’s portfolio exceeds this ensure that investment risk is spread and diversified. The level, in which case the Company will be permitted to Board believes that this provides the necessary flexibility increase its exposure to such investee company up to for the Investment Manager to pursue the Investment the Benchmark ‘neutral’ weighting of that company or, Objective, given the dynamic and rapid changes in the field if lower, 15% of the Company’s gross assets. of technology, while maintaining a spread of investments. • The Company will have a maximum exposure to companies listed in emerging markets (as defined by the MSCI Emerging Markets Index) of 25% of its gross assets. • The Company may invest in unquoted companies from time to time, subject to prior Board approval. Investments in unquoted companies in aggregate will not exceed 10% of the gross assets of the Company. Such limits are measured at the time of acquisition of the relevant investment and whenever the Company increases the relevant holding. In addition to the restrictions set out above, the Company is subject to Chapter 15 of the FCA’s Listing Rules which apply to closed ended investment companies with a premium listing on the Official List of the London Stock Exchange. www.polarcapitaltechnologytrust.co.uk 55 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Strategic Report continued In order to comply with the current Listing Rules, During the year, the Company had two loan facilities the Company will not invest more than 10% of its total with ING Bank NV: one for 36m US Dollars at a fixed rate assets at the time of acquisition in other listed closed of 5.43% pa and one for 3.8bn Japanese Yen at a fixed ended investment funds, whether managed by the rate of 1.13% pa, both of which were drawn down in Investment Manager or not. This restriction does not apply September 2022. These loans fall due for repayment in to investments in closed ended investment funds which September 2024. The loan facilities will be reviewed and themselves have published investment policies to invest no may be replaced on expiry. more than 15% of their total assets in other listed closed Details of the loans are set out in Note 17 to the Financial ended investment funds. However, the Company will not in Statements. any case invest more than 15% of its total assets in other closed ended investment funds. The Investment Manager’s use of derivatives is monitored by the Board in accordance with the Company’s investment Cash, Borrowings (Gearing) and Derivatives policy and any leverage from the use of such derivatives The Company may borrow money to invest in the Portfolio will be subject to the restriction on gearing. over both the long and short-term. Any commitment to ### borrow funds is agreed by the Board and the AIFM. Future Developments The Board remains positive on the longer-term outlook The Investment Manager may also use from time-to-time for technology and the Company will continue to derivative instruments, as approved by the Board, such as pursue its Investment Objective. The outlook for future financial futures, options, contracts-for-difference and performance is dependent to a significant degree on the currency hedges. These are used for the purpose of world’s financial markets and their reactions to economic efficient portfolio management. Any such use of derivatives events and other geopolitical forces. In accordance with will be made in accordance with the Company’s policies the Articles of Association, the Board will propose the on spreading investment risk as set out in this investment next five-yearly continuation vote of the Company at the policy and any leverage resulting from the use of such Annual General Meeting to be held in September 2025. derivatives will be subject to the restrictions on borrowings. The Chair’s Statement and the Investment Manager’s ### Cash Report comment on the outlook. The Company may hold cash or cash equivalents if the ### Dividends Investment Manager feels that these will, at a particular The Company’s revenue varies from year to year and the time or over a period, enhance the performance of the Board considers the dividend position each year in order Portfolio. The Board has agreed that management of cash to maintain the Company’s status as an investment trust. may be achieved through the purchase of appropriate The revenue reserve remains in deficit and historically government bonds, money market funds or bank deposits the Company has not paid dividends given its focus on depending on the Investment Manager’s view of the capital growth. investment opportunities and the benefits of diversification. The Directors do not recommend, for the year under ### Gearing and Derivatives review, the payment of a dividend (2022: no dividend The Company’s Articles of Association permit borrowings recommendation). up to the amount of its paid-up share capital plus capital and revenue reserves. The Company may use gearing in the form of bank loans which are used on a tactical basis by the Investment Manager, when considered appropriate. The Board monitors the level of gearing available to the Portfolio Manager and agrees, in conjunction with the AIFM, all bank facilities in accordance with the Investment Policy. The Board approves and controls all bank facilities and any net borrowings over 20% of the Company’s net assets at the time of draw down will only be made after approval by the Board. 56 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### 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 website services which it arranges through Huguenot Limited, and administrative services, including accounting, portfolio valuation and trade settlement which it has arranged to deliver through HSBC Securities Services (‘HSS’ or “the Administrator”). The Company also contracts directly, on terms agreed periodically, with a number of third parties for the provision of specialist services. The cost of the services outlined below are paid for directly by the Company and are separate from the Investment Management Fee payable to Polar Capital: • Stifel Nicolaus Europe Limited as Corporate Broker; • Equiniti Limited as Share Registrars; • HSBC Securities Services as Custodian and Depositary; • RD:IR for Investor Relations and Shareholder Analysis; • Camarco as PR advisors; and • Perivan Limited as designers and printers for shareholder communications. www.polarcapitaltechnologytrust.co.uk 57 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 Strategic Report continued # 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 the investment management team will help to achieve the optimum return for shareholders. As such, the Board and the Investment Manager operate in a supportive, co-operative and open environment. The Investment Manager is Polar Capital LLP ('Polar Capital'), which is authorised and regulated by the Financial Conduct Authority, to act as Investment Manager and AIFM of the Company with sole responsibility for the discretionary management of the Company's assets (including uninvested cash) and sole responsibility to take decisions as to the purchase and sale of individual investments. The Investment Manager also has responsibility for asset allocation within the limits of the investment policy and guidelines established and regularly reviewed by the Board, all subject to the overall control and supervision of the Board. Polar Capital provides a team of technology specialists led by Ben Rogoff. Each team member focuses on specific areas while Ben Rogoff, with Alastair Unwin as Deputy, has overall responsibility for the portfolio. Polar Capital also has other specialist and geographically focused investment teams which may contribute to idea generation. The technology investment team's biographies can be found on pages 10 and 11. The Investment Manager has other investment resources which support the investment team and has experience in administering and managing other investment companies. # Fee Arrangements Under the terms of the Investment Management Agreement, the Company pays to the Investment Manager a base fee, and in certain performance circumstances, a performance fee. # Management fee With effect from 1 May 2022, the base management fee paid by the Company monthly in arrears to the Manager is calculated on the daily Net Asset Value ('NAV') as follows: - Tier 1: 0.80 per cent. for such of the NAV up to and including £2bn; - Tier 2: 0.70 per cent. for such of the NAV between £2bn and £3.5bn; and - Tier 3: 0.60 per cent. for such of the NAV above £3.5bn. Any investment in funds managed by Polar Capital are wholly excluded from the base management fee calculation. Management fees of £21,918,000 (2022: £28,281,000) have been paid for the year to 30 April 2023 of which £1,827,000 (2022: £6,374,000) was outstanding at the year end. Under the terms of the IMA the Board may undertake a three-yearly review of the fee arrangements, the next of which will commence in 2025, with the anticipation that any changes proposed and subsequently agreed will take effect from the start of the following financial year. Further details on the performance fee methodology and calculation are provided on page 134 within the Shareholder Information section. 58 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Longer-Term Viability In accordance with the AIC Code of Corporate Governance, the Company is required to make a forward-looking longer-term viability statement. The Board has considered and addressed the ability of the Company to continue to operate over a period significantly beyond the twelve-month period required for the going concern statement. The Board has considered the industry and market in which the Company operates and believes that despite the market volatility experienced during the financial year under review, there continues to be appetite for technology investment. The Board continues to use five years as a reasonable term over which the viability of the Company should be viewed; Shareholders have the opportunity to vote on the continuation of the Company every five years, therefore the outlook for the next five-year period incorporates the continuation vote which will be put to shareholders at the AGM in 2025. The process and matters considered in establishing the longer-term viability are detailed within the Audit Committee Report on page 82. In establishing the positive outlook for the Company over the next five years to 30 April 2028, the Board has taken into account: The ability of the The assessment took account of the Company’s current financial position, its cash flows and its liquidity Company to meet its position, the principal risks as set out on pages 62 to 65 and the Committee’s assessment of any material liabilities as they fall due uncertainties and events that might cast significant doubt upon the Company’s ability to continue as a going concern. The assessment was then subject to a sensitivity analysis over a five-year period, which stress tested a number of the key assumptions underlying the forecasts both individually and in aggregate for normal, favourable and stressed conditions and considered whether financing facilities will be renewed. The portfolio comprises a spread of investments by size of company, traded on major international stock exchanges. 99.8% of the current portfolio 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 and there are no capital commitments foreseen which would alter that position. The ongoing charges of the Company for the year ended 30 April 2023 (excluding performance fees) were 0.81% (2022: 0.84%). Repayment of the bank facilities, drawn down at the year end, and due in September 2024, would equate to approximately 21% of the cash or cash equivalents available to the Company at 30 April 2023, without having to liquidate the portfolio of investments. The Company has no employees and consequently does not have redundancy or other employment related liabilities or responsibilities. The Company will Under the AIC SORP, where Shareholders have the opportunity to vote in favour or against a company propose a resolution on continuing in existence, it will normally be the case that shareholders will have to vote in favour of a the continuation of the liquidation before it can occur. It is reasonable to believe that if positive long-term performance is achieved Company at the AGM in over the period until the next continuation vote shareholders will vote in favour of continuation. September 2025 Factors impacting the The Investment Manager’s Report and the Strategic Report provide a comprehensive review of factors forthcoming years which may impact the Company in forthcoming years. In making its assessment, the Board considered these factors alongside the Principal Risks and Uncertainties, and their corresponding mitigation and controls, as set out on pages 62 to 65. Regulatory changes Despite the increased level of regulation and the unpredictability of future requirements it is considered that regulation will not increase to a level that makes the running of the Company uneconomical or untenable in comparison to other competitive products. Closed-ended Investment It is believed that the business model of being a closed ended investment fund will continue to be wanted Funds by investors and the Investment Objective will continue to be desired and achievable. www.polarcapitaltechnologytrust.co.uk 59 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Strategic Report continued ### Further, the Board recognises that there has been Going Concern significant progress made in the technology sector and The Board has also considered the ability of the Company immense change in what is deemed to be a technology to adopt the Going Concern basis for the preparation of the company which broadens the universe for potential Financial Statements. investment. Technology remains a specialist sector for which there continues to be a need for independent Consideration included the Company’s current financial specialist sector investment expertise. The Board therefore position, its liquidity position and its assessment. In addition, have a reasonable expectation that the company will be the Company’s cash flows were stressed tested for base case able to continue in operation and meet its liabilities as they and reasonable worse case scenarios such as higher inflation fall due over the five years to 30 April 2028. and interest rate increases. Further detail on the assessment for going concern is provided in the Report of the Audit Committee on pages 81 and 82 and in Note 2(a) of the Financial Statements. ### Key Performance Indicators 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 and these KPIs have not differed from the prior year. KPI Control Process Outcome | The provision of investment | The Board reviews the performance of the | At 30 April 2023 the total net assets of the | | --- | --- | --- | | returns to shareholders | portfolio in detail and hears the views of | Company amounted to £2,828,141,000 | | measured by long-term | the Investment Manager at each meeting. | (2022: £3,050,985,000). The Company’s | | NAV growth and relative | | NAV has, over the year to 30 April 2023, | The Board discusses the market factors performance against the underperformed the Benchmark by 5.7%. giving rise to any discount or premium, Benchmark. The NAV per share fell by 2.8% from the long or short-term nature of 2305.13p to 2239.48p while the Benchmark The Board is aware of the those factors and the overall benefit increased 2.9% in Sterling terms over vulnerability of a sector to Shareholders of any actions. The the same period. As at 30 April 2023 specialist investment trust market liquidity is also considered when the portfolio comprised 87 (2022: 96) to a change in investor authorising the issue or buy back of shares investments. sentiment to that sector. when appropriate market conditions prevail. Investment performance is explained in the Chair’s Statement and the Investment Manager’s Report. The performance of the Company over the longer-term is shown by the ten year historic performance chart on page 3. Monitoring and reacting to The Board receives regular information on the The discount/premium of the ordinary share issues created by the discount composition of the share register including price to NAV per ordinary share (diluted or premium of the ordinary trading patterns and discount/premium levels when appropriate) has been as follows: share price to the NAV per of the Company’s ordinary shares. Financial year to 30 April 2023 ordinary share with the aim A daily NAV per share, diluted when of reduced discount volatility • Minimum discount over year: 5.55% appropriate, calculated in accordance with for Shareholders. the AIC guidelines, is issued to the London • Maximum discount over year: 17.28% Stock Exchange. • Average discount over year: 11.85% 60 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information KPI Control Process Outcome | The Company does not have an absolute | In the year ended 30 April 2023, the | | --- | --- | | target discount level at which it buys back | Company bought back 6,070,882 ordinary | | shares but has historically bought back | shares (representing 4.4% of the issued | | significant amounts of the outstanding | share capital) at an average discount of | | share capital when deemed appropriate | 11.95%, Subsequent to the year end and | | and will continue to do so. This approach | to 13 July 2023, the Company bought back | | does not preclude a more active approach | a further 1,229,369 shares. | as discounts widen and the Investment Over the previous five financial years ended Manager may consider that a single 30 April 2023 purchase or a series of purchases of shares in current or greater volumes, which would • Maximum premium over period: 6.06% enhance the Company’s NAV per share, • Maximum discount over period: 17.28% would be an attractive investment of the Company’s cash resources, given the positive • Average discount over period: 6.52% long-term prospects for the Company’s Over the previous five financial years ended portfolio. As always, the Board keeps the 30 April 2023 the Company has issued level of discount under careful review 3,520,000 Ordinary shares as a result of and has been buying back shares actively market demand. in recent months at levels set out in the adjacent column. | To qualify and continue to | The Board receives regular financial | This has been achieved for every year since | | --- | --- | --- | | meet the requirements for | information which discloses the current | launch in 1996. | | Sections 1158 and 1159 of | and projected financial position of the | | HMRC has approved the investment trust the Corporation Tax Act 2010 Company against each of the tests set out status subject to the Company continuing to (‘investment trust status’). in Sections 1158 and 1159. meet the relevant eligibility conditions and ongoing requirements. The Directors believe that the tests have been met in the financial year ended 30 April 2023 and will continue to be met. Efficient operation of the The Board considers annually the services The Board has received and considered Company with appropriate provided by the Investment Manager, satisfactory the internal controls report investment management both investment and administrative, and of the Investment Manager and other resources and services from reviews on a cycle the provision and costs key suppliers including contingency third party suppliers within of services provided by third parties. arrangements to facilitate the ongoing a stable and risk-controlled operations of the Company in the event of The annual operating expenses are environment. withdrawal or failure of services. reviewed and any non-recurring project related expenditure is approved separately The ongoing charges of the Company for by the Board. the year ended 30 April 2023 excluding the performance fee were 0.81% of net assets (2022: 0.84%). There was no performance fee payable for the year ended 30 April 2023 (2022: nil) and therefore the ongoing charges including the performance fee were 0.81% (2022: 0.84%) of net assets. www.polarcapitaltechnologytrust.co.uk 61 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Strategic Report continued ### Principal Risks and Uncertainties Committee also identifies any emerging risks during its review process and continues to closely monitor these risks The Board is responsible for the management of risks faced along with any other emerging risks as they develop and by the Company and, through delegation to the Audit implements mitigating actions as necessary. Emerging risks Committee, has established procedures to manage risk, during the financial year under review included Climate oversee the internal control framework and determine the change as well as the deterioration of relations between nature and extent of the principal risks the Company is willing China and Taiwan and the impact that a war between the to take in order to achieve its long-term strategic objectives. two countries may have on the Company’s portfolio, the The established risk management process the Company market and global economy. This has also been captured in follows, identifies and assesses various risks, their likelihood, our risk map as an emerging risk. The medium and longer and possible severity of impact, considering both internal and term impacts of this risk will continue to be assessed by external controls and factors that could provide mitigation. the Audit Committee in light of how they may affect the A post mitigation risk impact score is then determined for Company’s portfolio and the economic and geopolitical each principal risk. environment in which the Company operates. At each Audit Committee, identified principal risks are The Principal Risks post mitigation are detailed on the reviewed and reassessed against the backdrop of the following pages along with a high-level summary of their ever-changing world the Company is operating in. management through mitigation and status arrows to Furthermore, the Audit Committee carries out, at least indicate any change in assessment over the past financial annually, a robust assessment of overall risks and year. uncertainties faced by the Company with the assistance of the Investment Manager. As part of this process, the ### RISK CYCLE Identify Risk Monitoring Analyse and Review Risk Manage Build Risk Risk Strategy 62 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Principal Risks and Uncertainties continued Management of risks through Mitigation & Controls Trend year on PORTFOLIO RISK year Failure to achieve investment objective due to poor performance The Board seeks to manage the impact of such risks through regular reporting and monitoring of investment performance. In addition, the Board regularly considers, 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. 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. The Board is committed to a clear communication program to ensure shareholders understand the investment strategy. A resolution is put forward every five years to provide shareholders with an opportunity to vote on the continuation of the Company. The last continuation vote was held in September 2020 and had 100% of votes cast in favour, the next continuation resolution will be proposed at the AGM to be held in September 2025. Given the market volatility experienced during the year under review and the increased timeframe over which the Company’s performance has suffered, the Board agreed to hold this risk at the elevated level following the Company’s year-end. Portfolio management errors e.g. breach of policy 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. The Investment Manager on behalf of the Company undertakes counterparty monitoring and only trades with brokers which have satisfied the approval process. Trade settlement, currency exposure and all dealing operations are monitored by various systems and groups including the Investment Manager’s operations and risk teams and independent monitoring by the depositary. OPERATIONAL RISK Failure in services provided by the Investment Manager The Board carries out an annual review of internal control reports from suppliers which includes the Investment Manager’s cyber protocols and disaster recovery procedures. Accounting, Financial or Custody errors Due diligence and service reviews are undertaken with third-party service providers including the Custodian and Depositary. The Board considers, approves and monitors supplier appointments. The Investment manager reports on breaches of service level agreements and failure to meet standards as it becomes aware of the issue. Annual controls reports from service providers are reviewed by Board, and exceptions highlighted to the Board. Representatives from each service provider attend meetings to apprise the Board of exceptions found in their control environments. Directors regularly attend due diligence visits to service providers. Increase Decrease Unchanged www.polarcapitaltechnologytrust.co.uk 63 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Strategic Report continued ### Principal Risks and Uncertainties continued Management of risks through Mitigation & Controls Trend year on OPERATIONAL RISK continued year IT failure, Fraud and Cyber Risk The number, severity and success rate of cyberattacks have increased considerably in 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 Company Secretary, 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. In light of the increased potential for fraud and cyber attacks during the year under review, the Board decided to elevate the pre-mitigation score associated with this risk, the post mitigation remains unchanged. Black Swan event – e.g. unforeseen natural disaster The Company has a disaster recovery plan in place along with a Black Swan Committee comprised of any two directors, who are able to provide a response to such events as necessary. Failure of Depositary, Custodian, Sub-Custodian 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 Administrator services (see glossary for further information) 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 Administrator and verified by the Investment Manager. REGULATORY RISK Breach of Statutes and Regulation 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. Failure to effectively communicate with investors Polar Capital Sales Team and the Corporate Broker provide periodic reports to the Board on communications with shareholders and feedback received. The Audit Committee received the half-year and annual financial statements prior to sign-off and makes recommendations to the Board. Contact details and how to contact the Board are provided in regulatory announcements and in half year and annual reports. The Board are present at the AGM to speak to shareholders. Increase Decrease Unchanged 64 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Management of risks through Mitigation & Controls Trend year on ECONOMIC AND MARKET RISK year Global geo-political risk The Board regularly discusses the global geopolitical issues and general economic conditions and developments. The impact on the portfolio from geopolitical changes is 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. Uncertainty in regulatory environment (including inflation, recession and interest rates) The Board regularly receives reports which detail corporate matters including legislative and regulatory developments. Guidance on implementation is sought from and provided via the Company Secretary and professional advisers where necessary. Note 27 describes the impact of changes in foreign exchange rates. The Company’s largest exposure is to US$ holdings. The Company has a varying level of cash which is primarily held in US Dollars and also has loan facilities in both US Dollars and Japanese Yen. Fluctuations in exchange rates are monitored which may impact investor returns. An analysis of currency is given in Note 27 to the Financial Statements. KEY STAFF RISK Loss of Portfolio Manager or other Key staff The strength and depth of investment team provides comfort that there is not over-reliance on one person with alternative senior technology 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. Ali Unwin was appointed as Deputy Fund Manager and is responsible for managing the portfolio of the Company alongside Ben Rogoff, Lead Manager since 1 May 2006. Insufficient resource or experience on the Board Respected recruiters are used to source suitably experienced candidates for non-executive directorships. A Board, Committee and Individual evaluation process is carried out annually and justification for re-election of Directors is provided in Annual Report to Shareholders. Increase Decrease Unchanged www.polarcapitaltechnologytrust.co.uk 65 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Section 172 Statement This report forms part of the Strategic report section The statutory duties of the Directors are detailed in s171-177 of the Companies Act 2006. The Board recognises that under s172, Directors have a duty to promote the success of the Company for the benefit of its shareholders as a whole and in doing so have regard to the consequences of any decision in the long term, as well as having regard to the Company’s wider stakeholders amongst other considerations. The fulfilment of this duty not only helps the Company achieve its Investment Objective but ensures decisions are made in a responsible and sustainable way for shareholders. To ensure that the Directors are aware of, and understand, their duties, they are provided with an induction, including details of all relevant regulatory and legal duties as a director when they first join the Board, and continue to receive regular and ongoing updates on relevant good practice, legislative and regulatory developments. They also have continued access to the advice and services of the Company Secretary and, where deemed necessary, the Directors may 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 shareholders and stakeholders and these are taken into account during all of its discussions and as part of its 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 shareholder engagement when making the strategic decisions during the year that affect shareholders, the confirmation of the continued appointment of the Investment Manager and the recommendation that shareholders vote in favour of the resolutions to be proposed at the AGM. The Directors have also engaged with and taken account of shareholders’ interests during the year. The Portfolio Manager has held numerous face to face meetings and interacted with a number of shareholders and institutions in addition to presenting at a number of conferences during the year. Where appropriate, directors are invited to attend these conferences to meet with shareholders and prospective investors; in addition, the annual Investor Relations dinner was again held in October 2022. Positive feedback was received from all attendees of the dinner who welcomed the opportunity to interact with the Board and Manager. The Chair will write to the Company’s largest shareholders following the publication of the Annual Report and Financial Statements offering the opportunity to meet to discuss any matters of interest or concern. The AGM of the Company was held as a hybrid event in September 2022 and the Board were delighted to once again welcome shareholders to the meeting in person. However the online level of presence was minimal. The Company’s next AGM will be held at 2:30pm on Thursday 7 September 2023. Following the trials of holding semi-virtual and hybrid meetings, and considering the feedback received from shareholders, we have decided to return to an in-person only AGM and will not be providing a facility for online attendance. 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 attend, vote and participate, we have therefore considered the meeting location and, based on feedback received, have moved to a central London office which is close to Liverpool Street Station with easy access from a number of directions. The meeting will therefore be held at the offices of Herbert Smith Freehills, Exchange House, Primrose Street, London, EC2A 2EG. Once again, we will be inviting feedback from shareholders and will take this into account when planning the 2024 meeting. 66 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Stakeholder Group How we engage with them 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 shareholders who attend. Shareholders are encouraged to send any questions ahead of the AGM to the Board via the Company Secretary at cosec@polarcapital.co.uk stating the subject matter as PCTT-AGM. The investment manager will give an in-person presentation and the Chair of the Board and all members of the Board will be in attendance 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. Should this situation occur, the Board will 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 next 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 shareholder meetings attended and any concerns that have been raised in those meetings. The Board also reviews correspondence from shareholders and may attend investor presentations. The Chair has met with shareholders representing in the region of 12% of the share register, during the year and responded to comments raised both at the AGM and via email. Shareholders are able to raise any concerns directly with the Chair or the Board without intervention of the Manager or Company Secretary, they may do this either in person at the AGM or at other events, or in writing either via the registered office of the Company or to the Chair’s specific email address Chair.pctt@polarcapital.co.uk. 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 in which the Investment Manager presents. The Company, through the sales and marketing efforts of the Investment Manager, encourages retail investment platforms to engage with underlying shareholders in relation to Company communications and enable those shareholders to cast their votes on shareholder resolutions; the Company however has no responsibility over such platforms. The Board therefore encourage shareholders invested via the platforms to regularly visit the Company’s website or to make contact with the Company directly to obtain copies of shareholder communications. The Company has also made arrangements with its registrar for shareholders, who own their shares directly rather than through a nominee or share scheme, to view their account online at www.shareview.co.uk. Other services are also available via this service. www.polarcapitaltechnologytrust.co.uk 67 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Section 172 Statement continued | Shareholder Group | How we engage with them | | --- | --- | | | **Outcomes and strategic decisions during the year****AGM** As detailed above the Board have decided to hold an in-person only AGM this year and have changed the location to accommodate feedback received in 2022. Further details can be found on pages 133 to 134 of the shareholder information section. **Buybacks** Further to shareholder authority being granted, the Company has the facility to conduct share buy backs when, in normal market conditions, it is in the best interests of shareholders to do so. The Company bought back a total of 6,070,882 shares during the year under review. Subsequent to the year end and to 13 July 2023, the Company bought back a further 1,229,369 shares. **Gearing** The Company is aware of the positive effect that leverage can have in increasing the return to shareholders when utilised. The Company has term loans with ING Bank NV, which expire in September 2024, consideration will be given to renewal or replacement ahead of the expiry date. Please see note 17 for further information. **Continuation Vote** The Company has within its corporate structure the requirement to hold a continuation vote every five years; ahead of each vote the Board, Investment Manager and Corporate Broker seek the feedback of shareholders including any concerns, and an indication of whether they were likely to vote in favour of the Company's continuation. The last continuation vote was held in September 2020, for which 100% of the votes cast were in favour, and the next continuation vote will be held at the AGM in September 2025. **Directors' Remuneration** The remuneration of Directors is reviewed regularly and was increased with effect from 1 May 2022 and again from 1 May 2023, to bring the fees of the Directors more in line with the wider market. Further details are provided in the Report of the Remuneration Committee on page 86. | 68 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Stakeholder Group How we engage with them Investment Engagement Manager Through the Board meeting cycle, regular updates and the work of the Management Engagement Committee reviewing the services of the Investment Manager twice yearly, the Board is able to safeguard shareholder interests by: • Ensuring adherence to the Investment Management Policy and reviewing the agreed management and performance fees; • Ensuring excessive risk is not undertaken in the pursuit of investment performance; • Reviewing the Investment Manager’s decision making and consistency in investment process; • Ensuring compliance with statutory legal requirements, regulations and other advisory guidance such as consumer duty and aspects of operational resilience; and • Considering the succession plans for the Technology Team in ensuring the continued provision of portfolio management services. 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. Outcome and Strategic Decisions during the year ESG The Board continued to engage with the Investment manager to understand how ESG has been integrated into the overall house style, the technology team investment approach and decision making as well as the methodology behind this. The Board also receives information on how ESG affects Polar Capital as a business and the technology team in particular. Consumer Duty The Board has worked with the Investment Manager to ensure the obligations of the new Consumer Duty regulations are appropriately applied to the Company. In light of the obligations, all communications including the website, fact sheets and other published documentation, have been reviewed to ensure they are appropriate for all end users. A ‘value for money’ assessment has also been undertaken and is made available to distributors on request for their due diligence processes. Management The Management Engagement Committee has recommended the continued appointment of the Investment Manager on the terms agreed within the Investment Management Agreement. www.polarcapitaltechnologytrust.co.uk 69 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Section 172 Statement continued Stakeholder Group How we engage with them Investee Stewardship Companies The Board has instructed the Investment Manager to take into account the published corporate governance policies of the companies in which it invests. The Board has also considered the Investment Manager’s Stewardship Code and Proxy Voting Policy. The voting policy is for the Investment Manager to vote at all general meetings of companies in favour of resolutions proposed by the management where it believes that the proposals are in the interests of shareholders. However, in exceptional cases, where it believes that a resolution could 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 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). The Technology Investment Team also use the services of ISS to assist with their own evaluation of companies’ proposals or reporting ahead of casting votes on behalf of the Company at their general meetings. In the event that an investee company has share blocking in place, the default position is to refrain from voting to ensure the ability to trade these stocks if required. During the year ended 30 April 2023, votes were cast at 99% of investee company general meetings held. At 52% of those meetings a vote was either cast against management recommendation, withheld or abstained from. Further information on how the Investment Manager considers ESG in its engagement with investee companies can be found in the ESG Report on pages 40 to 51. Outcomes and strategic decisions during the year During the year the Board discussed the impact of ESG and other market factors and how the Investment Manager factors these into its strategy, investment and decision-making process. The Board receives information on the ratings of investee companies and is able to use this as tool to inform discussions with the Manager during Board meetings. Service Engagement Providers The Directors have frequent engagement with the Company’s other key service providers through the annual cycle of reporting, site visits and due diligence meetings. The schedule of deep-dive in-person meetings re-commenced in 2023. 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 shareholders and the Company as a whole. 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, through due diligence undertaken by the Company Secretary and the Polar Capital Compliance team, is satisfied that the service received continues to be of a high standard. 70 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Stakeholder Group How we engage with them Proxy Advisors Engagement The support of proxy adviser agencies is important to the Directors, as the Company seeks to retain a reputation for high standards of corporate governance, which the Directors believe contributes to the long-term sustainable success of the Company. The Directors consider the recommendations of these various proxy voting agencies when contemplating decisions that will affect shareholders and also when reporting to shareholders through the Half Year and Annual Reports. Recognising the principles of stewardship, as promoted by the UK Stewardship Code, the Board welcomes engagement with all of its investors. The Board recognises that the views, questions from, and recommendations of many institutional investors and proxy adviser agencies provide a valuable feedback mechanism and play a part in highlighting evolving shareholders’ expectations and concerns. Outcomes and strategic decisions during the year Where possible the Chair and other representatives of the Company have engaged with the stewardship teams of some larger investors to understand and address their expectations in terms of board governance, recruitment and diversity. Prior to the Company’s AGMs, the Company engages with agencies including PIRC and ISS to fact check their advisory reports and clarify any areas or topics contained within the report. This ensures that whilst the proxy advisory reports provided to shareholders are objective and independent, the Company’s actions and intentions are represented as clearly as possible to assist with shareholders’ decision making when considering the resolutions proposed at the AGM. The AIC Engagement The Company is a member of the AIC and has supported lobbying activities such as the consultation 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. Approved by the Board on 18 July 2023 By order of the Board Jumoke Kupoluyi, ACG Polar Capital Secretarial Services Limited Company Secretary www.polarcapitaltechnologytrust.co.uk 71 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Report of the Directors The Directors, who are listed on pages 8 and 9, present their annual report, together with their Report on Corporate Governance and the Audited Financial Statements for the year ended 30 April 2023. 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 domiciled in the United Kingdom. It is an investment company as defined in Section 833 of the Companies Act 2006, operating 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). Its ordinary shares are listed and traded on the London Stock Exchange. As an investment trust the Company's ordinary shares are excluded from the FCA's restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to do so for the foreseeable future so that the exclusion continues to apply. ## Life of the Company The Articles of Association of the Company provide that a vote on whether the Company should continue in operation be proposed as an ordinary resolution at every fifth AGM of the Company. Such a resolution was proposed at the AGM held on 2 September 2020 and was passed with 100% of the votes cast in favour of continuing for a further five years. The next continuation vote will be proposed at the AGM to be held in September 2025. ## Directors The current Directors of the Company are listed on pages 8 and 9. All the Directors held office throughout the year under review with the exception of Sarah Bates who retired on 8 September 2022. All Directors will seek re-election at the AGM in September 2023 in accordance with the AIC Code, which recommends annual re-election for all directors. The fees paid to the Directors are set out in the Directors' Remuneration Report. The Board have considered the support for the Directors' re-election and the rationale for such is set out on pages 8 and 9. The Corporate Governance report on page 78 provides more information on the composition of the Board. ## Financial Instruments The Company's financial risk management objectives and policies arising from its financial instruments and its exposure to risk are disclosed in note 27 to the Financial statements. ## Listing Rule 9.8.4 Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm there are no disclosures to be made pursuant to this rule. ## Corporate Governance Statement The Report on Corporate Governance on pages 74 to 79 forms part of this Directors' Report. ## Capital Structure ### Issued The Company's share capital is divided into ordinary shares of 25p nominal value each. At 30 April 2023, there were 137,315,000 ordinary shares in issue of which 11,029,456 were held in treasury (2022: 4,958,574 ordinary shares held in treasury). As at 13 July 2023, the latest practicable date prior to signing of this report, there were 137,315,000 ordinary shares in issue of which 12,258,825 were held in treasury. ### Changes During the Year In the year under review, the Company bought back 6,070,882 ordinary shares (representing 4.4% of issued share capital) which were placed into treasury. Since the year ended 30 April 2023 to 13 July 2023, a further 1,229,369 shares have been bought back and placed in treasury. Further details can be found in Note 18 on page 115 to the Financial Statements. Further information on transferability and the voting rights attached to these shares can be found in the shareholder information page 134. ## Powers to issue and make market purchases of ordinary shares The Board was granted authority by shareholders at the AGM in 2022 to allot equity securities up to a nominal value of £3,432,875, representing approximately 10 per cent. of the then 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 Net Asset Value. 72 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information The Board also obtained shareholder authority at the AGM in 2022 to make market purchases up to a nominal value of £5,145,880 representing approximately 14.99 per cent. of the then issued share capital, or 20,583,518 ordinary shares, for cancellation or holding as treasury shares in accordance with the terms and conditions set out in the resolution. The level of the ordinary share price discount or premium to the Net Asset Value together with internal guidelines for the repurchase or issuance of new ordinary shares are kept under regular review by the Board. The Board considers that discount volatility is unattractive to shareholders but as a specialist investment fund, market sentiment can create sustained discount pressure. With this in mind the Board has a pragmatic approach to share buy backs. 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 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. These powers to issue and make market purchases of ordinary shares will expire at the AGM to be held in September 2023 and renewal of the authorities will be sought at that AGM. ### Major interests in ordinary shares As at the year end of 30 April 2023, 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 | 12,662,785 | 10.13% | | Brewin Dolphin Ltd | Indirect | 9,946,829 | 7.95% | | Investor Wealth & Investment Ltd | Direct | 6,813,636 | 5.45% | | Quilter plc | Indirect | 6,704,725 | 5.36% | | Lazard Asset Management LLC | Both | 6,383,454 | 5.10% | * The above percentages are calculated by applying the ordinary shareholdings as notified to the Total Voting Rights of the issued ordinary share capital at 13 July 2023 of 125,056,175 and do not necessarily match the submitted TRIs. ### Environmental, Social and Governance ("ESG") The Board is responsible for the corporate elements of ESG and for ensuring ESG is factored into the investment process. Details of how ESG is considered and where corporate requirements are met is provided on pages 40 to 51. ### Disclosure of information to the Auditors The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's Auditors are unaware; and each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that the Company's Auditors are aware of that information. ### Annual General Meeting The AGM of the Company will be held on Thursday, 7 September 2023. Please see pages 133 and 134 for further information on the resolutions to be proposed at the meeting. By order of the Board **Jumoke Kupoluyi, ACG** Polar Capital Secretarial Services Limited Company Secretary 18 July 2023 www.polarcapitaltechnologytrust.co.uk 73 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Report on Corporate Governance The Directors recognise the importance of strong corporate governance and acknowledge that they are ultimately accountable to the Company and its shareholders and are therefore responsible for the good governance of the Company. The Company has no employees and the Directors rely on third parties to administer the Company and to provide investment management services. The following diagram demonstrates the governance framework within which the Company is managed. Shareholders Board of Directors Investment Manager Third Party Service and AIFM Providers Management Engagement Nomination Remuneration Audit Committee Committee Committee Committee Chair: Chair: Chair: Chair: Charlotta Ginman Catherine Cripps Catherine Cripps Tim Cruttenden Members: Members: Members: Members: all independent NEDs all independent NEDs all independent NEDs all independent NEDs with the exception of the Chair of the Board ### As an externally managed investment trust, some Statement of Compliance and Application provisions of the FRC UK Code of Corporate Governance ### of The AIC Code’s Principles (the UK Code) are not relevant, including those relating The AIC Code is available on the AIC website to the roles of chief executive, executive directors’ (www.theaic.co.uk). It includes an explanation of how remuneration, statement of gas emissions and the the AIC Code adapts the Principles and Provisions set out requirement to have an internal audit function, therefore in the UK Code to make them relevant for investment the Board has considered the Principles and Provisions companies. The Board believes that the Company’s current of the Association of Investment Companies Code of practices are consistent in all material respects in applying Corporate Governance (the AIC Code) and considers that the principles and complying with the provisions of the AIC reporting against the Principles and Provisions of the AIC Code. The Board will continue to observe the principles Code provides more relevant information to Shareholders. and recommendations set out in the AIC Code. The AIC Code addresses the relevant principles set out in the Financial Report Council (‘FRC’) UK Code as well The AIC Code’s principles and provisions are structured as additional principles and recommendations on issues into five sections: Board leadership and purpose; division that are specific to investment trust companies. The FRC of responsibilities; composition, succession and evaluation; has confirmed that by following the AIC Code, boards audit, risk and internal control; and remuneration. The of investment companies (including those structured as Company’s application of the principles and compliance investment trusts) will meet their obligations under FCA with the provisions of each section is detailed on the Listing Rule 9.8.6. following pages. 74 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Participation from both groups is encouraged and the ### Board Leadership and Purpose (Principles Board can be easily contacted through the Company ### A‑E, Provisions 1‑7) Secretary. The Company’s service providers are subject Purpose to periodic visits and attend service review and other The purpose of the Company is to provide a vehicle in meetings throughout the year, ensuring effective which investment is spread across a diversified portfolio engagement. Fulfilling the Investment Objective and of technology companies which aim to deliver long the Company’s performance is the focus of the Board’s term capital growth to shareholders. The Investment primary discussions in meetings, these are also reported objective and policy seeks to achieve this purpose by on at least monthly. providing investors with global exposure to technology The Board’s effectiveness, including how it promotes companies and sets parameters to ensure the portfolio the long‑term sustainable success of the Company, is diversified and excessive risk is not undertaken. As is reviewed annually and is facilitated by an external an externally managed investment trust, the culture of evaluator every three years. The evaluation process the Company is consequential of the Board’s diversity, is managed by the Nomination Committee and the decisions and behaviours which are aligned with the values outcomes from the external evaluation completed in 2023 and behaviours of the Investment Manager, interaction are detailed in the Report of the Nomination Committee between the two and engagement with the Company’s on page 90. stakeholders. The Board monitors this culture, including the policies and practices it implements to maintain it. Role, responsibilities and committees of the board The Board has delegated to each of the Audit, Board Leadership Management Engagement, Remuneration and Nomination The Directors, collectively as the Board, are responsible committees specific remits detailed within the terms of for leading the Company and the strategic direction of reference which are available on the Company’s website, such and the Board engages various third‑party providers but the final responsibility in these areas remains with the to implement the strategy. In promoting the long‑term Board. In addition to formal meetings, the Board also holds sustainable success of the Company, the performance of ad hoc meetings or creates ad hoc committees (such as the Company’s portfolio is constantly reviewed in view the Black Swan Committee) to enact or approve policies of value generation for shareholders by achievement of or actions agreed in principle by the whole Board. The the investment objective. The engagement of third‑party Chair of each committee attends the AGM to deal with providers is considered regularly along with the fee rates questions relating to the Financial Statements and their payable to each. The largest financial commitment of the specific mandates. Company is with the Investment Manager with whom the Board reviews fees regularly; the last change was in Attendance at each of these meetings is disclosed 2022 and the next formal 3‑yearly review will commence on page 76. Given the size of the Board and that all in 2024. the Directors of the Company are non‑executive, all members of the Board serve on each Committee, with The Company’s performance over the previous ten years the exception of the Board Chair Catherine Cripps who can be found on page 3 and how the Board views its is an invited guest at meetings of the Audit Committee. duties is considered in the s172 statement on pages 66 This encourages unity, clear communication and prevents to 71. The Board’s engagement with shareholders and duplication of discussion between the Board and stakeholders and how it contributes to strategic decision the Committees. making is also discussed within the s172 statement. www.polarcapitaltechnologytrust.co.uk 75 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Report on Corporate Governance continued The number of formal meetings of the Board and its committees held during the year ended 30 April 2023 and the attendance of individual Directors are shown below. Board & Management Strategy Audit Engagement Remuneration Nomination 2022 AGM Number of Meetings Catherine Cripps* 5 3 2 1 1 1 Tim Cruttenden 5 3 2 1 1 1 Charlotta Ginman 5 3 2 1 1 1 Charles Park 5 3 2 1 1 1 Jane Pearce 5 3 2 1 1 1 Stephen White 5 3 2 1 1 1 Sarah Bates** 3 2 1 1 1 1 * Invited guest following appointment as Chair of the Board on 8 September 2022 **Invited guest / retired 8 September 2022 Investment Manager Report of The Nomination Committee The Board has contractually delegated the day‑to‑day Catherine Cripps chairs the Nomination Committee and management of the portfolio to Polar Capital LLP (the all independent non‑executive Directors are members. The ‘Manager’ or ‘Investment Manager’), directly represented Report of the Nomination Committee can be found on by Ben Rogoff as Portfolio Manager and Alastair Unwin as page 90. Deputy Fund Manager. It is the sole responsibility of the Report of The Audit Committee Portfolio Managers to take decisions as to the purchase Charlotta Ginman chairs the Audit Committee, and all and sale of individual investments other than unquoted independent non‑executive Directors are members with the investments where the Board is consulted. The Portfolio exception of the Chair of the Board, who may be invited to Manager has responsibility for tactical gearing, asset allocation attend meetings as a guest. The Audit Committee Report is and sector selection within the guidelines established and set out on pages 80 to 84. regularly reviewed by the Board. The Manager is responsible for providing or procuring Report of The Remuneration Committee accountancy services, company secretarial and administrative Tim Cruttenden as Senior Independent Director, chairs services. The Company Secretary also ensures that all the Remuneration Committee and all independent Directors receive in a timely manner all relevant management, non‑executive Directors are members. The Report of the regulatory and financial information. Representatives of the Remuneration Committee can be found on pages 85 to 89. Manager attend all Board meetings in a variety of capacities ### including investment management, compliance, risk and Division Of Responsibilities marketing, enabling the Directors to probe further on matters ### (Principles F‑I, Provisions 8‑21) of concern or seek clarification on certain issues. The Chair The whole Board reviews the performance of the Manager The Chair is responsible for the leadership of the Board and in all service disciplines and, at each Board meeting, the works with the Company Secretary for setting the Board Company’s performance against the market and a peer meeting agendas and for balancing the issues presented group of funds with similar investment objectives is reviewed. to each meeting. Open and honest debate is encouraged The investment team provided by the Manager, led by Ben at each Board meeting and the Chair keeps in touch with Rogoff, has long experience of investment in technology. In both the Company Secretary and other Directors between addition, the Manager has other investment resources which Board meetings. Catherine Cripps was appointed to the support the investment team and has experience in managing Board in September2021 and appointed as Chair of the and administering other investment trust companies. Board in September 2022. The Chair was independent The Board and Investment Manager work in a collaborative on appointment and continues to meet the criteria for manner and the Chair encourages open discussion and debate. independence. 76 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information The Senior Independent Director (‘SID’) implementing appropriate policies in respect of regulatory The Board does not have any executive directors; therefore changes that impacted the Company. Tim Cruttenden as the SID leads on matters relating to The Board continues to consider the Company’s strategy Chair succession, evaluation and remuneration of the Chair and its relevance to the market and shareholders and non‑executive Directors. The SID can be contacted via as a whole at each Board meeting and at least one the Registered Office of the Company. Board meeting per year includes an in‑depth focus on strategy. Through this process the Board supervises the Board Responsibilities management of the investment portfolio, the work of the The Board currently comprises six non‑executive Directors Investment Manager, the risks to which the Company is who are all considered to be independent. The Board exposed and their mitigation, and the quality of services considers that its overall composition is adequate for the received by the Company. effective governance of the Company. A formal schedule of matters specifically reserved for decision by the full Board The Nomination Committee seeks to balance the time has been defined and a procedure has been adopted for required, skills, knowledge and experience of individual individual Directors, in the furtherance of their duties, to Directors to form an effective and efficient Board. Directors take independent professional advice at the expense of the may adopt external appointments in compliance with the Company. No such advice has been sought during the year. Board’s conflicts of interests policy which also considers the time commitment of external appointments. The Directors have access to the advice and services of the Company Secretary which is provided in compliance Directors’ Professional Development with the IMA through Polar Capital Secretarial Services When new Directors are appointed, they are offered an Limited. An appointed representative, Jumoke Kupoluyi, induction course provided by the Manager. Directors are ACG, is responsible to the Board for ensuring that Board welcome to visit the Manager at any time to receive an procedures are followed, and that applicable rules and update on any aspect of interest or a refresher on the regulations are complied with. The Board and Investment Manager’s operations both generally and those which are Manager operate in a supportive, co‑operative and specific to the Company. Directors are also provided on a open environment. The Board acknowledges that PIRC regular basis with key information on the Company’s policies, (Pensions and Investment Research Consultants Limited, regulatory and statutory obligations and internal controls. an independent corporate governance and shareholder Changes affecting Directors’ responsibilities are advised to the advisory consultancy) has confirmed its voting guidelines Board as they arise. Directors may also regularly participate and recommends voting against the laying of the Annual in professional and industry seminars and may use the Report at an AGM where the Investment Manager provides Manager’s online training resources to ensure they maintain company secretarial services to the Company. The Board their knowledge. The programme of ‘deep‑dive’ internal believe the benefits gained by utilising the services of a controls reviews with suppliers serve to both maintain the Company Secretary provided by the Investment Manager level of internal review undertaken with suppliers but also to far outweigh any perceived risk or conflicts in the view enhance the Directors’ understanding of the services and any of PIRC. The Company Secretary is provided to the enhancements or changes made to such. Company as an independent service and the appointed representative acts as an officer of the Company and not Conflicts Of Interest an employee of the Investment Manager when working Directors have a duty to avoid a situation in which they with the Board and the Company. have a conflict of interest or a possible or perceived conflict with the interests of the Company. The Company’s Articles The Board has a schedule of regular meetings through the of Association contain provisions to permit the Board to year and meets at additional times as required. During the authorise conflicts or potential conflicts. year, Board and Committee meetings were held to deal with the ongoing stewardship of the Company and other matters The Board has in place a policy to govern situations where including the setting and monitoring of investment strategy a potential conflict of interest may arise, for example where and performance, review of the Financial Statements, ESG a director is also a director of a company in which the and considering any shareholder feedback. The level of Company invests or may invest. Where a conflict situation share price discount or premium to the net asset value arises, the conflicted Director is excluded from any discussions are kept under review along with matters affecting the or decisions relating to the matter of conflict. The Conflicts industry and the evaluation of third‑party service providers. Register is reviewed at every Board meeting and the Directors The Board was responsible for considering, reviewing and are reminded of their obligations for disclosure. No Director www.polarcapitaltechnologytrust.co.uk 77 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Report on Corporate Governance continued has declared the receipt of any material benefits other than the broadest range of candidates are found when recruiting their emoluments and associated expenses in their capacity as new directors. When recruiting directors, the Nomination a Director of the Company. Committee seeks to follow the diversity recommendations of the various Governance Reviews, amongst other factors; There were no contracts subsisting during or at the end of consideration is given to all forms of diversity in order to the year in which a Director is or was interested and which balance both the expertise on, and the structure of, the is or was significant in relation to the Company’s business Board as a whole. or to the Director since its introduction. All the Directors were considered independent of the Investment Manager The Board notes the reporting requirements of the FCA and had no relationship or conflicts which were likely to Diversity and Inclusion Policy and has chosen to align its affect their judgement. diversity reporting reference date with the Company’s financial year end, 30 April 2023. The Company has met The Directors’ interests in the ordinary shares of the two of the three targets on board diversity at its chosen Company are set out on page 88 of the Directors’ reference date: (i) at least 40% of the individuals on its Remuneration Report. board of directors are women, three of the six directors are female; and (ii) at least one senior female appointment, two ### Composition, succession and evaluation of the three females on the board hold senior positions, ### (principles j‑l, provisions 22‑28) the Chair and the Chair of the Audit Committee*. Whilst Board Composition and Diversity the current composition of the Board does not satisfy During the full year under review there were seven the ethnicity requirements (at least one non‑white ethnic non‑executive Directors, reducing to six with the retirement minority Board member), the Board continues to keep this of Sarah Bates on 8 September 2022. under consideration as part of the Board’s future succession plans and hopes to meet all aspects of the FCA’s Diversity In accordance with the Disclosure and Transparency Rules, policy in future. the Company is required to have a Diversity Policy. The * due to the Company being an investment trust with no employees or Board is committed to considering diversity at all stages of executive directors the Board considers senior roles on the Board to recruitment to the Board and has worked hard to ensure comprise the Chair, the Chair of the Audit Committee and the Senior Independent Director. As required under LR 9.8.6R(10), further detail in respect of the diversity targets as at 30 April 2023 are provided in the tables below. Number of senior positions on the Number of Percentage board (Chair, Audit board members of the board Chair and SID) Men 3 50% 1 Women 3 50% 2 Number of senior positions on the Number of Percentage board (Chair, Audit board members of the board Chair and SID) White British or other (including minority‑white groups) 6 100% 3 Minority Ethnic ‑ ‑ ‑ As an externally managed investment trust, the Company has no executive directors or employees therefore columns relating to executive roles/management have been omitted from the tables. As per the AIC’s Guidance, the Company considers the role of Board Chair and Chair of the Audit Committee as senior board positions and the above disclosures are made on this basis. Performance and re-election The rationales for re‑election of each Director are included The Board formally reviews the performance of the in the Board of Directors biographies on pages 8 to 9 and Directors each year and considers any recommendations the Chair’s letter which accompanies the Notice of Annual of the Nomination Committee, the deliberations of which General Meeting at which the re‑election resolution is take place in the absence of any Board nominee. Directors being put to shareholders. are required to stand for election by shareholders at the When considering Board structure and composition, the first AGM following their appointment to the Board and Committee seeks to ensure the candidates considered will each Director will stand for re‑election annually. 78 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information enhance the Board and replace or refresh desired skill sets. Operation of Internal Controls The Board has a policy to consider diversity and has worked The process was active throughout the year and up to the hard to ensure the broadest range of candidates are found date of approval of this Annual Report. However, such a when recruiting new directors. system is designed to manage rather than eliminate risks of failure to achieve the Company’s business objectives and Further information on the Company’s succession, can only provide reasonable and not absolute assurance evaluation and recruitment process can be found in the against material misstatement or loss. report of the Nomination Committee on page 90. The Board, in assessing the effectiveness of the Company’s ### Audit, Risk And Internal Control internal controls has, through the Audit Committee, ### (Principles M‑O, Provisions 29‑36) received formal reports on the policies and procedures in operation, where control failures have occurred an Internal Controls exceptions report is provided along with mitigation in The Board has overall responsibility for the Company’s place to ensure the control is met in future. For the year system of internal control, for reviewing its effectiveness under review, no material errors or control failures were and ensuring that risk management and control process are identified. The Manager and the key service providers embedded in the day to day operations which are operated have subsequently provided confirmation that their control or overseen by the Investment Manager. The Board, environments continued to operate effectively up to the through the Audit Committee, has established a process date of signing these Financial Statements. for identifying, evaluating, monitoring and reviewing, and managing the principal risks faced by the Company. The Board also considers other reports provided by This is documented through the use of a Risk Map which third‑party suppliers and ad hoc reports from the is subject to regular review by the Audit Committee and Investment Manager are supplied to the Board as required. accords with the Guidance on Risk Management, Internal The Manager has delegated the provision of accounting, Control and Related Financial and Business Reporting portfolio valuation and trade processing to HSBC Securities issued in September 2014 by the Financial Reporting Services but remains responsible to the Company for these Council. As the Company has no employees and its functions and provides the Board with information on operational functions are carried out by third parties, the these services. Audit Committee does not consider it necessary for the ### Company to establish its own internal audit function. Remuneration (Principles P‑R, Provisions 37‑42) Contracts with suppliers are entered into after full and proper The Remuneration Committee is chaired by Tim Cruttenden consideration by the Board of the quality and cost of the and all independent non‑executive Directors are members services offered, including the control systems in operation in of the Committee. The current remuneration policy was so far as they relate to the affairs of the Company. approved by shareholders at the AGM in September 2020 and came into effect on 1 May 2021, the policy shall expire The Investment Manager has an internal control framework on 30 April 2024, being three years since inception of the to provide reasonable but not absolute assurance on the policy. The new policy for the three year period from 1 effectiveness of the internal controls operated on behalf of May 2024, (which is proposed unchanged from the current its clients. The Manager is authorised and regulated by the policy) is subject to shareholder approval at the AGM Financial Conduct Authority and its compliance department in September 2023 and will apply to the three financial monitors the Company’s compliance with the various rules years commencing 1 May 2024 and ending on 30 April and regulations applicable to it including the FCA’s rules, 2027. Further detail is contained within the Report of the AIFMD and GDPR, for example. Remuneration Committee on page 85 and explains how The Audit Committee reviews and reports to the Board the policy is designed to support strategy and promote on the operation of the controls which are embedded long‑term sustainable success. within the business of the Manager and other third‑party suppliers. Controls and risk management covering the risks identified, including financial, operational, compliance, Jumoke Kupoluyi ACG safeguarding of assets, maintenance of proper accounting Polar Capital Secretarial Services Limited records and the publication of reliable financial information Company Secretary are monitored by a series of regular reports from the 18 July 2023 Investment Manager including risks not directly the responsibility of the Investment Manager. www.polarcapitaltechnologytrust.co.uk 79 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Audit Committee Report This report forms part of the Strategic report section Charlotta Ginman Chair of the Audit Committee ### Introduction from The Chair Committee Role and Responsibilities I am pleased to present, as Chair of the Audit Committee, The Committee has written terms of reference which my eighth report to Shareholders. As referenced in my clearly define its responsibilities and duties. The terms of report to you last year, Jane Pearce joined the Board on 6 reference which are reviewed annually by the Committee September 2021 as Audit Chair Elect and will succeed me and are approved by the Board, are available to view on the as Audit Chair for the year ending 30 April 2024. As part of Company’s website, www.polarcapitaltechnologytrust.co.uk. the phased transition and to ensure a smooth and orderly ### Matters considered by the Audit Committee handover process ahead of my retirement in September ### 2024, I will be stepping down as Audit Chair on 31 October during The Year 2023 but will remain on the Board as a non‑executive Geopolitical events Director whilst Jane will step up and assume the role of This time last year we were reporting on the impact Audit Chair. This is therefore my final report to you as Audit of the Russian war on Ukraine as well as the effects of Chair and I express my thanks to shareholders and my inflation and rising interest rates which closely followed the fellow board members for the support I have received in my transition out of the pandemic and the commencement of role since joining the Board in February 2015. the Russia‑Ukraine war. The effect of this is still being felt ### Committee Composition through escalating energy prices, supply chain shortages and more recently we have seen increased market volatility The Committee comprises all of the independent following the collapse of large banks such as Silicon Valley non‑executive Directors; with the exception of the Chair of Bank (“SVB”) and Credit Suisse. In addition to this, we the Board who attends Committee meetings by invitation. have seen relations between Taiwan and China deteriorate The Audit Committee, as a whole, has competence and tensions have grown in recent months increasing the relevant to the sector in which the Company operates. likelihood of a military escalation between the countries. Committee members have a range of financial, investment The consequences of these events and the associated and other relevant sector experience, including fund market volatility has had an impact on the Company’s management in both listed and private equity funds. The portfolio performance. Further details can be found in requirement for at least one member of the Committee to the Investment Manger’s Report on pages 14 to 27. The have recent and relevant financial experience is satisfied Committee will continue to monitor the impact of these by various members of the Committee who are Chartered events which appear in our assessment of risk and the Accountants and some of whom also chair Audit ability to achieve the Company’s investment objective. Committees for other public companies. More information The Committee regularly reviews the operational resilience of about the Committee members can be found in the its various service providers in connection with the mitigation Directors’ biographies on pages 8 and 9. of the business risks posed by geopolitical events. Many During the year the Audit Committee met three times, with of the external service providers have continued to utilise all members of the Committee attending each meeting. 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. 80 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information New Regulation and Guidance As a result of the work performed, the Committee has Since my last report to you, the Committee has concluded that the Annual Report for the year ended continued to follow developments in the relevant 30 April 2023, taken as a whole, is fair, balanced and regulatory environment to consider any new and ongoing understandable and provides the information necessary requirements. for Shareholders to assess the Company’s performance, business model and strategy, and this has been As reported last year, the Committee is aware of the recommended to the Board. extensive proposals outlined by the Department of Business and Trade (“DBT”) which seek to strengthen the UK’s audit Valuation of Investments and corporate governance framework. The outcomes of During the year the Committee once again reviewed the the consultation process were published on 31 May 2022 robustness of the Investment Manager’s processes in place and are now progressing through primary and secondary for recording investment transactions as well as ensuring legislation. the valuation of assets is carried out in accordance with the adopted accounting policies and as laid out in Note 2 (f). No The Committee will continue to monitor the detail of any unquoted valuations were held at the Company’s year end. primary and secondary legislation arising from the reforms and consider any suggested guidance from DBT for Existence and Ownership of Investments good practice. The FRC have also launched an associated During the year the Committee received reassuring quarterly consultation process for changes to the UK Code of reports from the Depositary on its work and safe keeping of Corporate Governance; the consultation will close in the Company’s investments, in accordance with the AIFM September 2023; the results will be reviewed thereafter in Regulations. No errors have been reported during the year. conjunction with the AIC’s Code of Corporate Governance which the Company follows. The Committee will report ### Other Reporting Matters on any changes made in the Annual Report following the introduction of any revised legislation as well as any Accounting Policies changes arising out of the FRC’s recently released “Audit During the year the Committee ensured that the accounting Committees and the External Audit: Minimum Standard” policies as set out on pages 104 to 108 were applied guidance. consistently throughout the year. In light of there being no unusual transactions during the year or other possible ### Significant Reporting Matters reasons, there were no changes to currently adopted policies. There were no new UK‑adopted international Annual Report and Financial Statements accounting standards (“UK‑adopted IAS”) or amendments (the ‘Annual Report’) to UK‑adopted IAS applicable to the current year which The Board has asked the Committee to once again confirm had any significant impact on the Company’s Financial that in its opinion the Annual Report as a whole can be Statements. taken as fair, balanced and understandable and provides the information necessary for shareholders to assess the Going Concern Company’s financial position, performance, business The Audit Committee considered the ability of the model and strategy. In doing so the Committee has given Company to adopt the Going Concern basis for the consideration to: preparation of the Financial Statements. Having reviewed the Company’s financial position, the Committee is • the ongoing comprehensive control framework around satisfied that it is appropriate for the Board to prepare the the production of the Annual Report, including the Financial Statements for the year ended 30 April 2023 on a verification processes in place to deal with the factual going concern basis. content; The Committee’s review of the Company’s financial • the extensive levels of review that are undertaken in position included consideration of the current cash the production process, by the Investment Manager and debt ratios of the Company; the ability to repay and the Committee; outstanding bank facilities with 21% cash equivalents • the internal control environment as operated by the readily available to the Company as at 30 April 2023; the Investment Manager and other suppliers including any diversification of the portfolio; and the analysis of portfolio checks and balances within those systems; and liquidity, which estimated liquidation of 99.8% of the • the unqualified audit report from the auditors. portfolio within seven trading days. www.polarcapitaltechnologytrust.co.uk 81 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Audit Committee Report continued The Committee is mindful of the ongoing inflation, Taxation and Expenses recession fears and rising interest rates along with the The Committee sought to ensure that the Company increased tensions between China and Taiwan and the was compliant with section 1158 of the Corporation longer term impact this may have on the global economy Tax Act 2010 throughout the year, by seeking and and the sector in which the Company operates. As noted receiving confirmation that the Company continues to above, these have been included on the Company’s risk meet the eligibility conditions. In the year under review, map and will continue to be monitored. The Committee Grant Thornton LLP provided services to the Company also considered the Company’s financial performance as tax agents in Taiwan and Arkk Solutions provided the during the year under review and concluded that: given iXBRL and ESEF tagging of the Company’s accounts for the lack of impact on dividend income received and there submission to HM Revenue and Customs. being no exposure to unquoted assets at the year‑end, At the Audit Committee meeting in May 2023, the this had not affected the Company’s ability to continue as Committee also considered the allocation of expenses a going concern and is not expected to have a significant between capital and income and agreed to continue with financial impact on the Company during the next the Company’s stated accounting policy of allocating 12 months. the indirect costs to revenue and any performance fees to capital, in line with market practice and permitted by Viability Statement the AIC SORP (Statement of Recommended Practice). The Committee considered the Company’s longer‑term viability, with reference to the FRC’s Guidance on Risk Interim Report and Financial Statements Management, Internal Control and Related Financial and The Committee considered and reviewed the Interim Business Reporting, and concluded that the Board may Report and Financial Statements, which are not audited state its reasonable expectation that the Company will be or reviewed by the external Auditors, to ensure that they able to continue in operation and meet its liabilities as they remained consistent with the accounting policies used in fall due over the period of their assessment. the annual Financial Statements. The assessment took account of the Company’s current financial position, its cash flows and its liquidity position, Internal Controls and Risk Management the principal risks as set out on pages 62 to 65 and the The Board has ultimate responsibility for the management Committee’s assessment of any material uncertainties of risk throughout the Company and has asked the Audit and events that might cast significant doubt upon the Committee to assist in maintaining an effective internal Company’s ability to continue as a going concern. control environment. The Company maintains a Risk Map which seeks to identify, monitor and control principal The assessment was then subject to a sensitivity analysis risks as well as identifying emerging risks. At each Audit projected over a five‑year period, which tested a Committee meeting, the Committee reviews the Risk Map number of the key assumptions including income and to identify the principal and emerging risks facing the expenditure underlying the forecasts both individually business including those that might threaten its business and in aggregate for normal, favourable and stressed model, future performance, liquidity and reputation. conditions. In conducting the stress tests, the Company’s Alongside this, the Committee considers the likelihood, principal risks such as failure to achieve the investment impact, mitigating factors and controls to reduce the objective, global geopolitical risk, black swan events impact of such risks as described on pages 62 to 65. and IT Failure, fraud and cyber risk were grouped into Any material changes to the Risk Map are proposed to three buckets according to their post mitigation scores the Board for consideration and if appropriate, adoption. and, where possible, material values were attached to the key risks materialising and evaluated to assess Furthermore, the Audit Committee discusses and assesses the effect of this on the Company’s ability to continue emerging risks and where appropriate recommends as a going concern and its viability over a five‑year changes to the Risk Map, as well as thinking of different period. The Committee recommended to the Board that ways of illustrating the level of risk faced by the business. the Company’s longer term prospects to continue its The Committee will actively continue to monitor the operations and meet its expenses and liabilities as they system of internal controls through the regular review of fall due over the next five years to 30 April 2028 were the Risk Map and the internal control environment in order reasonable. See pages 59 and 60 for further details. to provide assurance that they operate as intended and that the Risk Map reflects developing and new risks. 82 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information As part of the year end process the Audit Committee Appointment and Tenure undertook a review of the effectiveness of the system of Following a formal and competitive tender process, KPMG internal controls taking into account any issues that had arisen LLP (‘KPMG’) was appointed as the Company’s external during the course of the year. The Committee acknowledges auditor with their first year as the Company’s auditor being that the Company is reliant on the systems utilised by external the year ended 30 April 2018. Mr John Waterson was suppliers. Representatives of the Investment Manager the Audit Partner allocated to the Company by KPMG on reported to the Committee on the system of internal controls engagement until completion of the financial year ending in place for the performance of the Investment Manager’s in April 2022. Mr Waterson was succeeded by Mr Philip duties under the Investment Management Agreement. Merchant who will complete his first audit cycle with the Presentations and internal control reports were also received Company for the financial year ended 30 April 2023. from other key suppliers on the quality and effectiveness of In accordance with current legislation, the Company is the services provided to the Company. In addition, employees required to tender the external audit no later than for the of the Manager conducted an onsite due diligence visit with year ending 30 April 2028, after ten full audit years by the HSBC where they received thorough presentations from incumbent auditor. However, the Committee keeps the representatives covering the work of the Operations, Risk external audit function under review and may choose to Administration and Accounting Teams, in addition to the undertake an audit tender process earlier than prescribed Custodian and Depositary. No matters of concern with any should it be deemed in the best interests of shareholders areas of service were raised at any of the meetings or on so to do. The re‑appointment of KPMG as Auditor to the reviewing the internal controls reports. Deep dive review Company will be submitted for shareholder approval at meetings of service providers have been reintroduced the AGM to be held in September 2023, together with a following the COVID‑19 pandemic and the schedule of separate resolution to authorise the Directors to set the meetings commenced in May 2023, immediately following remuneration of the Auditor. the financial year under review. These meetings will be The Company has complied throughout the year ended reported on in the 2024 Annual Report. 30 April 2023 with the provisions of the Statutory Audit The Audit Committee has reviewed the Investment Services Order 2014, issued by the Competition and Manager’s policies on whistleblowing, anti‑bribery and the Markets Authority (‘CMA Order’). There are no contractual Modern Slavery Act and is satisfied that the Investment obligations restricting the choice of external auditor. The Manager has controls and monitoring processes in place external auditor is invited to all Committee meetings and to implement their policies across the main contractors receives copies of all relevant papers and meeting minutes. which supply goods and services to the Investment Manager and the Company. The Company has adopted The Audit an Anti‑Corruption policy which incorporates Anti‑Bribery, The scope of the annual external audit was agreed in Anti‑Slavery and the Corporate Criminal Offence of Tax advance with the Committee with a focus on areas of Evasion. In addition to this the Company has issued a data audit risk and the appropriate level of audit materiality. privacy notice in relation to the General Data Protection The Auditors reported to the Audit Committee on the Regulation. All such policies can be found on the Company’s results of the audit work and highlighted any issues which website www.polarcapitaltechnologytrust.co.uk. were significant or material in the context of the Financial Statements. There were no adverse matters brought to the The Audit Committee has also considered the Investment Audit Committee’s attention in respect of the financial year Manager’s policy and controls surrounding the use of 2023 which were material or significant or which should brokerage commissions generated from transactions be brought to shareholders’ attention. in the Company’s portfolio. There were no issues of concern arising from the reviews of the internal controls Effectiveness environment the Company relied upon during the course The Audit Committee monitored and evaluated the of the year ended 30 April 2023. effectiveness of the Auditors under the terms of their appointment based on an assessment of their External Auditor performance, qualification, knowledge, expertise and The Committee, on behalf of the Board, is responsible resources. The Auditors’ effectiveness was also considered for overseeing the relationship with the external auditor, along with other factors such as audit planning and including ensuring the quality and robustness of the audit. interpretations of accounting standards. This evaluation has been carried out throughout the year by meetings www.polarcapitaltechnologytrust.co.uk 83 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Audit Committee Report continued held with the Auditors, by review of the audit process and The Audit Committee is conscious of the increased external by comments from the Investment Manager and others audit fees which continue to be proposed across the involved in the audit process. industry in connection with increasing requirements of auditing standards and expectations. The Audit Committee The Auditors were provided with an opportunity to therefore continues to keep fee levels under close review address the Committee and independently, the Audit and considers that any fee increases must be justified. Chair, without the Investment Manager present to raise any concerns, or discuss any matters relating to the audit Non-Audit Services work, the cooperation of the Investment Manager and The Audit Committee’s policy on the provision of others in providing any information and the quality of that non‑audit services by the Auditors is available on the information including the timeliness in responding to audit Company’s website. The policy was produced in line with requests. No concerns were raised by the Auditors or the the FRC Ethical Standards (March 2020) and any non‑audit Audit Committee in relation to the service provided by services are required to be pre‑approved by the Audit the Investment Manager or any other third‑party service Committee. KPMG LLP were appointed to undertake their provider. first annual audit for the year ended 30 April 2018 and have not provided any non‑audit services to the Company Independence in the year under review, or in the previous year. To fulfil the Committee’s responsibility regarding the independence of the Auditor, the Committee reviewed the Effectiveness of The Committee senior staffing for the audit, the Auditors arrangements The services provided to the Board by the Committee are concerning any conflicts of interest, the extent of any reviewed within the Annual Board Evaluation, including non‑audit services, the Auditors independence statement consideration of actions undertaken by the Committee and any other issues that may affect the Auditors with the Investment Manager and Auditor to ensure an independence. appropriate audit process is undertaken. This year, an Subsequent to the review, the Audit Committee concluded internal evaluation was completed and I am pleased to that the Auditor remained independent and continued to confirm that the findings of the evaluation processes act in an independent manner. were positive with no matters of concern to report. The Committee continually seeks to improve its effectiveness Fees where possible and follow best practice guidance from the As part of the year end audit, the Committee considered FRC and other relevant legislative and industry bodies. 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 annual audit fee for the year was £62,500 (2022: £45,000). The fee represents Charlotta Ginman, FCA a further increase on the prior year to reflect the additional Chair of the Audit Committee work required by the auditors as a result of new auditing standards, specifically IAS 315, inflation and the level of 18 July 2023 audit work required to perform a robust quality audit. The year‑on‑year increase 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 levels of audit scrutiny and regulation. 84 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## Directors’ Remuneration Report The Remuneration Committee (“the Committee”) comprises all the independent non‑executive Directors and has written terms of reference, which are available to view on the Company’s website, www.polarcapitaltechnologytrust.co.uk. The terms of reference clearly define the Committee’s responsibilities and duties. Tim Cruttenden The Committee meets at least annually and is responsible Senior Independent for recommending the framework for the remuneration Director and Chair of the of Directors, including the ongoing appropriateness of Remuneration Committee the Remuneration Policy and the individual remuneration of Directors based on their contributions. The Committee aims to pay fees relative to other companies in the ### Introduction sector commensurate with the responsibilities and time This report is submitted in accordance with the Large and commitments of the Board. On at least an annual basis Medium‑Sized Companies and Groups (Accounts and and within the current year, we considered the time and Reports) (Amendment) Regulation 2013 (the ‘Regulations’), commitment required of the Directors and of the Chair of The Companies (Directors’ Remuneration Policy and Directors’ the Board. The remuneration review carried out in May Remuneration Report) Regulations 2019 and the Listing Rules 2023 is detailed on page 86. of the Financial Conduct Authority in respect of the year ended 30 April 2023. It has been audited where indicated. ### Remuneration Policy Shareholders approved the current Directors’ Remuneration ### Chair’s Report Policy by way of an ordinary resolution passed at the AGM The Remuneration Committee is Chaired by Tim Cruttenden in September 2020. Such Policy came into effect on 1 May who is also the Senior Independent Director (SID). 2021 and shall remain in force until 30 April 2024. Company’s Policy on Directors’ Remuneration effective until 30 April 2024 How policy supports strategy and Operation Opportunity promotes long term sustainable success The Board consists entirely of Non‑executive Directors have formal The Company’s policy in relation to fees is to offer only independent non‑executive letters of appointment and their a fixed basic fee in line with equivalent roles within the Directors, who meet regularly to deal remuneration is determined by the sector with additional fees for the roles of Chair of the with the Company’s affairs. Board within the limits set by the Company, Chair of the Audit Committee and SID. Articles of Association. The intention is that fees payable In accordance with the Company’s Articles of reflect the time spent by them Fees are reviewed annually but the Association, any Director who performs, or undertakes individually and collectively, be review will not necessarily result in any to perform, services which the Directors consider go far of a level appropriate to their change to rates. No Director is involved beyond the ordinary duties of a Director, may be paid responsibilities and be in line with in deciding their own remuneration such additional remuneration (whether by way of fixed market practice, sufficient to enable level. sum, bonus, commission, participation in profits or candidates of high calibre to be otherwise) as the Directors may determine. Non‑executive Directors are appointed recruited and retained. initially for a three‑year term, subject to In such instances, when the Remuneration Committee annual re‑election by Shareholders in believes that there have been exceptional circumstances accordance with the AIC Code. and a Director’s services have been substantially beyond what is typically expected, the Remuneration All fees are paid by credit transfer Committee will authorise a payment to a Director and monthly in arrears, to the Director provide details of the events, duties and responsibilities concerned. that gave rise to such within the Remuneration Implementation Report. As the Company is an investment Non‑executive Directors do not There are no performance conditions relating to trust and all Directors are receive any bonus, nor do they non‑executive Directors fees. non‑executive, it is considered participate in any long‑term incentive inappropriate to have any long‑term schemes or pension schemes. incentive schemes or benefits. www.polarcapitaltechnologytrust.co.uk 85 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Directors’ Remuneration Report continued As the current Remuneration Policy will expire on 30 April 2024, 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 the policy outlined on page 83 which was approved in 2020 and if approved by shareholders, the Remuneration Policy will come into force on 1 May 2024 until its expiry on 30 April 2027. As per previous AGM resolutions shareholders will be asked to consider a non‑binding vote for the approval of the Directors’ Remuneration Implementation Report which reports on how the current policy has operated during the year to 30 April 2023. The results of the Shareholder vote on the Directors’ Implementation Report and on Directors’ Policy Report submitted to the 2022 Annual General Meeting were as follows: Remuneration | Implementation Report | | | Policy for the three | | | --- | --- | --- | --- | --- | | | for the Year ended | | | years ending on | | | | 30 April 2022 | | 30 April 2024 | Votes for 99.87% of votes cast 99.94% of votes cast Votes against 0.13% of votes cast 0.06% of votes cast Votes withheld 21,716 1,379,929 Nurole Compensation Report and the Trust Associates ### 2022/23 Fees Paid 2022 Fee Review are considered. Consideration is also In the year under review the Directors’ fees were paid given to the rise in inflation and the retail price index since at the following annual rates, the Chair £55,000; other the last change in Directors’ fees and the increased level of Directors £33,000 with the Chair of the Audit Committee input and responsibility the members of the Board have in receiving an extra £7,000 and the Senior Independent relation to enhanced regulations and requirements. As a Director receiving an extra £4,200 for performing such result, the Committee decided to implement the following additional roles. increases with effect from 1 May 2023: ### Fee Review ### Chair The Committee carries out an annual review of fees paid to The annual fee for the Chair has been increased from to the Directors. While such a review will not necessarily result £55,000 to £63,600 pa. This is an increase of 15.6% year‑ in any change to the rates, the Committee believes that it on‑year. is important that these reviews happen annually. ### Directors As referenced in last years’ report, during the 2022 remuneration review and as reflected in the wider The annual fee for a non‑executive Director has been Board Evaluation report from the external evaluator, increased from £33,000 to £35,000 pa, representing we recognised that the Remuneration of the Chair was a 6.1% increase. Directors’ fees for the year ending significantly below that of peers and below the market 30 April 2023, in respect of the current board members, rate for a large investment trust. The Board usually after taking account of the retirement of the previous favours modest increases year on year therefore, we Chair, are expected to total £249,800. The maximum elected to increase the remuneration of the Chair in two aggregate amount provided for in the Company’s Articles stages, across 2022 and 2023. To that end we raised the of Association (the Articles), Article 99 is £300,000. Chair’s remuneration by 10% in 2022 and have raised The Board remains committed to ongoing shareholder the amount by 15.6% this year, reflecting both the need dialogue and any views expressed by shareholders on to get closer to the comparable pay of other similar the fees being paid to Directors would be taken into sized investment trusts and the current level of inflation. consideration by the Remuneration Committee in the The basic NED salary was raised in 2022 by 4.7% and in annual review of Directors’ fees. No such views have been 2023, by 6.1%, with the supplements for both audit chair received from shareholders. and senior independent director remaining unchanged for the financial year under review and the financial year to The Directors did not participate in discussions on the fees 30 April 2024. applicable to their own roles. During the review of Directors’ remuneration, a selection of peer comparisons and external reports including the 86 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Senior Independent Director and Chair of appointment under which they provide their services to the Company. A Director may resign by giving one month’s ### Audit Committee notice in writing to the Board at any time. The Directors The supplements for the Senior Independent Director and are not entitled to payment for loss of office. Chair of the Audit Committee remained unchanged at A sample equivalent to the Directors’ Letter of £4,200 and £7,000 respectively. Appointment is available on the Company’s website. ### Other Fees and Incentives In accordance with the Articles, any new Director is As the Company is an investment trust it has no executive required to stand for election at the first AGM following Directors or employees and as all the Directors are their appointment, and in accordance with good corporate non‑executive, it is considered inappropriate to have any long governance practice all Directors stand for re‑election by term incentive schemes. The fees are not specifically related to shareholders every year thereafter. the Directors’ performance, either individually or collectively. ### Directors’ And Officers’ Liability Insurance / The Directors are entitled to be reimbursed for reasonable ### Indemnity expenses incurred by them in connection with the performance of their duties and attendance at Board and Directors’ and officers’ liability insurance is held by the General Meetings. In certain circumstances, under HMRC Company in respect of the Directors. The Company has, to rules, travel and other out of pocket expenses reimbursed the extent permitted by law and the Company’s Articles, to the Directors may be considered as taxable benefits. provided each Director with a Deed of Indemnity which, subject to the provisions of the Articles and s234 of the The taxable expenses, for example, comprise of expenses Companies Act 2006 ‘qualifying third party indemnity incurred by the Directors attending Board and other provisions’, indemnifies the Directors in respect of costs meetings held in London. Such expenses are paid to the which they may incur relating to the defence of any Directors grossed up for taxation and shown in the taxable proceedings brought against them arising out of their column of the Directors remuneration table. position as Directors (excluding criminal and regulatory ### Letters of Appointment penalties). Directors’ legal costs may be funded up‑front provided they reimburse the Company if the individual In accordance with recommended practice, the Directors is convicted or, in an action brought by the Company, do not have service agreements but instead each Director judgement is given against them. These provisions were in has received a letter setting out the terms of their force during the year and remain in force. ### Remuneration Implementation Report Remuneration Paid In The Year Ended 30 April 2023 (Audited) The fees payable in respect of each of the Directors were as follows: Year ended 30 April 2023 Year ended 30 April 2022 | | Taxable | | | Total | Taxable | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 | | | | 1 | | | | Director Fixed fee | expenses | | Remuneration Fixed fee | | expenses | | Remuneration | | Catherine Cripps (appointed as Chair with effect from 8 Sep 2022 and to the Board on £47,737 ‑ £47,737 £20,677 ‑ £20,677 6 Sep 2021) Sarah Bates (retired as Chair and from the £19,603 ‑ £19,603 £50,000 ‑ £50,000 Board on 8 Sep 2022) Charlotta Ginman (Chair of the Audit £40,000 ‑ £40,000 £38,500 ‑ £38,500 Committee) Tim Cruttenden (Senior Independent Director) £37,200 ‑ £37,200 £35,700 ‑ £35,700 Charles Park £33,000 ‑ £33,000 £31,500 ‑ £31,500 Stephen White £33,000 ‑ £33,000 £31,500 ‑ £31,500 Jane Pearce £33,000 £3,004 £36,004 £20,677 £777 £21,454 Total £243,540 £3,004 £246,544 £228,554 £777 £229,331 Note 1: Taxable travel and subsistence expenses incurred in attending Board and Committee meetings. With effect from 1 May 2022, the amounts disclosed are the grossed figures and includes grossed elements from prior year end. www.polarcapitaltechnologytrust.co.uk 87 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Directors' Remuneration Report continued No pension contributions or other remuneration or compensation was paid or payable 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. The table below contains the annual percentage change in remuneration in the five financial years prior to the current year in respect of each Director: | Tax Rates | Year to 30 April 2019 | Year to 30 April 2020 | Year to 30 April 2021 | Year to 30 April 2022 | Year to 30 April 2023 | Year Actual from 1 May 2023 | | --- | --- | --- | --- | --- | --- | --- | | Chair | £43,000 +3.6% | £44,300 +3.0% | £46,500 +5.0% | £50,000 +7.5% | £55,000 +10.0% | £63,600 +15.6% | | Directors' fees | £27,600 +3.0% | £28,400 +2.9% | £30,000 +5.6% | £31,500 +5.0% | £33,000 +4.7% | £35,000 +6.1% | | Additional fees: | | | | | | | | Chair of Audit Committee | £3,600 +2.9% | £5,000 +38.9% | £6,000 +20.0% | £7,000 +16.6% | £7,000 0.0% | £7,000 0.0% | | Senior Independent Director | £3,600 +2.9% | £3,700 +2.8% | £4,000 +8.1% | £4,200 +5.0% | £4,200 0.0% | £4,200 0.0% | ## Directors' Share Interests (Audited) Neither the Company's Articles nor the Directors' letters of appointment require Directors to hold shares in the Company. The interests in the ordinary shares of the Company of the Directors in office at 30 April 2022 and 30 April 2023 are as follows: | Ordinary Shares | 30 April 2022 | 30 April 2022 | | --- | --- | --- | | Catherine Cripps | 481 | - | | Tim Cruttenden | 1,000 | 1,000 | | Charlotta Girman | 4,941 | 4,941 | | Charles Park | 1,840 | 1,840 | | Stephen White | 10,000 | 10,000 | | Jane Pearce | 930 | - | | Sarah Bates (Chair)* | N/A | 10,500 | *retired 8 September 2022 There have been no changes in these interests between the end of the financial year and 13 July 2023. ## Performance The Large and Medium-Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013, (Schedule 8, Part 3 (18, 4(c))) 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, being the five financial years with the last being the period under review. Each subsequent 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 Dow Jones Global Technology Index is shown because, as a market capitalisation weighted index based on the entire global technology sector, it is the most relevant benchmark. 88 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information ![img-8.jpeg](img-8.jpeg) ### Relative Importance Of Spend On Pay Under the Regulations (Schedule 8, Part 3 (20)), the Directors' Remuneration Report must show a comparison of all remuneration paid to employees to all distributions (including dividends and share buy backs) paid to shareholders for the current year, preceding year and the difference between those years. This is to assist the Directors 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 is a meaningful measure of the Company's overall performance, for comparison purposes the table below compares Directors' fees with the level of dividends paid, profit after tax and the cost of share buy backs undertaken by the Company. | | 2021 ('000) | 2022 ('000) | Change | | | --- | --- | --- | --- | --- | | | | | ('000) | % | | Directors' total remuneration* | 247 | 229 | 18 | 8% | | Dividends paid or declared in respect of the financial year | - | - | - | - | | Net loss for the year and total comprehensive expense | (105,182) | (258,646) | 153,464 | 59% | | Ordinary shares repurchased into treasury | 117,662 | 99,132 | 18,530 | 19% | * Increase relates to Directors' fee increase from 1 May 2022, and Catherine Cripps assuming the role of Chair following the retirement of Sarah Bates in September 2022. **Tim Cruttenden** Senior Independent Director and Chair of the Remuneration Committee 18 July 2023 www.polarcapitaltechnologytrust.co.uk 89 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Report of the Nomination Committee Catherine Cripps Chair of the Nomination Committee The Nomination Committee (“the Committee”) is chaired standing for re‑election continued to offer relevant by Catherine Cripps and comprises all the independent experience, effectively contributed to the operation of non‑executive Directors. The Committee has written terms the Board and had demonstrated independent views on of reference, which are available to view on the Company’s a range of subjects. The Committee is satisfied that the website, www.polarcapitaltechnologytrust.co.uk. The terms structure, mix of skills and operation of the Board continue of reference clearly define the Committee’s responsibilities to be effective and relevant for the Company. and duties. The last externally facilitated evaluation was carried out The Committee meets at least annually and is responsible to in 2022 by Stephenson Executive Search, an independent the Board for the size, structure and composition of the Board external Board Evaluator, with no other connection to the as well as for succession planning and the tenure policies for Company or individual Directors. External evaluations have the Chair and Directors. been completed every three years whilst the Company has been a constituent of the FTSE 350, the next externally Meetings and Work Undertaken administered Board Evaluation will be carried out in 2025 During the financial year ended 30 April 2023 the Nomination unless it is deemed to be required earlier. Committee met once and considered the following: ### Succession ### Board Evaluation The Board believes that retaining Directors with sufficient The Committee is also responsible for coordinating the experience of the Company, investment industry and evaluation of the Board and considering the conclusions financial markets is of benefit to shareholders while from that review. Evaluation of the Board, individual recognising that regular refreshment of approach is equally Directors and the committees is undertaken annually. The of benefit and importance. The Board does not consider evaluation undertaken in 2022‑2023 was self‑administered that the length of a Director’s tenure, in isolation, reduces and incorporated completion of questionnaires, his or her ability to act independently. The Board believes culminating in written reports being provided to the that continuity and experience add significantly to the Committee and the Board. strength of the Board. Directors will ordinarily retire from the Board at the AGM following nine‑years of service. The evaluation process was also used by the Committee to carefully review and rigorously assess the contribution of As reported in last year’s Annual Report, the Nomination each Director and their independence. The performance Committee carried out a phased recruitment process review of the Chair was also carried out by the Committee, commencing with the recruitment of a new non‑executive led by the SID. Each year, the evaluation outcomes are Director to succeed Charlotta Ginman as Audit Chair in reviewed by the Board as a whole and, should it be 2024. Jane Pearce and I, were appointed as non‑executive deemed necessary, additional reporting measures or Directors on 6 September 2021. During the recruitment operations are put in place. process, a long list of suitably qualified candidates was considered followed by interviews of shortlisted candidates The evaluation process considers the balance of skills, with the Board. Charlotta Ginman will step down as Chair experience, knowledge and independence on the Board. of the Audit Committee on 31 October 2023 and will be Consideration is also given to its diversity and other succeeded by Jane Pearce; it is anticipated that Charlotta factors which contribute to the effectiveness of the will remain on the Board until stepping down at the AGM Board, including how the Directors interact as a unit. The to be held in 2024. Committee has determined that each of the Directors 90 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### Board Recruitment Ahead of any recruitment process, the Nominations Committee on behalf of the Board, will engage with selected recruitment firms interested in working with the Board to appoint the next non‑executive director. A detailed role specification is compiled and presented to the selected recruitment agent who will then source candidates for consideration. Following a review of a prepared long‑ list of candidates, the Nominations Committee will select a short list of candidates for interview; selection is based on candidates’ fulfilment of required skill sets, taking into account board dynamics and board fit and the wider diversity criteria. Following a series of interviews, the selected candidate will be offered the opportunity to join the board on equal terms to the existing non‑executive directors. As detailed on page 78, the Board notes the expectations of the FCA diversity and inclusion policy and ensures this is factored into any recruitment process. ### Chair Tenure Policy As referenced in the succession section above, it is the Board’s view 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. The Board supports the best practice of Directors remaining on the Board for no‑longer than 9‑years but acknowledges that in exceptional circumstances the Chair may remain on the Board for up to 12‑years. ### Committee Evaluation The activities of the Nomination Committee were considered as part of the annual Board evaluation process. This year, an internal evaluation was completed and the findings of the evaluation processes were positive with no matters of concern to report. Catherine Cripps Chair of the Nomination Committee 18 July 2023 www.polarcapitaltechnologytrust.co.uk 91 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Management Engagement Committee Report The Committee has reviewed the performance of the Investment Manager in managing the portfolio over the longer‑term. The review also considered the quality of the other services provided, including the strength of the investment team, the depth of the other services provided and the resources available to provide such services. The Board reflected on the positive impact from the continued Catherine Cripps recruitment into various teams at the Investment Manager Chair of the Management to support the Company, which includes the investment Engagement Committee team, marketing, administration, and the organisation on the Company’s behalf of third party suppliers, and the quality of the shareholder communications. The Management Engagement Committee (“the Committee”) is chaired by Catherine Cripps and comprises all Following review, the Committee concluded that it is in the independent non‑executive Directors. The Committee has the best interests of shareholders as a whole that the written terms of reference, which are available to view on the appointment of Polar Capital LLP as Investment Manager is Company’s website, www.polarcapitaltechnologytrust.co.uk. continued on the terms agreed on 12 April 2019. The terms of reference clearly define the Committee’s Other Suppliers responsibilities and duties. The Board also monitors directly or through the Investment The Committee meets at least twice a year and is responsible Manager the performance of its other key service providers. for reviewing the performance of the Investment Manager • The Board has directly appointed HSBC Bank Plc as along with the Company’s other service providers. The Depositary and Stifel Nicolaus as Corporate Broker. Committee is also responsible for keeping under review the The Depositary reports quarterly and makes an annual terms of the Investment Management Agreement (‘IMA’) and presentation to the Board. The Corporate Broker provides the Manager’s appointment as AIFM. reports to the Board periodically and joins the Board on ### Performance Evaluation Process request to discuss markets and other issues. Investment Manager • The Registrar, Equiniti Limited, is directly appointed by the During the financial year ended 30 April 2023, the Board and the performance of its duties is monitored by Committee met twice to consider the relationship with and, the Company Secretary. the services provided by the Investment Manager. In addition, • Other suppliers such as printers, website designers and the Committee reviewed the terms of the IMA including the PR agents are monitored by the Company Secretary and level and structure of management and performance fee each supplier reports to the Board as and when deemed paid or payable to the Investment Manager, making relevant necessary. recommendations to the Board when appropriate. Committee Evaluation As referenced in the Strategic Report and detailed in the The activities of the Management Engagement Committee Notes to the Financial Statements, the Board keeps the were considered as part of the annual Board evaluation fee arrangements with Polar Capital LLP under review process. This year, an internal evaluation was completed and and considers any recommendations of the Committee. the findings of the evaluation processes were positive with The Committee reflected on the changes made to the no matters of concern or requirements for change were fee arrangements which took effect on 1 May 2022 and highlighted. confirmed that the next full review would take place in 2024 and any negotiated changes would come into effect from 1 May 2025; the Board is however at liberty to review the Catherine Cripps fees at any time should they deem it appropriate and in the Chair of the Management Engagement Committee best interests of shareholders to do so. Further details on the Management fee structure can be found on page 58 of the 18 July 2023 Strategic Report. There were no changes to the performance fee arrangements which were last reviewed for the financial year beginning 1 May 2019. 92 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## Statement of Directors’ Responsibilities in respect of ## the Annual Report and Financial Statements The Directors are responsible for preparing the Annual The Directors are responsible for the maintenance and Report and the financial statements in accordance with integrity of the corporate and financial information applicable law and regulations. included on the company’s website. Legislation in the UK governing the preparation and dissemination Company law requires the Directors to prepare financial of financial statements may differ from legislation in statements for each financial year. Under that law they other jurisdictions. have elected to prepare the financial statements in accordance with UK‑adopted international accounting ### Responsibility Statement of the Directors in standards and applicable law. Under company law the ### respect of the Annual Report and Financial directors must not approve the financial statements unless ### they are satisfied that they give a true and fair view of the Statements state of affairs of the Company and of its profit or loss for We confirm that to the best of our knowledge: that period. In preparing these financial statements, the • the financial statements, prepared in accordance with Directors are required to: the applicable set of accounting standards, give a true • select suitable accounting policies and then apply them and fair view of the assets, liabilities, financial position consistently; and profit or loss of the company; and • make judgements and estimates that are reasonable, • the Strategic Report includes a fair review of the relevant and reliable; development and performance of the business and the position of the issuer, together with a description of the • state whether they have been prepared in accordance principal risks and uncertainties that they face. with UK‑adopted international accounting standards; We consider the annual report and accounts, taken as • assess the Company’s ability to continue as a going a whole, is fair, balanced and understandable and provides concern, disclosing, as applicable, matters related to the information necessary for shareholders to assess the going concern; and Company’s position and performance, business model and • use the going concern basis of accounting unless they strategy either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. The Directors are responsible for keeping adequate Catherine Cripps accounting records that are sufficient to show and explain Chair the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company 18 July 2023 and enable them to ensure that its financial statements 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 Company 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. www.polarcapitaltechnologytrust.co.uk 93 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Independent Auditor's Report to the members of Polar Capital Technology Trust plc ## 1. Our opinion is unmodified We have audited the financial statements of Polar Capital Technology Trust plc ("the Company") for the year ended 30 April 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement, and the related notes, including the accounting policies in note 2. In our opinion the financial statements: - give a true and fair view of the state of the Company's affairs as at 30 April 2023 and of its loss 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. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is consistent with our report to the Audit Committee. We were first appointed as auditor by the shareholders on 7 September 2017. The period of total uninterrupted engagement is for the six financial years ended 30 April 2023. We have fulfilled our ethical responsibilities under, and we remain independent of the Company in accordance with UK ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that standard were provided. | **Overview** | | | --- | --- | | **Materiality:** Financial statements as a whole | £29.0m (2022: £31.6m) 1% (2022: 1%) of Total Assets | | **Key audit matter** | vs 2022 | | **Recurring risk** | Carrying amount of level 1 investments | ## 2. Key audit matters: our assessment of risks of material misstatement Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the financial statements and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, 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. We summarise below the key audit matter (unchanged from 2022), in arriving at our audit opinion above, together with our key audit procedures to address this matter and our findings from those procedures in order that the Company's members, as a body, may better understand the process by which we arrived at our audit opinion. This matter was addressed, and our findings are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the financial statements as a whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on this matter. | | The risk | Our response | | --- | --- | --- | | **Carrying amount of level 1 investments** (£2,641m, 2022: £2,817m) Refer to page 81 (Audit Committee Report), pages 105 and 106 (accounting policy) and pages 112 and 113 (financial disclosures). | **Low risk, high value:** The Company's portfolio of level 1 investments, makes up 91% (2022: 89%) of the Company's total assets (by value) and is one of the key drivers of results. We do not consider these investments to be at a high risk of significant misstatement, or to be subject to a significant level of judgement because they comprise liquid, level 1 investments. However, due to their materiality in the context of the financial statements as a whole, they are considered to be one of the areas which had the greatest effect on our overall audit strategy and allocation of resources in planning and completing our audit. | We performed the detailed tests below rather than seeking to rely on any of the Company's controls, because the nature of the balance is such that we would expect to obtain audit evidence primarily through the detailed procedures described below. Our procedures included: - **Test of detail:** Agreed the valuation of 100% of level 1 investments in the portfolio to externally quoted prices; and - **Enquiry of custodians:** Agreed 100% of level 1 investment holdings in the portfolio to independently received third party confirmations from investment custodians. **Our findings** - We found no differences (2022: no differences) from the holdings confirmations nor from the externally quoted prices of a size to require reporting to the Audit Committee. | 94 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information ### 3. Our application of materiality and an overview of the scope of our audit Materiality for the financial statements as a whole was set at £29.0m (2022: £31.6m), determined with reference to a benchmark of total assets, of which it represents 1% (2022: 1%). In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold; performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances add up to a material amount across the financial statements as a whole. Performance materiality was set at 75% (2022: 75%) of materiality for the financial statements as a whole, which equates to £21.7m (2022: £23.7m). We applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk. We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £1.4m (2022: £1.6m), in addition to other identified misstatements that warranted reporting on qualitative grounds. Our audit of the Company was undertaken to the materiality and performance materiality levels specified above and was performed by a single audit team. The scope of the audit work was fully substantive as we did not rely upon the Company's internal control over financial reporting. ![img-9.jpeg](img-9.jpeg) ### 4. Going concern The Directors have prepared the financial statements on the going concern basis as they do not intend to liquidate the Company or to cease its operations, and as they have concluded that the Company's financial position means that this is realistic. They have also concluded that there are no material uncertainties that could have cast significant doubt over its ability to continue as a going concern for at least a year from the date of approval of the financial statements ("the going concern period"). We used our knowledge of the Company, its industry, and the general economic environment to identify the inherent risks to its business model and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. The risks that we considered most likely to adversely affect the Company's available financial resources and metrics relevant to debt covenants over this period were: - the impact of a significant reduction in the valuation of investments and the implications for the Company's debt covenants; - the liquidity of the investment portfolio and its ability to meet the liabilities of the Company as and when they fall due; and - the operational resilience of key service organisations. We considered whether these risks could plausibly affect the liquidity or covenant compliance in the going concern period by assessing the degree of downside assumption that, individually and collectively, could result in a liquidity issue, taking into account the Company's current and projected cash and liquid investment position (a reverse stress test). We considered whether the going concern disclosure in note 2(A) to the financial statements gives a full and accurate description of the Directors' assessment of going concern, including the identified risks and related sensitivities. Our conclusions based on this work: - we consider that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate; - we have not identified, and concur with the Directors' assessment that there is not, a material uncertainty related to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for the going concern period; www.polarcapitaltechnologytrust.co.uk 95 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Independent Auditor’s Report continued – we have nothing material to add or draw attention to in including the segregation of duties between the Directors relation to the Directors’ statement in note 2(A) to the and the Administrator, no further high‑risk journal entries financial statements on the use of the going concern or other adjustments were identified. basis of accounting with no material uncertainties that On this audit we do not believe there is a fraud risk related may cast significant doubt over the Company’s use to revenue recognition because the revenue is non‑ of that basis for the going concern period, and we judgemental and straightforward, with limited opportunity for found the going concern disclosure in note 2(A) to be manipulation. We did not identify any additional fraud risks. acceptable; and Identifying and responding to risks of material – the related statement under the Listing Rules set out misstatement due to non-compliance with laws and on page 60 is materially consistent with the financial regulations statements and our audit knowledge. We identified areas of laws and regulations that could However, as we cannot predict all future events or reasonably be expected to have a material effect on conditions and as subsequent events may result in the financial statements from our general commercial outcomes that are inconsistent with judgements that and sector experience and through discussion with the were reasonable at the time they were made, the above Directors, the Investment Manager and the Administrator conclusions are not a guarantee that the Company will (as required by auditing standards), and discussed with the continue in operation. Directors the policies and procedures regarding compliance with laws and regulations. As the Company is regulated, 5. Fraud and breaches of laws and regulations – our assessment of risks involved gaining an understanding ability to detect of the control environment including the entity’s To identify risks of material misstatement due to fraud procedures for complying with regulatory requirements. (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to commit fraud We communicated identified laws and regulations or provide an opportunity to commit fraud. Our risk throughout our team and remained alert to any indications assessment procedures included: of non‑compliance throughout the audit. – enquiring of Directors as to the Company’s high‑level The potential effect of these laws and regulations on the policies and procedures to prevent and detect fraud, financial statements varies considerably. as well as whether they have knowledge of any actual, Firstly, the Company is subject to laws and regulations suspected or alleged fraud; that directly affect the financial statements including – reading Board and Audit Committee minutes; financial reporting legislation (including related companies legislation), distributable profits legislation, and its – assessing the segregation of duties in place between qualification as an Investment Trust under UK taxation the Directors, the Administrator and the Company’s legislation, any breach of which could lead to the Company investment manager, and losing various deductions and exemptions from UK We communicated identified fraud risks throughout the corporation tax, and we assessed the extent of compliance audit team and remained alert to any indications of fraud with these laws and regulations as part of our procedures throughout the audit. on the related financial statement items. As required by auditing standards, we perform procedures Secondly, the Company is subject to many other laws and to address the risk of management override of controls, in regulations where the consequences of non‑compliance particular the risk that management may be in a position could have a material effect on amounts or disclosures to make inappropriate accounting entries. We evaluated in the financial statements, for instance through the the design and implementation of the controls over journal imposition of fines or litigation. We identified the entries and other adjustments and made inquiries of the following areas as those most likely to have such an Administrator about inappropriate or unusual activity effect: money laundering, data protection, bribery and relating to the processing of journal entries and other corruption legislation and certain aspects of company adjustments. We substantively tested all material post‑ legislation recognising the financial and regulated nature closing entries and a sample of journal entries made at the of the Company’s activities and its legal form. Auditing end of the reporting period. Based on the results of our risk standards limit the required audit procedures to identify assessment procedures and understanding of the process, non‑compliance with these laws and regulations to enquiry 96 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information of the Directors and the Administrator and inspection of Directors’ remuneration report regulatory and legal correspondence, if any. Therefore if In our opinion the part of the Directors’ Remuneration a breach of operational regulations is not disclosed to us Report to be audited has been properly prepared in or evident from relevant correspondence, an audit will not accordance with the Companies Act 2006. detect that breach. Disclosures of emerging and principal risks and Context of the ability of the audit to detect fraud or longer-term viability breaches of law or regulation We are required to perform procedures to identify whether Owing to the inherent limitations of an audit, there is an there is a material inconsistency between the Directors’ unavoidable risk that we may not have detected some disclosures in respect of emerging and principal risks and material misstatements in the financial statements, even the viability statement, and the financial statements and though we have properly planned and performed our audit our audit knowledge. in accordance with auditing standards. For example, the Based on those procedures, we have nothing material to further removed non‑compliance with laws and regulations add or draw attention to in relation to: is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures – the Directors’ confirmation within the Principal Risks required by auditing standards would identify it. and Uncertainties disclosure on page 62 that they have carried out a robust assessment of the emerging and In addition, as with any audit, there remained a higher risk principal risks facing the Company, including those that of non‑detection of fraud, as these may involve collusion, would threaten its business model, future performance, forgery, intentional omissions, misrepresentations, or the solvency and liquidity; override of internal controls. Our audit procedures are designed to detect material misstatement. We are not – The Principal and Emerging Risks disclosures describing responsible for preventing non‑compliance or fraud and these risks and how emerging risks are identified, cannot be expected to detect non‑compliance with all laws and explaining how they are being managed and and regulations. mitigated; and – the Directors’ explanation in the Viability Statement 6. We have nothing to report on the other of how they have assessed the prospects of the information in the Annual Report Company, over what period they have done so and The Directors are responsible for the other information why they considered that period to be appropriate, and presented in the Annual Report together with the financial their statement as to whether they have a reasonable statements. Our opinion on the financial statements does expectation that the Company will be able to continue not cover the other information and, accordingly, we do in operation and meet its liabilities as they fall due not express an audit opinion or, except as explicitly stated over the period of their assessment, including any below, any form of assurance conclusion thereon. related disclosures drawing attention to any necessary qualifications or assumptions. Our responsibility is to read the other information and, in doing so, consider whether, based on our financial We are also required to review the Viability Statement, set statements audit work, the information therein is materially out on page 59 under the Listing Rules. Based on the above misstated or inconsistent with the financial statements procedures, we have concluded that the above disclosures or our audit knowledge. Based solely on that work we are materially consistent with the financial statements and have not identified material misstatements in the other our audit knowledge. information. Our work is limited to assessing these matters in the Strategic report and Directors’ report context of only the knowledge acquired during our Based solely on our work on the other information: financial statements audit. As we cannot predict all future events or conditions and as subsequent events may result in – we have not identified material misstatements in the outcomes that are inconsistent with judgements that were strategic report and the Directors’ report; reasonable at the time they were made, the absence of – in our opinion the information given in those reports anything to report on these statements is not a guarantee for the financial year is consistent with the financial as to the Company’s longer‑term viability. statements; and – in our opinion those reports have been prepared in accordance with the Companies Act 2006. www.polarcapitaltechnologytrust.co.uk 97 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Independent Auditor’s Report continued Corporate governance disclosures of the financial statements including being satisfied that We are required to perform procedures to identify whether they give a true and fair view; such internal control as there is a material inconsistency between the Directors’ they determine is necessary to enable the preparation corporate governance disclosures and the financial of financial statements that are free from material statements and our audit knowledge. misstatement, whether due to fraud or error; assessing the Company’s ability to continue as a going concern, Based on those procedures, we have concluded that each disclosing, as applicable, matters related to going concern; of the following is materially consistent with the financial and using the going concern basis of accounting unless statements and our audit knowledge: they either intend to liquidate the Company or to cease – the Directors’ statement that they consider that the operations, or have no realistic alternative but to do so. annual report and financial statements taken as a Auditor’s responsibilities whole is fair, balanced and understandable, and Our objectives are to obtain reasonable assurance about provides the information necessary for shareholders whether the financial statements as a whole are free from to assess the Company’s position and performance, material misstatement, whether due to fraud or error, and to business model and strategy; issue our opinion in an auditor’s report. Reasonable assurance – the section of the annual report describing the work of is a high level of assurance, but does not guarantee that an the Audit Committee, including the significant issues audit conducted in accordance with ISAs (UK) will always that the Audit Committee considered in relation to detect a material misstatement when it exists. Misstatements the financial statements, and how these issues were can arise from fraud or error and are considered material addressed; and if, individually or in aggregate, they could reasonably be – the section of the annual report that describes the expected to influence the economic decisions of users taken review of the effectiveness of the Company’s risk on the basis of the financial statements. management and internal control systems. A fuller description of our responsibilities is provided on the We are required to review the part of the Corporate FRC’s website at www.frc.org.uk/auditorsresponsibilities. . Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate 9. The purpose of our audit work and to whom Governance Code specified by the Listing Rules for our we owe our responsibilities review. We have nothing to report in this respect. This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the 7. We have nothing to report on the other Companies Act 2006 and the terms of our engagement by matters on which we are required to report the company. Our audit work has been undertaken so that by exception we might state to the Company’s members those matters Under the Companies Act 2006, we are required to report we are required to state to them in an auditor’s report, to you if, in our opinion: and the further matters we are required to state to them in accordance with the terms agreed with the Company, and – adequate accounting records have not been kept, or for no other purpose. To the fullest extent permitted by returns adequate for our audit have not been received law, we do not accept or assume responsibility to anyone from branches not visited by us; or other than the Company and the Company’s members, – the financial statements and the part of the Directors’ as a body, for our audit work, for this report, or for the Remuneration Report to be audited are not in opinions we have formed. agreement with the accounting records and returns; or – certain disclosures of Directors’ remuneration specified Philip Merchant (Senior Statutory Auditor) by law are not made; or for and on behalf of KPMG LLP, Statutory Auditor – we have not received all the information and Chartered Accountants explanations we require for our audit. Saltire Court We have nothing to report in these respects. 20 Castle Terrace Edinburgh 8. Respective responsibilities EH1 2EG Directors’ responsibilities As explained more fully in their statement set out on 18 July 2023 page 93, the Directors are responsible for: the preparation 98 ## Financial Statements Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Statement of Comprehensive Income ### For the year ended 30 April 2023 Year ended 30 April 2023 Year ended 30 April 2022 | | Revenue | Capital | Total | Revenue | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | | | return | return | return | return | return | return | | Notes | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | Investment income 3 16,160 42 16,202 15,870 - 15,870 Other operating income 4 3,820 - 3,820 31 - 31 Losses on investments held at fair value 5 - (106,807) (106,807) - (253,694) (253,694) Gains/(losses) on derivatives 6 - 34 34 - (5,799) (5,799) Other currency gains 7 - 8,409 8,409 - 17,535 17,535 Total income 19,980 (98,322) (78,342) 15,901 (241,958) (226,057) Expenses Investment management fee 8 (21,918) - (21,918) (28,281) - (28,281) Other administrative expenses 9 (1,176) - (1,176) (1,335) - (1,335) Total expenses (23,094) - (23,094) (29,616) - (29,616) Loss before finance costs and tax (3,114) (98,322) (101,436) (13,715) (241,958) (255,673) Finance costs 10 (1,598) - (1,598) (973) - (973) Loss before tax (4,712) (98,322) (103,034) (14,688) (241,958) (256,646) Tax 11 (2,148) - (2,148) (2,000) - (2,000) Net loss for the year and total (6,860) (98,322) (105,182) (16,688) (241,958) (258,646) comprehensive expense Loss per share (basic and diluted) (pence) 12 (5.30) (75.98) (81.28) (12.36) (179.25) (191.61) The total column of this statement represents the Company’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 AIC. All items in the above statement derive from continuing operations. The Company does not have any other comprehensive income. The notes on pages 104 to 125 form part of these Financial Statements. 100 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## Statement of Changes in Equity ### For the year ended 30 April 2023 Special non- | | | | Capital | | | distrib- | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | redemption | | | Share | utable | Capital | Revenue | | | | capital | | reserve | premium | | reserve | reserves | reserve | Total | | Notes | £’000 | | £’000 | | £’000 | £’000 | £’000 | £’000 | £’000 | Total equity at 30 April 2021 34,329 12,802 223,374 7,536 3,240,833 (110,111) 3,408,763 Total comprehensive expense: Loss for the year to 30 April 2022 - - - - (241,958) (16,688) (258,646) Transactions with owners, recorded directly to equity: Ordinary shares repurchased into treasury 18, 22 - - - - (99,132) - (99,132) Total equity at 30 April 2022 34,329 12,802 223,374 7,536 2,899,743 (126,799) 3,050,985 Total comprehensive expense: Loss for the year to 30 April 2023 - - - - (98,322) (6,860) (105,182) Transactions with owners, recorded directly to equity: Ordinary shares repurchased into treasury 18, 22 - - - - (117,662) - (117,662) Total equity at 30 April 2023 34,329 12,802 223,374 7,536 2,683,759 (133,659) 2,828,141 The notes on pages 104 to 125 form part of these Financial Statements. www.polarcapitaltechnologytrust.co.uk 101 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Balance Sheet As at 30 April 2023 | | Notes | 30 April 2023 £'000 | 30 April 2022 £'000 | | --- | --- | --- | --- | | **Non current assets** | | | | | Investments held at fair value through profit or loss | 13 | 2,640,177 | 2,811,080 | | **Current assets** | | | | | Receivables | 14 | 20,605 | 31,096 | | Overseas tax recoverable | | 379 | 286 | | Cash and cash equivalents | 15 | 239,096 | 311,363 | | Derivative financial instruments | 13 | 2,571 | 6,479 | | | | 262,651 | 349,224 | | **Total assets** | | 2,902,828 | 3,160,304 | | **Current liabilities** | | | | | Payables | 16 | (23,842) | (57,284) | | Bank loans | 17 | - | (52,035) | | | | (23,842) | (109,319) | | **Non current liabilities** | | | | | Bank loans | 17 | (50,845) | - | | **Net assets** | | 2,828,141 | 3,050,985 | | **Equity attributable to equity shareholders** | | | | | Share capital | 18 | 34,329 | 34,329 | | Capital redemption reserve | 19 | 12,802 | 12,802 | | Share premium | 20 | 223,374 | 223,374 | | Special non-distributable reserve | 21 | 7,536 | 7,536 | | Capital reserves | 22 | 2,683,759 | 2,899,743 | | Revenue reserve | 23 | (133,659) | (126,799) | | **Total equity** | | 2,828,141 | 3,050,985 | | **Net asset value per ordinary share (pence)** | 25 | 2239.48 | 2305.13 | The Financial Statements, on pages 100 to 125, were approved and authorised for issue by the Board of Directors on 18 July 2023 and signed on its behalf by: **Catherine Cripps** Chair The notes on pages 104 to 125 form part of these Financial Statements Registered number 3224867 102 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information # Cash Flow Statement For the year ended 30 April 2023 | | Notes | 2022 £'000 | 2022 £'000 | | --- | --- | --- | --- | | **Cash flows from operating activities** | | | | | Loss before tax | | (103,034) | (256,646) | | Adjustments | | | | | Losses on investments held at fair value through profit or loss | 5 | 106,807 | 253,694 | | (Gains)/losses on derivative financial instruments | 6 | (34) | 5,799 | | Proceeds of disposal on investments | | 2,311,861 | 2,822,328 | | Purchases of investments | | (2,266,936) | (2,618,737) | | Proceeds on disposal of derivative financial instruments | 13 | 46,536 | 39,006 | | Purchases of derivative financial instruments | 13 | (42,594) | (47,194) | | Increase in receivables | | (472) | (64) | | Decrease in payables* | | (4,580) | (401) | | Finance costs* | | 1,598 | 973 | | Overseas tax | | (2,241) | (2,124) | | Foreign exchange gains | 7 | (8,408) | (17,535) | | **Net cash generated from operating activities** | | **38,502** | **179,099** | | **Cash flows from financing activities** | | | | | Finance costs paid* | | (1,539) | (927) | | Ordinary shares repurchased into treasury | | (116,449) | (98,001) | | **Net cash used in financing activities** | | **(117,988)** | **(98,928)** | | **Net (decrease)/increase in cash and cash equivalents** | | **(79,486)** | **80,171** | | Cash and cash equivalents at the beginning of the year | | 311,363 | 212,732 | | Effect of movement in foreign exchange rates on cash held | 7 | 7,219 | 18,460 | | **Cash and cash equivalents at the end of the year** | 15 | **239,096** | **311,363** | ## Reconciliation of cash and cash equivalents to the Balance Sheet is as follows: | | Notes | 2022 £'000 | 2022 £'000 | | --- | --- | --- | --- | | Cash held at bank and derivative clearing houses | 15 | 148,682 | 219,403 | | BlackRock's Institutional Cash Series plc (US Treasury Fund), money market fund | 15 | 90,414 | 91,960 | | **Cash and cash equivalents at the end of the year** | 15 | **239,096** | **311,363** | * The finance costs paid which were previously included in the cash flows from operating activities in the year 2022 have been represented as a cash flow from financing activities to align with the current year presentation. The notes on pages 104 to 125 form part of these Financial Statements. www.polarcapitaltechnologytrust.co.uk 103 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Notes to the Financial Statements For the year ended 30 April 2023 ## 1 General Information Polar Capital Technology Trust plc is a public limited company registered in England and Wales whose shares are traded on the London Stock Exchange. The principal activity of the Company 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 Company's Financial Statements have been prepared and approved by the Directors in accordance with UK-adopted International Accounting Standards ("UK-adopted IAS"). The Company's presentational currency is Pounds Sterling. All figures are rounded to the nearest thousand pounds (£'000) except as otherwise stated. ## 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 Financial Statements have been prepared on a going concern basis under the historical cost convention, as modified by the inclusion 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. The financial position of the Company as at 30 April 2023 is shown in the balance sheet on page 102. As at 30 April 2023 the Company's total assets exceeded its total liabilities by a multiple of over 37. The assets of the Company consist mainly of securities that are held in accordance with the Company's Investment Policy, as set out on page 54 and these securities are readily realisable. The Company has two, two-year fixed rate term loans with ING Bank N.V. both of which fall due for repayment on 30 September 2024. The Directors have considered a detailed assessment of the Company's ability to meet its liabilities as they fall due. The assessment took account of the Company's current financial position, its cash flows and its liquidity position. In addition, the Company's cash flows were stressed tested for base case and reasonable worse case scenarios such as higher inflation and interest rate increases. In light of the results of these tests, the Company's cash balances, and the liquidity position, the Directors consider that the Company has adequate financial resources to enable it 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 Company's Financial Statements. ### (B) Presentation of Statement of Comprehensive Income In order to reflect better 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 Company's compliance with certain requirements set out in section 1158 of the Corporation Taxes Act 2010. ### (C) Income Dividends receivable from equity shares are 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 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. 104 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Unfranked income includes the taxes deducted at source. Bank interest, money market fund interest and other income receivable are accounted for on an accruals basis and is recognised in the period in which it was earned. Interest outstanding at the year end is calculated on a time apportioned basis using the market rates of interest. (D) Expenses and Finance Costs All expenses, including finance costs, are accounted for on an accruals basis. All indirect expenses have been presented as revenue items per the non-allocation method except as follows: – any performance fees payable are allocated wholly to capital, reflecting the fact that, although they are calculated on a total return basis, they are expected to be attributable largely, if not wholly, to capital performance. – transaction costs incurred on the acquisition or disposal of investments are expensed either as part of the unrealised gain/loss on investments (for acquisition costs) or as a deduction from the proceeds of sale (for disposal costs). Finance costs are calculated using the effective interest rate method and are accounted for on an accruals basis. (E) 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 profit for the year. 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 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 Tax 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. (F) 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 Company has designated all of its investments as held at fair value through profit or loss as defined by UK-adopted IAS. www.polarcapitaltechnologytrust.co.uk 105 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued 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. Investments in unit trusts or OEICs are valued at the closing price, the bid price or the single price as appropriate, as released by the relevant investment manager. Fair values for unquoted investments, or for investments for which there is only an inactive market, are established by using various valuation techniques. These may include recent arms length market transactions, the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Where there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Where no reliable fair value can be estimated for such instruments, they are carried at cost, subject to any provision for impairment. 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. (G) 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. (H) 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. The Company’s investment in BlackRock’s Institutional Cash Series plc – US Treasury Fund of £90,414,000 (2022: £91,960,000) is managed as part of the Company’s cash and cash equivalents as defined under IAS 7. In the Balance Sheet bank overdrafts are shown within current liabilities. (I) Payables Payables are initially recognised at fair value and subsequently measured at amortised cost. Payables are not interest-bearing and are stated at their nominal value (amortised cost). (J) Bank Loans Interest bearing bank loans are initially recognised at cost, being the proceeds received net of direct issue costs, and subsequently at amortised cost. The amounts falling due for repayment within one year are included under current liabilities in the Balance Sheet. (K) Derivative Financial Instruments The Company’s activities expose it primarily to the financial risks of changes in market prices, foreign currency exchange rates and interest rates. Derivative transactions which the Company may enter into comprise forward exchange contracts, the purpose of which is to manage the currency risks arising from the Company’s investing activities, quoted options on shares held within the portfolio, or on indices appropriate to sections of the portfolio, the purpose of which is to provide additional capital return. The use of financial derivatives is governed by the Company’s policies as approved by the Board, which has set written principles for the use of financial derivatives. A derivative instrument is considered to be used for hedging purposes when it alters the market risk profile of an existing underlying exposure of the Company. The use of financial derivatives by the Company does not qualify for hedge accounting under UK-adopted IAS. As a result, changes in the fair value of derivative instruments are recognised in the Statement of Comprehensive Income as they arise. If capital in nature, associated change in value is presented in the capital return column of the Statement of Comprehensive Income. 106 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information (L) Rates of Exchange 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) Share Capital Represents the nominal value of authorised and allocated, called-up and fully paid shares issued. (N) Capital Reserves Capital reserves - gains/losses on disposal includes: – gains/losses on disposal of investments – exchange differences on currency balances and on settlement of loan balances – cost of own shares bought back – other capital charges and credits charged to this account in accordance with the accounting policies above Capital reserve - revaluation on investments held includes: – increases and decreases in the valuation of investments and loans held at the year end. All of the above are accounted for in the Statement of Comprehensive Income except the cost of own shares bought back or issued which are accounted for in the Statement of Changes in Equity. (O) Repurchase of Ordinary Shares (including those held in treasury) Where applicable, 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 capital 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. (P) Share issue costs Costs incurred directly in relation to the issue of new shares together with additional share listing costs have been deducted from the share premium reserve. (Q) 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 Manager (with oversight from the Board). The Board is of the opinion that the Company is engaged in a single segment of business, namely by investing in a diversified portfolio of technology companies from around the world in accordance with the Company’s Investment Objective, and consequently no segmental analysis is provided. In line with IFRS 8, additional disclosure by geographical segment has been provided in Note 26. Further analyses of expenses, investment gains or losses, profit and other assets and liabilities by country have not been given as either it is not possible to prepare such information in a meaningful way or the results are not considered to be significant. www.polarcapitaltechnologytrust.co.uk 107 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued (R) Key Estimates and Assumptions 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 majority of the Company’s investments are in US Dollars, the level of which varies from time to time. The Board considers the functional and reporting currency to be Sterling. In arriving at this conclusion the Board considered that Sterling is most relevant to the majority of the Company’s Shareholders and creditors and the currency in which the majority of the Company’s operating expenses are paid and the Company’s shares are denominated in Sterling. The only estimates and assumptions that may cause material adjustment to the carrying value of assets and liabilities relate to the valuation of unquoted investments and investments for which there is an inactive market. These are valued in accordance with the techniques set out in Note 2(f). At the year end, there was no unquoted investments (2022: same). (S) 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 Company’s Financial Statements. i) There were no relevant standards became effective for the current annual reporting period that potentially impact the Company are in issue. ii) At the date of authorisation of the Company’s Financial Statements, the following relevant standards that potentially impact the Company are in issue but are not yet effective and have not been applied in the Financial Statements: Effective for periods commencing on | Standards & Interpretations | | or after | | --- | --- | --- | | Disclosure of Accounting | Requirement amended to disclose material accounting | 1 January 2023 | | Policies (Amendments to | policies instead of significant accounting policies and | | | IAS 1 and IFRS Practice | provided guidance in making materiality judgements to | | | Statement 2) | accounting policy disclosure. | | | Definition of Accounting | Introduced the definition of accounting estimates and | 1 January 2023 | | Estimates (amendments to | included other amendments to IAS 8 to help entities | | | IAS 8) | distinguish changes in accounting estimates from changes | | in accounting policy. 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 Company in future periods. ### 3 Investment income | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Revenue: Overseas dividend income 16,160 15,870 16,160 15,870 Capital: Special dividends allocated to capital 42 - All investment income is derived from listed investments. Included within income from investments is £350,000 (2022: £172,000) of special dividends classified as revenue in nature in accordance with note 2 (c). £42,000 of special dividend has been recognised in capital as the dividend paid out of the proceeds from a disposal of an overseas investments (2022: nil). 108 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### 4 Other operating income | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Bank interest 1,478 4 Money market fund interest 2,342 27 3,820 31 ### 5 Losses on investments held at fair value | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Net (losses)/gains on disposal of investments at historic cost (130,861) 232,360 Transfer on disposal of investments (59,647) (353,508) Losses on disposal of investments based on carrying value at previous balance sheet date (190,508) (121,148) Valuation gains/(losses) on investments held during the year 83,701 (132,546) (106,807) (253,694) ### 6 Gains/(losses) on derivatives | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Gains/(losses) on disposal of derivatives held 5,019 (10,212) (Losses)/gains on revaluation of derivatives held (4,985) 4,413 34 (5,799) The derivative financial instruments represent the call and put options, which are used for the purpose of efficient portfolio management. Refer to page 112 for further details. ### 7 Other currency gains | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Exchange gains on currency balances 7,219 18,460 Exchange losses on settlement of loan balances (507) - Exchange gains/(losses) on translation of loan balances 1,697 (925) 8,409 17,535 ### 8 Investment management and performance fee | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Investment management fee paid to Polar Capital (charged wholly to revenue) 21,918 28,281 Performance fee paid to Polar Capital (charged wholly to capital) - - There was no performance payable in respect of the year nor outstanding at the year end (2022:same). The basis for calculating the investment management and performance fees are set out in the Strategic Report on page 58 and details of all amounts payable to the Manager are given in Note 24 on page 117. www.polarcapitaltechnologytrust.co.uk 109 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued As a result of the current fee arrangements which came into force on 1 May 2022, the management fee in 2023 is calculated on the reduced rates and daily net asset value, as such has subsequently decreased compared to the previous year. Details of the Investment Management Agreement are disclosed in the Strategic Report on page 58. ### 9 Other administrative expenses | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | 1 Directors' fees and expenses 247 229 National insurance contributions 26 24 2 Depositary fee 192 233 Registrar fee 54 51 3 Custody and other bank charges 267 358 4 UKLA and LSE listing fees 204 190 Legal & professional fees and other financial services 16 4 AIC fees 21 21 Auditors' remuneration - for audit of the financial Statements 63 45 Directors' and officers' liability insurance 38 23 5 AGM expenses 6 31 6 Corporate brokers' fee - - 7 Shareholder communications 38 82 Other expenses 4 44 1,176 1,335 1 Full disclosure is given in the Directors’ Remuneration Report on page 85. 2 Depositary fee is based on the value of the net assets. The daily average net asset value decreased by 19.3% compared to the previous year. 3 Custody fees are based on the value of the assets and geographical activity and determined on the pre-approved rate card with HSBC. 4 Fees are based on the market capitalisation of the Company which has risen over the last invoice period. 5 Reduced 2023 AGM expenses mainly due to the removal of Lumi online hybrid AGM option. 6 2022/2023 annual fee was offset by the commission credit on shares repurchases. 7 Includes reversal of prior year over accruals in this period. ### 10 Finance costs | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Interest on loans and overdrafts 1,514 973 Loan arrangement and facility fees 84 - 1,598 973 110 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### 11 Taxation | | Year ended | | Year ended | | | --- | --- | --- | --- | --- | | | 30 April 2023 | | 30 April 2022 | | | a) Analysis of tax charge for the year: | | £’000 | | £’000 | Overseas tax 2,148 2,000 Total tax for the year (see Note 11b) 2,148 2,000 b) Factors affecting tax charge for the year: The charge for the year can be reconciled to the loss per the Statement of Comprehensive Income as follows: Loss before tax (103,034) (256,646) Tax at the UK corporation effective tax rate of 19.5% (2022: 19%) (20,092) (48,763) Tax effect of non-taxable dividends (3,159) (3,015) Tax effect of losses on investments that are not taxable 19,181 45,972 Unrelieved current year expenses and deficits 4,070 5,806 Overseas tax suffered 2,148 2,000 Total tax for the year (see Note 11a) 2,148 2,000 c) Factors that may affect future tax charges: There is an unrecognised deferred tax asset comprising: Unrelieved management expenses 66,998 61,780 Non-trading loan relationship deficits 1,807 1,807 68,805 63,587 The deferred tax asset is based on a corporation tax rate of 25% (2022: 25%). The Company has an unrecognised deferred tax asset of £66,998,000 (2022: £61,780,000) arising from surplus management expenses of £267,992,000 (2022: £247,120,000) and unrecognised deferred tax asset of £1,807,000 (2022: £1,807,000) arising from non-trade loan relationship deficits of £7,227,000 (2022: £7,227,000) based on a corporation tax rate of 25% (2022: 25%). In its 2021 budget, the government announced that the main rate of corporation tax would increase to 25% for the fiscal year beginning on 1 April 2023. This deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts. Due to the Company’s tax status as an investment trust and the intention to continue meeting the conditions required to maintain 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. ### 12 Loss per ordinary share Year ended 30 April 2023 Year ended 30 April 2022 Revenue Capital Total Revenue Capital Total return return return return return return The calculation of basic loss per share is based on the following data: Net loss for the year (£'000) (6,860) (98,322) (105,182) (16,688) (241,958) (258,646) Weighted average ordinary shares in issue 129,409,889 129,409,889 129,409,889 134,984,460 134,984,460 134,984,460 during the year From continuing operations Basic - loss per ordinary share (pence) (5.30) (75.98) (81.28) (12.36) (179.25) (191.61) As at 30 April 2023 there are no potentially dilutive shares in issue and the earnings per share therefore equate to those shown above (2022: there was no dilution). www.polarcapitaltechnologytrust.co.uk 111 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued ### 13 Investments held at fair value through profit or loss i) Investments held at fair value through profit or loss | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Opening book cost 2,253,434 2,199,334 Opening investment holding gains 557,646 1,043,700 Opening fair value 2,811,080 3,243,034 Analysis of transactions made during the year Purchases at cost 2,236,802 2,639,004 Sales proceeds received (2,300,898) (2,817,264) Losses on investments held at fair value (106,807) (253,694) Closing fair value 2,640,177 2,811,080 Closing book cost 2,058,477 2,253,434 Closing investment holding gains 581,700 557,646 Closing fair value 2,640,177 2,811,080 Of which: Listed on a recognised Stock Exchange 2,640,177 2,811,080 The Company received £2,300,898,000 (2022: £2,817,264,000) from disposal of investments in the year. The book cost of these investments when they were purchased was £2,431,759,000 (2022: £2,584,904,000). 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. Included in additions at cost are purchase costs of £1,055,000 (2022: £1,005,000). Included in proceeds of disposals are sales costs of £1,231,000 (2022: £1,182,000). These costs primarily comprise commission. ii) Changes in derivative financial instruments | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Valuation at 1 May 6,479 4,090 Additions at cost 42,594 47,194 Proceeds of disposal (46,536) (39,006) Gains/(losses) on disposal 5,019 (10,212) Valuation (losses)/gains (4,985) 4,413 Valuation at 30 April 2,571 6,479 The derivative financial instruments represent the call and put options, which are used for the purpose of efficient portfolio management. As at 30 April 2023, the Company held NASDAQ 100 Stock Index put option and the market value of these open put option position was £1,559,000 (2022: NASDAQ 100 Stock Index put options with a market value of £6,431,000). The Company also held Microsoft Corp call options and the market value of these open call option position was £1,012,000 (2022: Apple Inc. call options with a market value of £48,000). iii) Classification under Fair Value Hierarchy: The table below sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset as follows: Level 1 - valued using quoted prices in active markets for identical assets. Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1. Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data. The valuation techniques used by the Company are explained in the accounting policies note on pages 105 and 106. 112 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information | Year ended | | Year ended | | | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2022 | | | | £’000 | | £’000 | Equity Investments and derivative financial instruments Level 1 2,641,189 2,817,559 Level 2 1,559 - Level 3 - - 2,642,748 2,817,559 The NASDAQ 100 Stock Index put options held at the year ended 30 April 2023 have been classified as level 2 due to the absence of regular trading activity levels closer to the measurement date. All other options held at the current and prior year end have been classified as level 1. There has been no further transfer between Levels 1, 2 and 3 during the year ended 30 April 2023. iv) Unquoted investments As at 30 April 2023, the portfolio comprised no unquoted investment (30 April 2022: same): ### 14 Receivables 30 April 2023 30 April 2022 £’000 £’000 Sales for future settlement 18,352 29,315 Prepayments and accrued income 2,215 1,741 VAT recoverable 38 40 20,605 31,096 The carrying values of other receivables approximate their fair value. ### 15 Cash and cash equivalents 30 April 2023 30 April 2022 £’000 £’000 Cash at bank 148,682 211,940 Cash held at derivative clearing houses - 7,463 Money market funds 90,414 91,960 Cash and cash equivalents 239,096 311,363 As at 30 April 2023, the Company held BlackRock’s Institutional Cash Series plc – US Treasury Fund with a market value of £90,414,000 (30 April 2022: £91,960,000), which is managed as part of the Company’s cash and cash equivalents as defined under IAS 7. ### 16 Payables 30 April 2023 30 April 2022 £’000 £’000 Purchases for future settlement 19,285 49,419 Repurchase of ordinary shares awaiting settlement 2,344 1,131 Accruals 2,213 6,734 23,842 57,284 The carrying values of other payables approximate their fair value. www.polarcapitaltechnologytrust.co.uk 113 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Notes to the Financial Statements continued # 17 Bank loans # i) Bank loans | | 30 April 2023 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | The Company has the following unsecured Japanese Yen and US Dollar loans: | | | | JPN¥3,800m at a rate of 0.9% repayable 30 September 2022 | - | 23,361 | | US$36m at a rate of 1.335% repayable 30 September 2022 | - | 28,674 | | JPN¥3,800m at a rate of 1.13% repayable 30 September 2024 | 22,203 | - | | US$36m at a rate of 5.43% repayable 30 September 2024 | 28,642 | - | | | 50,845 | 52,035 | The bank loans held at the year end are a Japanese Yen 3.8 billion and a US Dollar 36 million two-year fixed rate term loan with ING Bank N.V. The loans are unsecured but are subject to certain undertakings and restrictions, all of which have been complied with during the year. The carrying value of the loans approximates at their fair value. These loans are repayable on 30 September 2024. The main covenants relating to the above loans are: - (i) Total borrowings shall not exceed 30% of the Company's net asset value - (ii) The Company's minimum net asset value shall be £400 million - (iii) The Company shall not change the Investment Manager without prior written consent of the lenders. # ii) Reconciliation of bank loans | | 30 April 2023 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | Bank loans held as at 30 April 2022 | 52,035 | 51,110 | | Term loan of JPN¥3,800m and US$36m under September 2020 facility expired in September 2022 | (56,441) | - | | Term loan of JPN¥3,800m and US$36m under September 2022 facility due to expire in September 2024 | 56,441 | - | | Exchange losses on settlement of loan balances | 507 | - | | Effect of changes in foreign exchange rates on bank loans held | (1,697) | 925 | | Bank loans held as at 30 April 2023 | 50,845 | 52,035 | Both of the Japanese Yen 3.8 billion and US Dollar 36 million two-year fixed rate term loans expired on 30 September 2022, and were replaced with a Japanese Yen 3.8 billion and a US Dollar 36 million two-year fixed rate term loan with ING Bank N.V. The movement in the liability arising from the bank loans due to changes in foreign exchange rates is a non-cash movement and is included in the Statement of Comprehensive Income within 'Other currency gains'. 114 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information ## 18 Share capital | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | Allotted, Called up and Fully paid: | | | | Ordinary shares of 25p each | | | | Opening balance of 132,356,426 (30 April 2022: 136,544,764) | 33,089 | 34,136 | | Repurchase of 6,070,882 (30 April 2022: 4,188,338) ordinary shares into treasury | (1,518) | (1,047) | | Allotted, called up and fully paid: 126,285,544 (30 April 2022: 132,356,426) ordinary shares of 25p | 31,571 | 33,089 | | 11,029,456 (2022: 4,958,574) ordinary shares held in treasury | 2,758 | 1,240 | | **At 30 April 2023** | **34,329** | **34,329** | During the year, there were no ordinary shares issued to the market (2022: same). A total of 6,070,882 (2022: 4,188,338) ordinary shares were repurchased into treasury at a cost of £117,078,000 (2022: £98,639,000). Subsequent to the year end, and to 13 July 2023 (latest practicable date), 1,229,369 ordinary shares were repurchased into treasury at an average price of 2151.43p per share. ## 19 Capital redemption reserve | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | As at 1 May 2022 | 12,802 | 12,802 | | **As at 30 April 2023** | **12,802** | **12,802** | The Capital Redemption Reserve represents the nominal value of shares repurchased and cancelled. This reserve is not distributable. ## 20 Share premium | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | As at 1 May 2022 | 223,374 | 223,374 | | **As at 30 April 2023** | **223,374** | **223,374** | The share premium arises from excess of consideration received on the issue of the shares over the nominal value. This reserve is not distributable. www.polarcapitaltechnologytrust.co.uk 115 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued ### 21 Special non-distributable reserve 30 April 2023 30 April 2022 £’000 £’000 As at 1 May 2022 7,536 7,536 As at 30 April 2023 7,536 7,536 The special non-distributable reserve arose from the exercise of warrants which were issued by the Company at launch in 1996. The final warrant conversion was exercised in 2005. This reserve is not distributable. ### 22 Capital reserves | | Capital* | | | | | | | | Capital | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | reserve - | | Capital** | | | | Total | | reserve - | | Capital | | Total | | gains/losses | | | reserve - | | | | capital | gains/losses | | | reserve - | | capital | | on disposal | | | revaluation | | | reserves | | on disposal | | revaluation | | | reserves | | 30 April 2023 | | 30 April 2023 | | | 30 April 2023 | | | 30 April 2022 | | 30 April 2022 | | 30 April 2022 | | | | £’000 | | | £’000 | | | £’000 | | £’000 | | £’000 | | £’000 | As at 1 May 2022 2,339,715 560,028 2,899,743 2,198,239 1,042,594 3,240,833 Net losses on disposal of investments (190,508) - (190,508) (121,148) - (121,148) Transfer on disposal of investments 59,647 (59,647) - 353,508 (353,508) - Valuation gains/(losses) on investments held - 83,701 83,701 - (132,546) (132,546) during the year Net gains/(losses) on derivative contracts 5,019 (4,985) 34 (10,212) 4,413 (5,799) Special dividends allocated to capital 42 - 42 - - - Exchange gains on currency balances 7,219 - 7,219 18,460 - 18,460 Exchange losses on settlement of loan balances (507) - (507) - - - Exchange gains/(losses) on translation of loan - 1,697 1,697 - (925) (925) balances Ordinary shares repurchased into treasury (117,078) - (117,078) (98,639) - (98,639) Stamp duty on ordinary shares repurchased (584) - (584) (493) - (493) into treasury As at 30 April 2023 2,102,965 580,794 2,683,759 2,339,715 560,028 2,899,743 * These are realised distributable capital reserves which may be used to repurchase the Company’s shares or be distributed as dividends. ** This reserve comprises holdings gains on investments (which may become realised) and other amounts, which are unrealised. An analysis has not been made between the amounts that are realised (and maybe distributed or used to repurchase the Company’s shares) and those that are unrealised. ### 23 Revenue reserve 30 April 2023 30 April 2022 £’000 £’000 As at 1 May 2022 (126,799) (110,111) Loss for the year to 30 April (6,860) (16,688) As at 30 April 2023 (133,659) (126,799) The revenue reserve may be distributed or used to repurchase the Company’s shares (subject to being a positive balance). 116 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ### 24 Transactions with the Manager and related party transactions (a) Transactions with the Manager Under the terms of an agreement dated 9 February 2001 the Company 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 management fees, paid under this agreement to Polar Capital in respect of the year ended 30 April 2023 were £21,918,000 (2022: £28,281,000) of which £1,827,000 (2022: £6,374,000) was outstanding and accrued at the year end. There was no performance fee payable in respect of the year nor outstanding at the year end (2022: same). In addition, the research costs and the first £200,000 of marketing costs per annum are borne by the Manager. The new investment management agreement which came into force on 1 May 2022 agreed lower rates of the management base fee, simplified the structure of the base fee to three tiers and calculated on the daily net asset value. The Manager also agreed an increased contribution to the marketing costs payable by the Company to the first £200,000 per annum. Details of the Investment Management Agreement are provided in the Strategic Report on page 58. (b) Related party transactions The compensation payable to key management personnel in respect of short term employee benefits is £247,000 (2022: £229,000) which comprises £247,000 (2022: £229,000) paid by the Company to the Directors. Refer to pages 85 to 89 for the Directors’ Remuneration Report including Directors’ shareholdings and movements within the year. ### 25 Net asset value per ordinary share Net asset value per share 30 April 2023 30 April 2022 Undiluted: Net assets attributable to ordinary Shareholders (£'000) 2,828,141 3,050,985 Ordinary shares in issue at end of year 126,285,544 132,356,426 Net asset value per ordinary share (pence) 2239.48 2305.13 As at 30 April 2023, there were no potentially dilutive shares in issue (2022: there was no dilution) ### 26 Segmental reporting Geographical segments Since the Company does not have external customers an analysis of the Company’s investments held at 30 April 2023 by geographical segment and the related investment income earned during the year to 30 April 2023 is noted below: | | | Year ended | | | | Year ended | | | --- | --- | --- | --- | --- | --- | --- | --- | | 30 April 2023 | | 30 April 2023 | | 30 April 2022 | | 30 April 2022 | | | | Value of | | Gross | | Value of | | Gross | | investments | | | income | investments | | | income | | | £’000 | | £’000 | | £’000 | | £’000 | North America (inc. Latin America) 2,079,055 7,658 2,260,033 6,945 Europe 112,437 1,516 91,450 2,171 Asia Pacific (inc. Middle East) 448,685 6,986 459,597 6,754 Total 2,640,177 16,160 2,811,080 15,870 www.polarcapitaltechnologytrust.co.uk 117 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Notes to the Financial Statements continued ### 27 Derivatives and other financial instruments Risk management policies and procedures The Company invests in equities and other financial instruments for the long term to further the Investment Objective set out on page 54. This exposes the Company to a range of financial risks that could impact on the assets or performance of the Company. The main risks arising from the Company’s pursuit of its Investment Objective are market risk, liquidity risk, credit risk and gearing risk and the Directors’ approach to the management of them is set out below. The risks have remained unchanged since the beginning of the year to which the Financial Statements relate. The Company’s exposure to financial instruments comprise: - Equity and non-equity shares which are held in the investment portfolio in accordance with the Company’s Investment Objective. - Term loans and bank overdrafts, the main purpose of which is to raise finance for the Company’s operations. - Cash, money market funds, liquid resources and short-term receivables and payables that arise directly from the Company’s operations. - Derivative transactions which the Company enters into may include equity or index options, index future contracts, forward foreign exchange contracts and interest rate swaps. The purpose of these is to manage the market price risks, foreign exchange risks and interest rate risks arising from the 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 27(a)(i)), currency risk (see Note 27(a)(ii)), and interest rate risk (see Note 27(a)(iii)). (i) Market Price Risk The Company is an investment company and as such its performance is dependent on the valuation of its investments. Consequently, market price risk is the most significant risk that the Company faces. Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s operations. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. A detailed breakdown of the investment portfolio is given on pages 31 to 37. Investments are valued in accordance with the Company’s accounting policies as stated in Note 2(f). At the year end, the Company’s portfolio included derivative instruments of £2,571,000 (2022: £6,479,000). 118 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information 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 technology 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 risk exposure The Company’s exposure to changes in market prices at 30 April on its quoted investments was as follows: 30 April 2023 30 April 2022 £’000 £’000 Non-current asset investments at fair value through profit or loss 2,640,177 2,811,080 Derivative financial instruments at fair value through profit or loss 2,571 6,479 2,642,748 2,817,559 An analysis of the Company’s portfolio is shown on pages 31 to 37. 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 20% (2022: 20%) in the fair values of the 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 Company’s investments at each balance sheet date, with all other variables held constant. 30 April 2023 30 April 2022 | Increase in | | Decrease in | | Increase in | | Decrease in | | | --- | --- | --- | --- | --- | --- | --- | --- | | fair value | | fair value | | fair value | | fair value | | | | £’000 | | £’000 | | £’000 | | £’000 | Revenue return (3,700) 3,700 (3,945) 3,945 Capital return 528,550 (528,550) 563,512 (563,512) Change to the profit after tax for the year 524,850 (524,850) 559,567 (559,567) Change to Shareholders' funds 524,850 (524,850) 559,567 (559,567) Change to NAV per share (pence) 415.61 (415.61) 422.77 (422.77) (ii) Currency Risk The Company’s total return and net assets can be significantly affected by currency translation movements as the majority of the Company’s assets and revenue are denominated in currencies other than Sterling. Management of the risk The Investment Manager mitigates the individual currency risks through the international spread of investments and may make use of forward foreign exchange contracts. Borrowings in foreign currencies are entered into to manage the asset exposure to those currencies, which vary according to the asset allocation. www.polarcapitaltechnologytrust.co.uk 119 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Notes to the Financial Statements continued # **Foreign currency exposure** The table below shows, by currency, the split of the Company's non-Sterling monetary assets, liabilities and investments that are priced in currencies other than Sterling. | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | **Monetary Assets:** | | | | Cash and short term receivables | | | | US Dollars | 199,560 | 218,119 | | Japanese Yen | 25,424 | 32,928 | | Euros | 20,710 | 57,761 | | Hong Kong Dollars | 4,565 | 8,035 | | Swedish Krona | 1,727 | 1,703 | | Canadian Dollars | 627 | - | | Korean Won | 394 | 375 | | Taiwan Dollars | 317 | 923 | | Swiss Franc | 24 | 12,879 | | Polish Zloty | 5 | 5 | | Norwegian Krone | - | 222 | | **Monetary Liabilities:** | | | | Payables | | | | US Dollars | (19,419) | (43,678) | | Swedish Krona | (1,645) | - | | Canadian Dollars | (626) | - | | Japanese Yen | (22) | (16) | | Euros | - | (3,105) | | Taiwan Dollars | - | (2,709) | | Swiss Franc | - | (7) | | Bank Loans: | | | | US Dollars | (28,642) | (28,674) | | Japanese Yen | (22,203) | (23,361) | | Foreign currency exposure on net monetary items | 180,796 | 231,400 | | **Non-Monetary Items:** | | | | Investments at fair value through profit or loss that are equities | | | | US Dollars | 2,166,854 | 2,322,762 | | Japanese Yen | 122,202 | 104,636 | | Euros | 105,695 | 73,137 | | Taiwan Dollars | 87,974 | 124,760 | | Korean Won | 83,895 | 88,449 | | Hong Kong Dollars | 51,641 | 66,960 | | Canadian Dollars | 11,909 | 9,169 | | Swiss Franc | - | 3,309 | | Swedish Kroner | - | 2,181 | | Investments at fair value through profit or loss that are derivatives | | | | US Dollars | 2,571 | 6,479 | | Total net foreign currency exposure | 2,813,537 | 3,033,242 | 120 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information ### Foreign currency exchange rate movement During the financial year Sterling appreciated by 0.1% (2022: depreciated by 9.3%) against the US Dollar, appreciated by 5.2% (2022: appreciated by 7.5%) against the Japanese Yen, depreciated by 4.3% (2022: appreciated by 3.5%) against the Euro, appreciated by 0.2% (2022: depreciated by 8.4%) against the Hong Kong Dollar, appreciated by 6.7% (2022: appreciated by 2.4%) against the Korean Won and appreciated by 4.4% (2022: depreciated by 4.3%) against the Taiwan Dollar. ### Foreign currency sensitivity The following table illustrates the sensitivity of the loss after tax for the year and the value of Shareholders' funds in regard to the financial assets and financial liabilities and the exchange rates for the £/US Dollar, £/Euro, £/Japanese Yen, £/Hong Kong Dollar, £/Korean Won and £/Taiwan Dollar. Based on the year end position, if Sterling had depreciated, by a further 10% (2022: 10%), against the currencies shown, this would have the following effect: | | 30 April 2022 £'000 | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | US Dollar | Euro | Japanese Yen | Hong Kong Dollar | Korean Won | Taiwan Dollar | | Statement of Comprehensive Income - profit/loss after tax | | | | | | | | Revenue return | 560 | 142 | 282 | 28 | 220 | 166 | | Capital return | 257,839 | 13,992 | 13,820 | 6,245 | 9,322 | 9,810 | | Change to the profit/loss after tax for the year | 258,399 | 14,134 | 14,102 | 6,273 | 9,542 | 9,976 | | Change to Shareholders' funds | 258,399 | 14,134 | 14,102 | 6,273 | 9,542 | 9,976 | | | 30 April 2022 £'000 | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | US Dollar | Euro | Japanese Yen | Hong Kong Dollar | Korean Won | Taiwan Dollar | | Statement of Comprehensive Income - profit/loss after tax | | | | | | | | Revenue return | 746 | 87 | 355 | 21 | 209 | 285 | | Capital return | 274,996 | 14,179 | 12,552 | 8,333 | 9,828 | 13,664 | | Change to the profit/loss after tax for the year | 275,742 | 14,266 | 12,907 | 8,354 | 10,037 | 13,949 | | Change to Shareholders' funds | 275,742 | 14,266 | 12,907 | 8,354 | 10,037 | 13,949 | Based on the year end position, if Sterling had appreciated, by a further 10% (2022: 10%), against the currencies shown, this would have the following effect: | | 30 April 2022 £'000 | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | US Dollar | Euro | Japanese Yen | Hong Kong Dollar | Korean Won | Taiwan Dollar | | Statement of Comprehensive Income - profit/loss after tax | | | | | | | | Revenue return | (411) | (116) | (231) | (23) | (180) | (136) | | Capital return | (210,959) | (11,448) | (11,308) | (5,110) | (7,627) | (8,026) | | Change to the profit/loss after tax for the year | (211,370) | (11,564) | (11,539) | (5,133) | (7,807) | (8,162) | | Change to Shareholders' funds | (211,370) | (11,564) | (11,539) | (5,133) | (7,807) | (8,162) | www.polarcapitaltechnologytrust.co.uk 121 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Notes to the Financial Statements continued | | 30 April 2022 (£'000) | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | US Dollar | Buro | Japanese Yen | Hong Kong Dollar | Korean Wen | Taiwan Dollar | | Statement of Comprehensive Income - profit/loss after tax | | | | | | | | Revenue return | (610) | (71) | (290) | (17) | (171) | (233) | | Capital return | (224,997) | (11,601) | (10,270) | (6,818) | (8,041) | (11,179) | | Change to the profit/loss after tax for the year | (225,607) | (11,672) | (10,560) | (6,835) | (8,212) | (11,412) | | Change to Shareholders' funds | (225,607) | (11,672) | (10,560) | (6,835) | (8,212) | (11,412) | In the opinion of the Directors, neither of the above sensitivity analysis 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 Company's objectives. # **(iii) Interest Rate Risk** Interest rate changes may affect the income received from cash at bank and interest payable on borrowings. All cash balances earn interest at a variable rate. The Company has additional exposure to interest rate risk in relation to its holdings in the money market funds and receive interests income at a variable rate. The Company finances its operations through its term loans as well as bank overdrafts and any retained gains arising from operations. The Company uses borrowings in the desired currencies at both fixed and floating rates of interest to both generate the desired interest rate profile and manage the exposure to interest rate fluctuations. The Company's Japanese Yen and US Dollar two-year term loans carry a fixed rate of interest and therefore do not give rise to any interest rate risk. # **Management of the risk** The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. The Company may also enter into interest rate swap agreements. # **Interest rate exposure** The exposure, at 30 April, of financial assets and liabilities to interest rate risk is shown by reference to: - fixed interest rates (i.e. giving fair value interest rate risk) - when the financial instrument is due for repayment. | | 30 April 2022 (£'000) | | | 30 April 2022 (£'000) | | | | --- | --- | --- | --- | --- | --- | --- | | | Within one year | More than one year | Total | Within one year | More than one year | Total | | Exposure to floating interest rates: | | | | | | | | Cash and cash equivalents | 148,682 | - | 148,682 | 219,403 | - | 219,403 | | Money market funds | 90,414 | - | 90,414 | 91,960 | - | 91,960 | | Exposure to fixed interest rates: | | | | | | | | Bank loan | - | (50,845) | (50,845) | (52,035) | - | (52,035) | | Total exposure to interest rates | 239,096 | (50,845) | 188,251 | 259,328 | - | 259,328 | 122 Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information Upon expiry of the Japanese Yen and US Dollar two-year fixed rate term loan on 30 September 2022, the Company entered into replacement contracts with ING Bank N.V. for two, two-year fixed rate term loans of Japanese Yen 3.8 billion (2022: 3.8 billion) at an interest rate of 1.13% (2022: 0.90%) and US Dollar 36 million (2022: 36 million) at an interest rate of 5.43% (2022: 1.335%) per annum, both of which fall due for repayment on 30 September 2024. #### Interest rate sensitivity The sensitivity analysis is based on the Company's monetary financial instruments held at each balance sheet date, with all other variables held constant. The table below illustrates the Company's sensitivity to interest rate movements, with a change of 1.5% (2022: 1%) per annum in the rates of interest available to the Company's a change of 1.5% (2022: 1%) per annum in the rates of interest available to the Company's financial liabilities. The effect on the revenue and capital return after tax and the value of Shareholders' funds are as follows if rates increased: | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | Statement of Comprehensive Income - profit/loss after tax | | | | Revenue return | 2,824 | 2,593 | | Capital return | - | - | | Change to the profit/loss after tax for the year | 2,824 | 2,593 | | Change to Shareholders' funds | 2,824 | 2,593 | A corresponding decrease in the rate would have equal and opposite effect to that shown in the table above. This level of change is considered to be reasonably possible based on observation of current market conditions. This is not representative of the year as a whole, since the exposure changes as level of cash/(loans) held during the year will be affected by the strategy being followed in response to the Investment 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 Company to realise sufficient assets to meet its financial liabilities. #### Management of the risk The Company's assets mainly comprise readily realisable securities which may be sold to meet funding requirements as necessary. #### Liquidity risk exposure The maturity of the Company's existing borrowings are set out in Note 17 to the Financial Statements. Short-term flexibility is achieved through the use of overdraft facilities. At 30 April the financial liabilities comprised of: | | 30 April 2022 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | **Due within 1 month:** | | | | Balances due to brokers | 19,285 | 49,419 | | Repurchase of ordinary shares awaiting settlement | 2,344 | 1,131 | | Accruals | 2,058 | 6,688 | | **Due after 3 months and within 1 year:** | | | | Bank loan interest (2022: Bank loan and interest) | 1,992 | 52,336 | | **Due after 1 year and within 2 years:** | | | | Bank loan and interest | 51,613 | - | www.polarcapitaltechnologytrust.co.uk 123 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Notes to the Financial Statements continued # **(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 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 Company's assets. The 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 year and the prior year. # **Credit risk exposure** The maximum exposure to credit risk at 30 April 2023 was £259,526,000 (30 Apr 2022: £342,331,000) comprising: | | 30 April 2023 £'000 | 30 April 2022 £'000 | | --- | --- | --- | | Balances due from brokers | 18,352 | 29,315 | | Accrued income | 2,078 | 1,653 | | Cash at bank | 148,682 | 211,940 | | Cash held at derivative clearing houses | - | 7,463 | | Money market funds | 90,414 | 91,960 | | | 259,526 | 342,331 | 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 Company's financial assets are past due or impaired. All deposits were placed with banks that had a rating of A or higher. The money market fund, BlackRock's Institutional Cash Series plc – US Treasury Fund, held by the Company as at year ended 30 April 2023 has a rating of AAA or higher, the fund invests primarily in US Treasury bills, US Treasury Repurchase Agreements and other similar instruments. Investment transactions are carried out with a large number of brokers, the credit standing of each is reviewed periodically by the Investment Manager are set on the amount that may be due from any one broker. # **(d) Gearing risk** The Company's policy is to increase its exposure to equity markets through the judicious use of borrowings. When borrowings are invested in such markets, the effect is to magnify the impact on Shareholder's funds of changes, both positive and negative, in the value of the portfolio. # **Management of the risk** The Company uses short-term loans to manage gearing risk, details of which can be found in Note 17. # **Gearing risk exposure** The loans are valued at amortised cost, using the effective interest rate method in the Financial Statements. The Board regulates the overall level of gearing by raising or lowering cash balances. 124 Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information (e) Capital Management Policies and Procedures The Company’s capital, or equity, is represented by its net assets which are managed to achieve the Company’s Investment Objective set out on page 54. The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes: (i) the planned level of gearing through the Company’s fixed rate loan facility, credit facility and (ii) 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). The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting period. The 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 Company has to be able to meet one of the two capital restriction tests imposed on investment companies by Company Law. The Company is also subject to externally imposed capital requirements through the loan covenants set out in the loan facility. These requirements are unchanged since the previous year end and the Company has complied with them. ### 28 Post Balance Sheet Event Subsequent to the year end, and to 13 July 2023, 1,229,369 ordinary shares were repurchased and placed in the Treasury at an average price of 2,151.43p per share. There are no other significant events that have occurred after the end of the reporting period to the date of this report which require disclosure. www.polarcapitaltechnologytrust.co.uk 125 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Shareholder Information Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Alternative Performance Measures (APMs) 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: ### NAV Total Return The NAV total return shows how the net asset value per share has performed over a period of time taking into account both capital returns and dividends paid to shareholders. NAV total return reflects the change in value of NAV plus the dividend paid to the shareholder. Since the Company has not paid a dividend the NAV total return is the same as the NAV per share return as at the year ended 30 April 2023 and 30 April 2022. | | | Year ended 30 April 2023 | Year ended 30 April 2022 | | --- | --- | --- | --- | | Opening NAV per share | a | 2305.13p | 2496.44p | | Closing NAV per share | b | 2239.48p | 2305.13p | | **NAV total return for the year** | (b / a)-1 | (2.8%) | (7.7%) | ### Share Price Total Return 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 Share price total return reflects the change in share price value plus the dividend paid to the Shareholder. Since the Company has not paid dividends the share price total return is the same as the price per ordinary share return as at year end 30 April 2023 and 30 April 2022. | | | Year ended 30 April 2023 | Year ended 30 April 2022 | | --- | --- | --- | --- | | Opening share price | a | 2040.00p | 2364.00p | | Closing share price | b | 1940.00p | 2040.00p | | **Share price total return for the year** | (b / a)-1 | (4.9%) | (13.7%) | ### (Discount)/Premium 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. A premium or discount is generally the consequence of supply and demand for the shares on the stock market. | | | 30 April 2023 | 30 April 2022 | | --- | --- | --- | --- | | Closing share price | a | 1940.00p | 2040.00p | | Closing NAV per share | b | 2239.48p | 2305.13p | | **Discount of ordinary share price to the NAV per ordinary share** | (a / b)-1 | (13.4%) | (11.5%) | 128 | Overview | Manager's Report | Environmental, Social and Governance (ESG) | Corporate Governance | Financial Statements | Shareholder Information | | --- | --- | --- | --- | --- | --- | ## Ongoing Charges Ongoing charges are calculated in accordance with AIC guidance by taking the total expenses of the Company, 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 non-recurring 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 April 2021 | Year ended 30 April 2022 | | --- | --- | --- | | Investment Management Fee (Note 8 on page 109) | £21,918,000 | £28,281,000 | | Other Administrative Expenses (Note 9 on page 110) | £1,176,000 | £1,335,000 | | a | £23,094,000 | £29,616,000 | | Average daily net assets value | £2,843,190,000 | £3,525,121,000 | | **Ongoing Charges excluding performance fee** | a / b 0.81% | 0.84% | | Performance fee (Note 8 on page 109) | c – | – | | d = a+c | £23,094,000 | £29,616,000 | | **Ongoing charges including performance fee** | d / b 0.81% | 0.84% | www.polarcapitaltechnologytrust.co.uk 129 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Glossary of Terms Administrator The Company’s Administrator is HSBC Securities Services (HSS) who are contracted through Polar Capital LLP to provide accounting and administrative services under the terms of the Investment Management Agreement (“IMA”). AGM Annual General Meeting – a meeting required to be held in accordance with the Companies Act 2006, within six months of the Company’s financial year end. The AGM of the Company will be held on Thursday, 7 September 2023. Details of the arrangements will be provided in the separate Notice of AGM and on the Company’s website. AIC Association of Investment Companies, the industry body for closed ended investment companies. AIF Alternative Investment Fund – the Company is an investment trust which is a collective investment undertaking which raises capital from a number of investors (in the case of the Company, by selling shares in the open market on the London Stock Exchange) with a view to investing the capital in accordance with the investment policy (see page 54). AIFM Alternative Investment Fund Manager, a body appointed in accordance with the AIFMD (see below). Polar Capital LLP is the appointed AIFM to the Company. 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 UK and European Union, must appoint a Depositary and an Alternative Investment Fund Manager (‘AIFM’). Benchmark The Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal of relevant withholding taxes). The naming convention of the benchmark has been updated to align with the S&P 500. The benchmark of the Company remains unchanged. The performance of the Company is measured against the performance of the benchmark. Closed-ended An Investment Company whose shares are traded in the open market, e.g., on the Investment Company London Stock Exchange. Custodian HSBC Bank plc is the Custodian of the Company’s assets. The Custodian is a financial institution responsible for safeguarding, worldwide, the listed securities and certain cash assets of the Company, as well as the income arising therefrom, through provision of custodial, settlement and associated services. Depositary The Company’s Depositary is also HSBC Bank plc. Under AIFMD (see above) 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 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 Derivative is 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. The use of derivatives is to protect the capital value of the portfolio or for efficient portfolio management. A derivative can be an asset or a liability and is a form of gearing because it can increase the economic exposure to shareholders. Discount/premium See Alternative Performance Measure (APM) on page 128. Earnings per Share A company’s profitability expressed on a per share basis and calculated by dividing the (“EPS”) company’s annual earnings after tax by the weighted average number of shares in issue. 130 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information Fund/Portfolio Ben Rogoff (Lead Manager) and Ali Unwin (Deputy Fund Manager) of Polar Capital LLP Manager have been delegated responsibility for the creation and management of the portfolio of investments subject to the investment policy and various parameters set by the Board of Directors. FCA The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. IFRS International Financial Reporting Standards (IFRS) are accounting standards which are developed by the International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB). The IASB sets IFRS Accounting Standards and the ISSB sets IFRS Sustainability Disclosure Standards. Inflation A measure of the change in the average price level of a basket of goods and services in a particular economy. Investment Company In 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. Investment Trust UK Corporation Tax law (Section 1158 of the Corporation Tax Act 2010) allows an taxation status Investment Company (referred to in Tax law as an Investment Trust) to be exempt 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. KPMG The Company’s auditor is KPMG LLP, represented by Philip Merchant, Partner. Leverage As defined under AIFMD rules, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Leverage is broadly equivalent to gearing but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowings). Liquidity The ease with which a security can be traded on the market, usually defined by turnover of the shares divided by the number of shares in issue. Manager/Investment Polar Capital LLP (Polar Capital), also appointed as AIFM (see above). The responsibilities and Manager fees payable to Polar Capital are set out in the Strategic Report. Market capitalisation Also sometimes referred to as ‘market cap’, this is a measure which describes the size of a Company or an Investment Trust. It is calculated by multiplying the number of shares by the price of the shares. Net Asset Value (NAV) The NAV is the value attributed to the shareholders of the Company less the liabilities, presented either on a per share or total basis. The value of the Company’s assets, principally investments made in other companies and cash being held, minus any liabilities. The NAV is also described as ‘Shareholders’ funds’ per share. 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. The NAV per ordinary share is published daily. Non-executive Director The Company is managed by a Board of Directors who are appointed by letter rather than a contract of employment. The Company does not have 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. PCT or the Company Polar Capital Technology Trust Plc. www.polarcapitaltechnologytrust.co.uk 131 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Glossary of Terms continued Price/earnings ratio A way to estimate the future earnings potential of a particular company or investment trust. (P/E ratio) It is calculated by taking the current price and dividing it by earnings per share. The P/E ratio also gives an indication of how quickly the company is expected to grow – a high PE indicates that a company is expected to see EPS grow quickly in the future. SORP The Statement of Recommended Practice (SORP) for investment trust is issued by the AIC and it provides recommendations on financial reporting that supplement official accounting standards. The financial statements of the Company are prepared in accordance with the Investment Trust SORP. Treasury shares Treasury shares are the Company’s own shares that have been brought back from shareholders and not cancelled but held in Treasury. Such shares may be reissued into the market at a premium to NAV. Treasury shares do not attract the right to receive dividends or have any other voting rights. UK-adopted IAS The international accounting standards adopted by the UK Endorsement Board after delegation of adoption powers. This includes International Accounting Standards (IAS), IFRS and related interpretations, subsequent amendments to those standards and related interpretations, future standards and related interpretations issued or adopted by the IASB. Volatility Volatility describes the price movement of an investment. High volatility indicates frequent and significant price movement, whereas low volatility investments have less frequent or severe fluctuations in price. Yield The yield is the return on an investment, usually expressed as a percentage of the purchase price. 132 www.polarcapitaltechnologytrust.co.uk Overview Manager's Report Environmental, Social and Governance (ESG) Corporate Governance Financial Statements Shareholder Information # Corporate Information - AGM ## 2023 Annual General Meeting ("AGM") The Company's AGM will be held at 2:30pm on Thursday 7 September 2023 at offices of Herbert Smith Freehills, Exchange House, Primrose Street, London, EC2A 2EG. 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 cosect@polacapital.co.uk stating the subject matter as PCTT-AGM. We will endeavour to answer relevant questions at the meeting. 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 in full. 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 and any forward-looking statements. 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 April 2024 unless renewed. The Policy being presented for renewal is unchanged from the current Policy and will apply to the three financial years commencing 1 May 2024 and ending on 30 April 2027. 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 85 to 89. Resolutions 4 to 9 relate to the annual re-election of directors. In line with good corporate governance the tenure policy of directors is 9-years, with the exception of the Board's Chair tenure policy which allows the Chair to remain in role for up to 12-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 90, the Directors have provided a rationale for their support for the reappointment of each director on pages 8 and 9 and within the Notice of AGM. Resolutions 10 and 11 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 pages 80 to 84. Resolutions 12 to 14 relate to potential changes in the share capital. Resolution 12 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 13 is proposed in connection with 12 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 the same to all; 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 14 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 www.polacapitaltechnologytrust.co.uk 133 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ### Corporate Information - AGM continued shares of the Company may trade at a discount to NAV, (2022: nil) was outstanding at the year end. when this is the case the Company may step in and buy Performance periods coincide with the Company’s back shares in an effort to reduce the discount. Each of accounting periods. In the event of a termination of these authorities require shareholder approval and are the investment management agreement, the date the regular resolutions proposed to each AGM; each authority agreement is terminated will be deemed to be the end of remains in place for 12 months or until the limits have the relevant performance period and any performance fee been reached. payable shall be calculated as at that date. ### Share Capital, Voting Rights and Transferability Calculation The Company’s share capital is divided into ordinary shares A notional performance fee entitlement (‘NPFE’) is of 25p nominal value each. At 30 April 2023, there were calculated and if positive, accrued daily, having made up all 137,315,000 ordinary shares in issue of which 11,029,456 past underperformance; however, it is only at the financial were held in treasury (2022: 4,958,574 ordinary shares year end that payment of the performance fee is tested. held in treasury). The calculation period starts at the end of the financial Ordinary shares carry voting rights which are exercised on year in which the last performance fee was paid and is a show of hands at a meeting, or on a poll, where each open until the end of the financial year that the next share has one vote. Arrangements for the casting of proxy performance fee is paid. votes are provided when a notice of meeting is issued. The 1 per cent. cap is applied as part of the NAV Any shares in the Company may be held in uncertificated calculation so the performance fee accrual will never form and, subject to the Articles, title to uncertificated exceed 1 per cent. of the NAV. shares may be transferred by means of a relevant Any under performance since the last performance fee was system. Further information can be found in the Articles paid must be made good before a fee may be paid. of Association available on the Company’s website www.polarcapitaltechnologytrust.co.uk. Payment Conditions On the final day of each financial year the NPFE will be tested. The Company is not aware of arrangements to restrict the votes or transferability of its shares. If the NPFE is positive, then a performance fee may be paid to the Manager if the following conditions have been achieved: ### History, Structure and Fees • There has been outperformance of the Benchmark in The Company was launched in 1996 with a five-yearly the financial year; continuation vote. Shareholders approved the resolution for the Company to continue in operation in its current • The NAV per share at the financial year end is equal form at the AGM in 2020. The next continuation vote to or higher than the NAV per share when the last of the Company, in accordance with the Articles of performance fee was paid; Association, will be proposed at the AGM to be held in • The NAV per share at the financial year end is equal to 2025. The Company continues to operate as an investment or higher than the NAV per share at the beginning of trust with an independent Board and third-party the financial year; and investment manager. • If the NPFE is negative, then no performance fee is paid, Performance fee and the calculation period remains open. The performance fee participation rate is 10 per cent. of ### outperformance above the Benchmark, subject to a cap Termination Arrangements on the amount which may be paid out in any one year of The Investment Management Agreement (“IMA”) may be 1 per cent. of NAV. Any amount over the 1 per cent. payment terminated by either party giving 12 months’ notice, but is written off. There was no performance fee payable for the under certain circumstances the Company may be required year to 30 April 2023 (2022: nil), and therefore no amount to pay up to one year’s management charges if immediate 134 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information notice is given. Compensation will be on a sliding scale if less than 12 months’ notice is given. 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. Other In addition to the above, the Investment Manager is responsible for the first £200,000 of marketing costs and all research costs. www.polarcapitaltechnologytrust.co.uk 135 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 ## Corporate Information - Other ### Company Website that in all material respects the Company was managed in accordance with the applicable FCA rules and AIFMD. www.polarcapitaltechnologytrust.co.uk Polar Capital Technology Trust plc is a public listed company The Investment Manager maintains a website on behalf of on the London Stock Exchange Premium Market section and the Company which provides a wide range of information complies with the Financial Conduct Authority (‘FCA’) Listing on the Company, monthly factsheets issued by the Rules. It is not directly authorised and regulated by the FCA. Investment Manager and copies of announcements, including the annual and half year reports when issued. ### Statement By The AIFM Information on the Company can also be obtained from The statement by the AIFM in respect of matters to be various other sources including: disclosed to investors for the year ended 30 April 2023 is available on the Company’s website. • www.theaic.co.uk ### • www.ft.com/markets Share Price and Net Asset Value • www.londonstockexchange.co.uk The Company’s Net Asset Value (NAV) is normally released daily, on the next working day, following the calculation ### Benchmark date, to the London Stock Exchange. The mid-market price The Company uses the Dow Jones Global Technology of the ordinary shares is published daily in the Financial Index (total return, Sterling adjusted, with the removal Times in the Companies and Markets section under the of relevant withholding taxes) as the Benchmark against heading ‘Investment Companies’. Share price information which Net Asset Value (NAV) performance is measured for is also available from The London Stock Exchange website: the purpose of assessing performance fees. www.londonstockexchange.co.uk ### Dividends Securities Financing Transactions The Company has not historically paid a dividend as the The Securities Financing Transactions Regulation, as objective is capital growth. published by the European Securities and Markets Authority, aims to improve the transparency of the ### Capital Gains Tax securities financing markets. Disclosures regarding exposure Information on Capital Gains Tax (‘CGT’) is to Securities Financing Transactions (‘SFTs’) or total return available on the HM Revenue & Customs website swaps will be required on all reports & accounts published www.hmrc.gov.uk/cgt/ index. after 13 January 2018. During the period to 30 April 2023 and at the balance sheet date, the Company did not use When shares are disposed of a capital gain may result if the SFTs or total return swaps, as such no disclosure is required. disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share ### Electronic Communications dealing costs. The exercise of subscription shares into ordinary If you hold your shares in your own name you can choose shares should not have given rise to a capital gain, however a to receive communications from the Company in electronic capital gain may arise on the eventual disposal of those shares. format. This method reduces cost, is environmentally The calculations required to compute capital gains may friendly and, for many, is convenient. be complex and depend on personal circumstances. If you would like to take advantage of Electronic shareholders are advised to consult their personal financial Communications, please visit our registrar’s website at advisor for further information regarding a possible tax www.shareview.co.uk. You will need your Shareholder liability in respect of their shareholdings. Reference Number. If you agree to the terms and Within the Document Library of the Company’s website, conditions, in future, on the day that documents are sent to launch and calculation details for CGT purposes are shareholders by post you will receive an e-mail providing the provided, Shareholders may find these useful when website address where the documents can be viewed and considering their tax position. downloaded. Paper copies will still be available on request. ### Statement by the Depositary Disability Act The statement of the Depositary’s responsibilities in Copies of this Annual Report and Financial Statements or respect of the Company and its report to Shareholders other documents issued by the Company are available from for the year ended 30 April 2023 is available on the the Company Secretary. If needed, copies can be made Company’s website. The Depositary, having carried out available in a variety of formats, either Braille or on audio such procedures as it considered necessary, was satisfied tape or larger type as appropriate. 136 www.polarcapitaltechnologytrust.co.uk Manager’s Environmental, Social Corporate Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information key features documents and understand the risks associated ### Investing with investing in the shares of the Company. If you are in The ordinary shares of the Company are listed and traded any doubt as to the suitability of a plan or any investment on the London Stock Exchange. Investors should be aware available within a plan, please take professional advice. that the value of the Company’s ordinary shares may reflect the greater relative volatility of technology shares. Tax rates and reliefs change from time to time and may affect the value of your investment. Polar Capital Technology Trust plc is an investment trust and as such its ordinary shares are excluded from the FCA’s For those investors who would like advice: restrictions which apply to non-mainstream investment Private Client Stockbrokers – generally for investors with products. The Company conducts its affairs and intends a large lump sum to invest, a private client stockbroker will to do so for the foreseeable future so that the exclusion manage a portfolio of shares on behalf of a private investor continues to apply. and will offer a personalised service to meet an individual’s particular needs. A list of private client stockbrokers is There are a variety of ways to invest in the Company. available from The Personal Investment Management & However, this will largely depend upon whether you Financial Advice Association (PIMFA) at www.pimfa.co.uk would like financial advice or are happy to make your own investment decisions. Financial Advisers – carry out the share transactions for their clients, they can do this directly but also via a ### Investing Risks growing number of platforms that offer investment trusts Investors should be aware of the following risks when including AJ Bell, Interactive Investor, Ascentric, Embark, considering investing in the shares of Polar Capital Nucleus, Raymond James, Seven IM and Transact. For Technology Trust plc: investors looking to find a financial adviser, please visit Past performance is not a guide to future performance. www.unbiased.co.uk Please remember that any investment in the shares of For those investors who are happy to make their Polar Capital Technology Trust either directly or through own investment decisions: a savings scheme or ISA carries the risk that the value of Online Stockbroking Services – There are a number of real the investment and any income from such may go down time execution only stockbroker services which allow private as well as up due to the fluctuations of the share price, the investors to trade online for themselves, manage a portfolio market and interest rates. This risk may result in an investor and buy UK listed shares. Online stockbroking services include not getting back the original amount invested. AJ Bell, Interactive Investor, Barclays Stockbrokers, Halifax Share Dealing and Hargreaves Lansdown. Investors should be aware that the value of the NAV of the Company’s shares may reflect the greater relative volatility As an investor holding shares through one of these platforms, of technology shares. Technology shares are subject to the you are entitled to attend and vote at company general risks of developing technologies, competitive pressures and meetings. For example, interactive investor allow you to vote other factors including the acceptance by business and your shares at no extra cost through your account and new consumers of new technologies. Many companies in the customers are automatically signed up to the voting and technology sector are smaller companies and are therefore information service, which enables you to receive shareholder also subject to the risks attendant on investing in smaller materials and vote on decisions directly affecting your UK capitalisation businesses. As the Company invests in registered shareholdings. overseas companies changes in exchange rates may cause Please visit the AIC’s pages below for further information: fluctuations in the value of the investments and of your https://www.theaic.co.uk/how-to-attend-an-AGM investment in the Company. The Company takes on bank debt for investment purposes https://www.theaic.co.uk/availability-on-platforms/how- (‘gearing’) which exposes the company to exchange risk tovote-your-shares when the borrowings are in different currencies and the ### Share Dealing Services value of the investments made with the borrowings may fall and may not be sufficient to cover the borrowings and The Company has also made arrangements with its share interest costs. However, the Company may increase or registrars, Equiniti Limited, for investors to buy and sell decrease its borrowing levels to suit market conditions. shares through the Shareview.co.uk service. If you are investing through a savings plan, ISA or other For telephone sales call 0345 603 7037 (or +44 121 415 7560) investment arrangement it is important that you read the between 8.30am and 4.30pm for dealing and up to 6.00pm www.polarcapitaltechnologytrust.co.uk 137 Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023 # Corporate Information - Other continued 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. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the principal risks and uncertainties included in the Strategic Report 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 Technology 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 the Polar Capital Technology 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 # If you're suspicious, report it # 1 Reject unexpected offers Scammers usually sold call, but contact can also come by email, post, word of mouth or at a seminar. If you've been offered an investment out of the blue, chances are it's a high risk investment or a scam. # 2 Check the FCA Warning List Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without our authorisation. # 3 Get impartial advice Get impartial advice before investing – don't use an adviser from the firm that contacted you. You can report the firm or scam to us by 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 Be ScamSmart and visit www.fca.org.uk/scamsmart 138 Manager’s Environmental, Social Financial Shareholder Overview Report and Governance (ESG) Governance Statements Information ## Contact Information | Registered office and address for contacting the | Registrar | | --- | --- | | directors | Equiniti Limited | | 16 Palace Street, | Aspect House, Spencer Road, Lancing, West Sussex, | | London, | BN99 6DA | SW1E 5JD Shareholder helpline: 0371 384 2476 020 7227 2700 (or +44 (0) 371 384 2476 from overseas) www.shareview.co.uk Company Registered Number Polar Capital Technology Trust Plc Shareholders who have their shares registered in their own (The ‘Company’) name, not through a share savings scheme or ISA, can is incorporated in England and Wales with company contact the registrars with any queries on their holding. number 3224867 and registered as an investment company In correspondence you should refer to Polar Capital under section 833 of the Companies Act 2006. Technology Trust plc, stating your registered name and address and, if available, your full account number. Investment Manager and AIFM | Polar Capital LLP | Financial Calendar | | --- | --- | | Authorised and regulated by the Financial Conduct | The key dates in the Company’s financial year are as | | Authority | follows: | | Represented by Portfolio Manager Ben Rogoff and Deputy | 30 April Financial year-end | | Manager Alastair Unwin | July Announcement of year-end results | September Annual General Meeting Company Secretary 31 October Half-year end Polar Capital Secretarial Services Limited December Announcement of half-year results Represented by Jumoke Kupoluyi, ACG Identification Code Email: cosec@polarcapital.co.uk SEDOL 422002 | Independent Auditor | ISIN GB0004220025 | | --- | --- | | KPMG LLP | TICKER PCT | | Chartered Accountants and Statutory Auditors | BLOOMBERG PCT.LN | | 15 Canada Square, | DATASTREAM PCT | | London, | REUTERS PCT.L | | E14 5GL | LIPPER 71000395 | GIIN J29SBF.99999.SL.826 Corporate Broker LEI 549300TN1O5392UC4K19 Stifel Nicolaus Europe Limited | 150 Cheapside, | AIC | | --- | --- | | London, | The Company is a member of the Association of Investment | | EC2V 6ET | Companies (‘AIC’). The AIC website www.theaic.co.uk | contains detailed information about investment trusts, Depositary, Custodian and Administrator* including guides and statistics. HSBC Bank PLC 8 Canada Square, London, E14 5HQ * Administrator appointed under the Investment Management Agreement. This document is printed on Respecta 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 The Association of chlorine free (ECF) process. Investment Companies CBP013582 ### See more at: polarcapitaltechnologytrust.co.uk