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Annual Report and Financial Statements for the year ended 30 September 2021
Annual Report and Financial Statements for the year ended 30 September 2021
Polar Capital Global Healthcare Trust plc
2021
Contents
Strategic Report
Your Company at a Glance 1
Highlights 2
Performance 3
Chair’s Statement 4
Board of Directors 6
Management Team 8
Investment Manager’s Report 11
Ten Largest Investments 23
Full Investment Portfolio 24
Strategic Report 25
Section 172 Statement 34
Corporate Governance
Report of the Directors 38
Report on Corporate Governance 41
Directors’ Remuneration Report 49
Audit Committee Report 54
Statement of Directors’ Responsibilities 61
Independent Auditors’ Report 62
Financial Statements and Notes
Statement of Comprehensive Income 71
Statements of Changes in Equity 72
Balance Sheets 73
Cash Flow Statements 74
Notes to the consolidated Financial Statements 75
Shareholder Information
Alternative Performance Measures (APMs) 95
Glossary of Terms 97
Investing 99
Additional Information 101
Contact Information 103
Forward Looking Statements 104
Purpose
The purpose of the Group, comprising
the Company and the wholly owned
subsidiary PCGH ZDP Plc, is to provide
a vehicle for investors in which assets
are invested across a diversified global
portfolio of healthcare stocks which aim
to deliver long term capital growth to
shareholders. The purpose is achieved
through implementation of the
Investment Objective and investment
policies incorporating parameters to
ensure excessive risk is not undertaken.
Investment Objective
The generation of capital growth
through investments in a global
portfolio of healthcare stocks.
See more at: polarcapitalhealthcaretrust.co.uk
Annual General Meeting
The health and wellbeing of our shareholders, advisors and
the wider community in which we operate is of importance to
the Board. The Board recognises that the AGM is an important
event for Shareholders and the Company and is keen to
ensure that Shareholders are able to exercise their right to vote
and participate. Unless circumstances change, the meeting
will be held at the offices of Polar Capital, 16 Palace Street,
London SW1E 5JD. Any changes to these arrangements will
be communicated through the Company’s website and via a
Regulatory Information Service announcement. Questions can
be submitted ahead of the AGM via email to
Cosec@polarcapital.co.uk with the subject line
‘PCGH AGM’.
Polar Capital Global Healthcare Trust plc
The AGM will be held on 11 February 2022 at 2:00pm
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 1
Strategic Report
Your Company at a Glance
Who we are
The Group comprises the Company, Polar Capital Global Healthcare Trust Plc and
the subsidiary, PCGH ZDP Plc. The Group was formed on 30 March 2017 as part
of a reconstruction of the Company which included the change of the name on
20 June 2017 from Polar Capital Global Healthcare Growth and Income Trust plc
and a revised objective from creation of income and growth, to growth.
The Company was originally launched on 15 June 2010.
Management
The Company is an investment trust led by an experienced
Board of independent non-executive Directors with a variety
of expertise in investment and healthcare matters and with
experience in the regulatory and legal framework within
which the Group operates. The role of the Board is to provide
oversight of the Company’s activities and to seek to ensure
that the appropriate controls are in place to deliver the
Investment Objective and to manage the risks associated with
such activities.
The Investment Manager is Polar Capital LLP (“Polar Capital”)
and, with effect from 1 August 2019, the appointed Co-
Managers are Dr James Douglas and Mr Gareth Powell
supported by the wider Polar Capital Healthcare Team. Polar
Capital LLP is also the Alternative Investment Fund Manager
for the purposes of AIFM Regulations and is authorised and
regulated by the Financial Conduct Authority.
Life
In the absence of any prior alternative proposals, the articles
of association of the Company require the Directors to put
forward at the first Annual General Meeting to be held
after 1 March 2025 a resolution to place the Company into
voluntary liquidation.
Benchmark
The benchmark since launch has been the MSCI ACWI Health
Care Index (total return in sterling with dividends reinvested).
Capital structure
At 30 September 2021 the Company had in issue
124,149,256 Ordinary shares of 25 pence each of which
2,879,256 were held in treasury (2020:124,149,256 Ordinary
shares of which 2,879,256 were held in treasury). During
the year ended 30 September 2021 no shares were issued or
bought back.
Dividend policy
The Company’s focus remains on capital growth, and while
the Company continues to aim to pay two dividends per year
these are expected to be a small part of shareholder total
return.
Gearing
The Company maintains long-term structural gearing in the
form of a loan from the wholly owned subsidiary PCGH ZDP
Plc. No additional short-term borrowings have been made
and there are no arrangements made for any bank loans.
The Company may borrow up to 15% of its Net Asset Value
at the time of drawdown for tactical deployment when the
Board believes (on the recommendation of the Manager) that
gearing will enhance returns to shareholders.
Fees
The current arrangements came into force on 1 October
2020. The Investment Manager is entitled to a management
fee at the rate of 0.75% (previously 0.85%) per annum of the
lower of the Group market capitalisation and the Company’s
adjusted net asset value. 80% of the management fee
is charged to the capital account and 20% is charged to
income.
The Investment Manager may receive a performance fee paid
in cash when various performance parameters are met. No
performance fee has been accrued or is due to be paid for
the year ended 30 September 2021 (2020: nil).
Further details are included in the Strategic Report.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20212
Strategic Report
Highlights
Financial Highlights
Net Asset Value per Ordinary Share (Total Return)*
Benchmark Index
Total Net Assets (Group and Company)
Net Asset Value per Ordinary Share
Price Per Ordinary Share
Share Price Total Return*
Highlights in detail for the year to 30 September 2021
Performance
Net asset value per Ordinary share (total return)* 19.46%
Benchmark Index (MSCI ACWI Health Care Index (total return in sterling with dividends reinvested)) 13.40%
Since restructuring
Net asset value per Ordinary share (total return) since restructuring *~ 52.28%
Benchmark index total return since restructuring 53.42%
Expenses 2021 2020
Ongoing charges* 0.83% 1.01%
Financials
As at
30 September 2021
As at
30 September 2020 Change
Total net assets (Group and Company) £385,728,000 £325,133,000 +18.6%
Net asset value per Ordinary share 318.07p 268.11p +18.6%
Net asset value per ZDP share^ 113.50p 110.20p +3.0%
Price per Ordinary share 288.00p 233.00p +23.6%
Discount per Ordinary share* 9.5% 13.1%
Price per ZDP share^ 113.50p 107.50p +5.6%
Net gearing* 6.04% 5.28%
Ordinary shares in issue (excluding those held in treasury) 121,270,000 121,270,000 -
Ordinary shares held in treasury 2,879,256 2,879,256 -
ZDP shares in issue^ 32,128,437 32,128,437 -
Dividends
The Company has paid or declared the following dividends relating to the financial year ended 30 September 2021:
Pay date
Amount per
Ordinary share Record Date Ex-Date Declared Date
First interim: 31 August 2021 1.00p 6 August 2021 5 August 2021 15 July 2021
Second interim: 28 February 2022 1.00p 4 February 2022 3 February 2022 16 December 2021
Total (2020: 2.00p) 2.00p
* See Alternative Performance Measures on pages 95 and 96.
~ The Company’s portfolio was restructured on 20 June 2017. The total return NAV performance since restructuring is calculated by reinvesting the dividends in the assets of the Company
from the relevant payment date.
^ For information purposes.
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
NET ASSET VALUE PER ORDINARY SHARE
(TOTAL RETURN)
NET ASSET VALUE PER ORDINARY SHARE
2020
2021
318.07p
2020
2021
13.40%
BENCHMARK INDEX PRICE PER ORDINARY SHARE
2020
2021
288.00p
2020
2021
£385.7m
TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN*
268.11p
15.95%
2020
2021
233.00p
£325.1m
(TR: Total Return, rebased to 100 at June 2010)
19.46%
14.14%
2020
2021
24.55%
7.81%
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 3
Strategic Report
Performance since launch (15 June 2010)
Performance since reconstruction (20 June 2017)
Performance
0
100
200
300
400
500
Sep
2021
Mar
2021
Sep
2020
Mar
2020
Sep
2019
Mar
2019
Sep
2018
Mar
2018
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2017
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2017
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2016
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2016
Sep
2015
Mar
2015
Sep
2014
Mar
2014
Sep
2013
Mar
2013
Sep
2012
Mar
2012
Sep
2011
Mar
2011
Sep
2010
Jun
2010
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at launch on 15 June 2010)
Company reconstruction 20 June 2017
Ordinary Share Price (TR) NAV per share (TR)
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at reconstruction on 20 June 2017)
Ordinary Share Price (TR) NAV per share (TR)
50
100
150
200
Mar
2025
Sep
2024
Mar
2024
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2023
Mar
2023
Sep
2022
Mar
2022
Sep
2021
Mar
2021
Sep
2020
Mar
2020
Sep
2019
Mar
2019
Sep
2018
Mar
2018
Sep
2017
Jun
2017
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20214
Strategic Report
Chair’s
Statement
Lisa Arnold
Chair
Dear Shareholders
On behalf of the Board I am pleased
to provide to you the Company’s
Annual Report for the year ended
30 September 2021.
When I wrote to you at this time last year the first COVID-19
vaccine had yet to be approved. It seems a lot has happened
since then, with multiple vaccines now available. The
innovation and collaboration across the globe to achieve this
has been unprecedented. For all its negatives, COVID-19 has
proved to be a positive catalyst in accelerating other trends,
such as outsourcing and efficient delivery of healthcare,
which should persist and create further opportunities for
investment. The path through the pandemic is still uncertain,
but there is more cause for optimism as we look to the year
ahead.
Performance
The Board is pleased to report that the portfolio has
performed well over the financial year, delivering strong
absolute returns of 19.46%, outperforming its benchmark
by 6.06%. The second half of the financial year showed a
particularly strong period of relative performance, as mid to
larger capitalisation stocks moved back into favour, supportive
to the Company’s strategy of seeking opportunities across the
healthcare spectrum, selecting stocks with resilient, medium-
term growth profiles. The discount also narrowed, ending the
year at 9.5%, from 13.1% the previous year. As at close of
13 December 2021, the latest practicable date, the discount
was 9.3%.
Further detail is provided within the Manager’s Report on
pages 11 to 22.
Outlook
The Board continues to monitor performance and remains
very optimistic about the outlook for the healthcare sector
and the opportunities to generate returns for shareholders.
As the fund managers highlight in their report, the six key
investment themes, which underpinned individual stock
selection in 2020, are still very much relevant today and likely
to persist over the medium-term. The COVID-19 pandemic
has been extremely challenging, but has also been a catalyst
for positive change in healthcare, highlighting the need
for healthcare systems globally to adopt new products,
technologies and services, designed to drive efficiencies
without compromising quality of care.
The Company continues to offer a diversified approach to
gain access to growth opportunities and solid innovation
ideas, but without the need to take risk in less developed
areas, or on single product outcomes. We believe the
healthcare industry fundamentals remain strong and sector
valuations look attractive. The Board remains confident that
the Company is well placed to generate attractive returns for
its shareholders.
Dividends
The Company’s focus remains on capital growth and
consequently dividends are expected to represent a relatively
small part of Shareholders’ total return. The Company has a
policy to pay two small dividends per year but it is recognised
that these will not necessarily be of equal amounts and may
be reduced.
In August 2021 the Company paid an interim dividend of
1.00p per ordinary share. The Board has declared a further
interim dividend of 1.00p per ordinary share payable to
shareholders on the register as at 4 February 2022. This will
bring the total dividend paid for the financial year under
review to 2.00p per ordinary share, equal to the previous
financial year.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 5
Strategic Report
Environmental, Social and Governance
As detailed in my report last year, the Board recognises the
continued importance of ESG as this subject rises on all board
agendas. The Board continues to believe the Managers are
best placed to integrate ESG factors into its decision making
process and to engage with any poorly rated companies to
change behaviour and bring about genuine improvements.
During the year we have been actively engaged with our
Managers to better understand how ESG has been integrated
more fully into the decision-making process. We have also
been keen to understand the progress that has been made
on the corporate side of Polar Capital’s business. Last year
we initiated an ESG reporting process and the Managers
provided a high level ESG overview report. This year, the
process has progressed and the Managers have again
provided an overview but with more in depth information on
the investment processes including reporting, engagement
and monitoring of investee companies. We as a Board
have considered in more depth how we both integrate
and monitor ESG factors into the running of the Company,
particularly in relation to governance. Please refer to the ESG
statement on pages 19, 20 and 33 which incorporate both
the investment and corporate approach.
Share Capital
The Company has 121,270,000 ordinary shares in issue as at
the date of writing and no other shares have been bought
back or issued during the financial year under review. The
Company’s share price on 30 September 2021 was 288.00p
(2020: 233.00p). The Company’s market capitalisation at
the financial year end was £349.3m (2020: £282.6m). The
Company’s share price traded in a discount range of 8.0%
to 15.5% throughout the year, ending at a discount of
9.5% compared to 13.1% at the start of the year. The Board
has reconfirmed the authority given to the Manager to use
discretion to purchase shares in the market when deemed
appropriate to do so.
Companies Act 2006, S172 – Directors’
Duties / Shareholder Engagement
Shareholder and stakeholder engagement remains important
to the Board and throughout the year the Board continuously
considers the needs and priorities of the Company’s
stakeholders as part of the decision-making process. Further
information is provided in our section 172 Statement on
pages 34 to 36.
Annual General Meeting
The Company’s eleventh Annual General Meeting (AGM)
will be held at 2pm on Friday 11 February 2022. The notice
of AGM has been provided to Shareholders and will also
be available on the Company’s website. At the time of
writing there were no government restrictions in relation to
COVID-19, and accordingly it is our intention to hold the
AGM at Polar Capital’s offices at 16 Palace Street, London
SW1E 5JD, and to welcome our shareholders in person. We
will however, keep a watch on developments as we move
through winter and follow any restrictions which may be
re-introduced. Should we have to change our plans and move
to a virtual meeting, we will advise shareholders as early as
possible with a notice on the website and a regulatory news
service announcement.
Lisa Arnold
Chair
16 December 2021
Join us at
OUR ANNUAL
GENERAL MEETING
on
11 February
2022
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20216
Strategic Report
Board of Directors
Lisa Arnold Independent Non-Executive Chair
Neal Ransome Independent Non-Executive Director and Audit Committee Chair
Appointed to the Board on 1 February 2018 and as Chair of the Board with effect from
26 February 2020, a member of the Audit and Management Engagement Committees.
Skills and experience
Lisa was formerly a global pharmaceuticals and healthcare analyst for NatWest Markets from 1987 and continued her healthcare
career in roles with UBS Warburg, Commerzbank and Lehman Brothers. Lisa has held a number of independent adviser and
non-executive roles including nine years with the Medicines and Healthcare Products Regulatory Agency (MHRA) and eight years
as a non-executive director of Futura Medical plc.
Other appointments
Lisa holds a number of pension trustee directorships and is the chair of the Allied Domecq Pension Fund and chair of the
investment committee of the Sainsbury’s Pension Fund. She is also a non-executive director of Aquila Energy Efficiency Trust PLC
and PIMCO Europe Limited where she chairs the audit committees.
PCGH Share Interests
20,000 (0.02% of issued share capital)
Annual Remuneration
£39,000
Rationale for supporting re-election
Lisa has had a long career as a global pharmaceuticals and healthcare analyst ahead of her taking on non-executive director
positions. Since joining the Board and taking on the Chair Lisa has brought investment and strategic experience along with her
detailed and effective leadership skills. Through Lisa’s pension fund roles, particularly with the early adoption of TCFD, and more
recently through her appointment at Aquila Energy Efficiency Trust, she has a comprehensive understanding of the importance
and challenges of ESG and climate related issues. In her role as Chair, over the course of a difficult 2020, Lisa worked closely with
the corporate brokers and the Managers to improve communication both internally and externally for the benefit of all and, in
particular, when considering a shareholder perspective. Lisa continues to lead the Board with an inclusive and engaging manner
and her nomination for re-election as Chair and non-executive Director is supported by both the Board and the Managers.
Appointed to the Board on 13 December 2017 and, with effect from 28 February 2018, as Chair
of the Audit and Management Engagement Committees.
Skills and experience
Neal is a chartered accountant with an MA in Modern History from Oxford University. Neal was a partner at PwC from 1996
to 2013. He led PwC’s Pharmaceutical and Healthcare M&A practice for 17 years and was also chief operating officer of PwC’s
Advisory Services business.
Other appointments
Neal is currently chairman of ProVen VCT plc and Octopus AIM VCT Plc.
PCGH Share Interests
10,073 (0.01% of issued share capital)
Annual Remuneration
£33,500 (including Audit Committee Chair supplement)
Rationale for supporting re-election
Neal has recent and relevant financial expertise with a strong accounting background which enables him to perform in-depth
analyses of the Company’s performance and Financial Statements. In addition to his financial expertise, Neal has a wealth of
experience in evaluating pharmaceutical and healthcare companies having previously led PwC’s Pharmaceutical and Healthcare
M & A practice. Neal is Chair of the Company’s Audit Committee, a role in which he has had extensive experience on other boards.
Neal’s re-election as a non-executive Director and Audit Committee Chair is supported by the Board and the Managers.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 7
Strategic Report
Andrew Fleming Independent Non-Executive Director
Jeremy Whitley Independent Non-Executive Director
Appointed to the Board on 1 December 2019, also a member of the Audit and Management
Engagement Committees.
Skills and experience
Andrew is chair of Saltus Asset Management Limited and was previously chief executive of Waverton Investment Management.
He started his career at Gartmore where he was a main board director and head of equities. Andrew went on to hold senior
positions at ABN Amro and was chief executive of Kames Capital for nine years. He was a director and chairman of JP Morgan
Japanese Investment Trust plc retiring in December 2018.
Other appointments
Andrew is chair of Saltus Asset Management and CTVC Limited. He is also a trustee of the Rank Foundation and chairs its
Investment Committee.
PCGH Share Interests
10,000 (0.01% of issued share capital)
Annual Remuneration
£28,000
Rationale for supporting re-election
Andrew joined the Board shortly before the pandemic struck and has worked with the Board and the Managers to ensure the
continuation and continued improvement of service. Andrew continues to share his investment and management experience
and is a key participant in Board meetings. In addition to his extensive investment and commercial management expertise he
also has deep ESG experience having launched one of Europe’s first ESG funds some 20 years ago and was a very early advocate
and signatory of the UNPRi principles. Andrew’s re-election as a non-executive Director is supported by the Board and Managers.
Appointed to the Board on 1 December 2019, also a member of the Audit and Management
Engagement Committees.
Skills and experience
Jeremy was formerly Head of UK and European Equities at Aberdeen Asset Management, a position he held from 2009 to 2017.
Previous roles there included being a senior investment manager on the Global equities team as well as the Asian equities team, based
in Singapore, where he was lead manager of the Edinburgh Dragon Trust. He began his investment career at SG Warburg & Co in 1988.
Other appointments
Jeremy is currently a non-executive director and chairman of the audit committee of The Scottish Oriental Smaller Companies
Trust plc and a non-executive director of JP Morgan Indian Investment Trust plc.
PCGH Share Interests
20,000 (0.02% of issued share capital)
Annual Remuneration
£28,000
Rationale for supporting re-election
Jeremy also joined the Board shortly before the pandemic and previously held positions as Head of Equities for UK and Europe
and was Senior Investment Manager for Global and Asian Equities based in Singapore. Jeremy’s experience has brought a global
perspective to the review of the portfolio and he has been a strong advocate for clear performance attribution analysis. Jeremy
also brings to the Board experience of other investment trust management. Jeremy’s re-election as a non-executive Director is
supported by the Board and the Managers.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20218
Strategic Report
James Douglas, PhD – Co-Manager Gareth Powell, CFA – Co-Manager
James joined Polar Capital in September 2015 as a senior analyst for
the healthcare team. He has 22 years of industry experience and has
been an integral part of the management team for the Company
since restructure.
Skills and experience
Prior to joining Polar Capital, he was in equity sales specialising in
global healthcare at Morgan Stanley, RBS and HSBC. James also
has equity research experience garnered from his time at UBS,
where he worked as an analyst in the European pharmaceutical and
biotechnology team. Before moving across to the financial sector, he
worked as a consultant for Evaluate Pharma. James received both
his PhD and his first class honours degree in Medicinal Chemistry
from Newcastle University and holds an ACCA diploma in Financial
Management (DipFM).
Gareth joined Polar Capital to set up the healthcare team in 2007,
he has over 23 years’ investment experience in the healthcare sector
with 17 years as a Portfolio Manager.
Skills and experience
Prior to joining Polar Capital Gareth worked at Framlington, where he
began his career in investment management in 1999. He joined the
healthcare team in 2001 and helped launch the Framlington Biotech
Fund, which he managed from 2004 until his departure. Gareth
studied Biochemistry at Oxford and is a CFA charterholder.
Daniel Mahony, PhD
Daniel joined Polar Capital to set up the
healthcare team in 2007 and was a key
member of the team until October 2021.
Dan has since moved to being a consultant
to the healthcare team and continues to
consult on all healthcare products. He has
30 years of industry experience, comprising
more than 23 years’ investment experience
in the healthcare sector.
Skills and experience
Prior to joining Polar Capital, he was head
of the European healthcare research team
at Morgan Stanley. Daniel received his PhD
from Cambridge University in 1995 and a
first class honours degree in Biochemistry
from Oxford University in 1991.
David Pinniger, CFA
David joined Polar Capital’s healthcare team
in August 2013 and is the Lead Manager of
the Polar Capital Biotechnology Fund. He
has over 21 years’ investment experience in
the healthcare sector.
Skills and experience
Prior to joining Polar Capital, David spent
five years as a Portfolio Manager of the
International Biotechnology Trust at SV
Life Sciences. He also previously spent
three years working at venture capital
firm Abingworth as an analyst managing
biotechnology investments held across the
firm’s venture and specialist funds, and
four years at Morgan Stanley as an analyst
covering the European pharmaceuticals and
biotechnology sector. David received a first
class honours degree in Human Sciences
from Oxford University in 1999 and is a CFA
charterholder.
Deane Donnigan, Pharm D
Deane joined Polar Capital in June 2013 as
a senior analyst for the healthcare team.
She has 36 years’ industry experience
of which over 21 are in healthcare asset
management.
Skills and experience
She trained as a clinical pharmacist having
graduated with a post baccalaureate
Doctor of Pharmacy, from the University of
Georgia. In 1990, she accepted a position
with Emory University Hospital in Atlanta,
Georgia as a clinical specialist in Drug
Information and Adult Internal Medicine.
In 1997, Deane left the US to begin her
career in fund management at Framlington
in the UK. Having started as an analyst, she
spent 14 years at Framlington, eventually
becoming Lead Portfolio Manager on
both the Framlington Healthcare and
Biotechnology funds.
Management Team
Healthcare has to be become more efficient – the pandemic has
only accelerated the disruption we will see in the years ahead
Innovation is the ability to see change as an opportunity –
not a threat
Damiano Soardo, CFA
Damiano joined the healthcare team in
October 2020 as an Investment Analyst.
Damiano is responsible for supporting the
fund managers by performing analysis
of business models, industry trends and
financials. Previously, Damiano worked in the
Operations department when he joined Polar
Capital in February 2016 and subsequently
moved to the Risk team in January 2019.
Skills and experience
Prior to joining Polar Capital, he worked as
a technical consultant at a FinTech company.
Damiano has an MSc in Mathematics and
Foundations of Computer Science from
the University of Oxford and is a CFA
charterholder.
Audrey Stynes
Audrey joined the healthcare team in April
2019 as the team assistant. Aside from
organising the team’s administration and
communication workload both internally
and externally, she coordinates presentations
and marketing material in addition to
generating bespoke reports that inform daily
fund management activities for the team
at large. Previously, Audrey worked in the
Product and Operations department when
she joined Polar Capital in March 2018.
Skills and experience
Audrey graduated with a BA (1st Class
Hons) in Early Childhood Education from
the Dublin Institute of Technology and a
MA in Early Childhood Education and Care
from the Dublin Institute of Technology, Oslo
University College, University of Malta and
the University of Gothenburg.
Brett Pollard, PhD
Brett Pollard joined the Polar Capital
Healthcare team in September 2021 as an
investment analyst. Prior to Polar Capital,
Brett was Managing Director of Strategy and
Corporate Development at Scapa plc, with
responsibility for investor relations. Since
2001 he has worked across the healthcare
sector and within equity capital markets as a
healthcare analyst, most recently at Numis.
Brett also has worked in and led financial
communications, corporate development,
investor relations and operations.
Skills and experience
Studied cell and molecular biology at the
University of St. Andrews; PhD in molecular
virology.
Tara Raveendran, PhD
Tara joined Polar Capital in September 2021
as a consultant focused on independent
research for the team. Prior to joining Polar
Capital, she was the Head of Healthcare
& Life Sciences Research at Shore Capital.
Previously Tara spent over 15 years working
in equity research, specialising in European
pharmaceuticals, biotechnology and
medtech at Lehman Brothers and Jefferies.
She has also worked with a number of
healthcare-focused startups through her life
sciences consultancy, SSquared Consulting,
most recently working with the UK
government’s Vaccine Taskforce.
Skills and experience
BSc in Biochemistry and PhD in Structural
Biology from Imperial College, London.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 9
Strategic Report
Scientific progress is
leading to earlier disease
detection, more targeted
therapies and better patient
outcomes, all of which
should yield much-needed
cost-savings
Strategic Report
Expert
Knowledge
Track record and an
experienced team
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202110
Strategic Report
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 11
Investment Manager’s
Report
The objective of Polar Capital Global Healthcare Trust plc (“the Company”) is
to generate long-term capital appreciation by investing in a globally diversified
portfolio of healthcare companies.
The Company’s diversification strategy, coupled with its focus
on large-capitalisation healthcare companies with resilient,
medium-term growth profiles, helps drive the relatively lower
risk-profile of the underlying assets, relative to the more volatile
areas of healthcare. Further, the broad investment remit affords
the opportunity to invest in growth areas regardless of the
economic, political and regulatory environment. Importantly,
the Company also has the opportunity to invest in earlier-stage,
more innovative and disruptive companies, companies that
tend to be lower down the market capitalisation and liquidity
scale. This is a key advantage of a closed-end company like an
investment trust. Regardless of size, sub-sector or geography,
stock selection is central to the process, as we look to identify
companies where there is a disconnect between valuations and
the near and medium-term growth drivers.
In terms of structure, the majority of the Company’s assets
(calculated on a gross basis and referred to as the Growth
portfolio) will be invested in companies with a market
capitalisation >$5bn at the time of investment, with the
balance invested in companies with a market capitalisation
<$5bn (a maximum of 20% of gross assets and referred to as
the Innovation portfolio). At the end of the reporting period,
33 investments were in the Growth portfolio, comprising
some 93.7% of net assets, and 13 investments were in
the Innovation portfolio, comprising 12.2% of net assets.
Structural gearing, in the form of Zero Dividend Preference
Shares, offers access to additional liquidity and the opportunity
to enhance returns.
Dr James Douglas
Co-Manager
Gareth Powell
Co-Manager
Market Capitalisation
Market Capitalisation at
30 September
2021
30 September
2020
Large (>US$10bn) 78.9% 82.9%
Medium (US$5bn - US$10bn) 14.8% 11.1%
Small (<US$5bn) 12.2% 11.3%
Other net liabilities (5.9%) (5.3%)
100.0% 100.0%
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202112
Strategic Report
Investment Manager’s Report continued
Over the financial year to the end of September 2021, the
Company achieved a strong result, with a NAV per share total
return of 19.46%, which was 6.06% ahead of its benchmark
healthcare index (MSCI All Country World Index/Healthcare (total
return in sterling)). The absolute performance of the healthcare
sector was also strong, up 13.40% over the reporting period,
although the sector did lag the broader market (as tracked by
the MSCI All Country World Net Total Return in pounds sterling)
which was up 22.2%. Unprecedented monetary stimulus and
successful COVID-19 vaccination programmes were amongst
the key drivers behind the buoyant market conditions. October
2020 aside, the global equity markets enjoyed pretty consistent,
upwards momentum throughout the reporting period, with
energy and financials leading the way.
Healthcare facilities, healthcare supplies and life sciences tools
and services all performed strongly over the period. The facilities
and supplies companies benefitted from returning patient
volumes, especially in regions with successful vaccination
programmes. The life sciences tools and services sub-sector has
been instrumental in not only delivering COVID-19 testing kits
but also contributing to the vaccine manufacturing processes.
At the other end of the scale, the last 12 months has been
a difficult period for the biotechnology and pharmaceuticals
sub-sectors. For biotechnology, it has been a challenging period
driven by a number of factors including excessive valuations
in certain thematic pockets, disappointing clinical data and
regulatory setbacks. We remain optimistic, however, given that
the innovation cycle is extremely strong, the sector is well-
funded and consolidation remains a distinct possibility. The
pharmaceutical sub-sector continues to innovate and invest
substantially in research designed to address unmet medical
needs, but short-term growth prospects face the challenges of
mature margins and patent expiries between now and the end
of the decade.
Reflecting on last year’s annual report, the focus was
very much on six key investment themes, some of which
accelerated through the COVID-19 crisis. Disrupting the
delivery of healthcare, outsourcing and prevention are key
investment themes for the Company, with all three showing
signs of gathering momentum. Healthcare systems globally
are looking to shift more and more patient volumes to lower-
cost settings such as ambulatory surgery centres and the
home. Outsourcing is also enjoying a period of strong growth
and consolidation, with the clinical research organisations
especially well-positioned. Prevention, not just vaccination
programmes, but early and accurate diagnosis, is also an area
that has flourished and should continue to do so in a post-
pandemic world given the increased investment in diagnostics
infrastructure. The other key themes discussed in last year’s
annual report, namely emerging markets, innovation and
consolidation are no less important, but are perhaps less
influenced by the COVID-19 pandemic. Crucially the six
themes discussed above will, we believe, continue to be
growth drivers for the healthcare industry and should be able
to yield some exciting investment opportunities.
US politics, always an important consideration, has been less
prominent this year than it was in 2020. Top congressional
Democrats are acknowledging for the first time that they will
have to scale back their drug pricing ambitions to gain much-
needed centrist votes for President Joe Biden’s social spending
bill. As such, direct drug price negotiation by the Federal
government feels less likely now, something that would be a big
relief for the bio-pharmaceuticals industry. There remains political
will to address high out-of-pocket costs for US seniors and to
control drug price inflation, but far-reaching legislation remains
some way off. With regards to access to healthcare, President
Joe Biden continues to be a staunch supporter of the Affordable
Care Act, signed in to law by President Barack Obama in early
2010. Indeed, the Administration introduced a special enrolment
period during the pandemic to ensure that US citizens that
needed access to care got it. Priorities from here could involve
making the expansion of the subsidies and eligibility permanent,
expanding Medicaid further and adding dental, vision and
hearing coverage to the Medicare fee-for-service program.
The key investment themes that the Company focused on in
2020 are very much relevant today and will continue to be so
over the medium-term. The COVID-19 pandemic has been
hugely challenging for everyone but has also shone a light on a
couple of things: firstly, the terrific levels of innovation that the
healthcare industry can deliver and, secondly, the acute need
for structural change. It is imperative, given the general ageing
of populations and the rising costs of healthcare, that patient
volumes are directed into lower cost settings, early and accurate
diagnoses become routine and that the industry focuses on
sustainability, whether that be through improving clinical
outcomes, improving affordability and access or improving
efficiency. If the healthcare industry can deliver on these
objectives, the commercial and financial rewards should be there
for investors.
Performance Review
Over the financial year to the end of September 2021, the
Company achieved a strong result, with a NAV per share total
return of 19.46%, which was 6.06% ahead of its benchmark
healthcare index. The absolute performance of the overall
healthcare sector was also strong, with the index returning
13.40%, although it did underperform the broader market.
The Company was marginally ahead of its benchmark in the
first five months of the financial year and started a strong
period of relative performance in mid-March 2021, when
global markets began a steep rally which lasted until the end of
September 2021.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 13
Strategic Report
The Company entered the financial year with approximately 5%
net gearing and a large exposure to biotechnology, life sciences
tools and services and healthcare distributors, with the largest
underweight in the pharmaceuticals sector. As the COVID-19
crisis began to decline in early spring 2021, the gearing was
increased and the underexposure in pharmaceuticals was
further increased to add to the medical technology sub-sector.
In the last quarter of the financial year, although the gearing
was kept stable, the portfolio was more defensively positioned
with more exposure to pharmaceuticals, distributors and
healthcare facilities, with less capital allocated to biotechnology
and life sciences tools and services. This sub-sector positioning
through the financial year meant that the allocation effect
was positive with strong contributions from life sciences tools
and services, pharmaceuticals and managed care outstripping
lesser contributions from biotechnology, healthcare services and
medical technology. Overall, allocation accounted for half of the
Company’s outperformance, with the balance driven by stock
selection in life sciences tools and services, medical technology
and pharmaceuticals.
From a market capitalisation perspective, small capitalisation
healthcare companies enjoyed a period of outperformance
relative to the general healthcare sector in the first five months
of the financial year. However, this reversed abruptly as the
prospects of higher interest rates and of a less accommodative
global monetary environment caused investors to switch to
larger and more established businesses. With this backdrop, the
Growth part of the Company’s portfolio contributed positively
while the Innovation book was a small drag to performance.
In general, stock-picking across all market capitalisation bands,
but in particular large and mid-capitalisation companies, was
extremely positive and overshadowed the negative allocation
effects from smaller capitalisation stocks.
On a geographical basis, the largest positive contributors were
North America thanks to strong allocation and stock-picking,
and Europe where selection was particularly favourable. Middle
East & Africa, where the Company had no exposure, were the
only regions that very marginally detracted from performance.
Given the Company maintained an average net gearing position
of 4% through the financial year, and the healthcare market
returned 13.4%, the active management of gearing added
to the relative outperformance in the financial year, with the
additional returns afforded by the gearing far out-weighing the
cost of the debt.
Top 10 Relative Contributors (%)
Top 10
Average
Stock
Weight
Active
Weight
Stock
Return
Stock
Return
vs BM
Total
Attri-
bution
Biohaven Pharmaceutical 1.86 1.86 104.94 91.55 1.53
Avantor 2.50 2.28 74.43 61.03 1.22
Syneos Health 2.47 2.47 57.84 44.44 1.21
Align Technology 2.03 1.45 94.97 81.57 1.16
Hill-Rom Holdings 2.46 2.46 72.28 58.88 1.02
Sartorius 1.35 1.12 116.50 103.10 0.99
Cytokinetics 1.01 1.01 58.34 44.94 0.88
Bio-Rad Laboratories 3.37 3.18 38.80 25.41 0.84
Chugai Pharmaceutical 0.62 0.22 -19.97 -33.37 0.79
PRA Health Sciences 0.45 0.45 29.53 16.13 0.77
Source: Polar Capital, as at 30 September 2021. Past performance is not indicative or a
guarantee of future results.
Positive contributors to performance for the financial year
included Biohaven Pharmaceutical, Avantor, Syneos Health,
Align Technology and Hill-Rom Holdings.
Biohaven Pharmaceutical performed strongly during the
reporting period thanks to consistent, consensus-beating
revenues for migraine drug, Nurtec ODT. As a reminder, the
FDA approved the drug for the treatment of acute migraine
back in March 2020. Enthusiasm for the asset was boosted
further in May 2021 when the FDA approved an additional
indication, the preventive treatment of migraine. The approval
was based on the results of a Phase III study that revealed that
Nurtec ODT reduced migraine days by 30% after just one week
of every-other-day treatment. Further, after three months of
treatment, approximately half of patients experienced at least a
50% reduction in moderate-to-severe migraine days.
Avantor, a life sciences tools and services company which
distributes chemicals, reagents, and laboratory supplies,
benefitted from the general strength of its sub-sector. In
addition, the Avantor team has consistently over-delivered
on consensus expectations throughout the financial year,
leading analysts to upgrade financial estimates with the shares
following suit. Further, Avantor announced the purchase of
MasterFlex, a business that allows Avantor to enter the fast-
growing bioprocessing market. The deal was well received by
investors who saw the acquisition as accretive to the enlarged
company’s revenue growth and operating margins. A final
catalyst for the stock was its inaugural analyst day, in which
Avantor reiterated the guidance for the financial year 2021 and
provided attractive long-term targets.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202114
Strategic Report
Investment Manager’s Report continued
Syneos Health runs a contract research organisation, an
industry that saw an upsurge in demand due to the need to
develop COVID-19 pharmaceuticals and vaccines, coupled with
a generally buoyant bio-pharmaceutical funding environment.
The company’s outperformance was driven by positive
momentum in the non-COVID-19-related business, which
reassured investors of the sustainability of Syneos Health’s
growth trajectory. Finally, the company also announced an
acquisition (Synteract) which increases its exposure to the
fast-growing and well-capitalised small and mid-capitalisation
market. The global COVID-19 pandemic accelerated some
of the key drivers of performance for Align Technology, the
leading maker of clear aligners for dental treatments. Firstly,
consumers have developed a strong preference for fewer
in-practice dentist visits, something that is enabled by Align
Technology’s digital workflow investments, and secondly, the
“Zoom meetings” effect has been a catalyst for consumers to
invest in dental aesthetics. The company delivered impressive
quarterly financial results throughout the period under review,
with revenues often coming in significantly ahead of consensus
expectations.
Hill-Rom Holdings traded just slightly ahead of medical
technology peers from September 2020 to mid-July 2021
when speculation started to emerge that Baxter International
might be interested in acquiring the company. Eventually the
deal was announced on 2nd September 2021, with Baxter
International offering a friendly all-cash offer of $156 per
share, at a premium of more than 30% to the average price
over the previous 20 days.
Bottom 10 Relative Contributors (%)
Bottom 10
Average
Stock
Weight
Active
Weight
Stock
Return
Stock
Return
vs BM
Total
Attri-
bution
Moderna 0.00 -0.79 421.75 408.35 -1.39
Amedisys 0.53 0.53 -39.51 -52.91 -1.14
Quotient 1.18 1.18 -56.33 -69.73 -1.06
Incyte 1.94 1.73 -26.49 -39.88 -0.91
Amgen 3.28 1.37 -19.75 -33.15 -0.76
AptarGroup 1.54 1.54 1.44 -11.96 -0.71
Medley 1.50 1.50 -24.94 -38.33 -0.71
Zealand Pharma 1.21 1.21 -27.44 -40.84 -0.63
Exelixis 0.45 0.45 -17.07 -30.47 -0.59
Novo Nordisk 0.64 -1.21 34.02 20.62 -0.57
Source: Polar Capital, as at 30 September 2021. Past performance is not indicative or a
guarantee of future results.
Negative contributors to performance for the financial
year 2021 included Moderna, Amedisys, Quotient, Incyte and
Amgen.
The largest detractor to performance for the Company was its
lack of holdings in mRNA manufacturer Moderna, a decision
driven by what we perceived to be an excessive valuation
relative to the opportunity set ahead for the company. The
meteoric share-price ascent started in December 2020, when
the FDA used emergency use authorisation to allow access to
Pfizer/BioNTech’s COVID-19 vaccine, the first vaccine developed
using mRNA technology. Using similar technology, the market
quickly put upwards pressure on expectations for Moderna’s
mRNA vaccine candidate, mRNA-1273, which positively
impacted the share price performance.
Amedisys operates home health facilities and hospices.
Unfortunately, the company announced in their Q2’FY21
results that they were facing some near-term challenges due
to high levels of staff turnover in the hospice business and to
wage inflation for nurses and carers. Although the issues can
be attributed to the COVID-19 pandemic, investors felt that
the growth prospect and trajectory for 2022 might also be
impacted, causing the stock to materially underperform the
overall healthcare sector.
Quotient began to underperform in December 2020, after
announcing a regulatory delay in the US for MosaiQ, a
fully automated testing platform for blood grouping and
transfusion-transmitted infection screening of donated blood.
As COVID-19 continued to affect the timelines on its diagnostic
development programmes, analysts were prompted to reduce
their financial forecasts, which adversely impacted Quotient’s
equity value. Although the biotechnology sector put up a
strong performance in the first four months of the Company’s
financial year, it started to underperform the overall healthcare
sector in mid-February 2021, driven, in part, by the prospect
of higher real yields and reduced terminal values. Incyte was
not immune to the sector weakness, and it further struggled
when the FDA approved ruxolitinib cream (opzelura) in mild-to-
moderate atopic dermatitis (AD) with a so-called “black-box”
warning. This update dampened enthusiasm for the product’s
peak sales potential.
The catalyst for Amgen’s underperformance in the early
part of the reporting period was the top-line data for heart
failure agent omecamtiv mecarbil. While the trial hit statistical
significance for the primary endpoint, that is reducing
cardiovascular death or heart failure events, the magnitude was
underwhelming and there was no reduction in the secondary
endpoint of cardiovascular death. Additionally, the company
reported unimpressive financial data and readouts/execution
issues from other key trials.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 15
Strategic Report
Compelling opportunities lie-ahead
The 2020 annual report focused on six key themes that we
believed, and continue to believe, offer the potential for
significant returns in the years ahead. In brief, these themes
are:
• Employing technology to disrupt healthcare delivery
and shift utilisation to lower cost settings; This will be
by far the most important structural shift in healthcare for
the next 10-20 years and the enablers of this shift should
enjoy significant growth.
• Outsourcing; A continuing theme but growth is robust
across clinical trial outsourcing and contract manufacturing.
• Prevention; References diagnostics and vaccines, both
of which provide tremendous value to healthcare systems
as prevention is the most cost-effective way of delivering
healthcare. The impact of COVID-19 has highlighted the
value of diagnostics and vaccines.
• Product and service innovation; Long-term product or
service development success dependent on ability to lower
healthcare costs.
• Consolidation on the rise again; Leaders that can
acquire high quality assets in fragmented markets at
attractive valuations can enjoy significant outperformance.
• Growth in emerging market healthcare demand;
Projected to accelerate over the next 15-20 years –
investing in the long-term structural growth stories should
deliver handsome returns.
Healthcare delivery disruption,
outsourcing and prevention: Starting to
accelerate
The COVID-19 pandemic has been a real catalyst for positive
change, highlighting the need for healthcare systems globally
to adopt new products, technologies and services designed
to drive efficiencies without compromising quality of care.
One critical area is disrupting the healthcare delivery pathway
to ensure greater access to care. Virtual care platforms and
remote monitoring tools are excellent examples of enabling
technologies that can drive the agenda. Virtual care platforms
are being used not just to expand and improve access to
mental health services, for example, but also to connect
patients to licensed behavioural health providers. Sadly, these
sorts of services will be in high demand as we navigate our
way through the COVID-19 pandemic. Remote monitoring
tools can be used to support patient care by providing
clinicians with patient data that allows for proactive health
care interventions that can ultimately lead to reduced hospital
readmissions.
Out-patient surgeries and services will also grow in
importance in the coming years. Medical care provided
at alternative sites of care that meet quality and cost-
efficiency criteria can lead to better outcomes at a lower
cost for the consumer. Ambulatory surgery centres and
stand-alone imaging centres, for example, can provide the
same or higher quality care at a lower cost compared to
hospitals. UnitedHealth Group estimates that the average
price for routine diagnostic imaging at a hospital out-patient
department can be 165% more than the price of a test
performed at a stand-alone imaging centre or physician’s
office. UnitedHealth Group has also calculated that
conducting more joint replacement surgeries in ambulatory
surgery centres could save the US health systems $3 billion
annually by achieving 500,000 fewer hospitalisations.
Outsourcing is also accelerating, with the COVID-19
pandemic offering a substantial boost to both clinical trial
activity and to contract manufacturing. We anticipate that
this rate of growth will be sustained as the pace of innovation
in the biotechnology and pharmaceuticals industries gathers
momentum. The biotechnology industry is especially well
capitalised at present and will look to deploy that capital
through clinical trial development and, hopefully, through
to commercialisation. The greatest, near-term beneficiaries
of this trend are the contract research organisations
which provide a multitude of services including pre-clinical
research, clinical research, clinical trial management and
pharmacovigilance. The sector has also experienced some
consolidation during the reporting period with life sciences
tools and services company Thermo Fisher looking to acquire
PPD and Icon looking to acquire PRA Health Sciences.
Whilst the benefits of safe and effective vaccination
programmes should never be understated, it is perhaps the
potential impact of effective diagnostics that could be more
important for healthcare systems in the long run. Advanced
diagnostic solutions enable clinicians to make critical decisions
for their patients earlier, more accurately, and with greater
confidence. Improved decision-making benefits not only
individual patients but also society as a whole. Healthcare
systems, under increasing pressure to control costs, can use
limited resources more efficiently while, at the same time,
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202116
Strategic Report
Investment Manager’s Report continued
increasing access and driving better outcomes. Encouragingly,
COVID-19 has accelerated the investment in diagnostics
infrastructure, with labour-efficient automated machines at
the forefront. With greater infrastructure in place, it is hoped
that testing menus will expand and that we will see broader
adoption of diagnostics globally.
The remaining three themes of innovation, consolidation
and emerging markets are no less important than the three
discussed above, but possibly less influenced by the COVID-19
pandemic. The healthcare industry is highly innovative, is well
capitalised and will continue to push scientific boundaries in
the search for novel solutions to meet unmet medical needs.
The contribution to science and society from the COVID-19
vaccines based on mRNA technology is clear, the big question
now becomes, “how widely can the technology be used?”.
2021 also witnessed two other potentially game-changing
breakthroughs: the first in the field of gene editing with
US company, Intellia Therapeutics, disclosing the first ever
clinical data supporting the safety and efficacy of in vivo
CRISPR genome editing in humans; the second in the field of
obesity, with NovoNordisk’s Wegovy enjoying a phenomenal
early launch. The drug works by mimicking a hormone called
glucagon-like peptide-1, or GLP-1, which delays gastric
emptying, increases gastric volumes and suppresses appetite.
In a highly fragmented industry, with strong balance sheets
and low costs of debt, consolidation is likely to continue to be
an important theme for the healthcare industry. Management
teams are looking to augment their internal assets with
complementary assets and technologies. The Company has
been the beneficiary of four proposed acquisitions during the
reporting period. In chronological order, PRA Health Sciences
was the subject of a bid from contract research organisation
peer, Icon. Contract research organisation PPD is also in the
process of being acquired by Thermo Fisher, under-pinning
our view that the contract research organisation industry
has a prolonged growth runway. Swedish Orphan Biovitrum
and Hill-Rom Holdings were also the subject of bids. In early
September, private equity firm Advent and Singapore wealth
fund GIC, offered an all-cash bid of 235 Swedish krona per
share to acquire Swedish Orphan Biovitrum, a company
where we believe the pipeline assets to be under-appreciated
by the market. Baxter International’s decision to acquire
Hill-Rom Holdings accelerates the company’s connected care
strategy, is accretive to top and bottom-line growth and is
expected to generate a high single-digit ROIC by year five.
We expect emerging markets to continue to be an important
source of growth for a number of sub-sectors including
biopharmaceuticals, life sciences tools and services, medical
devices and contract research organisations. Many emerging
markets are not just investing heavily in ensuring widespread
access to healthcare but are also changing the way they
think about regulatory approvals, pricing and reimbursement.
Innovation is critical, but so is local manufacturing and a sales
reach that can access volumes during inevitable periods of
pricing pressure.
Positioning and process; Constructive on
facilities, distributors and technology
As at 30th September 2021, the main overweight sub-sector
positionings are in healthcare facilities, managed care, healthcare
distributors, healthcare equipment and supplies and healthcare
technology. These correlate with three of the key investment
themes, namely disruption of healthcare delivery, outsourcing
and innovation, but are also consistent with the concept of
sustainability by improving the efficiency of healthcare delivery
and expanding access to care. From a healthcare facilities
perspective, the investments here are biased towards those
providing access to healthcare services in the lowest cost settings
such as home healthcare, hospital at home and hospice at
home. The managed care companies will also play a pivotal role
in ensuring that their members access care in the lowest-cost
settings. The Company also has exposure to behavioural health
services, where we have sadly seen a huge jump in demand
due to the pandemic. On the healthcare distribution side, this
is effectively outsourcing of delivery by manufacturers which
has been commonplace for years with therapeutics. More
recently, this has been extended to distribution including sales
and marketing on the medical device side and also to increased
provision of services on specialty pharmaceuticals, which are
typically much more challenging to manage.
Healthcare equipment, whilst continuing to innovate in
areas such as minimally invasive surgery, robotics, remote
monitoring and connected care, should also benefit from
patients returning to the healthcare system to address their
medical needs which have been put on hold during the
COVID-19 pandemic. Healthcare supplies exposure has been
increased and reflects innovation and volume recovery in the
ophthalmology and dental sectors. On the ophthalmology side,
the treatment of myopia is a new focus, with new products
being launched in the contact lens category. To highlight
the unmet need, more than 80% of children in China have
myopia. Lastly, healthcare technology is seeing extensive
innovation, which in the years to come will make healthcare
more sustainable and much more productive, a necessity
considering the current cost of running healthcare systems.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 17
Strategic Report
Biotechnology exposure was reduced to reflect the challenges
that large capitalisation companies face in this sub-sector
with anaemic growth, limited pipelines and upcoming patent
expiries. Exposure has been maintained in mid capitalisation
and small capitalisation through the Innovation portfolio.
September 2020
-15% -10% -5% 0% 5% 10%
Healthcare Facilities
Managed Healthcare
Healthcare
Distributors
Healthcare Supplies
Apparel, Accessories
& Luxury Goods
Healthcare Equipment
Metal & Glass
Containers
Biotechnology
Healthcare Technology
Healthcare Services
Life Sciences Tools
& Services
Pharmaceuticals
September 2021
-15% -10% -5% 0% 5% 10%
Healthcare Facilities
Managed Healthcare
Healthcare
Distributors
Healthcare Supplies
Apparel, Accessories
& Luxury Goods
Healthcare Equipment
Metal & Glass
Containers
Biotechnology
Healthcare Technology
Healthcare Services
Life Sciences
Tools & Services
Pharmaceuticals
30 September 2020
Sub-sector weightings relative to
benchmark
Source: Polar Capital.
30 September 2021
Sub-sector weightings relative to
benchmark
September 2020
-15% -10% -5% 0% 5% 10%
Healthcare Facilities
Managed Healthcare
Healthcare
Distributors
Healthcare Supplies
Apparel, Accessories
& Luxury Goods
Healthcare Equipment
Metal & Glass
Containers
Biotechnology
Healthcare Technology
Healthcare Services
Life Sciences Tools
& Services
Pharmaceuticals
September 2021
-15% -10% -5% 0% 5% 10%
Healthcare Facilities
Managed Healthcare
Healthcare
Distributors
Healthcare Supplies
Apparel, Accessories
& Luxury Goods
Healthcare Equipment
Metal & Glass
Containers
Biotechnology
Healthcare Technology
Healthcare Services
Life Sciences
Tools & Services
Pharmaceuticals
Source: Polar Capital.
Note: Sector exposure refers to the extent to which the Fund is overweight or underweight in each sector compared (relative) to the index (MSCI All Country World Index/Healthcare).
M&A, which was predicted to have been a feature for the
healthcare sector over the last 12 months, has been extremely
quiet, especially in the biotechnology sphere, but we expect
that trend to reverse at some point and continue to believe
that consolidation will be an important investment theme. Life
sciences tools and services exposure has been reduced, largely
because outperformance has led to higher valuations which
are harder to justify. The fundamentals in biotechnology are
in rude health, and as a collective they continue to be very
committed to R&D and sustainability, which we acknowledge is
an increasing area of focus for investors.
Pharmaceuticals remain a significant underweight in the
portfolio although greater exposure to these stocks could be
justified in a more defensive market later in the economic
cycle. The pharmaceutical sector continues to invest heavily in
R&D, and continues to contribute significantly to key scientific
breakthroughs, but is challenged with mature margins, anaemic
growth profiles and a raft of upcoming patent expiries.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202118
Strategic Report
Investment Manager’s Report continued
Sector Exposure at 30 September 2021 30 September 2020
Healthcare Equipment 23.4% 21.3%
Pharmaceuticals 23.0% 25.1%
Biotechnology 14.8% 22.6%
Managed Healthcare 11.8% 8.2%
Healthcare Facilities 7.2% 1.5%
Healthcare Supplies 6.3% 3.8%
Life Sciences Tools & Services 5.4% 12.5%
Healthcare Distributors 4.9% 4.2%
Apparel, Accessories & Luxury Goods 2.7% -
Healthcare Technology 2.3% 3.4%
Metal & Glass Containers 2.3% -
Healthcare Services 1.8% 2.7%
Other net liabilities (5.9%) (5.3%)
Total 100.0% 100.0%
Geographical Exposure at 2021
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Geographical Exposure at 2020
Sector Exposure at 2021
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Sector Exposure at 2020
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Geographical Exposure at 2021
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Geographical Exposure at 2020
Sector Exposure at 2021
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Sector Exposure at 2020
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Sector Exposure
2021
2020
Source: Polar Capital.
Geographical Exposure at 30 September 2021 30 September 2020
United States 69.0% 68.0%
United Kingdom 7.3% 3.7%
France 6.2% 3.9%
Netherlands 5.2% 5.3%
Denmark 4.6% 6.5%
Germany 2.7% 5.2%
Switzerland 2.5% 4.8%
Australia 2.4% -
Belgium 2.3% -
Ireland 1.9% 5.5%
Japan 1.8% 2.4%
Canada - -
Other net liabilities (5.9%) (5.3%)
Total 100.0% 100.0%
Geographical Exposure at 2021
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Geographical Exposure at 2020
Sector Exposure at 2021
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Sector Exposure at 2020
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Geographical Exposure at 2021
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Canada
Japan
Ireland
Belgium
Australia
Switzerland
Germany
Denmark
Netherlands
France
United Kingdom
United States
Geographical Exposure at 2020
Sector Exposure at 2021
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Sector Exposure at 2020
Healthcare Services
Metal & Glass Containers
Apparel, Accessories & Luxury Goods
Healthcare Technology
Healthcare Supplies
Healthcare Distributors
Life Sciences Tools & Services
Healthcare Facilities
Managed Healthcare
Biotechnology
Pharmaceuticals
Healthcare Equipment
Geographical Exposure
2021
2020
Source: Polar Capital.
From a geographical perspective, changes to the portfolio in the period were limited, with a reduction in Denmark and an increase
in the UK driven by a change in selection of two pharmaceutical stocks at the higher end of the market capitalisation scale.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 19
Strategic Report
Whilst the previous charts focus on sub-sector and
geographical weightings, bottom-up stock selection is
central to the team’s investment process. The healthcare
industry is extremely complicated and dynamic, and subject
to varied newsflow, often hyped, which lends itself to active
management. We look to take advantage of dislocations
between near-term valuations and medium-term returns. Our
own in-house idea generation is complemented by input from
external research, with conviction built through company
meetings, investor conferences and dialogue with expert
physician and consultant networks. The team also has strong
valuation discipline looking at a large number of metrics
including sales and earnings revisions, price-to-earnings,
enterprise values, free-cash flow and returns on invested
capital.
Zero Dividend Preference shares;
A vehicle for enhancing returns
In terms of top-down strategy for the Company’s portfolio,
the team does allocate time to the macro-outlook,
which feeds into positioning in terms of gearing, market
capitalisation, sub-sector and geographical exposure. Third
party research is utilised to aid this work, alongside many key
risk indicators that are monitored on a regular basis.
Net Gearing
The gearing afforded to the Company by its ZDPs is used
to enhance risk-adjusted returns. Throughout the last
12 months, gearing has been changed according to the risk
outlook. Net gearing was reduced from just north of 5%
at the start of the financial year to approximately 2% by
the calendar year-end, due to concerns of over-exuberance
in the small and mid-capitalisation stocks, which put the
performance of the Innovation portfolio at risk. Since the
start of 2021 gearing was increased mainly to a range of
between 5-6% due to a more bullish outlook for established
large-capitalisation healthcare companies, especially those at
the higher-end of the quality scale. As we exited the 2021
financial year gearing was 6.04%, a figure that reflects not
just our constructive view on the healthcare sector, but also
the balance of tailwinds and headwinds as we move through
the mid-phase of the market cycle.
Environmental Social and Governance;
Focusing on sustainability
Sustainability is central to the team’s ESG philosophy.
Healthcare is a long-term, secular growth industry as an
ageing population around the world drives the demand and
the need for increased healthcare provision. In 2018, global
healthcare spending was $8.3 trillion, accounting for 10%
of GDP (World Health Organization, 2020). Sustainable
healthcare delivery for growing and ageing populations is an
important part of the United Nations (“UN”) 2030 Agenda
for Sustainable Development; specifically, Goal 3 is to “ensure
healthy lives and promoting well-being for all at all ages.”
We believe that a sustainable healthcare system is one that
delivers better healthcare to more people for less money.
Healthcare companies with products, technologies and/or
services that deliver demonstrable value to drive improvements
in efficiency are not only well-placed for growth but are also
likely to play a role in creating a sustainable healthcare system.
Indeed, sustainable healthcare delivery has been one of the
dominant underlying investment themes for the Company for
some time now. Specifically, we focus on three characteristics
of sustainable healthcare delivery:
1) improvement in clinical outcomes for patients through
innovation,
2) improvement in the affordability and accessibility of
healthcare services; and
3) improvement in the efficiency of the delivery of healthcare
services.
0
1
2
3
4
5
6
7
8
Sep
2021
Aug
2021
Jul
2021
Jun
2021
May
2021
Apr
2021
Mar
2021
Feb
2021
Jan
2021
Dec
2020
Nov
2020
Oct
2020
Sep
2020
Source: Polar Capital.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202120
Strategic Report
Investment Manager’s Report continued
Investment Portfolio
Portfolio Watchlist
Healthcare Sustainability
Investable Universe
Sector Focus
Normative Screening
Negative Exclusion
Positive Selection Criteria
Company Due Diligence
Financial Analysis
ESG Integration
Based on proprietary
ESG model:
• Score trends (negative
and positive revision)
• Scores below
satisfactory levels
• Rate stocks not covered
by MSCI
Engagement informed
by:
• Key issues highlighted in
MSCI Reports
• Score trends and absolute
levels
• In-house company
analysis
Voting in line with our
ESG principles
ESG Process
Total Investment Universe
Ongoing ESG AnalysisActive Ownership
The Company has a well-defined and disciplined process
to ensure our investments are aligned with our core
sustainability characteristics. After the initial screenings of
the investment universe against norms based standards such
as the UN Global Compact, the UN Guiding Principles on
Business and Human Rights and the International Labour
Organisation’s conventions, we use in-house research and
third-party reports to continuously monitor the ESG profiles
of the Company’s holdings, and their alignment with the
core sustainability characteristics. Particular attention is paid
to businesses that fail to meet certain standards and are
involved in practices that could contradict the Company’s ESG
philosophy, and to businesses that positively align with the
Company’s core sustainability characteristics.
Although our ongoing ESG analysis is an important part
of our process, we believe that engaging directly with
companies on sustainability, using internal and third-party
reports such as MSCI and ISS, is the most productive course
of action we can take and that engagement produces the
highest quality outcomes on sustainability. Interactions are
systematically logged in an internal database as a matter of
record. The Managers also have regular interactions with
Polar Capital’s Head of Sustainability.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 21
Strategic Report
Outlook for healthcare in a post COVID-pandemic world
The impact of the COVID-19 pandemic on healthcare will
be felt for many years, on top of the fact that the virus is
likely to become endemic. In terms of structural changes,
there has been a big pick-up in R&D in pharmaceutical and
biotech companies, not just on infectious diseases, but across
other areas in response to the innovation and progress that
has been witnessed over the last five years. The enormous
amount of money that has moved into life sciences venture
capital over the last two years is evidence of the enthusiasm
around the industry and the benefits that it can bring through
the discovery of new drugs that can dramatically change
patients’ lives. The impact of vaccine development against
COVID-19 has been the accelerant for greater R&D spend and
there will be many companies that benefit, particularly those
focused in life sciences tools and services, clinical research
organisations and contract manufacturers.
In the shorter term, the impact on supply chains is an issue
as much for the healthcare sector as it is for other industries,
with costs having jumped considerably since before the
pandemic. Also on the labour side, the pandemic has driven
a sea change in what employees want and expect from their
jobs, which is having a significant impact on healthcare.
A recently published survey highlighted that 18% of US
healthcare workers quit their jobs during the pandemic, with
79% of healthcare professionals saying that the national
employee shortage has affected them and their place of
work. Not only are positions being left vacant, but providers
are also seeing a significant spike in wages. This is likely to
remain a challenge for many organisations for the next 12 to
18 months.
The disruption in healthcare delivery that started several years
ago has been another area that has seen an acceleration
driven by the pandemic. The shift of care to lower cost
settings and away from the large in-patient hospitals is a
must if healthcare systems are to become more efficient.
With hospitals being at the centre of managing patients
affected by COVID-19, care for other conditions has naturally
moved away from the hospital with other providers such
as ambulatory care, outpatient and home healthcare
experiencing a significant boost in demand. This trend will
continue, but many of the companies in these areas are being
impacted by the wage inflation and employee shortages, a
situation that needs to improve if they are to cope with the
acceleration in demand.
Backlogs have increased dramatically due to the pressure
of the pandemic on healthcare system, most visibly on the
elective side for procedures such as hips and knees. Here in
the UK, for example, the British Medical Association estimates
that between April 2020 and July 2021, there were 3.79
million fewer elective procedures and 26.02 million fewer
outpatient attendances. Further, the total waiting list currently
sits at an alarming, record high of 5.61 million, and continues
to grow. The “invisible” backlog is perhaps more concerning,
and is the consequence of the lack of screening and testing
for diseases such as cancer during the last 18 months which,
sadly, will likely cause an increase in more serious and later
stage disease in the months and years ahead. An article
published in the Journal of Clinical Pathology referenced that
cancer diagnoses in an Italian pathology unit fell by 39% in
2020 compared with the average number recorded in 2018
and 2019. Prostate cancer (-75%), bladder cancer (-66%),
and colorectal cancer (-62%) had the greatest decreases. This
is of course very concerning for the patients involved, but
will effectively lead to high levels of demand for healthcare
services for many years to come.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202122
Strategic Report
Conclusion
Whilst we do have some sympathy with the view
that the near-term outlook for healthcare, and
indeed the broader markets, is carrying some
uncertainty due to the COVID-19 virus, we have
a high level of conviction that the healthcare
industry will continue to find innovative solutions,
will continue to work on improving access to
care and will look to drive efficiencies across the
healthcare continuum. If successful, an optimistic
stance about the medium-term prospects for the
sector is the right one. In terms of timing, we
believe that now could be an interesting time to
engage for the following reasons:
• The healthcare industry’s fundamentals are
in rude health, with many sub-sectors having
even stronger foundations now than before the
COVID-19 pandemic.
• The sector remains under-owned and under-
appreciated, with allocations to the sector near
decade-lows.
• Relative and absolute valuations in the US are
attractive and supportive, respectively.
As we look forward into the current financial
year, we remain confident, with a focus on
sustainability and on our six key investment
themes, that the diverse and creative nature of
the healthcare industry will yield a multitude of
compelling investments, which we expect to
generate attractive returns for the Company’s
shareholders.
James Douglas and Gareth Powell
Co-Managers
16 December 2021
Investment Manager’s Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 23
Strategic Report
Ten Largest Investments
As at 30 September 2021
Ranking Market Value £'000 % of total net assets
2021 2020 Stock Sector Country 2021 2020 2021 2020
1 (-)
Johnson & Johnson
Pharmaceuticals United States 29,093 - 7.5% -
Johnson & Johnson is a global healthcare company that develops medical devices, pharmaceuticals, and consumer packaged goods.
2 (31)
Managed Healthcare United States 24,053 5,898 6.2% 1.8%
UnitedHealth is an American managed healthcare and insurance company working to build a modern, high-performing health
system through improved access, affordability, outcomes and experiences.
3 (-)
Pharmaceuticals United Kingdom 19,954 - 5.2% -
AstraZeneca is a global pharmaceutical company pushing the boundaries of science to deliver life-changing medicines.
4 (4)
Pharmaceuticals United States 15,580 14,393 4.0% 4.4%
Bristol Myers Squibb is a pharmaceutical company that manufactures prescription pharmaceuticals and biologics in several therapeutic
areas, including cancer, HIV/AIDS, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis, and psychiatric disorders.
5 (5)
Pharmaceuticals France 13,629 12,825 3.5% 3.9%
Sanofi is a diversified healthcare company that manufactures and distributes pharmaceuticals, vaccines and has also a consumer
health division. Therapeutic areas of interest within the pharmaceutical division include diabetes, auto-immune disorders, multiple
sclerosis, and oncology.
6 (15)
Healthcare Equipment United States 13,582 9,696 3.5% 3.0%
Baxter International is an American healthcare company primarily focused on developing products to treat kidney disease, and other
chronic and acute medical conditions.
7 (22)
Managed Healthcare United States 11,618 8,526 3.0% 2.6%
Centene operates local healthcare programmes and offers a range of health insurance solutions. It also contracts with other
healthcare and commercial organizations to provide specialty services.
8 (-)
Healthcare Equipment United States 10,912 - 2.8% -
Steris is a leading provider of infection prevention and other procedural products and services. The company is focused primarily on
healthcare, pharmaceutical and medical device customers.
9 (17)
Biotechnology United States 10,910 9,335 2.8% 2.9%
Horizon Therapeutics plc is a biopharmaceutical company focused on researching, developing, and commercializing medicines that
address critical needs for people impacted by rare and rheumatic diseases.
10 (-)
Healthcare Equipment United States 10,810 - 2.8% -
Boston Scientific is a medical device company with a focus on non-invasive treatment – primarily of cardiovascular, respiratory,
neurological, digestive, urological and pelvic conditions.
Total – 10 Largest Investments 160,141 41.3%
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 23
Strategic Report
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202124
Strategic Report
Full Investment Portfolio
As at 30 September 2021
Ranking Market Value £’000 % of total net assets
2021 2020 Stock Sector Country 2021 2020 2021 2020
1 (-) Johnson & Johnson Pharmaceuticals United States 29,093 - 7.5% -
2 (31) UnitedHealth Managed Healthcare United States 24,053 5,898 6.2% 1.8%
3 (-) AstraZeneca Pharmaceuticals United Kingdom 19,954 - 5.2% -
4 (4) Bristol Myers Squibb Pharmaceuticals United States 15,580 14,393 4.0% 4.4%
5 (5) Sanofi Pharmaceuticals France 13,629 12,825 3.5% 3.9%
6 (15) Baxter International Healthcare Equipment United States 13,582 9,696 3.5% 3.0%
7 (22) Centene Managed Healthcare United States 11,618 8,526 3.0% 2.6%
8 (-) Steris Healthcare Equipment United States 10,912 - 2.8% -
9 (17) Horizon Pharma Biotechnology United States 10,910 9,335 2.8% 2.9%
10 (-) Boston Scientific Healthcare Equipment United States 10,810 - 2.8% -
Top 10 investments 160,141 41.3%
11 (21) Amerisourcebergen Healthcare Distributors United States 10,721 8,545 2.8% 2.6%
12 (-) Siemens Healthineers Healthcare Equipment Germany 10,450 - 2.7% -
13 (-) Hologic Healthcare Equipment United States 10,401 - 2.7% -
14 (12) Koninklijke Philips Healthcare Equipment Netherlands 10,277 10,071 2.7% 3.1%
15 (-) Essilor International
Apparel, Accessories & Luxury
Goods
France 10,241 - 2.7% -
16 (-) Molina Healthcare Managed Healthcare United States 9,961 - 2.6% -
17 (25) ArgenX Biotechnology Netherlands 9,703 7,216 2.5% 2.2%
18 (-) Envista Healthcare Equipment United States 9,619 - 2.5% -
19 (-) Acadia Healthcare Healthcare Facilities United States 9,595 - 2.5% -
20 (-) Alnylam Pharmaceuticals Biotechnology United States 9,312 - 2.5% -
Top 20 investments 260,421 67.5%
21 (-) Ramsay Health Care Healthcare Facilities Australia 9,158 - 2.4% -
22 (-) Cytokinetics Biotechnology United States 8,974 - 2.3% -
23 (-) Encompass Health Healthcare Facilities United States 8,893 - 2.3% -
24 (-) AptarGroup Metal & Glass Containers United States 8,852 - 2.3% -
25 (-) UCB Pharmaceuticals Belgium 8,799 - 2.3% -
26 (-) CooperCompanies Healthcare Supplies United States 8,776 - 2.3% -
27 (9) Avantor Life Sciences Tools & Services United States 8,637 10,948 2.2% 3.4%
28 (13) Bio-Rad Laboratories Life Sciences Tools & Services United States 8,439 9,867 2.2% 3.0%
29 (37) Biohaven Pharmaceutical Biotechnology United States 8,411 3,821 2.2% 1.2%
30 (-) GN Store Nord Healthcare Equipment Denmark 7,991 - 2.1% -
Top 30 investments 347,351 90.1%
31 (-) Alcon Healthcare Supplies Switzerland 7,678 - 2.0% -
32 (-) Amedisys Healthcare Services United States 6,856 - 1.8% -
33 (24) Align Technology Healthcare Supplies United States 5,922 7,615 1.5% 2.3%
34 (-) Genmab Biotechnology Denmark 5,712 - 1.5% -
35 (43) Uniphar Healthcare Distributors Ireland 5,438 193 1.4% 0.1%
36 (30) Medley Healthcare Technology Japan 4,404 5,905 1.1% 1.8%
37 (18) Syneos Health Life Sciences Tools & Services United States 3,879 8,948 1.0% 2.8%
38 (35) Intelligent Ultrasound Healthcare Technology United Kingdom 3,811 4,062 1.0% 1.2%
39 (-) LivaNova Healthcare Equipment United Kingdom 3,810 - 1.0% -
40 (33) Zealand Pharma Biotechnology Denmark 3,807 4,742 1.0% 1.5%
Top 40 investments 398,668 103.4%
41 (39) Ship Healthcare Healthcare Distributors Japan 2,882 1,850 0.7% 0.6%
42 (36) Axonics Modulation Technologies Healthcare Equipment United States
2,180 3,896 0.6% 1.2%
43 (32) Quotient Healthcar
e Supplies Switzerland 2,123 4,874 0.5% 1.5%
44 (42) Avadel Pharmaceuticals Pharmaceuticals Ireland 2,018 1,105 0.5% 0.3%
45 (41) Renalytix AI Healthcare Technology United States 460 1,523 0.1% 0.4%
46 (-) Verici DX Healthcare Technology United Kingdom 230 - 0.1% -
Total equities 408,561 105.9%
Other net liabilities (22,833) (5.9%)
Net assets 385,728 100.0%
Note - Sectors are from the GICS (Global Industry Classification Standard).
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 25
Strategic Report
Strategic Report
The Strategic Report section of this Annual Report comprises the
Chair’s Statement, the Investment Manager’s Report, including
information on the portfolio, and this Strategic Report. This
Report has been prepared to provide information to shareholders
on the Company’s strategy and the potential for this strategy to
succeed, including a fair review of the Company’s performance
during the year ended 30 September 2021, the position of the
Company at the year end and a description of the principal risks
and uncertainties. Throughout the Strategic Report there are
certain forward-looking statements made by the Directors in
good faith based on the information available to them at the
time of their approval of this Report. Such statements should
be treated with caution due to inherent uncertainties, including
both economic and business risk factors, underlying any such
forward-looking information.
History
In June 2017 a reconstruction of the Company, change in
investment mandate and change of name was implemented
having been approved by shareholders. Further information
is provided within the Shareholder Information section
on page 101 and on the Company’s website www.
polarcapitalglobalhealthcaretrust.co.uk. Following the
reconstruction and in the absence of any prior proposals, the
Articles of Association require the Directors to put forward
at the first Annual General Meeting to be held after 1 March
2025, a resolution for the voluntary winding up of the
Company and the appointment of a liquidator. Members voting
in favour, whether in person or by proxy, shall collectively have
sufficient votes, irrespective of number, to pass the resolution.
The Board remains positive on the outlook for healthcare
and the Company will continue to pursue its Investment
Objective in accordance with the stated investment policy and
strategy. Future performance is dependent to a significant
degree on the world’s financial markets and their reactions to
economic events and other geo-political forces. The Chair’s
Statement and the Investment Manager’s Report comment
on the development and performance of the business during
the financial year, the outlook and potential risks to the
performance of the portfolio.
Business Model and Regulatory
Arrangements
The Company’s business model follows that of an externally
managed investment trust providing Shareholders with access
to a global portfolio of healthcare stocks.
The Company is designated an Alternative Investment Fund
(‘AIF’) under the Alternative Investment Fund Management
Directive (‘AIFMD’) and, as required by the Directive, has
contracted with Polar Capital LLP to act as the Alternative
Investment Fund Manager (‘AIFM’) and HSBC Bank Plc to act
as the Depositary.
Both the AIFM and the Depositary have responsibilities
under AIFMD for ensuring that the assets of the Company
are managed in accordance with the investment policy and
are held in safe custody. The Board remains responsible for
setting the investment strategy and operational guidelines as
well as meeting the requirements of the Financial Conduct
Authority (‘FCA’) Listing Rules and the Companies Act 2006.
The AIFMD requires certain information to be made available
to investors in AIFs before they invest and requires that
material changes to this information be disclosed in the
Annual Report of each AIF. Investor Disclosure Documents,
which set out information on the Company’s investment
strategy and policies, gearing, risk, liquidity, administration,
management, fees, conflicts of interest and other Shareholder
information are available on the Company’s website.
There have been no material changes to the information
requiring disclosure. Any information requiring immediate
disclosure pursuant to the AIFMD will be disclosed to the
London Stock Exchange. Statements from the Depositary and
the AIFM can be found on the Company’s website.
The Company seeks to manage its portfolio in such a
way as to meet the tests in section 1158 and 1159 of the
Corporation Tax Act 2010 (as amended by Section 49(2)
of the Finance Act 2011) and continue to qualify as an
investment trust. This qualification permits the accumulation
of capital within the portfolio without any liability to UK
Capital Gains Tax. Further information is provided in the
Directors’ Report on pages 38 to 40.
Investment Objective and Policy
The Company’s Investment Objective is to generate capital
growth through investments in a global portfolio of
healthcare stocks.
The Company will seek to achieve its objective by investing
in a diversified global portfolio consisting primarily of listed
equities. The portfolio is diversified by geography, industry
sub-sector and investment size.
The portfolio will comprise a single pool of investments, but for
operational purposes, the Investment Manager will maintain
a Growth portfolio and an Innovation portfolio. Innovation
companies are broadly defined by the Investment Manager as
small/mid cap innovators that are driving disruptive change,
giving rise not only to new drugs and surgical treatments but
also to a transformation in the management and delivery of
healthcare. The Growth portfolio is expected to comprise a
majority of the Company’s assets. For this purpose, once an
innovation stock’s market capitalisation has risen above US
$5bn, it will ordinarily then be treated as a growth stock.
The relative ratio between the two portfolios may vary
over the life of the Company due to factors such as asset
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202126
Strategic Report
growth and the Investment Manager’s views as to the risks
and opportunities offered by investments in each pool and
across the combined portfolio. The original make-up of the
combined portfolio was of up to 50 stocks, with growth
stocks being primarily US listed. In 2018, the Board authorised
an increase to the number of stocks able to be held to 65 and
confirmed there is no restriction on geographical exposure.
The combined portfolio will therefore be made up of interests
in up to 65 companies, with no single investment accounting
for more than 10% (or 15% in the case of an investment
in another fund managed by the Investment Manager) of
the Gross Assets at the time of investment. The innovation
portfolio may include stocks which are neither quoted nor
listed on any stock exchange but the exposure to such stocks,
in aggregate, will not exceed 5% of Gross Assets at the time
of investment. In the event that the Investment Manager
launches a dedicated healthcare innovation fund, the
Company’s exposure to innovation stocks may be achieved
in whole or in part by an investment in that fund. In any
event, the Company will not, without the prior consent of
the Board, acquire more than 15% of any such healthcare
innovation fund’s issued share capital.
The Board
As the day to day management of the Company is
outsourced to service providers the Board’s focus at each
meeting is on investment performance, including the outlook
and strategy. The Board also considers the management
and provision of services received from third-party service
providers and the risks inherent in the various matters
reviewed and discussed.
Strategy and Investment Approach
The Investment Manager’s investment process is primarily
based on bottom-up fundamental analysis. The Investment
Manager uses a qualitative filter consisting of key criteria
to build up a watch-list of securities that is monitored on
a regular basis. Due diligence is then carried out on the
individual securities on the watch-list. Each individual holding
is assessed on its own merits in terms of risk: reward including
ESG criteria. While the Company expects normally to be
fully or substantially invested, the Company may hold cash
or money market instruments pending deployment in the
portfolio. In addition, it will have the flexibility, when the
Investment Manager perceives there to be actual or expected
adverse equity market conditions, to maintain cash holdings
as it deems appropriate.
Service Providers
Polar Capital LLP has been appointed to act as the Investment
Manager and AIFM as well as to provide or procure company
secretarial services, marketing and administrative services,
including accounting, portfolio valuation and trade settlement
which it has arranged to deliver through HSBC Securities
Services (“HSS”).
The Company also contracts directly, on terms agreed
periodically, with a number of third parties for the provision
of specialist services, including:
• Panmure Gordon & Co as Corporate Broker;
• Herbert Smith Freehills LLP as Solicitors;
• HSBC Securities Services as Custodian and Depositary;
• Equiniti Limited as Share Registrars;
• RD: IR for Investor Relations and Shareholder Analysis;
• Camarco as PR advisors;
• PricewaterhouseCoopers LLP as independent Auditors;
• Huguenot Limited as website designers and internet
hosting services; and
• Perivan Limited as designers and printers for shareholder
communications.
Gearing
Following the restructure of the Company in June 2017,
the Company maintains long-term structural gearing in the
form of a loan from the wholly owned subsidiary PCGH ZDP
Plc. No short-term borrowings have been made and there
are no arrangements made for any bank loans. The Articles
of Association provide that the Company may borrow up
to 15% of its Net Asset Value at the time of drawdown, for
tactical deployment when the Board believes that gearing will
enhance returns to shareholders. Further details of the loan
provided by the subsidiary are given on pages 76 and 77.
Benchmark
The Company will measure the Investment Manager’s
performance against the MSCI ACWI Healthcare Index
total return, in sterling with dividends reinvested. Although
the Company has a benchmark, this is neither a target
nor determinant of investment strategy. The portfolio may
diverge substantially from the constituents of this index. The
purpose of the Benchmark is to set a reasonable measure of
performance for shareholders above which the Investment
Manager earns a share for any outperformance it has delivered.
Strategic Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 27
Strategic Report
Performance and Key Performance Objectives
The Board appraises the performance of the Company and the Investment Manager as the key supplier of services to the
Company against key performance indicators (‘KPIs’). The objectives of the KPIs comprise both specific financial and Shareholder
related measures. These KPI’s have not differed from the prior year.
KPI Control Process Outcome
The provision of investment
returns to shareholders
measured by long- term
NAV growth and relative
performance against the
Benchmark.
The Board reviews the performance of the portfolio in
detail and hears the views of the Investment Manager at
each meeting.
The Board also considers the value delivered to
shareholders through NAV growth and dividends paid.
As at 30 September 2021, the total net assets of the
Company amounted to £385,728,000. The Company’s
NAV total return, over the year ended 30 September
2021, was 19.46% while the Benchmark Index over
the same period increased by 13.40%. The Company’s
performance is explained further in the Investment
Manager’s Report. Since restructuring on 20 June
2017, the total return of the NAV was 52.28% and the
benchmark was 53.42%. Investment performance is
explained in the Chair ’s Statement and the Investment
Manager’s Report.
The achievement of the
dividend policy.
Financial forecasts are reviewed to track income and
distributions.
Two dividends have been paid or are payable in respect
of the year ended 30 September 2021 totalling 2.00 p
per share (2020: two dividends totalling 2.00p per share).
The Company’s focus remains on capital growth. While
the Company continues to aim to pay two dividends
per year these are expected to be a small part of a
shareholder total return.
Monitoring and reacting
to issues created by the
discount or premium of
the ordinary share price to
the NAV per ordinary share
with the aim of reduced
discount volatility for
shareholders.
The Board receives regular information on the
composition of the share register including trading
patterns and discount/premium levels of the Company’s
ordinary shares. The Board discusses and authorises the
issue or buy back of shares when appropriate.
The Board is aware of the vulnerability of a sector
specialist investment trust to a change in investor
sentiment to that sector. While there is no formal
discount policy the Board discusses the market factors
giving rise to any discount or premium, the long or
short-term nature of those factors and the overall benefit
to Shareholders of any actions. The market liquidity is
also considered when authorising the issue or buy back
of shares when appropriate market conditions prevail.
A daily NAV per share, calculated in accordance with the
AIC guidelines is issued to the London Stock Exchange.
The discount of the ordinary share price to the NAV per
ordinary share at the year ended 30 September 2021
was 9.5% (2020: 13.1%).
During the year ended 30 September 2021, no new
shares were issued or bought back.
The number of shares in issue, as at the year end was
124,149,256 of which 2,879,256 were held in treasury.
The total voting rights of the Company are 121,270,000
shares.
To qualify and continue to
meet the requirements for
sections 1158 and 1159 of
the Corporation Tax Act
2010 (‘investment trust
status’).
The Board receives regular financial information which
discloses the current and projected financial position
of the Company against each of the tests set out in
sections 1158 and 1159.
The Company was granted investment trust status
annually up to 1 October 2014 and is deemed to be
granted such status for each subsequent year subject
to the Company continuing to satisfy the conditions of
section 1158 of the Corporation Tax Act 2010 and other
associated ongoing requirements.
The Directors confirm that the tests have been met in the
financial year ended 30 September 2021 and believe that
they will continue to be met.
To ensure the efficient
operation of the Company
by monitoring the services
provided by third party
suppliers, including the
Investment Manager, and
controlling ongoing charges.
The Board considers annually the services provided by the
Investment Manager, both investment and administrative,
and reviews on a cycle the provision of services from third
parties including the costs of their services.
The annual operating expenses are reviewed and any
non-recurring project related expenditure approved by the
Board.
The Board has received, and considered satisfactory,
the internal controls report of the Investment Manager
and other key suppliers including the contingency
arrangements to facilitate the ongoing operations of the
Company in the event of withdrawal or failure of services.
The ongoing charges for the year ended 30 September
2021 were 0.83%, compared to 1.01% the previous year.
Strategic Report
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 27
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202128
Strategic Report
Risk Management
The Board is responsible for the management of risks faced by the Company and, through delegation to the Audit Committee,
has established procedures to manage risk, oversee the internal control framework and determine the nature and extent of the
principal risks the Company is willing to take in order to achieve its long-term strategic objectives.
The Audit Committee carries out, at least annually, a robust assessment of the principal risks and uncertainties with the
assistance of the Investment Manager, continually monitors identified risks and meets to discuss both long-term and emerging
risks outside of the normal cycle of Audit Committee meetings.
A Risk management process has been established to identify and assess various risks, their likelihood and the possible severity
of impact then, considering both internal and external controls and factors that could provide mitigation, a post mitigation risk
impact score is determined. The Audit Committee has identified the key risks faced by the Company. During the year the Audit
Committee, in conjunction with the Board and the Investment Managers undertook a full review of the Company’s Risk Map
including the mitigating factors and controls to reduce the impact of the risks. The Committee continues to closely monitor
these risks along with any other emerging risks as they develop and implements mitigating actions as necessary. The key risks
which are those classified as having the highest risk impact score post mitigation are detailed below with a high-level summary
of the management through mitigation and status arrows to indicate any change in assessment over the past financial year.
The Principal risks are detailed on the following pages along with a high-level summary of their management through mitigation
and status arrows to indicate any change in assessment over the past financial year.
The Committee continues to monitor the continuing risks posed by COVID-19, which was classified as a Black Swan event in
2020. Further information on how the Committee has considered COVID-19 along with the other risks faced by the Company
when assessing the effect on the Company’s ability to operate as a going concern and the Company’s longer-term viability can
be found on pages 58 and 59 of the Report of the Audit Committee.
Risk Cycle
Monitoring
and Review
Identify Risk
Analyse Risk
Build Risk
Strategy
Manage Risks
Strategic Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 29
Strategic Report
Portfolio Management
Investment Performance Gearing
Description
Breach of Investment policy, Investment Manager unable to deliver
the Investment Objective leading to poor performance against the
benchmark or market/industry average.
Description
Inability to repay ZDP loan and inappropriate use of derivatives.
Assessment
Unchanged from previous year.
Assessment
Unchanged from previous year.
Mitigation
The Board seeks to mitigate the impact of such risks through the
regular reporting and monitoring of the Company’s investment
performance against its peer group, benchmark and other agreed
indicators of relative performance. A detailed annual review of the
investment strategy is undertaken by the Investment Manager with
the Board including analysis of investment markets and sector trends.
At each meeting the Board discusses developments in healthcare
and drug pipelines with the Investment Manager in addition to
the composition and diversification of the portfolio with sales
and purchases of investments and the degree of risk which the
Investment Manager incurs to generate investment returns.
Individual investments are discussed with the Investment Manager
as well as the Investment Manager’s general views on the various
investment markets and the healthcare sector in particular. Analytical
performance data and attribution analysis is presented by the
Investment Manager.
The Board is committed to a clear communication program to ensure
Shareholders understand the investment strategy. This is maintained
through the use of monthly factsheets which have a market
commentary from the Investment Manager as well as portfolio data,
an informative website as well as annual and half year reports.
Mitigation
The Board considered the benefits and drawbacks of the structural
debt at the time of restructuring and concluded that the ability to
lock-in an effective interest rate of 3% pa for the 7-year life would be
beneficial to investment returns, the Board remains of the same belief.
The asset cover necessary to repay the ZDP shares is reviewed at each
Board meeting. If any flexible gearing is contemplated the Board would
agree the overall levels of gearing with the AIFM. The arrangement
of bank facilities and drawing of funds under such arrangements are
controlled by the Board. Derivatives are considered as being a form
of gearing and a policy for their use has been agreed by the Board.
The deployment of any borrowed funds is based on the Investment
Manager’s assessment of risk and reward.
Discount/Premium Trading
Description
Persistent discount in excess of Board or Shareholder acceptable
levels.
Description
Execution of unauthorised trade/dealing error. Error or breach may
cause regulatory investigation leading to fines, reputational damage
and risk to investment trust status.
Assessment
Unchanged from previous year.
Assessment
Unchanged from previous year.
Mitigation
The Board regularly considers, in comparison to the sector and peers,
the level of premium and discount of the share price to the NAV and
ways to enhance Shareholder value including share issuance and buy
backs.
The Board has carefully monitored the discount level and market
movements during the COVID-19 pandemic and has discussed
performance with the Managers and advisers. The discount of
the Company narrowed during the year under review and as at
30 September 2021, the discount of the ordinary share price to
the NAV per ordinary share was 9.5% (2020: 13.1%). The Chair
has also met (virtually) with key shareholders to understand any
concerns and views as detailed in the Chair’s Statement and within
the s172 Report. Further detail on the performance and the impact
of COVID-19 and market movements on the Company is given in the
Investment Manager’s Report.
Mitigation
Investment limits and restrictions are encoded into the dealing and
operations systems of the Investment Manager and various oversight
functions are undertaken to ensure there is early warning of any
potential issue of compliance or regulatory matters.
Principal Risks and Uncertainties
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202130
Strategic Report
Operational Risk
Service Failure Cyber Risk
Description
Failure in services provided by the Investment Manager, Custodian,
Depositary or other service providers; Accounting, Financial or Custody
Errors resulting in regulatory investigation or financial loss, failure of
trade settlement, potential loss of Shareholder assets and investment
trust status.
Description
Cyber-attack causing disruption to or failure of operational and
accounting systems and processes provided by the Investment Manager
creating an unexpected event and/or adverse impact on personnel or
the portfolio.
Assessment
Unchanged from previous year.
Assessment
Unchanged from previous year.
Mitigation
The Board carries out an annual review of internal control reports
from suppliers which includes cyber protocols and disaster recovery
procedures. Due diligence and service reviews are undertaken with
third-party service providers including the Custodian and Depository.
A full review of the internal control framework is carried out at least
annually. Regular reporting is received by the Investment Manager
on behalf of the Board from the Depositary on the safe custody of
the Company’s assets. The Board undertakes independent reviews
of the Depositary and external Administrator services and additional
resources have been put in place by the Investment Manager.
Management accounts are produced and reviewed monthly, statutory
reporting and daily NAV calculations are produced by the external
Administrator and verified by the Investment Manager. Accounting
records are tested, and valuations verified independently as part of
the year-end financial reporting process.
Mitigation
The number, severity and success rate of cyber-attacks have increased
considerably over recent years, controls are however in place and the
Board proactively seeks to keep abreast of developments through
updates from representatives of the Investment Manger who
undertakes meetings with the relevant service providers. In light of
the COVID-19 pandemic and the lockdown measures introduced
by the UK Government, the Audit Committee once again sought
assurance from each of the Company’s service providers on the
resilience of their business continuity arrangements whilst the
majority of their employees worked remotely. These assurances and
the subsequent detailed updates that were given to the Committee
provided a satisfactory level of assurance that there had not been,
and there was no anticipation of any disruption in the ability of each
service provider to fulfil their duties as would typically be expected.
Key Man Shareholder Communications
Description
Loss of Investment Manager or other key management professionals.
Impact on investor confidence leading to widening of the discount
and/or poor performance creating a period of uncertainty and
potential termination of the Investment Management Agreement.
Description
Failure to effectively communicate significant events to the
shareholder and investor base.
Assessment
Unchanged from previous year.
Assessment
Unchanged from previous year.
Mitigation
The strength and depth of investment team provides comfort that
there is not over-reliance on one person with alternative portfolio
managers available to act if needed. For each key business process
roles, responsibilities and reporting lines are clear and unambiguous.
During the year, the healthcare team was strengthened further with
the addition of two new team members. Further details are provided in
the Management team biographies on pages 8 and 9. The Investment
Manager has implemented BCP arrangements as a result of COVID-19
with staff working remotely with no loss of service.
Mitigation
The Board is committed to a clear communication programme
to ensure Shareholders understand the investment strategy. This
is maintained through the use of monthly factsheets which have
a market commentary from the Investment Manager as well as
portfolio data, an informative website as well as annual and half year
reports.
Strategic Report continued
Principal Risks and Uncertainties continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 31
Strategic Report
Regulatory Risk Economic And Market Risk
Description
Non-compliance with statutes, regulations and disclosure
requirements, including FCA listed company regime and Companies
Act 2006; s1158/1159 of the Corporation Tax Act 2010, the
Companies Act 2006 and other UK, European and overseas
legislation affecting UK companies including MiFID II and the GDPR.
Not complying with accounting standards could result is a
suspension of listing or loss of investment trust status, reputational
damage and Shareholder activism.
Further risks arise from not keeping abreast of changes in legislation
and regulations which have in recent years been substantial.
Description
Financial loss due to unexpected natural disaster or other unpredictable
event disrupting the ability to operate or significant exposure to the
economic cycles of the markets in which the underlying investments
conduct their business operations as well as the economic impact on
investment markets where such investments are listed.
Fluctuations in stock markets and currency exchange rates could
be advantageous or disadvantageous to the Company and its
performance.
Disruption to trading platforms and support services.
Assessment
Unchanged from previous year.
Assessment
Unchanged from previous year.
Mitigation
The Board monitors regulatory change with the assistance of the
Investment Manager, Company Secretary and external professional
suppliers and implements necessary changes should they be
required.
The Board receives regulatory reports for discussion and, if required,
considers the need for any remedial action. In addition, as an
investment company, the Company is required to comply with a
framework of tax laws, regulation and company law.
The Board keeps abreast of third party service provider internal
controls processes to ensure requirements are met in accordance
with regulatory requirements.
Mitigation
The Board regularly discusses the general economic conditions and
developments.
The impact on the portfolio from other geopolitical changes
including, as an example, tensions between the US and China are
monitored through existing control systems and discussed regularly
by the Board. While it is difficult to quantify the impact of such
changes, it is not anticipated that they will fundamentally affect
the business of the Company or make healthcare investing any
less desirable. The longer term effects of COVID-19 on this risk will
continue to be assessed by the Audit Committee in light of how they
will impact the Company’s portfolio and the overall economic and
geopolitical environment in which the Company operates.
The Company through the Investment Manager, has a disaster
recovery plan in place.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202132
Strategic Report
Management Company and Management
of the Portfolio
As the Company is an investment vehicle for shareholders,
the Directors have sought to ensure that the business of
the Company is managed by a leading specialist investment
management team and that the investment strategy remains
attractive to shareholders. The Directors believe that a strong
working relationship with Polar Capital LLP (the Investment
Manager) will achieve the optimum return for shareholders
and the Board and 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.
Under the terms of the IMA, the Investment Manager also
provides or procures accountancy services, company secretarial,
marketing and day-to-day administrative services, including
the monitoring of third-party suppliers, which are directly
appointed by the Company. The Investment Manager has, with
the consent of the Directors, delegated the provision of certain
of these administrative functions to HSBC Securities Services
and to Polar Capital Secretarial Services Limited.
Polar Capital provides a team of healthcare specialists and the
portfolio is co-managed by Dr James Douglas and Mr Gareth
Powell. The Investment Manager has other resources which
support the investment team and has experience in managing
and administering other investment trust companies.
Termination Arrangements
The IMA may be terminated by either party giving 12 months’
notice. The IMA may be terminated earlier by the Company
with immediate effect on the occurrence of certain events,
including: (i) if an order has been made or an effective
resolution passed for the liquidation of the Investment
Manager; (ii) if the Investment Manager ceases or threatens
to cease to carry on its business; (iii) where the Company is
required to do so by a relevant regulatory authority; (iv) on the
liquidation of the Company; or (v) subject to certain conditions,
where the Investment Manager commits a material breach
of the IMA. In the event the IMA is terminated before the
expiry of the Company’s fixed life then, except in the event of
termination by the Company for certain specified causes, the
base fee and the performance fee will be calculated pro rata
for the period up to and including the date of termination.
Fee Arrangements
Management Fee
Under the terms of the IMA, the Investment Manager will be
entitled to a management fee together with reimbursement
of reasonable expenses incurred by it in the performance
of its duties. The management fee is payable monthly in
arrears and, with effect from 1 October 2020, was charged
at the rate of 0.75% (previously: 0.85%) per annum based
on the lower of the market capitalisation and adjusted net
asset value. In accordance with the Directors’ policy on
the allocation of expenses between income and capital, in
each financial year 80% of the management fee payable is
charged to capital and the remaining 20% to income.
Performance Fee
The Investment Manager may be entitled to a performance
fee. The performance fee was reset at the date of
reconstruction of the Company and will be paid in cash at
the end of the Company’s expected life (except in the case
of an earlier termination of the IMA). The performance fee
will be an amount equal to 10% of the excess total return
(based on the Adjusted Net Asset Value per ordinary share
at that time) over the total return of the benchmark plus
1.5% compounded annually on each anniversary of share
admission and adjusted for periods of less than 12 months.
In the event of a performance fee becoming payable on the
future portfolio realisation date, such fee would be subject
to a maximum amount of 3.5% of the terminal NAV. For the
purposes of calculating the performance fee, the Company’s
Adjusted Net Asset Value will be based on the Net Asset
Value adjusted by the amount of any dividends paid by the
Company deemed to have been reinvested on the date of
payment in ordinary shares at their Net Asset Value (on such
date) and the resulting amount added to the Company’s
Net Asset Value. If at the end of the Company’s expected
life the amount available for distribution to shareholders is
less than 215.9p per ordinary share, no performance fee will
be payable. If the amount is more than 215.9p per ordinary
share but payment of the performance fee in full would
reduce it below that level, then the performance fee will be
reduced such that shareholders receive exactly 215.9p per
share. No performance fee has been paid or accrued since
inception and up to 30 September 2021.
Strategic Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 33
Strategic Report
Environmental, Social and Governance
(ESG)
Corporate Responsibility
The Company’s core investment and administrative activities
are undertaken by its Investment Manager which seeks to
limit the use of non renewable resources and reduce waste
where possible. The Investment Manager has a corporate
ESG policy, which is available in the document library of the
Company’s website, and wherever possible and appropriate
the parameters of such are considered and adopted by the
investment team in relation to the Company’s management
and portfolio construction. As detailed further within the
Investment Manager’s Report the Investment Managers are
required to have consideration of ESG factors when reviewing
new, continuing or exiting investments but they are not
required to take an investment decision solely on the basis of
ESG factors. The Board monitors the Investment Manager’s
approach to ESG including policies for improvement of
impact on the environment, and they themselves take into
account ESG factors in the management of the Company.
The Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013 require companies listed on
the Main Market of the London Stock Exchange to report
on the greenhouse gas (‘GHG’) emissions for which they
are responsible. The Company is an investment trust, with
neither employees nor premises, nor has it any financial or
operational control of the assets which it owns. Consequently,
it has no GHG emissions to report from its operations nor
does it have responsibility for any other emissions.
Diversity and Gender reporting
The Company has no employees and the Board is comprised
of one female and three male Independent non-executive
Directors. The Board is cognisant of the Hampton Alexander
Review which set a target for all FTSE350 companies to
have a board with a 33% female representation by the end
of 2020. The Company falls outside of the FTSE350 and
currently has 25% female representation but notes that the
most senior Board role of Chair is held by the female director.
The FCA issued a consultation document in July 2021 on
Diversity and Inclusion which proposes various changes to
the Listing Rules including the expansion of reporting beyond
gender diversity. If approved, the revised rules are expected
to come into force for financial years commencing on or after
1 January 2022. The Board will review and take any necessary
action in due course and will continue to have regard to the
benefits of diversity throughout any recruitment process,
especially when compiling a shortlist of candidates and
selecting individuals for interview, but will ultimately seek to
ensure directors appointed to the Board are chosen on merit.
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 such Act.
Anti-bribery, Corruption and Tax Evasion
The Board has adopted a zero-tolerance policy (available
on the Company’s website) to bribery, corruption and the
facilitation of tax evasion in its business activities. The Board
uses the principles 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.
Taskforce for Climate-Related Financial
Disclosures (“TCFD”)
The Company notes the TCFD recommendations on climate-
related financial disclosures. As stated above, the Company is
an investment trust with no employees, internal operations or
property. However, it is an asset owner and therefore we will
work to develop appropriate disclosures about our portfolio.
Information sources are developing and consultations on
reporting requirements are underway, we will continue to
work alongside our Investment Manager to provide more
information as it becomes available. Polar Capital supports
TCFD’s recommendations and is in the process of assessing
the guidance to ensure compliance going forward.
ESG and Third Party Service Providers
The Investment Manager on behalf of all clients receives
assurance on an annual basis that, where required, third
party service providers comply with the requirements of the
Modern Slavery Act and adhere to a zero-tolerance policy to
bribery and corruption. In light of the growing requirements
surrounding ESG, including TCFD, third party service providers
have been engaged in providing copies of their ESG, Diversity
and Inclusion, Stewardship and other related policies to the
Company. The Board will continue to monitor the practices
of service providers and seek to assure shareholders where
appropriate that suitable policies and procedures are in place
to effect positive change.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202134
Strategic Report
The statutory duties of the Directors are listed in s171-177 of the Companies Act 2006. Under s172, Directors have a duty to
promote the success of the Company for the benefit of its members (our Shareholders) as a whole and in doing so have regard
to the consequences of any decision in the long term, as well as having regard to the Company’s stakeholders amongst other
considerations. The fulfilment of this duty not only helps the Company achieve its Investment Objective but ensures decisions are
made in a responsible and sustainable way for Shareholders.
To ensure that the Directors are aware of, and understand, their duties, they are provided with an induction when they first join
the Board, including details of all relevant regulatory and legal duties as a Director and continue to receive regular and ongoing
updates on relevant legislative and regulatory developments. They also have continued access to the advice and services of the
Company Secretary and, when deemed necessary, the Directors can seek independent professional advice. The Schedule of
Matters Reserved for the Board, as well as the Terms of Reference of its committees, are reviewed annually and further describe
Directors’ responsibilities and obligations and include any statutory and regulatory duties.
The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during
discussions and as part of the decision-making process. As an externally managed investment company, the Company does not
have any employees or customers, however the key stakeholders and a summary of the Board’s consideration and actions where
possible in relation to each group of stakeholders are described in the table below.
Stakeholder Group How we engage with them
Shareholders
The Directors have considered this duty when making the strategic decisions during the year that affect
Shareholders, including the continued appointment of the Investment Manager and the recommendation that
Shareholders vote in favour of the resolutions for the Company to continue and to renew the allotment and buy
back authorities at the AGM. The Directors have also engaged with and taken account of Shareholders’ interests
during the year.
The Directors were unable to have the usual face-to-face interactions with Shareholders this year due to the
guidance from the UK government in respect of gatherings of people. Instead, the Board held a “Meet the Manager
and Board” session where shareholders had the opportunity to hear a brief introduction from the Managers and the
Chair and were provided with an opportunity to ask questions.
The Company’s AGM will be held at 2pm on Wednesday 11 February 2022. The Board has been considering how
best to deal with the continued uncertainties posed by the COVID-19 pandemic and possible future outbreaks
which may impact the holding of the AGM. The health and wellbeing of our employees, shareholders and the
wider community in which we operate is of importance to the Board. The Board also recognises that the AGM is
an important event for Shareholders and the Company and is keen to ensure that Shareholders are able to exercise
their right to vote and participate. Unless circumstances change, and they may do so at any time between now and
the AGM, the meeting will be held at the offices of Polar Capital, 16 Palace Street, London SW1E 5JD. Any changes
to these arrangements will be communicated through the Company’s website and via a Regulatory Information
Service announcement.
The Board believes that shareholder engagement remains important, especially in the current market conditions and
is keen that the AGM be a participative event for all 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 PCGH-AGM. The investment manager gives a presentation and the Chairs of the Board and of the
Committees attend and are available to respond to questions and concerns from Shareholders.
Should any significant votes be cast against a resolution, the Board will engage with Shareholders and explain
in its announcement of the results of the AGM the actions it intends to take to consult Shareholders in order to
understand the reasons behind the votes against. Following the consultation, an update will be published no later
than six months after the AGM and the Annual Report will detail the impact the Shareholder feedback has had on
any decisions the Board has taken and any actions or resolutions proposed.
Relations with Shareholders
The Board and the Manager consider maintaining good communications and engaging with Shareholders through
meetings and presentations a key priority. The Board regularly considers the share register of the Company and
receives regular reports from the Manager and the Corporate Broker on meetings attended with Shareholders and
any concerns that are raised in those meetings. The Board also reviews correspondence from Shareholders and may
attend investor presentations.
Shareholders are kept informed by the publication of annual and half year reports, monthly fact sheets, access
to commentary from the Investment Manager via the Company’s website and attendance at events at which the
Investment Manager presents.
Section 172 of the
Companies Act 2006
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 35
Strategic Report
Stakeholder Group How we engage with them
Shareholders
Continued
Shareholders are able to raise any concerns directly with the Board without using the Manager or Company
Secretary as a conduit. The Chair or other Directors are available to Shareholders who wish to raise matters either in
person or in writing. The Chair and Directors may be contacted through the registered office of the Company.
The Company, through the sales and marketing efforts of the Investment Manager, encourages retail investment
platforms to engage with underlying Shareholders in relation to Company communications and enabling those
Shareholders to cast their votes on Shareholder resolutions. The Company however has no responsibility over such
platforms. The Board therefore encourage Shareholders invested via the platforms to regularly visit the Company’s
website or to make contact with the Company directly to obtain copies of Shareholder communications.
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.
Investment
Manager
Through the Board meeting cycle, regular updates and the work of the Management Engagement Committee
reviewing the services of the Investment Manager annually, the Board is able to safeguard Shareholder interests by:
• Ensuring adherence to the Investment Policy;
• Ensuring excessive risk is not undertaken in the pursuit of investment performance;
• Ensuring adherence to the Investment Management Policy and reviewing the agreed management and
performance fees; and
• Reviewing the Investment Manager’s decision making and consistency in investment process.
Maintaining a close and constructive working relationship with the Manager is crucial as the Board and the
Investment Manager both aim to continue to achieve consistent, long-term returns in line with the Investment
Objective. The culture which the Board maintains to ensure this involves encouraging open discussion with the
Investment Manager; recognising that the interests of Shareholders and the Investment Manager are aligned,
providing constructive challenge and making Directors’ experience available to support the Investment Manager.
This culture is aligned with the collegiate and meritocratic culture which Polar Capital has developed and maintains.
Outcomes and strategic decisions during the year
The Board in their capacity as the Management Engagement Committee has recommended the continued
appointment of the Investment Manager on the terms agreed within the Investment Management Agreement.
Investee
Companies
The Board has instructed the Investment Manager to take into account the published corporate governance policies
of the companies in which they invest.
The Board has also considered the Investment Manager’s Stewardship Code and Proxy Voting Policy. The Proxy
Voting Policy directs the Investment Manager to vote at all general meetings of companies in line with ISS policy.
However, in exceptional cases, where the Investment Manager believes that a resolution would be detrimental
to the interests of shareholders or the financial performance of the Company, appropriate notification will be
given and abstentions or a vote against will be lodged. This Policy changed during the financial year, as the prior
default instruction had been for the Investment Manager to vote at all general meetings of companies in favour of
management’s recommendation.
The Investment Manager has voted at 45 company meetings over the year ended 30 September 2021, with 5.8%
of all votes being against management and 34% of meetings having at least one against or withheld vote.
The Investment Manager reports to the Board, when requested, on the application of the Stewardship Code and
Voting Policy. The Investment Manager’s Stewardship Code and Voting Policy can be found on the Investment
Manager’s website in the Corporate Governance section (www.polarcapital.co.uk). Further information on how
the Investment Manager considers ESG in its engagement with investee companies can be found in the Investment
Manager’s report on pages 11 to 22.
Outcomes and strategic decisions during the year
During the year, the Board discussed the impact of ESG and how the Investment Manager incorporated ESG into
their strategy and investment process.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202136
Strategic Report
Stakeholder Group How we engage with them
Service
Providers
The Directors have frequent engagement with the Company’s other service providers through the annual cycle of
reporting and due diligence meetings or site visits. This engagement is completed with the aim of having effective
oversight of delegated services, seeking to improve the processes for the benefit of the Company and to understand
the needs and views of the Company’s service providers, as stakeholders in the Company. Further information on
the Board’s engagement with service providers is included in the Corporate Governance Statement and the Report
of the Audit Committee.
Outcomes and strategic decisions during the year
The reviews of the Company’s service providers have been positive and the Directors believe their continued
appointment is in the best interests of the Company. The accounting and administration services of HSBC Securities
Services (HSS) are contracted through Polar Capital and provided to the Company under the terms of the IMA. The
Board however continue to conduct due diligence service reviews in conjunction with the Company Secretary and is
satisfied that the service received continues to be of a high standard.
Proxy Advisors
The support of proxy adviser agencies is important to the Directors, as the Company seeks to retain a reputation
for high standards of corporate governance, which the Directors believe contributes to the long-term sustainable
success of the Company. The Directors consider the recommendations of these various proxy voting agencies when
contemplating decisions that will affect Shareholders and also when reporting to Shareholders through the Half Year
and Annual Reports.
Recognising the principles of stewardship, as promoted by the UK Stewardship Code, the Board welcomes
engagement with all of its investors. The Board recognises that the views, questions from, and recommendations of
many institutional investors and proxy adviser agencies provide a valuable feedback mechanism and play a part in
highlighting evolving Shareholders’ expectations and concerns.
Prior to AGMs, the Company engages with these agencies to fact check their advisory reports and clarify any areas
or topics that the agency requests. This ensures that whilst the proxy advisory reports provided to Shareholders are
objective and independent, the Company’s actions and intentions are represented as clearly as possible to assist with
Shareholders’ decision making when considering the resolutions proposed at the AGM.
Outcomes and strategic decisions during the year
The Nomination Committee considers the time commitment required of Directors and the Board considers each
Director’s independence on an ongoing basis. The Board have confirmed that all Directors remain independent
and able to commit sufficient time in fulfilling their duties, including those listed on s172 of the Companies Act.
Accordingly, all Directors are standing for re-election at the Company’s AGM.
The AIC
The Company is a member of the AIC and has also supported lobbying activities such as the consultations on the
2019 AIC Code, the 2021 BEIS Restoring Trust in Audit and Corporate Governance and the FCA’s 2021 consultation
on Diversity and Inclusion on Company Boards. The Directors also cast votes in the AIC Board Elections each year
and regularly attend AIC events.
Approved by the Board on 16 December 2021
By order of the Board
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
Company Secretary
Section 172 of the Companies Act 2006 continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 37
Strategic Report
Corporate
Governance
A system of rules and
processes by which the
Company is governed
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 37
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 38
Corporate Governance
Report of the Directors
The Directors, who are listed on pages 6 and 7, present
their annual report together with their Report on Corporate
Governance, and the Audited Financial Statements for the
year ended 30 September 2021. In addition, the attention of
Shareholders is drawn to the Strategic Report Section (Chair’s
Statement, the Investment Manager’s Report, Strategic
Report, and the ESG and Section 172 Statements) which
provides further commentary on the activities and outlook for
the Company.
Introduction and Status
The Company is incorporated in England and Wales as
a public limited company and is domiciled in the United
Kingdom. It is an investment company as defined in section
833 of the Companies Act 2006 and has a premium listing on
the London Stock Exchange.
The Company seeks to continue to operate as an investment
trust in accordance with sections 1158 and 1159 of the
Corporation Tax Act 2010 (as amended by section 42(2) of
the Finance Act 2011). As an approved investment trust the
close company provisions do not apply. The Directors, under
advice, expect the affairs of the Company to continue to
satisfy the conditions of an investment trust.
As an investment trust the Company’s ordinary shares are
excluded from the FCA’s restrictions which apply to 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. The Company’s ordinary
shares are eligible for inclusion in a stocks and shares ISA.
Financial Regulation
The Audited Financial Statements are prepared in accordance
with International Accounting Standards (IAS) in conformity
with the requirements, including the legal requirements, of
the Companies Act 2006 (the Act). On the conclusion of
the BREXIT transition period, on 31 December 2020, the EU
adopted International Financial Reporting Standards (EU IFRS),
against which the Group has previously reported, were frozen
and companies preparing Financial Statements under IAS
but with a filing process straddling the end of the transition
period, are required to prepare Financial Statements with
reference to the frozen onshored IFRS standards within IAS
under the Act. The changes to presentation do not represent
a change in the basis of accounting and do not necessitate a
prior year restatement. Future years’ Financial Statements will
be prepared under the equivalent UK adopted standards.
Purpose
The purpose of the Group, comprising the Company and
the wholly owned subsidiary PCGH ZDP Plc, is to provide
a vehicle in which investment is spread across a diversified
global portfolio of healthcare stocks which aim to deliver
long term capital growth to shareholders. The purpose is
achieved through implementation of the Investment Objective
and investment policies incorporating parameters to ensure
excessive risk is not undertaken.
The portfolio is diversified by geographic location, industry
sub-sector and investment size. The portfolio comprises
a single pool of investments but for operational purposes
the Investment Manager will maintain both a growth and
an innovation portfolio. The purpose of the subsidiary is to
provide fixed life structural gearing to the Group.
The portfolio is managed within a framework of investment
limits and guidelines determined by the Board which seek to
meet the investment objective while seeking to spread and
mitigate risk. As an externally managed investment trust,
the culture of the Group is consequential of the Board’s
composition, decisions and behaviours which generally are
aligned with the values and behaviours of the Investment
Manager, interaction between the two and engagement with
the Group’s stakeholders. The Board monitors this culture,
including the policies and practices it implements to maintain
it. The day-to-day operations and functions of the Group
have been delegated to third parties.
The Company is registered under the United States’ FATCA
legislation and its Global Intermediary Identification Number
(GIIN) is ID3ME4.99999.SL.826. The Company’s Legal Entity
Identifier (LEI) code is 549300YV7J2TWLE7PV84.
Life of the Company
In the absence of any prior proposals, the Articles of
Association of the Company require the Directors to put
forward at the first Annual General Meeting following
1 March 2025 a special resolution to place the Company into
voluntary liquidation. The voting on that resolution will be
enhanced such that, provided any single vote is cast in favour,
the resolution will be passed.
The subsidiary, PCGH ZDP Plc, has a fixed life and the
Directors of the subsidiary are required to convene a general
meeting on or before 19 June 2024 (unless varied by the
holders of the Zero Dividend Preference shares) to propose a
resolution to wind up the subsidiary.
CAPITAL STRUCTURE
Issued Share Capital
The Company’s share capital is divided into ordinary shares of
25p each. At the year end, there were 124,149,256 ordinary
shares in issue (2020: 124,149,256 ordinary shares), of which
2,879,256 (2020: 2,879,256) were held in treasury by the
Company.
Changes during the year
During the year to 30 September 2021, no new shares were
issued from or bought back into treasury.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 39
Corporate Governance
Voting Rights
Ordinary shares carry voting rights which are exercised on a
show of hands at a meeting, where each shareholder has one
vote, or on a poll, where each share has one vote. Ordinary
shares held in treasury carry no voting rights. Arrangements
for the casting of proxy votes are provided when a notice of
meeting is issued.
Transferability
Any shares in the Company may be held in uncertificated
form and, subject to the Articles, title to uncertificated shares
may be transferred by means of a relevant system. Further
information can be found in the Articles of Association
available on the Company’s website
www.polarcapitalglobalhealthcaretrust.co.uk.
Powers to Issue Ordinary Shares and
Make Market Purchases of Ordinary
Shares
The Board was granted authority by Shareholders at the AGM
in January 2021 to allot equity securities up to a nominal
value of £3,031,750 and to issue those shares for cash
without offering those shares to Shareholders in accordance
with their statutory pre-emption rights. New ordinary shares
will not be allotted and issued at below the NAV per share
after taking into account the costs of issue. Any re-issue of
shares from treasury will follow institutional guidelines; it is
not anticipated that such shares would be re-issued below
N AV.
The Board also obtained Shareholder authority at the AGM in
January 2021 to make market purchases of up to 18,178,373
ordinary shares of the Company for cancellation or holding as
treasury shares in accordance with the terms and conditions
set out in the shareholder resolution.
These authorities will expire at the AGM to be held in
February 2022. Renewal of these authorities will be sought at
that AGM.
Dividends
The Company changed its dividend policy following the
change in strategy and reconstruction of the portfolio
approved in June 2017. The Company’s policy is an aim
to pay two interim dividends in February and August each
year. These interim dividends will not necessarily be of equal
amounts. Details of the dividends paid and proposed are set
out in Note 11 on page 83.
Shareholders should recognise that circumstances may arise
when it is necessary to reduce the level of dividend payment
or equally there may be instances when the level of dividend
must be increased in order to comply with sections 1158 and
1159 of the Corporation Tax Act 2010. Where this would
result in paying a dividend beyond the Board’s intended policy
a ‘special dividend’ will be declared and paid.
In accordance with best practice, the Directors will be
proposing a resolution to approve the Company’s dividend
policy at the AGM to be held in February 2022.
Directors
In accordance with the Company’s adopted practices detailed
on page 46 of the Report on Corporate Governance, all
Directors will retire and offer themselves for re-election at the
AGM of the Company to be held in February 2022. Having
undertaken a Board Evaluation process and discussed the
areas of expertise required to run the Company, the Board
have confirmed their support and rationale for each Directors’
re-election. The Directors believe that they have a balance of
experience, expertise and diversity and that they work well
together and that each brings multiple qualities to the Board.
The Board rationale for re-appointment of each Director is
given on pages 6 and 7 and in the letter accompanying the
Notice of AGM.
Annual General Meeting (‘AGM’)
The Company’s AGM will be held at 2pm on Friday
11 February 2022. The Board has been considering how
best to deal with the continued uncertainties posed by the
COVID-19 pandemic which may impact the holding of the
AGM. The health and wellbeing of our service providers’
employees, shareholders and the wider community in
which we operate is of importance to the Board. The Board
also recognises that the AGM is an important event for
shareholders and the Company and is keen to ensure that
shareholders are able to exercise their right to vote and
participate. Based on current conditions, the meeting will be
held at the offices of Polar Capital, 16 Palace Street, London
SW1E 5JD. Any changes to these arrangements required by a
change in circumstances will be communicated through the
Company’s website and via a Regulatory Information Service
announcement.
Shareholders are encouraged to send any questions ahead of
the AGM to the Board via the Company Secretary at
cosec@polarcapital.co.uk stating the subject matter as
PCGH-AGM. The Board will endeavour to answer relevant
questions at the meeting or via the website depending on
arrangements in place at the time.
The separate Notice of Meeting contains the usual resolutions
to receive the Financial Statements, approve the Directors’
Remuneration Implementation Report, re-elect Directors,
re-appoint the Auditors and empower the Directors to set
their fees, give authority to allot shares and issue shares for
cash, and to make market purchases. The full text of the
resolutions and explanation of each is set out in the Notice
of Meeting.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 40
Corporate Governance
Shareholder Type of Holding Number of Shares
% of Voting
Rights*
Rathbone Brothers plc Indirect 14,515,492 11.97
1607 Capital Partners Indirect 14,259,099 11.76
Investec Wealth & Investment Ltd Direct 14,003,515 11.55
Charles Stanley Indirect 6,106,096 5.04
Brewin Dolphin Limited Indirect 6,039,197 4.98
Canaccord Genuity Group Indirect 5,872,733 4.84
Cheviot Asset Management Limited Direct 4,805,275 3.96
Schroders plc Indirect Below 5% Below 5%
Since the year end and up to the date of this report, the Company has been notified of the following:
Shareholder Type of Holding Number of Shares
% of Voting
Rights*
Investec Wealth & Investment Ltd Direct 13,294,180 10.96
1607 Capital Partners Indirect 12,069,633 9.95
Allspring Investments Indirect 6,522,743 5.38
* The above percentages are calculated by applying the shareholdings as notified to the issued share capital at 16 December 2021 of 121,270,000 ordinary shares being all the issued ordinary
shares excluding those held in treasury where voting rights are suspended.
Listing Rule 9.8.4
Listing Rule 9.8.4 requires the Company to include certain
further information in relation to the Group and Company
which is not otherwise disclosed. The Directors confirm there
are no additional disclosures to be made pursuant to this rule.
By order of the Board
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
16 December 2021
Major Interests in Ordinary Shares
As at the year end of 30 September 2021, 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:
Report of the Directors continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 41
Corporate Governance
Corporate Governance Framework
The following diagram demonstrates the governance framework within which the Group is managed. The Directors are
ultimately accountable the Company and its Shareholders for the Group’s affairs and are therefore responsible for the good
governance of the Group. The Group and Company has no employees relies on third parties to administer the Group and
Company and to provide investment management services.
Report on Corporate Governance
Year ended 30 September 2021
Shareholders
Board of Directors
Chair: Lisa Arnold
Audit
Committee
Management
Engagement Committee
Nomination
Committee
Remuneration
Committee
Third Party
Service Providers
Investment Manager
and AIFM
Chair: Neal Ransome
Members: all independent
NEDs.
Chair: Neal Ransome
Members: all independent
NEDs
Functions of the
Nomination Committee
are carried out by the
Board as a whole.
Functions of the
Remuneration Committee
are carried out by the
Board as a whole.
The Financial Reporting Council (FRC) has endorsed the Association of Investment Companies (‘AIC’) Code of Corporate
Governance (the ‘AIC Code’) for AIC Member Companies to report against in relation to their corporate governance provisions.
The AIC Code addresses the relevant principles set out in the FRC UK Code as well as additional principles and recommendations
on issues that are specific to investment trust companies.
The FRC has confirmed that by following the AIC Code, boards of investment companies (including those structured as
investment trusts) will meet their obligations under FCA Listing Rule 9.8.6. As an externally managed investment company many
provisions of the FRC UK Code are not relevant, including those relating to the roles of chief executive, executive directors’
remuneration, statement of gas emissions and the requirement to have an internal audit function.
In addition, there are provisions within the FRC UK Code which the Board has chosen to depart from in favour of following the
AIC Code, such as the Company’s formal Chair Tenure Policy which allows the Chair to continue in role in excess of 9 years. See
page 46 for more information.
Statement of Compliance and Application of the AIC Code’s Principles
The Board has considered the Principles and Provisions of the 2019 AIC Code of Corporate Governance (AIC Code). The AIC
Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting
out additional Provisions on issues that are of specific relevance to the Company. The Board considers that reporting against
the Principles and Provisions of the AIC Code, which has been endorsed by the FRC provides more relevant information to
Shareholders.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 42
Corporate Governance
The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the
Principles and Provisions set out in the UK Code to make them relevant for investment companies.
The Board believes that the Company’s current practices are consistent in all material respects in applying the principles and
complying with the provisions of the AIC Code. The Board will continue to observe the principles and recommendations set out
in the AIC Code.
The AIC Code’s principles and provisions are structured into five sections: Board leadership and purpose; division of
responsibilities; composition, succession and evaluation; audit, risk and internal control; and remuneration. The Company’s
application of the principles and compliance with the provisions of each section is detailed on pages 42 to 48.
Purpose
The purpose of the Group, comprising the Company and the wholly owned subsidiary PCGH ZDP Plc, is to provide a vehicle for
investors in which assets are invested across a diversified global portfolio of healthcare stocks which aim to deliver long term
capital growth to shareholders. The purpose is achieved through the Investment Objective and policy incorporating parameters
to ensure excessive risk is not undertaken.
The Investment Policy seeks to generate capital growth by investing in a global portfolio of healthcare stocks. The Company
will seek to achieve its objective by investing in a diversified global portfolio consisting primarily of listed equities. The portfolio
is diversified by geography, industry sub-sector and investment size. As an externally managed investment trust, the culture of
the Company is a consequence of the Board’s composition, decisions and behaviours which are aligned with the values and
behaviours of the Investment Manager, interaction between the two and engagement with the Company’s stakeholders. The
Board monitors this culture, including the policies and practices it implements to maintain it.
Board Leadership
In promoting the long-term sustainable success of the Company, the performance of the Company’s portfolio is constantly
reviewed in pursuit of value generation for shareholders by achievement of the Investment Objective. Investment management
fees are reviewed periodically, with the last change occurring with effect from 1st October 2020. The Investment Manager
is entitled to a management fee at the rate of 0.75% (previously 0.85%) per annum of the lower of the Group market
capitalisation and the Company’s adjusted net asset value. The Company’s performance over the previous ten years can be
found on page 3 and how the Board views its duties is considered in the s172 statement on pages 34 to 36. The Board’s
engagement with shareholders and stakeholders and how it contributes to strategic decision making is also discussed within the
s172 statement. Participation from both groups is encouraged and the Board can be contacted through the Company Secretary.
The Company’s service providers are subject to periodic site visits and attend service review and other meetings throughout the
year, ensuring effective engagement. Fulfilling the Investment Objective and the Company’s performance is the focus of the
Board’s discussions.
The Board’s effectiveness, including how it promotes the long-term sustainable success of the Company, is reviewed annually.
The process and outcomes of the Board evaluation are detailed on pages 46 and 47.
Role, Responsibilities and Committees of the Board
The Board has delegated to the Audit Committee and the Management Engagement Committee specific remits for
consideration and recommendation but the final responsibility in these areas remains with the Board. The Board determined
that due to its size, and the fact that all the Directors are non-executive and independent, the functions of the nomination
committee and remuneration committee would be carried out by the full Board. The Board creates ad hoc committees from time
to time to enact policies or actions agreed in principle by the whole Board.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7)
Report on Corporate Governance continued
Year ended 30 September 2021
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 43
Corporate Governance
The number of formal meetings of the Board and its Committees held during the year ended 30 September 2021 and the
attendance of individual Directors are shown below:
Board
Audit
Committee
Management
Engagement 2021 AGM
Number of Meetings 7 4 1 1
Lisa Arnold 7 4 1 1
Andrew Fleming 7 4 1 1
Neal Ransome 7 4 1 1
Jeremy Whitley 7 4 1 1
Service Provider Performance Evaluation Process
Investment Manager
The Board has contractually delegated the management of the portfolio to the Manager. It is the Manager’s sole responsibility
to take decisions as to the purchase and sale of individual investments other than unquoted investments where the Board is
consulted. The Manager has responsibility for asset allocation and sector selection within the guidelines established and regularly
reviewed by the Board.
The Manager is responsible for providing or procuring accountancy services, company secretarial and administrative services
including the monitoring of third-party suppliers who are directly appointed by the Company. The Manager also ensures that
all Directors receive in a timely manner all relevant management, regulatory and financial information. Representatives of the
Investment Manager attend all Board meetings in a variety of capacities including investment management, compliance, risk and
marketing, enabling the Directors to probe further on matters of concern or seek clarification on certain issues.
The whole Board reviews the performance of the Investment Manager and, at each Board meeting, the Company’s performance
against the market and a peer group of funds with a similar Investment Objective is reviewed. The investment team provided
by the Investment Manager has long experience of investment in the healthcare sector. In addition, the Investment Manager
has other investment resources which support the investment team and have experience in managing and administering other
investment trust companies.
The Board and Investment Manager work in a collaborative manner and the Chair encourages open discussion and debate.
Report of the Management Engagement Committee
The Management Engagement Committee comprises all the independent non-executive Directors under the Chairmanship
of Neal Ransome, and will usually meet once a year and at such other times as may be necessary. The Management
Engagement Committee reviews the performance and activities of the Investment Manager and considers the terms of the
investment management agreement and other services and resources supplied by the Investment Manager, prior to making its
recommendation to the Board on whether the retention of the Investment Manager is in the interests of shareholders.
During the year ended 30 September 2021 the Management Engagement Committee met once to carry out the review of the
Investment Manager and consider its continued appointment for the next financial year ending 30 September 2022. During
the year, the Board reviewed its fee arrangements with the Manager taking into consideration the performance of the Manager
in managing the assets of the Company, the performance of the Company in both absolute and relative terms against its
benchmark since launch and since reconstruction in June 2017. In October 2020, following discussion with Polar Capital, a
reduction in the base management fee from 0.85% to 0.75% per annum based on the lower of the market capitalisation and
adjusted net asset value was agreed with effect from 1 October 2020. All other terms within the Investment Management
Agreement remain unchanged.
The review of the Investment Manager also considered the strength of the investment team, depth of other resources provided
by the Manager and quality of the services provided or procured by the Manager including shareholder communications.
The Board, through the work of the Management Engagement Committee, has concluded that it is in the best interests of
shareholders as a whole that the appointment of Polar Capital LLP as Investment Manager is continued.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 44
Corporate Governance
The Company uses a variety of performance measures when monitoring the performance of the portfolio managed by the
Investment Manager. These measures are considered to be Alternative Performance Measures under the ESMA guidelines and
are described further on pages 95 to 96.
Other Suppliers
The Board also monitors directly or through the Manager the performance of its other key service providers.
• The Board has directly appointed HSBC Bank Plc as Depositary and Panmure Gordon as Corporate Broker. The Depositary
reports quarterly and makes an annual presentation to the Board. The Corporate Broker provides reports to each Board
meeting and joins the Board on request, and at least every six months, to discuss markets and other issues.
• The Registrar, Equiniti Limited, is directly appointed by the Board and the performance of their duties is monitored and
reported on by the Company Secretary.
• Other suppliers such as printers, website services and PR agents are monitored by the Company Secretary and each supplier
reports to the Board as and when deemed necessary.
Report of the Audit Committee
The Audit Committee comprises all the independent non-executive Directors under the Chairmanship of Neal Ransome. The
Committee has formal terms of reference which clearly define its responsibilities and duties. A separate report of the work of
the Audit Committee over the year is set out on pages 54 to 60.
Report of the Remuneration Committee
As mentioned above, the role of the Remuneration Committee is undertaken by the full Board. The Directors’ Remuneration
Report including the processes undertaken when reviewing remuneration can be found on pages 49 to 53.
Chair
The Chair is responsible for the leadership of the Board and works with the Company Secretary for setting the Board’s meeting
agendas and for balancing the issues presented to each meeting. Open and honest debate is encouraged at each Board meeting
and the Chair keeps in touch with both the Company Secretary and other Directors between Board meetings. Lisa Arnold was
appointed to the Board in 2018 and appointed as Chair in February 2020. The Chair was independent on appointment and
continues to meet the criteria for independence. The Board considers the competence and independence of the Directors on an
annual basis.
Senior Independent Director
Due to the size and structure of the Board it was considered unnecessary to identify a senior independent non-executive director.
The Board considers that all Directors have different qualities and areas of expertise on which they may lead where issues arise
and to whom concerns may be conveyed.
Board Responsibilities
The Board currently comprises four non-executive Directors who are all considered to be independent in character and
judgement. No Director has any former or present connection with the Investment Manager. A formal schedule of matters
specifically reserved for decision by the full Board has been defined and a procedure has been adopted for Directors, in the
furtherance of their duties, to take independent professional advice at the expense of the Company. No professional advice
has been independently sought during the year. The Directors have access to the advice and services of the Company Secretary
which is provided in compliance with the IMA through Polar Capital Secretarial Services Limited. An appointed representative,
Tracey Lago, is responsible to the Board for ensuring that Board procedures are followed, and that applicable rules and
regulations are complied with. The Board and Investment Manager operate in a supportive, co-operative and open environment.
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21)
Report on Corporate Governance continued
Year ended 30 September 2021
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 45
Corporate Governance
The Board has a schedule of regular meetings through the year and meets at additional times as required. During the year, Board
and Committee meetings were held to deal with the ongoing stewardship of the Company and other matters including the
setting and monitoring of investment strategy and performance, review of the Financial Statements and shareholder feedback.
The level of the ordinary share price discount or premium to the Net Asset Value together with policies for re-purchase or
issuance (or re-issuance) of shares, are kept under review along with matters affecting the industry and the evaluation of third-
party service providers. The Board is also responsible for considering, reviewing and implementing appropriate policies in respect
of regulatory changes that impacted the Company.
The full investment strategy was revised during the reconstruction exercise undertaken in early 2017 which re-launched the Company
with a revised investment strategy in June 2017. The Board continues to consider the Company’s strategy and its relevance to the
market and Shareholders as a whole at each Board meeting and at least one Board meeting per year includes an in-depth focus on
strategy. Through this process the Board supervises the management of the investment portfolio, the work of the Investment Manager,
the risks to which the Company is exposed and their mitigation, and the quality of services received by the Company.
As reflected in the table on page 43 the Board formally met seven times during the year. In addition to the formal meetings,
the Board met on an informal ad-hoc basis as and when deemed necessary to discuss relevant matters and put in place any
responses deemed appropriate.
Delegated Responsibilities
The Board has delegated to each of the Audit and Management Engagement Committees specific remits for consideration
and recommendation, as detailed within the terms of reference which are available on the Company’s website, but the final
responsibility in these areas remains with the Board. The Chair of the Audit Committee attends the AGM to deal with questions
relating to the Annual Report and Financial Statements. Attendance at each of these meetings is disclosed in the table above on
page 43.
Directors’ Professional Development
When new Directors are appointed, they are offered an induction course provided by the Investment Manager. Directors are
provided on a regular basis with key information on the Company’s policies, regulatory and statutory obligations and internal
controls. Changes affecting Directors’ responsibilities are advised to the Board as they arise. Directors may also participate in
professional and industry seminars and may use the Manager’s online compliance training resources to ensure they maintain
their knowledge.
Conflicts of Interest
Directors have a duty to avoid a situation in which they have a conflict of interest or a possible conflict with the interest of the
Company. The Company’s Articles contain provisions to permit the Board to authorise conflicts or potential conflicts.
The Board has in place a policy to govern situations where a potential conflict of interest may arise, for example where a Director
is also a Director of a company in which the Company invests or may invest. Where a conflict situation arises, the conflicted
Director is excluded from any discussions or decisions relating to the matter of conflict.
Each Director has provided the Company with a statement of all conflicts of interest and potential conflicts of interest, which
have been approved by the Board and recorded in a register. The Conflicts Register is reviewed at every Board meeting and the
Directors are reminded of their obligations for disclosure.
No Director has declared receipt of any benefits other than their emoluments and associated expenses in their capacity as a
Director of the Company.
The Board as part of its year-end review has considered the register of conflicts, any conditions imposed on such conflicts or
potential conflicts and the operation of the notification and authorisation process. It concluded that the process has operated
effectively since its introduction. There were no contracts subsisting during or at the end of the year in which a Director is or was
interested and which is or was significant in relation to the Company’s business or to the Director.
The Directors’ interests in the ordinary shares of the Company are set out on page 52 of the Directors’ Remuneration Report.
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) continued
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 46
Corporate Governance
Composition
The Board is responsible to shareholders for the overall management of the Company’s affairs. For the full year under review
there were four non-executive Directors. Each Director has different qualities and areas of expertise on which they may lead
where issues arise. The Board has a policy to consider diversity and seeks to ensure that the broadest range of candidates are
found when recruiting new directors. The Board will have regard to the diversity recommendations of the Hampton-Alexander
and Parker Reviews, amongst other factors, when making future appointments.
The Board as the Nomination Committee considered the contribution and performance of each Director as part of the Director
and Board performance evaluation. The Board believes that the Directors demonstrate a breadth of experience across the
investment and financial services industry and exposure to the healthcare sector. Each Director effectively contributes to the
operation of the Board and demonstrates independent views on a range of subjects.
All the Directors were considered independent of the Investment Manager and had no relationship or conflicts which were likely
to affect their judgement.
Succession
The Board has determined that due to the limited life of the Company there is no need for a formal policy on the length
of service for Directors. In 2017, when the reconstruction approved by shareholders in June 2017 extended the life of the
Company for a further seven years, the original Board determined that the entire Board should be refreshed in two phases
which completed in December 2019. Following the completion of this process the Board considers that its overall composition is
well placed for the effective governance of the Company.
Performance and Re-election
The Board formally reviews the performance of the Directors each year as part of the annual evaluation process. Directors are
required to stand for election by Shareholders at the first AGM following their appointment to the Board and each Director will
stand for re-election annually. The rationale for re-election of each Director is included in the Board of Directors information
on pages 6 and 7 and the Chair ’s letter which accompanies the Notice of Annual General Meeting at which the re-election
resolutions are being put to shareholders.
Chair Tenure Policy
The Board considers that in the circumstances of an investment company, where corporate knowledge and continuity can
add value, there may be merit in appointing one of its members to the Chair. In addition, there may be circumstances where
succession plans are disrupted such that an internal candidate with some years’ existing experience is the most appropriate
candidate for the Chair. In other circumstances an external candidate may be more appropriate.
As per provision 22, the Board’s policy is that the maximum Board tenure for its Chair is up to 12 years (where up to 9 years
of this could be served as a non-executive Director). The Board believes that due to the staggered nature of the appointment
dates of existing Directors, and the expectation that Directors, unless assuming the role of Chair or there being unforeseen
circumstances, will retire from the Board after nine years of service, there is regular refreshment of the Board. The Board has
determined that due to the limited seven-year life of the Company there is no requirement for a formal policy on Directors’
tenure.
Evaluation
The evaluation of the Board, its Committees and individual Directors is carried out annually. The process involves the use of
a written questionnaire to assess the balance of skills, experience, knowledge, independence and effectiveness of the Board,
including how the Directors interact as a unit on the Board. The responses to the questionnaire are reviewed and discussed
individually with the Chair where appropriate and by the full Board and, should it be deemed necessary, additional reporting
measures or operations would be put in place. The review of the Chair’ s performance is conducted by the Board led by the
Chair of the Audit Committee. The Chair of the Board did not participate in this discussion.
COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28)
Report on Corporate Governance continued
Year ended 30 September 2021
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 47
Corporate Governance
In carrying out these evaluations, each Director is assessed on their relevant experience, their strengths and weaknesses in
relation to the overall requirements of the Board and their commitment to the Company in terms of time by regular attendance
and participation at Board meetings. The process is constructed to assess the contribution of individual Directors to the overall
operation of the Board and its Committees. The Board, through the work of the Nomination Committee, has determined that
each Director standing for re-election continues to offer relevant experience, effectively contributes to the operation of the
Board and has demonstrated independent views on a range of subjects. The Committee is satisfied that the structure, mix of
skills and operation of the Board continue to be effective and relevant for the Company.
Internal Controls
The Board has overall responsibility for the Group and Company’s system of internal control, for reviewing its effectiveness
and ensuring that risk management and control processes are embedded in the Company’s day- to -day operations which are
operated or overseen by the Investment Manager.
The Investment Manager has an internal control framework to provide assurance on the effectiveness of the internal controls
operated on behalf of its clients. The Manager is authorised and regulated by the Financial Conduct Authority and its
compliance department monitors the Company’s compliance with the various rules and regulations applicable to it, including
the FCA’s rules, AIFMD, MiFID II and GDPR, for example.
The Board, through the Audit Committee, has established a process for identifying, evaluating, monitoring and managing any
principal risks faced by the Company. This is documented through the use of a Risk Map which is subject to regular review by
the Audit Committee and accords with the Guidance on Risk Management, Internal Control and Related Financial and Business
Reporting issued in September 2014 by the Financial Reporting Council. The controls are embedded within the business and aim
to ensure that identified risks are managed and systems are in place to report on such risks. The internal controls seek to ensure
the assets of the Group and Company are safeguarded, proper accounting records are maintained, and the financial information
used by the Group and Company and for publication is reliable. Controls covering the risks identified, including financial,
operational, compliance and risk management controls, are monitored by a series of regular reports covering investment
performance, attribution analysis, reports from various third parties and from the Investment Manager.
As the Company has no employees and its operational functions are carried out by third parties, the Audit Committee does not
consider it necessary for the Company to establish its own internal audit function.
Contracts with suppliers are entered into after full and proper consideration by the Board of the quality and cost of the services
offered, including the control systems in operation in so far as they relate to the affairs of the Company.
Operation of Internal Controls
The process was active throughout the year and up to the date of approval of this Annual Report. However, such a system is
designed to manage rather than eliminate risks of failure to achieve the Company’s business objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss.
The Board, in assessing the effectiveness of the Group and the Company’s internal controls has, through the Audit Committee,
received formal reports on the policies and procedures in operation, including the policies put in place in connection with
COVID-19. The reports also include results of tests, with details of any known internal control failures from the Investment
Manager for its financial year ended 31 March 2021. The Manager has subsequently provided confirmation that there has been
no material change to the control environment up to the date of signing these Financial Statements.
The Board also considers reports from the Investment Manager and third-party suppliers and information is supplied to the
Board as required.
COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28) continued
AUDIT, RISK AND INTERNAL CONTROL (PRINCIPLES M-O, PROVISIONS 29-36)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 48
Corporate Governance
The Manager has delegated the provision of accounting, portfolio valuation and trade processing to HSBC Securities Services but
remains responsible to the Company for these functions and provides the Board with information on these services.
The Board undertakes an in-depth annual review of the Group and Company’s system of internal controls where the risk map is
reviewed and control processes considered. The Board, assisted by the Investment Manager, has conducted the annual review
of the risk map and the effectiveness of the system of internal controls taking into account any issues, none of which were
considered significant, which arose during the course of the year ended 30 September 2021 and up to the date of this report.
The principal risks and uncertainties to which the Company is subject are detailed in the Strategic Report. These risks are
monitored by the Audit Committee through the Company’s risk map and the implementation of internal controls, which are
reported on further on pages 28 to 31.
Based on the work of the Audit Committee and the reviews of the reports received by the Audit Committee on behalf of the
Board, the Board has concluded that there were no material control failures during the year and up to the date of this report.
Due to the fully independent non-executive Board comprising four Directors, the Board has deemed it appropriate for the full
Board to fulfil the role of the Remuneration Committee. The Board, acting as the Committee, meets at least annually and is
responsible for consideration and recommendations in relation to Directors’ remuneration.
The remuneration of the Directors is reviewed on an annual basis but will not necessarily lead to a change in remuneration
level awarded. Industry guidance, peer investment trust companies’ remuneration, the work undertaken by the Board in the
prior year along with plans for the current year and the overall regulatory environment are all considered when reviewing
remuneration.
Remuneration levels are set to attract candidates of high calibre to the Board. The Company’s remuneration policy was put to
shareholders for approval at the AGM on 26 February 2020 and is detailed within the Directors’ Remuneration Report on page
50.
Tracey Lago, FCG
Polar Capital Secretarial Services Limited
Company Secretary
16 December 2021
AUDIT, RISK AND INTERNAL CONTROL (PRINCIPLES M-O, PROVISIONS 29-36) continued
REMUNERATION (PRINCIPLES P-R, PROVISIONS 37-42)
Report on Corporate Governance continued
Year ended 30 September 2021
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 49
Corporate Governance
Directors’ Remuneration Report
Introduction
This report is submitted in accordance with the Large and Medium-Sized Companies and Groups (Accounts and Reports)
Regulations 2008 (as amended) (the ‘Regulations’) and the Listing Rules of the Financial Conduct Authority in respect of the year
ended 30 September 2021. It has been audited where indicated.
Chair’s Report
The Board has determined that due to its size, and the fact that all the Directors are non-executive and independent, the
functions normally carried out by a remuneration committee will be performed by the full Board.
Shareholders approved the current Directors’ Remuneration Policy by way of an ordinary resolution passed at the AGM held on
26 February 2020. Such policy came into effect on 1 October 2020 and shall remain in force until 30 September 2023:
Company’s Policy on Directors’ Remuneration effective until 30 September 2023
How policy supports strategy and promotes
long-term sustainable success Operation
The Board consists entirely of non-executive Directors, who
meet regularly to deal with the Company’s affairs.
The intention is that fees payable reflect the time spent by
them individually and collectively, be of a level appropriate
to their responsibilities and be in line with market practice,
sufficient to enable candidates of high calibre to be recruited
and retained.
The Company’s policy in relation to fees is to offer only a
fixed basic fee in line with equivalent roles within the sector
with additional fees for the roles of Chair of the Company
and Chair of the Audit Committee. As the Company is an
investment trust and all the Directors are non-executive,
it is considered inappropriate to have any long-term incentive
schemes or benefits.
In accordance with article 98(2) of the Company’s Articles
of Association, any Director who performs, or undertakes
to perform, services which the Directors consider go beyond
the ordinary duties of a Director may be paid such additional
remuneration (whether by way of fixed sum, bonus,
commission, participation in profits or otherwise) as the
Directors may determine.
Non-executive Directors have formal letters of appointment
which contain the responsibilities and obligations of the
Directors in relation to undertaking their role and managing
conflicts of interest; their remuneration is determined by the
Board within the limits set by the Articles of Association.
Directors are not entitled to payment for loss of office and do
not receive any bonus, nor do they participate in any long-
term incentive schemes or pension schemes. All fees are paid
in cash, monthly in arrears, to the Director concerned.
Rates are reviewed annually but the review will not necessarily
result in any change to rates. Non-executive Directors are
subject to annual re-election by shareholders.
There are no performance conditions relating to
non-executive Directors fees.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 50
Corporate Governance
As per previous AGM resolutions, Shareholders will be asked to consider a non-binding vote for the approval of the following
Directors’ Remuneration Implementation Report, which reports on how the Remuneration Policy has operated during the year
ended 30 September 2021.
The result of the shareholder votes on the Directors’ Remuneration Policy and the latest Implementation Report were as follows:
Implementation Report
for the
Year ended
30 September 2020
Remuneration Policy
for the three
years ended
30 September 2023
Approved at AGM on
26 January 2021
Approved at AGM on
26 February 2020
Votes for 99.99% 99.99%
Votes against 0% 0%
Votes abstained 0.01% 0.01%
The Board considers this level of support from shareholders a positive endorsement of both its Remuneration Policy and the policy
implementation. There has been no communication from shareholders regarding any aspect of the Directors’ remuneration.
Implementation Report
Directors’ Remuneration Paid for the Year Ended 30 September 2021
Annual Fees Review
The review of Directors’ fees is carried out on an annual basis and involves consideration of the time and commitment required
of the Directors, including any significant increase in requirements due to regulatory or other changes. For comparative purposes
the remuneration awarded to directors of similar companies and general market data is also considered. While such a review will
not necessarily result in any change to the rates the Committee believes that it is important that these reviews happen annually.
The appointment of an external remuneration consultant was considered unnecessary. No Director is involved in deciding their
own remuneration and all Directors exercise independent judgement and discretion when considering fees.
Directors’ fees were last increased with effect from 1 October 2019. In October 2021, the Committee carried out a review of
Directors’ remuneration which included a selection of peer comparisons and external reports including the Nurole Compensation
Report and the Trust Associates 2020 Fee Review. Consideration was also given to the increased level of input and responsibility
the members of the Board have in relation to enhanced regulations and requirements. As a result, the Committee decided
to implement the following increases, which are approximately in line with inflation since 1 October 2019, with effect from
1 October 2021:
• The annual fee for the Chair has been increased from £39,000 to £41,000pa, representing a 5.1% increase.
• The annual fee for a non-executive Director has been increased from £28,000 to £29,500pa, representing a 5.3% increase.
The additional supplement for the Chair of the Audit Committee remained unchanged at £5,500.
Directors’ Remuneration Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 51
Corporate Governance
In accordance with the Shareholder Rights Directive, the Board confirms that there were no variable pay awards made to the
Directors and there were no deferral periods or share based pay equivalents. The annual percentage change in remuneration in
respect of the five financial years prior to the current year in respect of each Director role is as follows:
Financial year to:
30 Sept
2016
30 Sept
2017
30 Sept
2018
30 Sept
2019
30 Sept
2020
30 Sept
2021
Chair 0% 0% 5.7% 0% 5.4% 0%
Non-Executive Director 0% 0% 6% 0% 5.7% 0%
Chair of the Audit Committee 0% 0% 0% 0% 10.0% 0%
Expenses
The Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of
their duties and attendance at Board and General Meetings. In certain circumstances, under HMRC rules, travel and other out
of pocket expenses reimbursed to the Directors may be considered as taxable benefits. Where expenses are classified as taxable
under HMRC guidance, they are paid gross and shown in the taxable column of the Directors remuneration table. The taxable
expenses comprise of travel and associated expenses incurred by the Directors attending the Board meetings held in London.
The policy for claiming such expenses was not changed during the year.
Letters of Appointment
In accordance with recommended practice, each Director has received a letter setting out the terms of their appointment. None
of the Directors has a contract of service or a contract for services and a Director may resign by giving notice in writing to the
Board at any time. The Directors are not entitled to payment for loss of office.
New Directors are appointed and elected with the expectation that they will serve for a period of at least three years. In
accordance with the Articles of Association any new Director is required to stand for election at the first AGM following their
appointment, and in accordance with good corporate governance practice all Directors shall stand for re-election every year
following their first election by shareholders. While it is encouraged, there is no requirement for Directors to hold shares in the
Company or Group.
Directors’ and Officers’ Liability Insurance
Directors’ and Officers’ liability insurance cover is held by the Company in respect of the Directors. The Company has, to the
extent permitted by law and the Company’s Articles of Association, provided each Director with a Deed of Indemnity which,
subject to the provisions of the Articles of Association and s234 of the Companies Act 2006, qualifying third party indemnity
provisions, indemnifies the Director in respect of costs which they may incur relating to the defence of any proceedings brought
against them arising out of their position as Directors (excluding criminal and regulatory penalties). Directors’ legal costs may be
funded up-front provided they reimburse the Company if the individual is convicted or, in an action brought by the Company,
judgment is given against them. These provisions were in force during the year and remain in force at the date of this report.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 52
Corporate Governance
Remuneration (Audited)
In the year under review the Directors’ fees were paid at the following annual rates, the Chair £39,000; other Directors £28,000
with the Chair of the Audit Committee receiving an extra £5,500 supplement for performing that additional role.
Year ended 30 September 2021 Year ended 30 September 2020
Director Fixed fee
Taxable
expenses
Total
remuneration Fixed fee
Taxable
expenses
Total
remuneration
Lisa Arnold £39,000 – £39,000 £34,417 – £34,417
(appointed Chair on 26 February 2020)
Neal Ransome £33,500 – £33,500 £33,500 – £33,500
(Chair of the Audit and Management Engagement
Committees)
Andrew Fleming £28,000 – £28,000 £23,333 – £23,333
(appointed on 1 December 2019)
Jeremy Whitley £28,000 – £28,000 £23,333 £296 £23,629
(appointed on 1 December 2019)
James Robinson – – – £16,250 £124 £16,374
(Chair, retired on 26 February 2020)
Antony Brampton – – – £11,667 – £11,667
(retired on 26 February 2020)
TOTAL* £128,500 – £128,500 £142,500 £420 £142,920
*See note 8 on page 81
No pension or other contributions were paid by the Company during the year to any of the Directors. Consequently, the figures
shown above comprise the single total remuneration figure for each Director in relation to the Group.
Directors’ Share Interests (Audited)
The interests of Directors in the ordinary shares of the Company on 30 September 2021 (and 2020):
2021 2020
Lisa Arnold 20,000 20,000
Andrew Fleming 10,000 10,000
Neal Ransome 10,073 10,073
Jeremy Whitley 20,000 20,000
There have been no changes in these interests between the end of the financial year and 16 December 2021. None of the
Directors hold shares in the subsidiary company PCGH ZDP Plc.
Performance
The Regulations require a line graph to be included in the Directors’ Remuneration Report showing the total shareholder
return for each of the financial years in the relevant period. Each annual graph is required to increase by one year until the
maximum relevant period of ten years is reached; thereafter the relevant period will continue to be ten years. The Company was
incorporated on 12 May 2010 and commenced trading on 15 June 2010, the performance comparison is therefore shown for
the period of 10 years from 1 October 2011 to 30 September 2021.
Directors’ Remuneration Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 53
Corporate Governance
Performance comparison
0
100
200
300
400
500
Sep
2021
Mar
2021
Sep
2020
Mar
2020
Sep
2019
Mar
2019
Sep
2018
Mar
2018
Sep
2017
Mar
2017
Sep
2016
Mar
2016
Sep
2015
Mar
2015
Sep
2014
Mar
2014
Sep
2013
Mar
2013
Sep
2012
Mar
2012
Sep
2011
MSCI ACWI Health Care Index in sterling with dividends reinvested (TR)
(TR: Total Return, rebased to 100 at 30 September 2011)
Company reconstruction 20 June 2017
Ordinary Share Price (TR)
The MSCI ACWI Healthcare Index (total return in sterling with dividends reinvested) is used as the comparator because, as a
market capitalisation weighted index, the Board considers that it is the most appropriate single market index.
Relative Importance of Spend on Pay
Under the Regulations, the Directors’ Remuneration Report must set out in a graphical or tabular form that shows in respect
of the relevant financial year and the immediately preceding financial year the actual expenditure of the company, and the
difference in spend between those years, on remuneration paid to or receivable by all employees of the group; and distributions
to shareholders by way of dividend and share buyback; and any other significant distributions and payments or other uses of
profit or cash-flow deemed by the Directors to assist in understanding the relative importance of spend on pay.
The Company has no employees and while the Directors do not consider that the comparison of Directors’ remuneration with
distributions to shareholders as a meaningful measure of the Company’s overall performance having regard to the Company’s
objective of capital growth, for comparison purposes the table below compares Directors’ fee with the level of dividends paid
out, profit after tax and the cost of share buy backs undertaken by the Company.
Change
2021
£’000
2020
£’000
£’000 %
Directors’ total remuneration 129 143 (14) (10%)
Dividends paid or declared in respect of
the financial year
2,426 2,426 – –
Profit on ordinary activities after tax 63,021 40,273 22,748 56%
Buy back of Ordinary shares – 1,040 (1,040) (100%)
Approved by the Board, and confirmed as a true reflection of the major decisions made by the Board acting in the capacity of a
remuneration committee, in relation to the remuneration of the Directors including any changes made on 16 December 2021.
Lisa Arnold
Chair
BL1
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 54
Corporate Governance
I am pleased to present my fourth Report to you as Chair of the Audit Committee.
The Committee has written terms of reference which are available to view on the
Company’s website, www.polarcapitalglobalhealthcaretrust.co.uk.
The Committee comprises all the Directors and the Board
is satisfied that the Committee has sufficient recent
and relevant financial experience and, as a whole, has
competence relevant to the sector in which the Company
operates to discharge its functions effectively. The experience
of the members of the Committee can be assessed from
the Directors’ biographies set out on pages 6 and 7. I am
a chartered accountant and a former partner and head
of the pharmaceutical and healthcare M&A practice of
PricewaterhouseCoopers LLP (‘PwC’). I hold the ICAEW’s FCA,
BFP and CF qualifications and am therefore deemed to have
appropriate experience and expertise to carry out the role of
Chair of the Audit Committee.
During the year the Audit Committee met four times, with
all members of the Committee attending each meeting. The
Committee continued to function remotely for the financial
year due to the restrictions which were in place as a result of
the COVID-19 pandemic. Zoom videoconferencing and online
Diligent Boardbooks continue to be utilised to assist with the
smooth running of meetings. I am pleased to confirm that
this has worked well, with Committee members being able
to operate as effectively as previously and that there has been
no break in service from external providers.
Matters Considered during the Financial
Year Ended 30 September 2021:
During the year the Audit Committee considered a variety of
matters, including:
Audit Regulation
• since my last report to you, the Committee has not had to
consider any new regulations. It does, however, regularly
review guidance and determine how to apply any relevant
best practice to the Company. The Committee also
reviews the outcomes of the FRC’s annual Audit Quality
Reviews and discusses the findings with our Auditors.
• the Committee is aware of the extensive proposals
outlined in the Department of Business, Energy and
Industrial Strategy consultation (“BEIS”) following
the three independent reviews by Sir John Kingman,
Sir Donald Brydon and the Competition and Markets
Authority which seek to strengthen the UK’s audit and
corporate governance framework. The Audit Committee
has considered the proposed recommendations outlined
as part of the consultation and how they could impact
the Company should they be implemented. Polar Capital,
the Investment Manager, responded in detail to the
consultation on behalf of the investment trusts which it
manages. The Committee will review the requirements
further once the outcomes of the consultation are
published and ahead of the introduction of any primary
legislation arising from the proposed reforms.
Audit Committee
Report
Neal Ransome
Chair of the Audit Committee
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 55
Corporate Governance
Annual External Audit
• the scope of the annual audit and agreement with the
Auditors of the key areas of focus;
• the reports from the Auditors concerning their audit of
the annual Financial Statements of the Company;
• the performance of the Auditors and the level of fees
charged for their services;
• the independence and objectivity of the Auditors;
• the appointment of the Auditors;
• the policy for non-audit services which may be provided
by the Auditors in line with the FRC guidance; and
• the extent of the non-audit services, the quality of such
work and the fees.
Internal Audit
• the potential need for an internal audit function, which
we continue to conclude is unnecessary for an externally
managed investment trust.
Accounting Policies and related matters
• the appropriateness and any changes to the accounting
policies of the Company including any judgements
required by such policies and the reasonableness of
such. During the year the Committee ensured that the
accounting policies as set out on pages 75 to 80 were
applied consistently throughout the year. The Committee
confirmed there have been no changes to any accounting
policies in the year under review. There were no new
IFRSs or amendments to IFRSs applicable to the current
year which had any significant impact on the Company’s
Financial Statements. The Committee also noted the FRC’s
latest Letter on Accounting & Corporate Reporting for the
end of the Brexit transition period. From the financial year
ending 30 September 2022 the Company will be required
to prepare Financial Statements using UK-adopted IFRSs.
• the financial disclosures contained in the Annual Report
and Half Year Report to shareholders; and
• the going concern statement, longer-term viability
statement and the requirement that the Annual Report
and Financial Statements when taken as a whole are fair,
balanced and understandable.
• the Committee has noted ESEF Regulations which will
come into force for accounting years starting on or
after 1 January 2021. The ESEF regulations will require
the Company, and all issuers of consolidated accounts
prepared in accordance with IFRS and trading on a
regulated market, to publish their annual Financial
Statements in a common electronic format. The
regulations will first apply to the Company for the
accounting year ending 30 September 2022.
The Company’s Subsidiary, PCGH ZDP Plc
• the Audit Committee also considers the Financial
Statements and audit requirements of the Company’s
wholly owned subsidiary, PCGH ZDP Plc. Accounting
standard IFRS9 specifies how an entity should classify and
measure financial assets, liabilities and some contracts.
PCGH ZDP Plc has advanced a loan to the Company
which falls within the scope of this accounting standard.
As required by IFRS9, an impairment review has been
conducted to assess the possibility of the Company
defaulting on its liability to PCGH ZDP Plc. It has been
concluded that the possibility of default is negligible,
and that accordingly no adjustment is required to the
carrying value of the loan in the Financial Statements of
PCGH ZDP Plc. A note on this matter has been included
in the Financial Statements of PCGH ZDP Plc. The liability
to PCGH ZDP Plc is the equivalent of the redemption
value of the ZDP Shares being 122.99p per ZDP Share
and becomes payable on 19 June 2024. The Company’s
minimum asset cover required to fulfil the loan covenant
is 1.8x. During the year under review the lowest asset
cover available at month end was 8.89 and the highest
was 10.82.
Investment Matters
• the investment management process, including
confirmation of the existence and ownership of
investments through the review of quarterly Depositary
Reports and meeting with the Depositary in relation to the
safeguarding of the Company’s assets.
Internal Controls and Risk
• the risk map covering the identification of new risks,
adjustments to existing risks and the mitigation and
controls in place to manage those risks; and
• reports from the Investment Manager and the Investment
Manager’s external Auditors on the effectiveness of the
system of internal financial controls including the risk
map.
Dividend Policy
• the Committee considered the Company’s Dividend
Policy as approved by Shareholders at the Annual General
Meeting held in January 2021 and recommended to the
Board that it continue in force. The Dividend Policy will be
proposed for approval by Shareholders at the Company’s
AGM to be held in February 2022. The Company’s focus
remains on capital growth, and while the Company
continues to aim to pay two dividends per year these are
expected to be a small part of a shareholder total return.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 56
Corporate Governance
Consideration of the Half Year Report and
Financial Statements
• prior to publication, the Committee considered and
reviewed the Half Year Report and Financial Statements,
which were not audited, to ensure that they were
prepared on a basis consistent with the accounting
policies used in the Annual Report and Financial
Statements for the year ended 30 September 2020.
Consideration of the Annual Report and
Financial Statements
• the Committee performed this role through monitoring
the integrity of the Financial Statements of the Company
and the system of accounting to ensure compliance with
the relevant and appropriate accounting standards. The
scope of the audit was agreed in advance with a focus
on areas of audit risk and the appropriate level of audit
materiality.
• the Auditors reported to the Committee on the results of
the audit work and highlighted any issues which the audit
work had discovered, or the Committee had previously
identified as significant or material in the context of the
Financial Statements. Following a comprehensive review
process the Audit Committee presented its conclusions to
the Board.
Significant Matters in Relation to the Financial
Statements for the Year Ended 30 September
2021
• in addition to the matters considered by the Committee
informing its opinions on going concern and longer-term
viability (described below) and in concluding that the
Annual Report and Financial Statements when taken
as a whole are fair, balanced and understandable, the
Committee also considered the following matters in
relation to the Financial Statements:
Audit Committee Report continued
Significant Matter How the Issue was Addressed
Valuation, existence and ownership of
investments
The valuation is carried out in accordance with the accounting policies of the
Company as described in note 2. The Depositary has reported on its work and safe
keeping of the Company’s investments and a report from the Depositary is provided
on the Company’s website www.polarcapitalglobalhealthcaretrust.co.uk
Compliance with s1159 and s1159 of
the Corporation Tax Act 2010
Consideration of compliance with the requirements of investment trust status is
carried out at each Board meeting throughout the year.
Stability and financial sustainability of
the subsidiary in relation to structural
gearing provided to the parent company
The ZDP shares issued by the subsidiary are traded and maintain a standard listing
on the London Stock Exchange. The valuation of the subsidiary is monitored
regularly by the Board and the subsidiary is subject to an independent audit
by PwC.
There were no adverse matters brought to the Audit
Committee’s attention in respect of the 2021 audit which
were material or significant, or which should be brought to
Shareholders’ attention.
Conclusions in Respect of the Annual Report
and Financial Statements
In order to reach the conclusion that the Annual Report
and Financial Statements when taken as a whole are fair,
balanced and understandable, the Board has requested that
the Committee advise on whether it considers these criteria
satisfied. In so doing the Committee has considered the
following:
• the ongoing comprehensive control framework around
the production of the Annual Report, including the
verification processes in place to deal with the factual
content;
• the extensive levels of review undertaken in the
production process, by the Investment Manager and the
Committee;
• the internal control environment as operated by the
Investment Manager and other suppliers including any
checks and balances within those systems; and
• the unqualified audit report from the Auditors confirming
their work based on substantive testing of the Financial
Statements.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 57
Corporate Governance
As a result of the work performed, the Committee has
concluded that the Annual Report and Financial Statements
for the year ended 30 September 2021, taken as a whole,
are fair, balanced and understandable and provide the
information necessary for shareholders to assess the
Company’s performance, business model and strategy, and it
has reported on these findings and provided such conclusion
to the Board.
External Auditors
Appointment of Auditors, Fees and Tenure
The Committee considers by way of meetings and reports,
the appointment, remuneration and work of the Auditors.
PwC (or the ‘Auditors’) have provided audit services to the
Company from its incorporation in 2010 and to the Group
since 2017. Following a formal and competitive tender
process, PwC were reappointed as the Company auditors
in 2020 and this was subsequently confirmed by resolution
of the Shareholders at the AGM held in January 2021. The
re-appointment of PwC as Auditors to the Company will
be submitted for Shareholder approval once again at the
AGM to be held in February 2022, together with a separate
Resolution to authorise the Directors to set the remuneration
of the Auditors. In accordance with current legislation, the
Company is required to instigate an audit tender process
at least every 10 years and will be required to change its
auditors after a maximum of 20 years’ engagement.
The audit partner who led our statutory audit for the year
under review was Kevin Rollo, who completed his first audit
of the Company following a rotation of the audit partner. The
external auditors are invited to all Committee meetings and
receives copies of all relevant papers and meeting minutes.
The fees paid to PwC in respect of the audit of the annual
Financial Statements of the Company amounted to £38,000
(2020: £38,000). The fees paid to PwC in respect of the audit
of the Financial Statements of the Company’s wholly owned
subsidiary, PCGH ZDP Plc, were £6,250 (2020: £6,000). The
fee represents a minor increase on the prior year to reflect
the level of audit work required to perform a robust quality
audit and the increased risks borne by audit firms. The fee
increases of the last two years are reflective of the wider
market recognising the increase in regulatory scrutiny faced
by auditors and therefore the Committee deemed the level of
fees appropriate and recommended such to the Board.
Effectiveness of Audit Process
The Committee, on behalf of the Board, is responsible
for overseeing the relationship with the external auditors
including ensuring the quality and effectiveness of the audit.
The Audit Committee monitored and evaluated the
effectiveness of the Auditors and any changes in the terms
of their appointment based on an assessment of their
performance, qualification, knowledge, expertise and
resources. The Auditor’s independence was also considered
along with other factors such as audit planning and
interpretations of accounting standards. This evaluation
has been carried out throughout the year by meetings held
with the Auditors, by review of the audit process and by
comments from the Investment Manager and others involved
in the audit process. Based on its review the Audit Committee
concluded that the Auditors remained independent and
continued to act in an independent manner.
The Auditors are provided with an opportunity to address the
Committee without the Investment Manager present to raise
any concerns or discuss any matters relating to the audit work
and the cooperation of the Investment Manager and others
in providing information and the quality of that information
including the timeliness in responding to audit requests.
Non-audit Work
The Audit Committee’s policy for the provision of non-
audit services by the Auditors is to ensure that there is a
clear separation of audit work and non-audit work and
that the cost of any non-audit work is justified and is not
disproportionate to the audit fees, to the extent that the
independence of the Auditors would be compromised.
The Audit Committee’s policy on the provision of non-
audit services by the Auditors is available on the Company’s
website. The policy is produced in line with the FRC Ethical
Standards (updated in March 2020) and any non-audit
services are required to be pre-approved by the Audit
Committee. In both the year under review and the prior year,
no non-audit services were provided by the Auditors.
Overview of Risk and Internal Controls
The Board has ultimate responsibility for the management
of risk throughout the Company and has asked the Audit
Committee to assist in maintaining an effective internal
control environment.
The Company maintains a Risk Map which seeks to identify,
monitor and control principal risks as well as identifying
emerging risks. The Committee has continued to review
the Risk Map to identify the principal and emerging risks
facing the business including those that might threaten its
business model, future performance, liquidity and reputation.
Alongside this, the Committee considered the likelihood,
impact, mitigating factors and controls to reduce the impact
of such risks as described on pages 28 and 31. This process
was carried out throughout the year and is the means by
which the Risk Map is monitored and kept relevant by
reflecting any changes to the source and level of risks facing
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 58
Corporate Governance
the Company. The Committee will actively continue to
monitor the system of internal controls through the regular
review of the Risk Map and the internal control environment
in order to provide assurance that they continue to operate as
intended.
As part of the year end processes the Audit Committee
also undertook a review of the effectiveness of the system
of internal controls considering any issues that had arisen
during the course of the year. The Committee acknowledges
that the Company is reliant on the systems utilised by
external suppliers. Representatives of the Investment
Manager reported to the Committee on the system of
internal controls that is in place for the performance of the
Investment Manager’s duties under the IMA. The Committee
and the Manager also received presentations and internal
control reports from other key suppliers on the quality and
effectiveness of the services provided to the Company.
In addition, the Manager also conducted a virtual due
diligence site visit with HSBC where they received thorough
presentations from representatives covering the work of the
Operations, Risk Administration and Accounting Teams, in
addition to the Custodian and Depositary. No matters of
concern with any areas of service were raised at any of the
meetings or on reviewing the internal controls reports.
The Audit Committee has also discussed with the Investment
Manager their policies on whistleblowing, cyber security,
antibribery and the Modern Slavery Act and is satisfied
that the Investment Manager has controls and monitoring
processes to implement their policies across the main
contractors which supply goods and services to the
Investment Manager and to the Company. The Company
has adopted an Anti-Corruption policy which incorporates
Anti-Bribery, Anti-Slavery and the Corporate Criminal Offence
of Tax Evasion. In addition to this the Company has issued a
data privacy notice in relation to the General Data Protection
Regulation. All such policies can be found on the Company’s
website www.polarcapitalglobalhealthcaretrust.co.uk.
The Audit Committee also considered the policy and controls
used by the Investment Manager surrounding the use of
brokerage commissions generated from transactions in the
Company’s portfolio and the obtaining of best execution on
all transactions.
There were no issues of concern arising from the reviews of
or within the internal controls environment the Company
relied upon during the course of the year ended 30
September 2021 and up to the date of this report.
The Impact of COVID-19
The Committee continues to consider the longer-term
effects of the COVID-19 pandemic on the Company and
the portfolio. COVID-19 is captured in our Risk Map as
a Black Swan event and its effect also appears in our
assessment of global geopolitical risk and the ability to
achieve the Company’s Investment Objective. Further detail
on the direct impact that COVID-19 has had on the sector
and the portfolio can be found in the Investment Manger’s
Report on pages 11 to 22.
The Committee has once again reviewed the operational
resilience of its various service providers in connection with
the mitigation of the business risks posed by COVID-19. The
external service providers have continuously demonstrated
their ability to provide services to the expected level, whilst
doing so remotely with no breaks in the services provided or
operational failures. The Committee was assured by the level
of detail and transparency offered by the service providers
in reporting how they had committed resources in adapting
their businesses to operate remotely for a longer period than
many business continuity plans expect to be in operation for.
We were further assured by the confirmation of no business
failures being experienced. We also considered the guidance
issued by the FRC when reviewing the stress testing required
in considering the Company’s ability to continue as a going
concern and making a statement in regard to the Company’s
ongoing viability.
Going Concern and Longer-term Viability
Going Concern
At the request of the Board, the Audit Committee has
considered the ability of the Company to adopt the going
concern basis for the preparation of the Financial Statements.
The Committee has considered the financial position of
the Company, its cashflows and its liquidity position. The
Committee has also considered any material uncertainties and
events that might cast significant doubt upon the Company’s
ability to continue as a going concern. The Audit Committee
has considered:
• the ability of the Company to liquidate its portfolio to
meet any liabilities as they fall due;
• the level of budgeted expenses and the exposure to
currency and credit risk; and
• the factors impacting the forthcoming year as set out in
the Strategic Report Section and comprising the Chair’s
Statement, the Investment Manager’s Report and the
Strategic Review. These factors include the long-term
effects and impact of the COVID-19 pandemic on the
Company and the investment portfolio.
The financial position of the Company and its cash flows and
liquidity position are described in the Strategic Report and
the Financial Statements. Note 26 to the Financial Statements
includes the Company’s policies and process for managing
its capital; its financial risk management objectives; details
Audit Committee Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 59
Corporate Governance
of financial instruments and hedging activities. Exposure to
credit risk and liquidity risk are also disclosed.
In considering the effects of COVID-19, the Committee has
continually monitored the Company’s financial performance
during the period of market volatility and economic
uncertainty since the outset of the pandemic. Based on the
information provided to the Committee and its assessment
of the financial position of the Company, the Committee has
recommended that a going concern basis should be adopted
by the Board for the preparation of the Financial Statements
for the year ended 30 September 2021.
Longer-term Viability
The Board has also asked the Audit Committee to address
the requirement that a longer-term viability statement be
provided to Shareholders. This statement should take account
of the Company’s financial position, the principal risks as set
out on pages 28 to 31 together with the mitigating factors
which are assumed to operate appropriately so that the Board
may state that they have a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment.
The Committee considered the Company’s longer-term
viability, with reference to the FRC’s Guidance on Risk
Management, Internal Control and Related Financial and
Business Reporting, and concluded that the Board may state
its reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment.
To provide this assessment, the Audit Committee has
considered the Company’s financial position as described
above including its ability to liquidate its portfolio and meet
its expenses as they fall due:
• the portfolio comprises investments traded on major
international stock exchanges, and there is a spread
of investments by market capitalisation of company.
Approximately 98.3% of the portfolio as at 30 September
2021 could be liquidated within seven trading days and
there is no expectation that the nature of the investments
held within the portfolio will be materially different in
future;
• the expenses of the Company are predictable and modest
in comparison with the assets of the Company and there
are no capital commitments foreseen which would alter
that position; and
• the Company has no employees and consequently has no
employment-related liabilities or responsibilities.
The Audit Committee has also had regard to the following
assumptions in considering the Company’s longer-term
viability:
• healthcare will continue to be an investable sector of the
international stock markets and investors will still wish to
have an exposure to such investments;
• closed ended investment trusts will continue to be wanted
by investors;
• regulation will not increase to a level that makes the
running of the Company uneconomical in comparison to
other competitor products;
• should the performance of the Company be less than
the Board deems acceptable it has appropriate powers to
replace the Investment Manager; and
• there will be no material or significant changes in the
principal risks and uncertainties.
Stress Testing
In addition to the above, stress testing was undertaken in
determining the Company’s longer-term viability and the
appropriateness of preparing the Financial Statements on
a going concern basis. In conducting the stress tests, the
Company’s principal risks were grouped into three buckets
according to their post mitigation scores and, where possible,
material values were attached to the key risks materialising
and evaluated to assess the effect of this on the Company’s
ability to continue as a going concern and its viability over a
five-year period. The stress tests also used a variety of falling
parameters to demonstrate the impact on the Company’s
share price and NAV. COVID-19 was also factored into the key
assumptions made by assessing its continued impact on the
Company’s key risks and whether the key risks had increased
in their potential to affect the normal, favourable and
stressed market conditions. Stress testing was also applied
to assess the Company’s ability to meet its liability to its
subsidiary, PCGH ZDP Plc. This liability is the equivalent of the
redemption value of the ZDP Shares being 122.99p per ZDP
Share and becomes payable on 19 June 2024. The Company’s
minimum asset cover required to fulfil the loan covenant is
1.8x. The average asset cover for the period under review was
9.73 and at the Company’s year-end was 10.68. The results
of the stress testing demonstrated the impact on the NAV
and reaffirmed the Company’s ability to be able to meet its
liability to PCGH ZDP Plc as it falls due.
The Audit Committee also notes that, in the absence of any
prior proposals, the Company’s Articles of Association require
the Directors to put forward at the first AGM following
1 March 2025 a resolution to place the Company into
liquidation. The voting on that resolution will be enhanced
such that, provided any single vote is cast in favour, the
resolution will be passed.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 60
Corporate Governance
Based on these considerations the Audit Committee has
recommended to the Board that a statement may be made
on the Company’s longer-term viability to continue its
operations and meet its expenses and liabilities as they fall
due until the liquidation vote at the first AGM following
1 March 2025.
Effectiveness of the Audit Committee
The services provided to the Board by the Audit Committee
are reviewed within the Annual Board Evaluation, including
consideration of actions undertaken by the Audit Committee
with the Investment Manager and Auditors to ensure an
appropriate audit process is undertaken. I am pleased to
confirm that the evaluation result was positive and no matters
of concern or requirements for change were highlighted. The
Committee continually seeks to improve its effectiveness and
follow best practice guidance from the FRC and other bodies.
Neal Ransome
Chair of the Audit Committee
16 December 2021
Audit Committee Report continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 61
Corporate Governance
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare Financial
Statements for each financial year. Under that law the
Directors have prepared the group and company Financial
Statements in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006. Additionally, the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules
require the directors to prepare the group Financial
Statements in accordance with international financial
reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
Under company law the Directors must not approve the
Financial Statements unless they are satisfied that they give
a true and fair view of the state of affairs of the group and
company and of the profit or loss of the group and company
for that period. In preparing the Financial Statements, the
Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether, for the group and company, international
accounting standards in conformity with the requirements of
the Companies Act 2006 and, for the group, international
financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union have
been followed, subject to any material departures disclosed
and explained in the Financial Statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the Financial Statements on the going concern
basis unless it is inappropriate to presume that the group
and company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Group
and enable them to ensure that its Financial Statements
comply with the Companies Act 2006. They are responsible
for such internal control as they determine is necessary to
enable the preparation of Financial Statements that are
free from material misstatement, whether due to fraud or
error, and have general responsibility for taking such steps
as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report, Directors’
Report, Directors’ Remuneration Report and Corporate
Governance Statement that comply with that law and those
regulations.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the company’s website. Legislation in the UK governing
the preparation and dissemination of Financial Statements
may differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the annual report and Financial
Statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the group and company’s position and
performance, business model and strategy.
Each of the Directors, whose names and functions are listed
in the Strategic Report, confirm that, to the best of their
knowledge:
• the company Financial Statements, which have been
prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the
company;
• the group Financial Statements, which have been
prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the group;
and
• the Strategic Report includes a fair review of the
development and performance of the business and the
position of the group and company, together with a
description of the principal risks and uncertainties that it
faces.
In the case of each Director in office at the date the Directors’
Report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the group and company’s Auditors
are unaware; and
• they have taken all the steps that they ought to have
taken as a Director in order to make themselves aware
of any relevant audit information and to establish that
the group and company’s Auditors are aware of that
information.
Lisa Arnold
Chair
16 December 2021
Statement of Directors’
Responsibilities
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 62
Corporate Governance
Report on the audit of the Financial Statements
Opinion
In our opinion, Polar Capital Global Healthcare Trust plc’s group Financial Statements and parent company Financial Statements
(the “Financial Statements”):
• give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 September 2021 and of the
group’s and parent company’s profit and the group’s cash flows for the year then ended;
• have been properly prepared in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements, included within the Report and Financial Statements (the “Annual Report”), which
comprise: the Group and Company Balance Sheets as at 30 September 2021; the Group Statement of Comprehensive Income,
the Group and Company Cashflow Statement, and the Group and Company Statement of Changes in Equity for the year then
ended; and the notes to the Financial Statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
As explained in note 2 (a) to the financial statements, the group and parent company, in addition to applying international
accounting standards in conformity with the requirements of the Companies Act 2006, have also applied international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In our opinion, the group and parent company financial statements have been properly prepared in accordance with
international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the Financial Statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
Financial Statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided.
We have provided no non-audit services to the parent company or its controlled undertakings in the period under audit.
Independent Auditors’ Report to the
Members of Polar Capital Global
Healthcare Trust plc
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 63
Corporate Governance
Our audit approach
Overview
Audit scope
• The Group is an Investment Trust Company and engages Polar Capital LLP (the “Manager”) to manage its assets.
• We conducted our audit of the Financial Statements using information from HSBC Securities Services (the “Administrator”)
to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions.
• We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the
third parties referred to above, the accounting processes and controls, and the industry in which the Company operates.
• We obtained an understanding of the control environment in place at both the Manager and the Administrator and adopted
a fully substantive testing approach using reports obtained from the Administrator.
Key audit matters
• Valuation and existence of investments (group and parent).
• Income from investments (group and parent).
Materiality
• Overall group materiality: £3,850,000 (2020: £3,250,000) based on 1% of net assets.
• Overall parent company materiality: £3,850,000 (2020: £3,250,000) based on 1% of net assets.
• Performance materiality: £2,887,500 (group) and £2,887,500 (parent company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Financial
Statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we
make on the results of our procedures thereon, were addressed in the context of our audit of the Financial Statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Consideration of the impact of COVID-19, which was a key audit matter last year, is no longer included because of reduced
uncertainty of the impact of COVID-19 in the current year as markets and economies continue to recover. Otherwise, the key
audit matters below are consistent with last year.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 64
Corporate Governance
Independent Auditors’ Report continued
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments (group and
parent)
Refer to the Accounting Policies (pages 77 and 78) and the
Notes to the Financial Statements (page 84).
The investment portfolio at the year-end comprised listed
equity investments valued at £408.56m
We focused on the valuation and existence of investments
because investments represent the principal element of the
net asset value as disclosed in the Balance Sheets in the
Financial Statements.
We also focussed on the accounting policy for the valuation
of investments held at fair value through profit or loss as
incorrect application could indicate a misstatement in the
valuation of investments.
We tested the valuation of the listed equity investments by
agreeing the prices used in the valuation to independent third
party sources.
We tested the existence of the investment portfolio by
agreeing investment holdings to an independent confirmation
obtained from the custodian, HSBC Bank plc.
We assessed the accounting policy for investments held at fair
value through profit or loss for compliance with accounting
standards and performed testing to check that investments
are accounted for in accordance with the stated accounting
policy.
We did not identify any material matters to report.
Income from investments (group and parent)
Refer to the Accounting Policies (pages 76 to 78) and the
Notes to the Financial Statements (pages 80 and 84).
We focused on the accuracy, occurrence and completeness
both of net capital gains on investments and of dividend
income recognition.
ISAs (UK) presume there is a risk of fraud in income
recognition. We considered this risk to relate to the risk
of overstating investment gains and the misclassification
of dividend income as either capital or revenue due to the
pressure management may feel to achieve a certain level of
capital or income growth in line with the objective of the
Company and in order to maintain the level of dividends paid
to shareholders in line with the dividend policy.
We also focussed on the accounting policy for investment
income recognition and its presentation in the Group
Statement of Comprehensive Income as set out in the
requirements of The Association of Investment Companies
Statement of Recommended Practice (the “AIC SORP”) as
incorrect application could indicate a misstatement in income
recognition.
We assessed the accounting policy for income recognition
for compliance with accounting standards and the AIC SORP,
and that income from investments has been accounted for in
accordance with the stated accounting policy.
We tested the accuracy of dividend receipts by agreeing the
dividend rates from investments to independent third-party
data. No material misstatements were identified.
We tested occurrence by testing that all dividends recorded
in the year had been declared in the market by investment
holdings, and we traced a sample of dividends received to
bank statements. Our testing did not identify any material
misstatements.
To test for completeness, we tested that the appropriate
dividends had been received in the year by reference to
independent data of dividends declared for all dividends
during the year. Our testing did not identify any unrecorded
dividends.
We also tested the allocation and presentation of dividend
income between the revenue and capital return columns of
the Statement of Comprehensive Income in line with the
requirements set out in the AIC SORP by determining reasons
behind dividend distributions. Our procedures did not identify
any material misstatements
The gains and losses on investments held at fair value
comprise realised and unrealised gains and losses. For
unrealised gains and losses, we tested the valuation of
the portfolio at the year-end, together with testing the
reconciliation of opening and closing investments. For realised
gains/losses, we tested a sample of disposals by agreeing
the proceeds to bank statements and we re-performed the
calculation of a sample of realised gains/losses.
We did not identify any material matters to report.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 65
Corporate Governance
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial
Statements as a whole, taking into account the structure of the group and the parent company, the accounting processes and
controls, and the industry in which they operate.
The Company’s accounting is delegated to the Administrator who maintains the Company’s accounting records and who has
implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as per
of our risk assessment, we understood and assessed the internal controls in place at both the Manager and the Administrator
to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations
involved obtaining and analysing the relevant control-reports issued by the independent service auditor of the Manager and the
Administrator in accordance with generally accepted assurance standards for such work. Following this assessment, we applied
professional judgement to determine the extent of testing required over each balance in the Financial Statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Financial Statements - group Financial Statements - parent
company
Overall materiality £3,850,000 (2020: £3,250,000). £3,850,000 (2020: £3,250,000).
How we determined it 1% of net assets 1% of net assets
Rationale for benchmark applied We have applied this benchmark, a
generally accepted auditing practice
for investment trust audits, in the
absence of indicators that an alternative
benchmark would be appropriate and
because we believe this provides an
appropriate and consistent year-on-year
basis for our audit.
We have applied this benchmark, a
generally accepted auditing practice
for investment trust audits, in the
absence of indicators that an alternative
benchmark would be appropriate and
because we believe this provides an
appropriate and consistent year-on-year
basis for our audit. While performing
our work, we applied the lower
appropriate and consistent year-on-year
basis for our audit. While performing
our work, we applied the lower
threshold of £3,650,000 being the
component materiality level allocated to
the Company for the purposes of the
audit of the Group Financial Statements.
component materiality level allocated to
the Company for the purposes of the
audit of the Group Financial Statements.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was between £365,000 and £3,650,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of
our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in
determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to £2,887,500 for the group
Financial Statements and £2,887,500 for the parent company Financial Statements.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 66
Corporate Governance
Independent Auditors’ Report continued
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £192,000
(group audit) (2020: £162,000) and £192,000 (parent company audit) (2020: £162,000) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s and the parent company’s ability to continue to adopt the going
concern basis of accounting included:
• evaluating the Directors’ risk assessment and whether it has addressed the relevant ongoing threats presented by COVID-19;
• evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available
information and our understanding of the business and assessed the potential impact on the Financial Statements;
• reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected
operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and
oversight of key third-party service providers; and
• assessing the implication of significant reductions in net assets as a result of market performance on the ongoing ability of
the Company to operate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and the parent company’s ability to continue as a going
concern for a period of at least twelve months from when the Financial Statements are authorised for issue.
In auditing the Financial Statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the Financial Statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and
the parent company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material
to add or draw attention to in relation to the directors’ statement in the Financial Statements about whether the directors
considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the Financial Statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the Financial Statements does
not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the Financial
Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 67
Corporate Governance
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic report and Report of the Directors
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Report of the Directors for the year ended 30 September 2021 is consistent with the Financial Statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and parent company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic report and Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part
of the corporate governance statement relating to the parent company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as
other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the Financial Statements and our knowledge obtained during the audit, and
we have nothing material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging
risks and an explanation of how these are being managed or mitigated;
• The directors’ statement in the Financial Statements about whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and
parent company’s ability to continue to do so over a period of at least twelve months from the date of approval of the
Financial Statements;
• The directors’ explanation as to their assessment of the group’s and parent company’s prospects, the period this assessment
covers and why the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the parent company will be able to continue
in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an
audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the Financial Statements and our knowledge and understanding of the group and parent company
and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for the members to assess the group’s and parent company’s position, performance,
business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 68
Corporate Governance
Independent Auditors’ Report continued
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the parent
company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified
under the Listing Rules for review by the auditors.
Responsibilities for the Financial Statements and the audit
Responsibilities of the directors for the Financial Statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
Financial Statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control as they determine is necessary to enable the preparation of Financial
Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the directors are responsible for assessing the group’s and the parent company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
Financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which
non-compliance might have a material effect on the Financial Statements. We also considered those laws and regulations that
have a direct impact on the Financial Statements such as the Companies Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the Financial Statements (including the risk of override of controls), and determined
that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital
gains) or to increase net asset value, and management bias in accounting estimates. Audit procedures performed by the
engagement team included:
• discussions with the Manager and Audit Committee, including consideration of known or suspected instances of
non- compliance with laws and regulation and fraud;
• reviewing relevant committee meeting minutes, including those of the Board and Audit Committee;
• review of financial statement disclosures to underlying supporting documentation;
• identifying and testing manual journal entries posted by the Administrator during the preparation of the Financial
Statements; and
• designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of
non- compliance with laws and regulations that are not closely related to events and transactions reflected in the Financial
Statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or
through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 69
Corporate Governance
populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we
will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the parent company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 12 May 2010 to audit the
Financial Statements for the year ended 30 September 2011 and subsequent financial periods. The period of total uninterrupted
engagement is 11 years, covering the years ended 30 September 2011 to 30 September 2021.
Kevin Rollo (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
16 December 2021
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 70
Corporate Governance
Financial
Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 70
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 71
Statement of Comprehensive Income
For the year ended 30 September 2021
Group Group
Year ended 30 September 2021 Year ended 30 September 2020
Note
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Investment income 3 3,685 – 3,685 3,446 – 3,446
Other operating income 4 – – – 17 – 17
Gains on investments held at fair value 5 – 64,165 64,165 – 42,435 42,435
Other currency losses 6 – (144) (144) – (647) (647)
Total income 3,685 64,021 67,706 3,463 41,788 45,251
Expenses
Investment management fee 7 (518) (2,070) (2,588) (535) (2,140) (2,675)
Other administrative expenses 8 (553) (59) (612) (685) (107) (792)
Total expenses (1,071) (2,129) (3,200) (1,220) (2,247) (3,467)
Profit before finance costs and tax 2,614 61,892 64,506 2,243 39,541 41,784
Finance costs 9 – (1,064) (1,064) (1) (1,038) (1,039)
Profit before tax 2,614 60,828 63,442 2,242 38,503 40,745
Tax 10 (421) – (421) (472) – (472)
Net profit for the year and total
comprehensive income
2,193 60,828 63,021 1,770 38,503 40,273
Earnings per Ordinary share (pence) 12 1.81 50.16 51.97 1.46 31.74 33.20
The total column of this statement represents Group’s Statement of Comprehensive Income, prepared in accordance with IFRS.
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the
Association of Investment Companies.
The Group does not have any other income or expense that is not included in net profit for the year. The net profit for the year
disclosed above represents the Group’s total comprehensive income.
There are no dilutive securities and therefore the Earnings per Share and the Diluted Earnings per share are the same.
All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or
discontinued in the year.
The notes on pages 75 to 94 form part of these Financial Statements.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 72
Statements of Changes in Equity
For the year ended 30 September 2021
Group and Company
Year ended 30 September 2021
Called
up share
capital
Capital
redemp-
tion
reserve
Share
premium
reserve
Special
distri-
butable
reserve
Capital
reserves
Revenue
reserve
Total
Equity
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
Total equity at 1 October 2020 31,037 6,575 80,685 3,672 201,149 2,015 325,133
Total comprehensive income:
Profit for the year ended
30 September 2021
– – – – 60,828 2,193 63,021
Transactions with owners,
recorded directly to equity:
Equity dividends paid 11 – – – – – (2,426) (2,426)
Total equity at 30 September 2021 31,037 6,575 80,685 3,672 261,977 1,782 385,728
Group and Company
Year ended 30 September 2020
Called
up share
capital
Capital
redemp-
tion
reserve
Share
premium
reserve
Special
distri-
butable
reserve
Capital
reserves
Revenue
reserve
Total
Equity
Note £’000 £’000 £’000 £’000 £’000 £’000 £’000
Total equity at 1 October 2019 31,037 6,575 80,685 4,712 162,646 2,792 288,447
Total comprehensive income:
Profit for the year ended
30 September 2020
– – – – 38,503 1,770 40,273
Transactions with owners,
recorded directly to equity:
Shares bought back and held in
treasury
20 – – – (1,040) – – (1,040)
Equity dividends paid 11 – – – – – (2,547) (2,547)
Total equity at 30 September 2020 31,037 6,575 80,685 3,672 201,149 2,015 325,133
The notes on pages 75 to 94 form part of these Financial Statements.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 73
Balance Sheets
As at 30 September 2021
Note
Group Company
30 September
2021
£’000
30 September
2020
£’000
30 September
2021
£’000
30 September
2020
£’000
Non-current assets
Investments held at fair value 13 408,561 342,404 408,561 342,404
Investment in subsidiary 13 – – 50 50
Current assets
Receivables 14 2,300 3,082 2,300 3,082
Overseas tax recoverable 572 589 572 589
Cash and cash equivalents 24 13,718 17,845 13,668 17,795
16,590 21,516 16,540 21,466
Total assets 425,151 363,920 425,151 363,920
Current liabilities
Payables 15 (2,956) (3,382) (2,956) (3,382)
(2,956) (3,382) (2,956) (3,382)
Non-current liabilities
Zero dividend preference shares 16 (36,467) (35,405) – –
Loan from subsidiary – – (36,467) (35,405)
Total liabilities (39,423) (38,787) (39,423) (38,787)
Net assets 385,728 325,133 385,728 325,133
Equity attributable to equity Shareholders
Called up share capital 17 31,037 31,037 31,037 31,037
Share premium reserve 19 80,685 80,685 80,685 80,685
Capital redemption reserve 18 6,575 6,575 6,575 6,575
Special distributable reserve 20 3,672 3,672 3,672 3,672
Capital reserves 21 261,977 201,149 261,977 201,149
Revenue reserve 22 1,782 2,015 1,782 2,015
Total equity 385,728 325,133 385,728 325,133
Net asset value per Ordinary share (pence) 23 318.07 268.11 318.07 268.11
Net asset value per ZDP share (pence) 23 113.50 110.20 – –
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own income
statement in the Financial Statements. The parent company’s profit for the year was £63,021,000 (2020: £40,273,000).
The Financial Statements on pages 71 to 94 were approved and authorised for issue by the Board of Directors on
16 December 2021 and signed on its behalf by
Lisa Arnold
Chair
The notes on pages 75 to 94 form part of these Financial Statements.
Registered number 7251471
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 74
Cash Flow Statements
For the year ended 30 September 2021
Note
Group and Company
Year ended
30 September
2021
£’000
Year ended
30 September
2020
£’000
Cash flows from operating activities
Profit before finance costs and tax 64,506 41,784
Adjustment for non-cash items:
Gains on investments held at fair value through profit or loss (64,165) (42,435)
Scrip dividends received – (204)
Adjusted profit/(loss) before tax 341 (855)
Adjustments for:
Purchases of investments, including transaction costs (626,164) (952,341)
Sales of investments, including transaction costs 625,115 967,884
(Increase)/decrease in receivables (108) 85
(Decrease)/increase in payables (479) 176
Overseas tax deducted at source (404) (368)
Net cash (used in)/generated from operating activities (1,699) 14,581
Cash flows from financing activities
Cost of shares repurchased – (1,040)
Interest paid (2) (7)
Equity dividends paid 11 (2,426) (2,547)
Net cash used in financing activities (2,428) (3,594)
Net (decrease)/increase in cash and cash equivalents (4,127) 10,987
Cash and cash equivalents at the beginning of the year 17,845 6,858
Cash and cash equivalents at the end of the year 24 13,718 17,845
The notes on pages 75 to 94 form part of these Financial Statements.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 75
Notes to the Financial Statements
For the year ended 30 September 2021
1 GENERAL INFORMATION
The consolidated Financial Statements for the year ended 30 September 2021 comprise the Financial Statements of the
Company and it’s wholly-owned subsidiary PCGH ZDP plc (together referred to as the ‘Group’).
The Group and Company’s presentational currency is pounds sterling (rounded to the nearest £’000). Pounds sterling is also the
functional currency of the Group and Company because it is the currency which is most relevant to the majority of the Group
and Company’s shareholders and creditors and the currency in which the majority of the Group and Company’s operating
expenses are paid.
2 ACCOUNTING POLICIES
The principal accounting policies which have been applied consistently for all years presented are set out below:
(a) BASIS OF PREPARATION
The Group and Company Financial Statements have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. See Director’s Report on page 38 for further
details.
The Financial Statements have been prepared on a going concern basis under the historical cost convention, as modified by the
revaluation of investments and derivative financial instruments at fair value through profit or loss.
Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by
the Association of Investment Companies (AIC) in April 2021 is consistent with the requirements of IFRS, in so far as those
requirements are applicable to the Financial Statements, the Directors have sought to prepare the Financial Statements on a
basis compliant with the recommendations of the SORP.
Basis of consolidation - The Group Financial Statements consolidate the Financial Statements of the Company and its wholly
owned subsidiary, PCGH ZDP plc, drawn up to the same accounting date. The subsidiary is consolidated from the date of its
incorporation.
The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and accordingly has not
presented a separate parent company income statement.
The financial position of the Group and Company as at 30 September 2021 are shown in the balance sheet on page 73. As at
30 September 2021 the Group and Company’s total assets exceeded its total liabilities by a multiple of over 10. The assets of the
Group and Company consist mainly of securities that are held in accordance with the Company’s Investment Policy, as set out
on page 25 and 26 and these securities are readily realisable. The Directors have considered a detailed assessment of the Group
and Company’s ability to meets their liabilities as they fall due. The assessment took account of the Group and Company’s
current financial positions, their cash flows and their liquidity positions. In addition to the assessment, the Group and Company
carried out stress testing, including assessment of the continuing risks arising from COVID-19, which used a variety of falling
parameters to demonstrate the effects on the Group and Company’s share prices and net asset values. In light of the results
of these tests, the Group and Company’s cash balances, and the liquidity positions, the Directors consider that the Group and
Company has adequate financial resources to enable them to continue in operational existence for at least 12 months.
Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group and
Company’s Financial Statements.
(b) PRESENTATION OF THE STATEMENT OF COMPREHENSIVE INCOME
In order to better reflect the activities of an investment trust company and in accordance with the guidance set out by the
AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and
capital nature has been presented alongside the Statement of Comprehensive Income. The results presented in the revenue
return column is the measure the Directors believe appropriate in assessing the Group and Company’s compliance with certain
requirements set out in section 1158 of the Corporation Tax Act 2010.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202176
Notes to the Financial Statements continued
For the year ended 30 September 2021
2 ACCOUNTING POLICIES continued
(c) INCOME
Dividends receivable from equity shares are recognised and taken to the revenue return column of the Statement of
Comprehensive Income on an ex-dividend basis.
Special dividends are recognised on an ex-dividend basis and may be considered to be either revenue or capital items. The facts
and circumstances are considered on a case-by-case basis before a conclusion on appropriate allocation is reached.
Where the Group and Company has received dividends in the form of additional shares rather than in cash, the amount of the
cash dividend foregone is recognised in the revenue return column of the Statement of Comprehensive Income. Any excess
in value of shares received over the amount of the cash dividend foregone is recognised in the capital return column of the
Statement of Comprehensive Income.
Bank interest is accounted for on an accruals basis. Interest outstanding at the year-end is calculated on a time apportionment
basis using market rates of interest.
(d) WRITTEN OPTIONS
The Group and Company may write exchange-traded options with a view to generating income. This involves writing short-
dated covered-call options and put options. The use of financial derivatives is governed by the Group and Company’s policies, as
approved by the Board.
These options are recorded initially at fair value, based on the premium income received, and are then measured at subsequent
reporting dates at fair value. Changes in the fair value of the options are recognised in the capital return for the period.
The option premiums are recognised evenly over the life of the option and shown in the revenue return, with an appropriate
amount shown in the capital return to ensure the total return reflects the overall change in the fair value of the options.
Where an option is exercised, any balance of the premium is recognised immediately in the revenue return with a corresponding
adjustment in the capital return based on the amount of the loss arising on exercise of the option.
(e) EXPENSES
All expenses, including the management fee, are accounted for on an accruals basis and are recognised when they fall due.
All expenses have been presented as revenue items except as follows:
Expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the
maintenance or enhancement of the value of investments can be demonstrated. In this respect the investment management
fees have been charged to the Statement of Comprehensive Income in line with the Board’s expected long-term split of
returns, in the form of capital gains and income from the Group and Company’s portfolio. As a result 20% of the investment
management fees are charged to the revenue account and 80% charged to the capital account of the Statement of
Comprehensive Income.
The performance fee (when payable) is charged entirely to capital as the fee is based on the out-performance of the Benchmark
and is expected to be attributable largely, if not wholly, to capital performance.
The research costs relate solely to specialist healthcare research and are accounted for on an accrual basis and, are allocated
20% to revenue and 80% capital. This is in line with the Board’s expected long-term split of revenue and capital return from the
Company’s investment portfolio.
FINANCE COSTS
The ZDP shares are designed to provide a pre-determined capital growth from their original issue price of 100p on 20 June 2017 to a
final capital repayment of 122.99p on 19 June 2024. The initial capital will increase at a compound interest rate of 3% per annum.
No dividends are payable on the ZDP shares. The provision for the capital growth entitlement of the ZDP shares is included as a finance
cost and charged 100% to capital within the Statement of Comprehensive Income (AIC SORP paragraph 53 - issued April 2021).
Overdraft interest costs are allocated 20% to revenue and 80% to capital in line with the Board’s expected long-term split of revenue
and capital return from the Company’s investment portfolio.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 77
SHARE ISSUE COSTS
Costs incurred directly in relation to the issue of shares in the subsidiary are borne by the Company and taken 100% to capital.
Share issue costs relating to ordinary share issues by the Company are taken 100% to the share premium account.
ZERO DIVIDEND PREFERENCE (ZDP) SHARES
Shares issued by the subsidiary are treated as a liability of the Group, and are shown in the Balance Sheet at their redemption
value at the Balance Sheet date. The appropriations in respect of the ZDP shares necessary to increase the subsidiary’s liabilities
to the redemption values are allocated to capital in the Statement of Comprehensive Income. This treatment reflects the Board’s
long-term expectations that the entitlements of the ZDP shareholders will be satisfied out of gains arising on investments held
primarily for capital growth.
(f) TAXATION
The tax expense represents the sum of the overseas withholding tax deducted from investment income, tax currently payable
and deferred tax.
The tax currently payable is based on the taxable profits for the year ended 30 September 2021. Taxable profit differs from net
profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The Group and Company’s liability
for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against
capital returns in the supplementary information in the Statement of Comprehensive Income is the “marginal basis”. Under this
basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement
of Comprehensive Income, then no tax relief is transferred to the capital return column.
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of
assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit,
and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised.
Investment trusts which have approval as such under section 1158 of the Corporation Taxes Act 2010 are not liable for taxation
on capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax rates that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity.
(g) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant
market, the investments concerned are recognised or derecognised on the trade date and are initially measured at fair value.
On initial recognition the Group and Company has designated all of its investments as held at fair value through profit or loss as
defined by IFRS. All investments are measured at subsequent reporting dates at fair value, which is either the bid price or the last
traded price, depending on the convention of the exchange on which the investment is quoted.
All investments, classified as fair value through profit or loss, are further categorised into the following fair value hierarchy:
Level 1: Unadjusted prices quoted in active markets for identical assets and liabilities.
Level 2: Having inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Having inputs for the asset or liability that are not based on observable market data.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202178
Notes to the Financial Statements continued
For the year ended 30 September 2021
2 ACCOUNTING POLICIES continued
(g) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS continued
Changes in fair value of all investments held at fair value and realised gains and losses on disposal are recognised in the capital
return column of the Statement of Comprehensive Income.
In the event a security held within the portfolio is suspended then judgement is applied in the valuation of that security.
(h) RECEIVABLES
Receivables are initially recognised at fair value and subsequently measured at amortised cost. Receivables do not carry
any interest and are short-term in nature and are accordingly stated at their nominal value (amortised cost) as reduced by
appropriate allowances for estimated irrecoverable amounts.
(i) CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, maturity of three months or less, highly
liquid investments that are readily convertible to known amounts of cash.
(j) DIVIDENDS PAYABLE
Dividends payable to shareholders are recognised in the Financial Statements when they are paid or, in the case of final
dividends, when they are approved by the shareholders.
(k) PAYABLES
Other payables are not interest-bearing and are initially valued at fair value and subsequently stated at their nominal value
(amortised cost).
(l) FOREIGN CURRENCY TRANSLATION
Transactions in foreign currencies are translated into sterling at the rate of exchange ruling on the date of each transaction. Monetary
assets, monetary liabilities and equity investments in foreign currencies at the balance sheet date are translated into sterling at the rates
of exchange ruling on that date. Realised profits or losses on exchange, together with differences arising on the translation of foreign
currency assets or liabilities, are taken to the capital return column of the Statement of Comprehensive Income.
Foreign exchange gains and losses arising on investments held at fair value are included within changes in fair value.
(m) CAPITAL RESERVES
Capital reserve arising on investments sold includes:
– gains/losses on disposal of investments
– exchange differences on currency balances
– transfer to subsidiary in relation to ZDP funding requirement
– other capital charges and credits charged to this account in accordance with the accounting policies above.
Capital reserve arising on investments held includes:
– increases and decreases in the valuation of investments held at the balance sheet date.
All of the above are accounted for in the Statement of Comprehensive Income.
When making a distribution to shareholders, the Directors determine the profits available for distribution by reference to the
‘Guidance on realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants
in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable
reserves in the Company is dependent on those dividends meeting the definition of qualifying consideration within the guidance
and on the available cash resources of the Company and other accessible sources of funds. The distributable reserves are
therefore subject to any future restrictions or limitations at the time such distribution is made.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 79
(n) REPURCHASE OF ORDINARY SHARES (INCLUDING THOSE HELD IN TREASURY)
The costs of repurchasing Ordinary shares including related stamp duty and transaction costs are taken directly to equity
and reported through the Statement of Changes in Equity as a charge on the special distributable reserve. Share repurchase
transactions are accounted for on a trade date basis.
The nominal value of Ordinary share capital repurchased and cancelled is transferred out of called up share capital and into the
capital redemption reserve.
Where shares are repurchased and held in treasury, the transfer to capital redemption reserve is made if and when such shares
are subsequently cancelled.
(o) SEGMENTAL REPORTING
Under IFRS 8, ‘Operating Segments’, operating segments are considered to be the components of an entity about which
separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how
to allocate resources and in assessing performance. The chief operating decision maker has been identified as the Investment
Manager (with oversight from the board).
The Directors are of the opinion that the Group and Company has only one operating segment and as such no distinct
segmental reporting is required.
(p) KEY ESTIMATE AND JUDGEMENTS
Estimates and assumptions used in preparing the Financial Statements are reviewed on an ongoing basis and are based on
historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these
estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. The Group and Company do not consider that there have been any significant estimates or
assumptions in the current financial year.
(q) NEW AND REVISED ACCOUNTING STANDARDS
There were no new IFRSs or amendments to IFRSs applicable to the current year which had any significant impact on the
Company’s Financial Statements.
i) The following new or amended standards became effective for the current annual reporting period and the
adoption of the standards and interpretations has not had a material impact on the Financial Statements of the
Company.
Standards & Interpretations
Effective for periods
commencing on or after
IFRS 3 Business Combinations
(amended)
Amendments to improve the definition of a business in order to help
companies determine whether an acquisition made is of a business or a
group of assets.
1 January 2020
IFRS 9, IAS 39 and IFRS17:
Interest Rate Benchmark
Reform (amended)
Amendments that provide certain reliefs which relate to hedge
accounting and have the effect that IBOR reform should not generally
cause hedge accounting to terminate.
1 January 2020
IAS 1 and IAS 8 Definition of
Material (amended)
Amendments to clarify the definition of ‘material’ and to align the
definition used in the Conceptual Framework and the Standards
themselves.
1 January 2020
References to the Conceptual
Framework in IFRS Standards
(amended)
The Amendments to References to the Conceptual Framework in IFRS
Standards were issued to support transition to the revised Conceptual
Framework for companies that develop accounting policies using the
Conceptual Framework when no IFRS Standard applies to a particular
transaction.
1 January 2020
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202180
Notes to the Financial Statements continued
For the year ended 30 September 2021
2 ACCOUNTING POLICIES continued
(q) NEW AND REVISED ACCOUNTING STANDARDS continued
ii) At the date of authorisation of the Company’s Financial Statements, the following new or amended IFRSs that
potentially impact the Company are in issue but are not yet effective and have not been applied in the Financial
Statements:
Standards & Interpretations
Effective for periods
commencing on or after
IFRS 4 Insurance Contracts –
temporary exemption from
IFRS 9 (amended)
The temporary exemption permits companies whose activities are
predominantly connected with insurance to defer the application of IFRS 9 to
annual periods beginning on or after 1 January 2023.
1 January 2021
IFRS 9, IAS 39, IFRS 7, IFRS
16 and IFRS 4: Interest Rate
Benchmark Reform – phase 2
(amended)
IBOR Reform - Phase 2 addresses issues that might affect financial reporting
during the reform of an interest rate benchmark, including the effects of
changes to contractual cash flows or hedging relationships arising from the
replacement of an interest rate benchmark with an alternative benchmark rate.
1 January 2021
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
30 September 2021
£’000
Year ended
30 September 2020
£’000
Revenue:
UK Dividend income 430 63
Overseas Dividend income 3,255 3,179
Scrip dividends – 204
Total investment income allocated to revenue 3,685 3,446
4 OTHER OPERATING INCOME
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Other income – –
Bank interest – 17
Total other operating income – 17
5 GAINS ON INVESTMENTS HELD AT FAIR VALUE
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Net gains on disposal of investments at historic cost 56,156 39,352
Less fair value adjustments in earlier years (10,661) (11,710)
Gains based on carrying value at previous balance sheet date 45,495 27,642
Valuation gains on investments held during the year 18,670 14,793
64,165 42,435
6 OTHER CURRENCY LOSSES
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Exchange losses on currency balances (144) (647)
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 81
7 INVESTMENT MANAGEMENT FEE
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Management fee
– charged to revenue 518 535
– charged to capital 2,070 2,140
Investment management fee payable to Polar Capital LLP 2,588 2,675
Management fees are allocated 20% to revenue and 80% to capital. Details of the fee arrangements are given in the Strategic
Report in page 32.
8 OTHER ADMINISTRATIVE EXPENSES (INCLUDING VAT WHERE APPROPRIATE)
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Directors’ fees
1
129 143
Directors’ NIC 12 14
Auditors’ remuneration
2
: For audit of the Group and Company Financial Statements 44 44
Depositary fee 24 23
Registrar fee 30 31
Custody and other bank charges 35 39
UKLA and LSE listing fees 50 46
Legal & professional fee
3
(7) 6
AIC fees 19 21
Directors’ and officers’ liability insurance 12 9
Corporate broker’s fee 25 24
Marketing expenses
4
18 42
Research costs – allocated to revenue
5
15 27
Shareholder communications 14 30
HSBC administration fee 131 182
Other expenses 2 4
Total other administrative expenses allocated to revenue 553 685
Research cost – allocated to capital
5
59 107
Total other administrative expenses 612 792
1 Full disclosure is given in the Directors’ Remuneration Report on page 52.
2 2021 includes £6,250 (2020: £6,000) paid to the Auditors for the audit of PCGH ZDP Plc.
3 Legal and professional fee includes the reversal of unused prior year accruals.
4 Includes marketing expenses payable to Polar Capital LLP of £12,600 (2020: £22,500).
5 Research costs (which applied from 3 January 2018) payable by the Company relate solely to specialist healthcare research and are capped at US $147,721 (£110,000) (2020: US $232,994
(£180,000)) with the cost of general non-specialist research and any amounts exceeding the agreed cap being absorbed by Polar Capital. Any adjustments to the prior year’s budget versus
actual spend is included in the current period. These costs are allocated 20% to revenue and 80% to capital and are included in the ongoing charges calculation.
Ongoing charges represents the total expenses of the fund, excluding finance costs and tax, expressed as a percentage of the
average daily net asset value, in accordance with AIC guidance issued in May 2012.
The ongoing charges ratio for the year ended 30 September 2021 was 0.83% (2020: 1.01%). See Alternative Performance
Measures on page 95 and 96.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202182
Notes to the Financial Statements continued
For the year ended 30 September 2021
9 FINANCE COSTS
Year ended 30 September 2021 Year ended 30 September 2020
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Interest on overdrafts – 2 2 1 6 7
Appropriation to ZDP shares – 1,062 1,062 – 1,032 1,032
Total finance costs – 1,064 1,064 1 1,038 1,039
10 TAXATION
Year ended 30 September 2021 Year ended 30 September 2020
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
a) Analysis of tax charge for the year:
Overseas tax 421 – 421 472 – 472
Total tax for the year (see note 10b) 421 – 421 472 – 472
b) Factors affecting tax charge for the year:
The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit before tax 2,614 60,828 63,442 2,242 38,503 40,745
Tax at the UK corporation tax rate of 19% (2020: 19%) 496 11,557 12,053 426 7,316 7,742
Tax effect of non-taxable dividends (700) – (700) (655) – (655)
Gains on investments that are not taxable – (12,164) (12,164) – (7,940) (7,940)
Unrelieved current period expenses and deficits 204 405 609 229 427 656
Overseas tax suffered 421 – 421 472 – 472
Expenses not allowable – 202 202 – 197 197
Total tax for the year (see note 10a) 421 – 421 472 – 472
c) Factors that may affect future tax charges:
The Company has an unrecognised deferred tax asset of £5,423,000 (2020: £3,513,000). The deferred tax asset is based on a
prospective corporation tax rate of 25% (2020: 19%). The Finance Act 2021 received Royal Assent on 10 June 2021 and the
rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset.
It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and deficits and
therefore no deferred tax asset has been recognised.
Due to the Company’s tax status as an investment trust and the intention to continue meeting the conditions required to
obtain approval of such status in the foreseeable future, the Company has not provided tax on any capital gains arising on the
revaluation or disposal of investments held by the Company.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 83
11 AMOUNTS RECOGNISED AS DISTRIBUTIONS TO ORDINARY SHAREHOLDERS IN THE YEAR
Dividends paid in the year ended 30 September 2021
Payment date No of shares Pence per share
Year ended
30 September
2021
£’000
26 February 2021 121,270,000 1.00p 1,213
31 August 2021 121,270,000 1.00p 1,213
2,426
The revenue available for distribution by way of dividend for the year is £2,193,000 (2020: £1,770,000).
The total dividends payable in respect of the financial year ended 30 September 2021, which is the basis on which the
requirements of section 1158 Corporation Tax Act 2010 are considered, is set out below:
Payment date No of shares Pence per share
Year ended
30 September
2021
£’000
31 August 2021 121,270,000 1.00p 1,213
28 February 2022 121,270,000 1.00p 1,213
2,426
Dividends paid in the year ended 30 September 2020
Payment date No of shares Pence per share
Year ended
30 September
2020
£’000
28 February 2020 121,270,000 1.10p 1,334
28 August 2020 121,270,000 1.00p 1,213
2,547
The total dividends payable in respect of the financial year ended 30 September 2020, which is the basis on which the
requirements of section 1158 Corporation Tax Act 2010 are considered, is set out below:
Payment date No of shares Pence per share
Year ended
30 September
2020
£’000
28 August 2020 121,270,000 1.00p 1,213
26 February 2021 121,270,000 1.00p 1,213
2,426
All dividends are paid as interim dividends, and all have been charged to revenue, where necessary utilising the revenue reserves.
The dividends paid in February each year relate to a dividend declared in respect of the previous financial year but paid in the
current accounting year.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202184
Notes to the Financial Statements continued
For the year ended 30 September 2021
12 EARNINGS PER ORDINARY SHARE
Year ended 30 September 2021 Year ended 30 September 2020
Revenue
return
Capital
return
Total
return
Revenue
return
Capital
return
Total
return
The calculation of basic earnings per share is based
on the following data:
Net profit for the year (£’000) 2,193 60,828 63,021 1,770 38,503 40,273
Weighted average Ordinary shares in issue during
the year
121,270,000 121,270,000 121,270,000 121,291,858 121,291,858 121,291,858
Basic – Ordinary shares (pence) 1.81 50.16 51.97 1.46 31.74 33.20
As at 30 September 2021 there were no potentially dilutive shares in issue.
13 INVESTMENT HELD AT FAIR VALUE
(a) Investments held at fair value through profit or loss
30 September 2021
£’000
30 September 2020
£’000
Opening book cost 321,976 291,648
Opening investment holding gains 20,428 17,345
Opening fair value 342,404 308,993
Analysis of transactions made during the year
Purchases at cost 626,217 944,790
Sales proceeds received (624,225) (953,814)
Gains on investments held at fair value 64,165 42,435
Closing fair value 408,561 342,404
Closing book cost 380,123 321,976
Closing investment holding gains 28,438 20,428
Closing fair value 408,561 342,404
The Company received £624,225,000 (2020: £953,814,000) from disposal of investments in the year. The book cost of these
investments when they were purchased were £568,069,000 (2020: £914,462,000). These investments have been revalued over
time and until they were sold, any unrealised gains/losses were included in the fair value of the investments.
The following transaction costs, including stamp duty and broker commissions were incurred during the year:
30 September 2021
£’000
30 September 2020
£’000
On acquisition 442 606
On disposal 256 350
698 956
(b) Fair value hierarchy
30 September 2021
£’000
30 September 2020
£’000
Level 1 assets 408,561 342,404
Valuation at 30 September 2021 408,561 342,404
All Level 1 assets are traded on a recognised Stock Exchange.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 85
(c) Subsidiary undertaking
Company and business
Country of registration,
incorporation and operation
Number and class of shares held by
the Company Holding
PCGH ZDP Plc England and Wales 50,000 Ordinary shares of £1 100%
The Company is a public limited company with the sole purpose of issuing Zero Dividend Preference (ZDP) shares. The registered
office is at Polar Capital, 16 Palace Street, London, SW1E 5JD.
The investment is stated in the Company’s Financial Statements at cost, which is considered by the Directors to equate to fair value.
The subsidiary is non-trading and the value of the net assets have not changed since the acquisition of the Ordinary share capital
by the Company. The cost is therefore considered to equate to the fair value of the shares held.
14 RECEIVABLES
30 September 2021
£’000
30 September 2020
£’000
Sales for future settlement 2,040 2,930
Accrued income 252 147
Prepayments 8 5
2,300 3,082
15 PAYABLES
30 September 2021
£’000
30 September 2020
£’000
Purchases for future settlement 2,587 2,534
Accruals 369 848
2,956 3,382
16 ZERO DIVIDEND PREFERENCE SHARES (‘ZDP SHARES’)
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 35,405 34,373
Capital growth of ZDP shares 1,062 1,032
At 30 September 2021 36,467 35,405
Further details on the ZDP shares are set out in the Additional Information on page 101.
17 CALLED UP SHARE CAPITAL
(i) Ordinary shares - Allotted, Called up and Fully paid:
30 September 2021
£’000
30 September 2020
£’000
Ordinary shares of nominal value 25p each:
Opening balance of 121,270,000 (2020: 121,770,000) 30,317 30,442
Repurchase of nil (2020: 500,000) Ordinary shares, into treasury – (125)
Allotted, Called up and Fully paid: 121,270,000 (2020: 121,270,000)
Ordinary shares of 25p 30,317 30,317
2,879,256 (2020: 2,879,256) Ordinary shares, held in treasury 720 720
At 30 September 2021 31,037 31,037
No Ordinary shares were repurchased into treasury (2020: 500,000 shares were repurchased at a total cost of £1,040,000).
The Ordinary shares held in treasury have no voting rights and are not entitled to dividends.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202186
Notes to the Financial Statements continued
For the year ended 30 September 2021
17 CALLED UP SHARE CAPITAL continued
(ii) Subsidiary company (for information purposes)
30 September 2021
£’000
30 September 2020
£’000
ZDP shares - Allotted, Called up and Fully paid:
ZDP shares of nominal value 1p each:
Opening balance of 32,128,437 ZDP shares (2020: 32,128,437) 32,128 32,128
Allotted, Called up and Fully paid: 32,128,437 (2020: 32,128,437) ZDP shares of 1p 32,128 32,128
At 30 September 2021 32,128 32,128
18 CAPITAL REDEMPTION RESERVE
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 6,575 6,575
At 30 September 2021 6,575 6,575
The Capital redemption reserve was created following the Company’s reconstruction tender offer shares were repurchased and
cancelled in 2017. This reserve is not distributable.
19 SHARE PREMIUM RESERVE
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 80,685 80,685
At 30 September 2021 80,685 80,685
This reserve is not distributable.
20 SPECIAL DISTRIBUTABLE RESERVE
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 3,672 4,712
Repurchase of nil (2020: 500,000) Ordinary shares into treasury – (1,040)
At 30 September 2021 3,672 3,672
The special distributable reserve was created following approval from the Court, received on 18 August 2010, to cancel that
share premium account from the initial share offering.
Surpluses to the credit of the special distributable reserve can be used to purchase the Group and Company’s own shares. In
addition the Group and Company may use this reserve for the payment of dividends.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 87
21 CAPITAL RESERVES
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 201,149 162,646
Net gains on disposal of investments 45,495 27,642
Valuation gains on investments held during the year 18,670 14,793
Exchange losses on currency balances (144) (647)
Overdraft interest allocated to capital (2) (6)
Research costs to capital (59) (107)
Investment management fee allocated to capital (2,070) (2,140)
Capital contribution to ZDP entitlement (191) (182)
ZDP appropriation (871) (850)
At 30 September 2021 261,977 201,149
The balance on the capital reserve represents a profit of £28,438,000 (2020: £20,428,000) on investments held and a profit of
£233,539,000 (2020: £180,721,000) on investments sold.
The balance on investments held comprises holding 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 may be distributed or used to
repurchase the Group and Company’s shares) and those that are unrealised.
The balance on investments sold are realised distributable capital reserves which may be used to repurchase the Group and
Company’s shares or be distributed as dividends subject to meeting the definition of qualifying consideration as noted in Note 2(m).
22 REVENUE RESERVE
30 September 2021
£’000
30 September 2020
£’000
At 1 October 2020 2,015 2,792
Revenue profit 2,193 1,770
Interim dividends paid (2,426) (2,547)
At 30 September 2021 1,782 2,015
The revenue reserve may be distributed or used to repurchase the Group and Company’s shares (subject to being a positive balance).
23 NET ASSET VALUE PER SHARE
(i) Ordinary shares
30 September 2021 30 September 2020
Net assets attributable to Ordinary Shareholders (£’000) 385,728 325,133
Ordinary shares in issue at end of year 121,270,000 121,270,000
Net asset value per Ordinary share (pence) 318.07 268.11
Total issued Ordinary shares 124,149,256 124,149,256
Ordinary shares held in treasury 2,879,256 2,879,256
Ordinary shares in issue 121,270,000 121,270,000
As at 30 September 2021 there were no potentially dilutive shares in issue.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202188
Notes to the Financial Statements continued
For the year ended 30 September 2021
23 NET ASSET VALUE PER SHARE continued
(ii) Subsidiary company (for information purposes)
ZDP shares
30 September 2021 30 September 2020
Calculated entitlement of ZDP shareholders (£) £36,466,967 £35,404,821
ZDP shares in issue at the end of the year 32,128,437 32,128,437
Net asset value per ZDP share (pence) 113.50 110.20
24 CASH AND CASH EQUIVALENTS
30 September 2021
£’000
30 September 2020
£’000
Cash at bank 13,668 17,795
Company cash and cash equivalents 13,668 17,795
Cash held at subsidiary 50 50
Group cash and cash equivalents 13,718 17,845
25 TRANSACTIONS WITH THE INVESTMENT MANGER AND RELATED PARTY TRANSACTIONS
(a) TRANSACTIONS WITH THE MANAGER
Under the terms of an agreement dated 26 May 2010 the Group has appointed Polar Capital LLP (“Polar Capital”) to provide
investment management, accounting, secretarial and administrative services. Details of the fee arrangement for these services
are given in the Strategic Report. The total fees, paid under this agreement to Polar Capital in respect of the year ended
30 September 2021 were £2,588,000 (2020: £2,675,000) of which £239,000 (2020: £457,000) was outstanding at the year-end.
In addition, the total research cost in respect of the year ended 30 September 2021 was £114,000 (2020: £170,000). As at the
year end, £18,700 (2020: £90,000) was outstanding. Refer to note 8 on page 81 for more details.
(b) RELATED PARTY TRANSACTIONS
The Group and Company has no employees and therefore no key management personnel other than the Directors. The Group
and Company paid £129,000 (2020: £143,000) to the Directors and the Remuneration Report including Directors’ shareholdings
and movements within the year is set out on page 52.
26 FINANCIAL INSTRUMENTS
RISK MANAGEMENT POLICIES AND PROCEDURES FOR THE GROUP AND COMPANY
The Group and Company invests in equities and other financial instruments for the long term to further the Investment
Objective set out on page 25 and 26. This exposes the Group and Company to a range of financial risks that could impact on
the assets or performance of the Group and Company.
The main risks arising from the Group and Company’s pursuit of its Investment Objective are market risk, liquidity risk and credit
risk and the Directors’ approach to the management of them is set out below.
The Group and Company’s exposure to financial instruments can comprise:
– Equity and non-equity shares and fixed interest securities which may be held in the investment portfolio in accordance with
the Investment Objective.
– Bank overdrafts, the main purpose of which is to raise finance for the Group and Company’s operations.
– Cash, liquid resources and short-term receivables and payables that arise directly from the Group and Company’s
operations.
– Derivative transactions which the Group and Company enters into may include equity or index options, index futures
contracts, and forward foreign exchange contracts.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 89
The purpose of these is to manage the market price risks and foreign exchange risks arising from the Group and Company’s
investment activities.
The overall management of the risks is determined by the Board and its approach to each risk identified is set out below. The
Board and the Investment Manager co-ordinate the risk management and the Investment Manager assesses the exposure to
market risk when making each investment decision.
(a) Market Risk
Market risk comprises three types of risk: market price risk (see note 26(a)(i)), currency risk (see note 26(a)(ii)), and interest rate
risk (see note 26(a)(iii)).
(i) Market Price Risk
The Group and Company is an investment company and as such its performance is dependent on its valuation of its
investments. Consequently, market price risk is the most significant risk that the Group and Company faces.
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Group and Company’s
operations.
It represents the potential loss the Group and Company might suffer through holding market positions in the face of price
movements.
A detailed breakdown of the investment portfolio is given on page 24. Investments are valued in accordance with the
accounting policies as stated in Note 2(g).
At the year end, the Group and Company did not hold any derivative instruments (2020: nil).
Management of the risk
In order to manage this risk it is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to
reduce both the statistical risk and the risk arising from factors specific to a particular healthcare sub sector. The allocation of
assets to international markets, together with stock selection covering small, medium and large companies, and the use of index
options, are other factors which act to reduce price risk. The Investment Manager actively monitors market prices throughout
the year and reports to the Board which meets regularly in order to consider investment strategy.
Market price risks exposure
The Group and Company’s exposure to changes in market prices at 30 September on its investments was as follows:
30 September 2021
£’000
30 September 2020
£’000
Non-current asset investments at fair value through profit or loss 408,561 342,404
408,561 342,404
Market price risk sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and the value of shareholders’ funds to an
increase or decrease of 15% in the fair values of the Group and Company’s investments. This level of change is considered to be
reasonably possible based on observation of current market conditions and historic trends.
The sensitivity analysis is based on the Group and Company’s investments at each balance sheet date, with all other variables
held constant.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202190
Notes to the Financial Statements continued
For the year ended 30 September 2021
26 FINANCIAL INSTRUMENTS continued
(a) Market Risk continued
Market price risk sensitivity continued
Year ended
30 September 2021
Year ended
30 September 2020
Increase in
fair value
£’000
Decrease in
fair value
£’000
Increase in
fair value
£’000
Decrease in
fair value
£’000
Statement of Comprehensive Income - profit after tax
Revenue return (103) 103 (87) 87
Capital return 60,867 (60,867) 51,012 (51,012)
Change to the profit after tax for the year 60,764 (60,764) 50,925 (50,925)
Change to equity attributable to Shareholders 60,764 (60,764) 50,925 (50,925)
(ii) Currency Risk
The Group and Company’s total return and net assets can be significantly affected by currency translation movements as the
majority of the Group and Company’s assets and revenue are denominated in currencies other than sterling.
Management of the risk
The Investment Manager mitigates risks through an international spread of investments.
Settlement risk on investment trades is managed through short term hedging.
Foreign currency exposure
The table below shows, by currency, the split of the Group and Company’s monetary assets, liabilities and investments that are
priced in currencies other than sterling.
Year ended
30 September 2021
£’000
Year ended
30 September 2020
£’000
Monetary Assets:
Cash and short term receivables
US Dollars 4,240 1,857
Swiss Francs 394 3,145
Euros 214 201
Danish Krone 98 103
Australia Dollar 66 –
Monetary Liabilities:
Other payables
US Dollars (2,587) (2,534)
Swiss Francs – (2,727)
Foreign currency exposure on net monetary items 2,425 45
Non-Monetary Items:
Investments at fair value through profit or loss that are equities
US Dollars 273,938 245,218
Euros 68,537 47,374
Danish Krone 17,509 20,981
Australia Dollar 9,158 –
Swiss Francs 7,678 15,491
Japanese Yen 7,286 7,755
Total net foreign currency exposure 386,531 336,864
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 91
During the financial year, movements against sterling in the five major currencies noted above were:
• US Dollar depreciated by 4.3% (2020: depreciated by 4.9%),
• Euro depreciated by 5.5% (2020: appreciated by 2.5%),
• Danish Krone depreciated by 5.4% (2020: appreciated by 2.8%).
• Australian Dollar depreciated by 3.5% (2020: appreciated by 1.3%),
• Swiss Franc depreciated by 5.9%% (2020: appreciated by 3.3%),
Foreign currency sensitivity
The following table illustrates the sensitivity of the profit after tax for the year and the value of equity attributable to
Shareholders in regard to the financial assets and financial liabilities and the exchange rates for the £/US Dollar, £/Euros,
£/Danish Krone, £/Australian Dollars and £/Swiss Francs.
Based on the year end position, if sterling had depreciated by a further 15% (2020: 15%) against the currencies shown, this
would have had the following effect:
Year ended 30 September 2021
£’000
US Dollars Euro Danish Krone Australian Dollar Swiss Francs
Statement of Comprehensive Income -
profit after tax
Revenue return 47 38 17 12 70
Capital return 48,586 12,095 3,090 1,616 1,355
Change to the profit after tax for the
year and to equity attributable to
Shareholders 48,633 12,133 3,107 1,628 1,425
Year ended 30 September 2020
£’000
US Dollars Euro Danish Krone Swiss Francs
Statement of Comprehensive Income - profit after tax
Revenue return 43 35 18 74
Capital return 43,112 8,360 3,703 2,734
Change to the profit after tax for the year and to equity
attributable to Shareholders 43,155 8,395 3,721 2,808
Based on the year end position, if sterling had appreciated by a further 15% (2020: 15%) against the currencies shown, this
would have had the following effect:
Year ended 30 September 2021
£’000
US Dollars Euro Danish Krone Australian Dollar Swiss Francs
Statement of Comprehensive Income -
profit after tax
Revenue return (35) (28) (13) (9) (51)
Capital return (35,911) (8,940) (2,284) (1,195) (1,001)
Change to the profit after tax for the
year and to equity attributable to
Shareholders (35,946) (8,968) (2,297) (1,204) (1,052)
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202192
Notes to the Financial Statements continued
For the year ended 30 September 2021
26 FINANCIAL INSTRUMENTS continued
(a) Market Risk continued
Foreign currency sensitivity continued
Year ended 30 September 2020
£’000
US Dollars Euro Danish Krone Swiss Francs
Statement of Comprehensive Income - profit after tax
Revenue return (32) (26) (13) (55)
Capital return (31,865) (6,179) (2,737) (2,020)
Change to the profit after tax for the year and to equity
attributable to Shareholders (31,897) (6,205) (2,750) (2,075)
In the opinion of the Directors, while these are regarded as reasonable estimates, neither of the above sensitivity analyses are
representative of the year as a whole since the level of exposure changes frequently as part of the currency risk management
process used to meet the Group’s objectives.
(iii) Interest Rate Risk
Although the majority of the Group and Company’s financial assets are equity shares which pay dividends, not interest, the
Group and Company will be affected by interest rate changes as interest is earned on any cash balances and paid on any
overdrawn balances.
Given the interest rate risk exposure noted below, the impact of any interest rate change is not considered to be significant and
as such, no sensitivity analysis has been provided. Interest rate changes will also have an impact on the valuation of equities,
although this forms part of price risk, which has already been considered separately above.
Management of the risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account
when making investment decisions.
Derivative contracts are not used to hedge against the exposure to interest rate risk.
Interest rate exposure
At the year-end, financial assets and liabilities exposed to floating interest rates were as follows:
30 September 2021
£’000
30 September 2020
£’000
Cash at bank 13,668 17,795
Cash held at subsidiary 50 50
13,718 17,845
The above year-end amounts may not be representative of the exposure to interest rates in the year ahead since the level of
cash held during the year will be affected by the strategy being followed in response to the Board’s and Manager’s perception of
market prospects and the investment opportunities available at any particular time.
(b) Liquidity Risk
Liquidity risk is the possibility of failure of the Group and Company to realise sufficient assets to meet its financial liabilities.
Management of the risk
The Group and Company’s assets mainly comprise readily realisable securities which may be sold to meet funding requirements
as necessary.
Financial Statements
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 93
Liquidity risk exposure
At 30 September the financial liabilities comprised:
30 September 2021
£’000
30 September 2020
£’000
Due within 1 month:
Other creditors and accruals 2,956 3,382
Due in more than 1 year:
ZDP’s entitlement 36,467 35,405
39,423 38,787
The ZDP shares have a planned repayment date of 19 June 2024 in the amount of £39,514,000.
(c) Credit Risk
Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of
investments or to repay deposits.
Management of the risk
The Group and Company manages credit risk by using brokers from a database of approved brokers and by dealing through
Polar Capital. All cash balances are held with approved counterparties.
HSBC Bank plc is the custodian of the Group and Company’s assets. The Group and Company’s assets are segregated from
HSBC’s own trading assets and are therefore protected in the event that HSBC were to cease trading.
These arrangements were in place throughout the current and prior year.
Credit risk exposure
The maximum exposure to credit risk at 30 September 2021 was £13,970,000 (2020: £17,992,000) comprising:
30 September 2021
£’000
30 September 2020
£’000
Accrued Income 252 147
Cash at bank 13,718 17,845
13,970 17,992
All of the above financial assets are current, their fair values are considered to be the same as the values shown and the
likelihood of a material credit default is considered low. None of the Group and Company’s assets are past due or impaired. All
deposits were placed with banks that had a rating of A or higher.
Financial Statements
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202194
Notes to the Financial Statements continued
For the year ended 30 September 2021
26 FINANCIAL INSTRUMENTS continued
(d) Capital Management Policies and Procedures
The Group and Company’s capital, or equity, is represented by its net assets which amounted to £385,728,000 for the year ended
30 September 2021 (2020: £325,133,000), which are managed to achieve the Group’s and Company’s Investment Objective set out
on page 25 and 26.
The Board monitors and reviews the broad structure of the Group’s and Company’s capital on an ongoing basis. This review includes:
(i) the need to issue or buy back equity shares for cancellation, which takes account of the difference between the net asset value
per share and the share price (i.e. the level of share price discount or premium); and
(ii) the determination of dividend payments.
The Group and Company is subject to externally imposed capital requirements through the Companies Act with respect to its status
as a public company. In addition, in order to pay dividends out of profits available for distribution by way of dividend, the Group and
Company has to be able to meet one of two capital restriction tests imposed on investments by company law.
These requirements are unchanged since the previous year end and the Group and Company has complied with them and no
breaches have taken place during year under review.
27 POST BALANCE SHEET EVENTS
There are no significant events that have occurred after the end of the reporting period to the date of this report which require
disclosure.
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 95
Shareholder Information
In assessing the performance of the Company, the Investment Manager and the Directors use the following APMs which are not
defined in accounting standards or law but are considered to be known industry metrics:
Net Asset Value (NAV) and NAV per share
The NAV is the value attributed to the underlying assets of the Company less the liabilities, presented either on a per share or
total basis.
The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV
per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold
by an investor. See Note 23 on page 87 for detailed calculations. The NAV per Ordinary share is published daily.
NAV Total Return (APM)
The NAV total return shows how the net asset value has performed over a period of time taking into account both capital
returns and dividends paid to shareholders. NAV total return is calculated as the change in NAV from the start of the period,
assuming that dividends paid to shareholders are reinvested on the payment date in Ordinary shares at their net asset value.
Year ended
30 September 2021
Year ended
30 September 2020
Opening NAV per share a 268.11p 236.88p
Closing NAV per share b 318.07p 268.11p
Dividend reinvestment factor c 1.006997 1.008482
Adjusted closing NAV per share d = b*c 320.30p 270.38p
NAV total return for the year (d / a)-1 19.46% 14.14%
NAV Total Return Since Restructuring (APM)
NAV total return since restructuring is calculated as the change in NAV from the date of reconstruction on 20 June 2017,
assuming that dividends paid to Shareholders are reinvested on the payment date in Ordinary shares at their net asset value.
Year ended
30 September 2021
Year ended
30 September 2020
NAV per share at reconstruction a 215.85p 215.85p
Closing NAV per share b 318.07p 268.11p
Dividend reinvestment factor c 1.033409 1.026326
Adjusted closing NAV per share d = b*c 328.70p 275.17p
NAV total return since reconstruction (d / a)-1 52.28% 27.48%
Share Price Total Return (APM)
Share price total return shows how the share price has performed over a period of time. It assumes that dividends paid to
shareholders are reinvested in the shares at the time the shares are quoted ex-dividend.
Year ended
30 September 2021
Year ended
30 September 2020
Opening share price a 233.00p 218.00p
Closing share price b 288.00p 233.00p
Dividend reinvestment factor c 1.007605 1.008701
Adjusted closing share price d = b*c 290.19p 235.03p
Share price total return for the year (d / a)-1 24.55% 7.81%
Alternative Performance Measures
(APMs)
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 96
Shareholder Information
(Discount)/Premium (APM)
A description of the difference between the share price and the net asset value per share usually expressed as a percentage (%)
of the net asset value per share. If the share price is higher than the NAV per share the result is a premium. If the share price is
lower than the NAV per share, the shares are trading at a discount.
As at
30 September 2021
As at
30 September 2020
Closing share price a 288.00p 233.00p
Closing NAV per share b 318.07p 268.11p
Discount per Ordinary share (a / b)-1 9.45% 13.10%
Ongoing Charges (APM)
Ongoing charges are calculated in accordance with AIC guidance by taking the Company’s annual ongoing charges, excluding
performance fees and exceptional items, if any, and expressing them as a percentage of the average daily net asset value of the
Company over the year.
Ongoing charges include all regular operating expenses of the Company. Transaction costs, interest payments, tax and 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 September 2021
Year ended
30 September 2020
Investment Management (Note 7) £2,588,000 £2,675,000
Other Administrative Expenses (Note 8) £612,000 £792,000
a £3,200,000 £3,467,000
Average daily net assets value b £384,905,000 £343,020,000
Ongoing Charges a / b x 100 0.83% 1.01%
Performance fee (Note 7) c – –
d = a + c £3,200,000 £3,467,000
Ongoing charges including performance fee d / b x 100 0.83% 1.01%
Net Gearing (APM)
Gearing is calculated in line with AIC guidelines and represents net gearing, i.e. total assets less cash and cash equivalents
divided by net assets. The total assets are calculated by adding back the structural gearing which is the ZDP value. Cash and cash
equivalents are cash and purchases and sales for future settlement outstanding at the year end.
As at
30 September 2021
As at
30 September 2020
Net assets a £385,728,000 £325,133,000
ZDP loan value (Note 16) b £36,467,000 £35,405,000
Total assets c = (a+b) £422,195,000 £360,538,000
Cash and cash equivalents (including amounts awaiting settlement) d £13,171,000 £18,241,000
Net gearing (c-d)/a -1 6.04% 5.28%
Alternative Performance Measures (APMs) continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 97
Shareholder Information
AAF Report A report prepared in accordance with Audit and Assurance Faculty guidance issued by the Institute of
Chartered Accountants in England and Wales. Utilised within the review of internal controls.
AGM The Annual General Meeting, to be held at 2pm on Friday, 11 February 2022 at the office of the manager,
Polar Capital, 16 Palace Street, London SW1E 5JD.
AIC Association of Investment Companies, the industry body for closed ended investment companies.
AIFM Alternative Investment Fund Manager – Polar Capital LLP.
AIFMD Alternative Investment Fund Managers Directive. Issued by the European Parliament in 2012 and 2013,
the Directive requires that, while the Board of Directors of an Investment Trust remains fully responsible
for all aspects of the Company’s strategy, operations and compliance with regulations, all alternative
investment Funds (‘AIFs’) in the European Union, must appoint a Depositary and an Alternative
Investment Fund Manager (‘AIFM’). The Company’s AIFM is Polar Capital LLP.
Benchmark The Benchmark is the MSCI ACWI/Healthcare Index (total return in sterling with dividends reinvested).
BREXIT The process of the UK leaving the European Union following the public referendum in 2016.
Closed-ended
Investment
Company
An Investment Company with a fixed issued ordinary share capital, the shares of which are traded on
an exchange at a price not necessarily related to the net asset value of the company and which can
only be issued or bought back by the company in certain circumstances.
Custodian The Custodian is HSBC Bank plc, a financial institution responsible for safeguarding, worldwide, the
listed securities and certain cash assets of the Group and Company, as well as the income arising
therefrom, through provision of custodial, settlement and associated services.
Depositary The Depositary is also HSBC Bank plc. Under AIFMD rules the Company must appoint a Depositary
whose duties in respect of investments, cash and similar assets include: safekeeping; verification of
ownership and valuation; and cash monitoring. Under the AIFMD rules, the Depositary has strict
liability for the loss of the Group and Company’s financial assets in respect of which it has safe-keeping
duties. The Depositary’s oversight duties will include but are not limited to share buybacks, dividend
payments and adherence to investment limits.
Derivative A contract between two or more parties, the value of which fluctuates in accordance with the value of
an underlying security. Examples of derivatives are Put and Call Options, Swap contracts, Futures and
Contracts for Difference. A derivative can be an asset or a liability and is a form of gearing because it
can increase the economic exposure to shareholders.
ESEF European Single Electronic Format is the single electronic reporting format which will apply with effect
from 1 January 2021 to consolidated annual accounts prepared in accordance with IFRS and traded on
a regulated market.
ESMA The European Securities and Markets Authority is an independent EU authority whose purpose is to
improve investor protection and promote stable, orderly financial markets.
IFRS International accounting standards in conformity with the requirements of the Companies Act 2006.
They comprise standards and interpretations approved by the International Accounting Standards
Board (IASB) and International Financial Reporting Committee, including interpretations issued by the
IFRS Interpretations Committee and interpretations issued by the International Accounting Standard
Committee (IASC).
Glossary of Terms
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 98
Shareholder Information
Investment
Company
Section 833 of the Companies Act 2006. An Investment Company is defined as a company which
invests its funds in shares, land or other assets with the aim of spreading investment risk.
Investment
Manager /
Manager
Polar Capital LLP is the Investment Manager. Mr Gareth Powell and Dr James Douglas have delegated
responsibility for the creation of the portfolio of investments subject to various parameters set by the
Board of Directors. The responsibilities of the Investment Manager and the fees payable are set out in
the Directors’ Report.
Investment Trust
taxation status
Section 1158 of the Corporation Tax Act 2010. UK Corporation Tax law allows an Investment
Company (referred to in Tax law as an Investment Trust) to be exempted from tax on its profits realised
on investment transactions, provided it complies with certain rules. These are similar to Section 833
above but further require that the Company must be listed on a regulated stock exchange and that it
cannot retain more than 15% of income received. The Directors’ Report contains confirmation of the
Company’s compliance with this law and its consequent exemption from taxation on capital gains.
MiFID II Markets in Financial Instruments Directive, applicable from 3 January 2018.
Non-executive
Director
The Group and Company are managed by a Board of Directors who are appointed by letter rather
than a contract of employment. Neither the Group nor Company has any executive Directors.
Remuneration of the non-executive Directors is set out in the Directors’ Remuneration Report while the
duties of the Board and the various Committees are set out in the Corporate Governance Statement.
An example of the letter of appointment is available on the Company’s website.
PRIIPS The Packaged Retail and Insurance-based Investment Products regulations which came into force on
1 January 2018 in the UK and EU. The regulations require generic pre-sale disclosure of investment
‘product’ costs, risks and certain other matters.
PwC The Group and Company’s Auditors are PricewaterhouseCoopers LLP, represented by Kevin Rollo,
Partner.
SORP The Statement of Recommended Practice. The Financial Statements of the Group and Company are
drawn up in accordance with the Investment Trust SORP issued by the AIC.
ZDP Zero Dividend P reference shares are preference shares which carry no entitlement to dividends, but
which carry the right, on a fixed date, to the repayment of capital and a fixed rate of return in priority
to any capital payment to the holders of ordinary shares.
Glossary of Terms continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 99
Shareholder Information
Market Purchases
The ordinary shares of Polar Capital Global Healthcare Trust
plc are listed and traded on the London Stock Exchange.
Investors may purchase shares through their stockbroker,
bank or other financial intermediary.
Share Dealing Services
The Company has arranged for Shareview Dealing, a
telephone and Internet share sale service offered by Equiniti
to be made available.
For telephone sales call 0345 603 7037
(or +44 121 415 7560 ) between 8.30am and 4.30pm for
dealing and up to 6.00pm for enquiries, Monday to Friday.
For Internet sales log on to www.shareview.co.uk/dealing
There are a variety of ways to invest in the Company however
this will largely depend upon whether you would like financial
advice or are happy to make your own investment decisions.
For those investors who would like advice:
Private Client Stockbrokers
Investors with a large lump sum to invest may want to
contact a private client stockbroker. They will manage a
portfolio of shares on behalf of a private investor and will
offer a personalised service to meet an individual’s particular
needs. A list of private client stockbrokers is available from
The Personal Investment Management & Financial Advice
Association (PIMFA) at www.pimfa.co.uk
Financial Advisers
Financial Advisers who wish to purchase shares for their
clients can also do so via a growing number of platforms that
offer investment trusts including AJ Bell, Interactive Investor,
Ascentric, Embark, Nucleus, Raymond James, Seven IM and
Transact. For investors looking to find a financial adviser,
please visit www.unbiased.co.uk
For those investors who are happy to make their own
investment decisions:
Online Stockbroking Services
There are a number of real time execution only stockbroker
services which allow private investors to trade online for
themselves, manage a portfolio and buy UK listed shares.
Online stockbroking services include AJ Bell, Interactive
Investor, Barclays Stockbrokers, Halifax Share Dealing,
Hargreaves Lansdown.
Investing Risks
Please remember that any investment in the shares of Polar
Capital Global Healthcare Trust plc either directly or through
a savings scheme or ISA carries the risk that the value of your
investment and any income from them may go down as well
as up due to the fluctuations of the share price, the market
and interest rates. This risk may result in an investor not
getting back their original amount invested. Past performance
is not a guide to future performance.
Polar Capital Global Healthcare Trust plc is allowed to borrow
against its assets and this may increase losses triggered by
a falling market. The Company may increase or decrease its
borrowing levels to suit market conditions.
If you are in any doubt as to the suitability of a plan or any
investment available within a plan, please take professional
advice.
Polar Capital Global Healthcare Trust plc is an investment
trust and as such its ordinary shares are excluded from the
FCA’s restrictions which apply to non-mainstream investment
products. The Company conducts its affairs and intends
to continue to do so for the foreseeable future so that the
exclusion continues to apply.
Please also see the additional disclosures on page 99.
Investing
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 100
Shareholder Information
As the shares in an investment trust are traded on a stock
market, the share price will fluctuate in accordance with
supply and demand and may not reflect the underlying net
asset value of the shares; where the share price is less than
the underlying value of the assets, the difference is known as
the ‘discount’. For these reasons, investors may not get back
the original amount invested.
Although the Company’s Financial Statements are
denominated in sterling, it may invest in stocks and shares
that are denominated in currencies other than sterling. To
the extent that it does so, asset values may be affected by
movements in exchange rates. As a result, the value of your
investment may rise or fall with movements in exchange rates.
Investors should note that tax rates and reliefs may change
at any time in the future. The value of ISA tax advantages
will depend on personal circumstances. The favourable tax
treatment of ISAs may not be maintained.
Boiler Room Scams
Shareholders of the Polar Capital Global Healthcare Trust
plc may receive unsolicited phone calls or correspondence
concerning investment matters. These are typically from
overseas based ‘brokers’ who target UK shareholders,
offering to sell them what often turn out to be worthless or
high risk shares in U.S. or UK investments or offering to act
on the shareholder’s behalf on the payment of a retainer or
similar in a spurious corporate event. These operations are
commonly known as ‘boiler rooms’. These ‘brokers’ can be
very persistent and extremely persuasive.
It is not just the novice investor that has been duped in this
way; many of the victims had been successfully investing for
several years. Shareholders are advised to be very wary of any
unsolicited advice, offers to buy shares at a discount or offers
of free company reports.
If you have been contacted by an unauthorised firm regarding
your shares the FCA would like to hear from you. You can report
an unauthorised firm using the FCA helpline on 0845 606 1234
or 0800 111 6768 or by visiting their website, which also has
other useful information, at www.fca.org.uk
If you receive any unsolicited investment advice:
• Make sure you get the correct name of the person and
organisation
• If the calls persist, hang up
If you deal with an unauthorised firm, you will not be
eligible to receive payment under the Financial Services
Compensation Scheme.
More detailed information on this or similar activity can be
found on the FCA website.
Investing continued
How to avoid investment and pension scams
If you’re suspicious, report it
You can report the �rm 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
Reject unexpected o�ers
Scammers usually cold call, but contact
can also come by email, post, word of mouth
or at a seminar. If you’ve been o�ered an
investment out of the blue, chances are it’s
a high risk investment or a scam.
Check the FCA Warning List
Use the FCA Warning List to check the risks
of a potential investment – you can also search
to see if the �rm is known to be operating without
our authorisation.
Get impartial advice
Get impartial advice before investing – don’t use
an adviser from the �rm that contacted you.
Be ScamSmart and visit
www.fca.org.uk/scamsmart
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Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 101
Shareholder Information
History
The Company was incorporated as Polar Capital Global
Healthcare Growth and Income Trust plc on 12 May 2010.
On 15 June 2010 the Company issued 89,000,000 ordinary
shares of 25p each and 17,800,000 subscription shares of
1p each which were admitted to trading on the Main Market
of the London Stock Exchange. The original subscription
price for each ordinary share was £1 and the Net Asset Value
(NAV) per share on 15 June 2010 was 98p (after launch
costs). The subscription share rights expired on 31 January
2014, following the issue of 17,800,000 ordinary shares. The
subscription shares were subsequently cancelled.
On 20 June 2017 the Company was reconstructed and the
name was changed to Polar Capital Global Healthcare Trust
plc. As part of the reconstruction, a 100% tender offer
was made to shareholders of which 21.8% was accepted
resulting in 26,299,042 ordinary shares being bought back
by the Company; the Company also offered new ordinary
shares in the form of an issue and placing which resulted in
27,798,298 new ordinary shares being created. As part of
the reconstruction and change of investment strategy, the
Company created a wholly owned subsidiary, PCGH ZDP Plc
(the ‘subsidiary’) (together with the Company, the ‘Group’)
which was created to provide structural gearing to the
Company through the placing of Zero Dividend Preference
shares (‘ZDP shares’). The subsidiary was incorporated on
30 March 2017 and issued 50,000 ordinary shares of £1 each
which were subscribed by the Company and fully paid up. On
19 June 2017 the subsidiary issued 32,128,437 ZDP shares at
100p each. These ZDP shares have a standard listing on the
London Stock Exchange.
Each ZDP share is entitled to 122.99p on 19 June 2024 on
the winding up of the subsidiary. The proceeds of the ZDP
Share issue were advanced to the Company under the terms
of a loan agreement for investment by the Company in
accordance with its Investment Policy.
Portfolio Details
Portfolio information is provided to the AIC for its monthly
statistical information service (www.theaic.co.uk). The
portfolio is also published to the Company’s website.
Company Website
www.polarcapitalglobalhealthcaretrust.co.uk
The Company maintains a website which provides a
wide range of information on the Company, monthly
factsheets issued by the Investment Manager and copies of
announcements, including the annual and half year reports
when issued.
Information on the Company can also be obtained from
various different sources including:
• www.theaic.co.uk
• www.ft.com/markets
• www.londonstockexchange.co.uk
Share Prices and Net Asset Value
The Company’s Net Asset Value (NAV) is normally released
daily, on the next working day, following the calculation
date, to the London Stock Exchange. The mid-market price
of the ordinary shares is published daily in the Financial Times
in the Companies and Markets section under the heading
‘Investment Companies’. Share price information is also
available from The London Stock Exchange website:
www.londonstockexchange.co.uk
Electronic Communications
If you hold your shares in your own name you can choose
to receive communications from the Company in electronic
format. This method reduces costs, is environmentally friendly
and, for many, is convenient.
If you would like to take advantage of Electronic
Communications please visit our registrar’s website at
www. shareview.co.uk and register. You will need your
shareholder reference number. If you agree to the terms and
conditions, in future, on the day that documents are sent
to shareholders by post you will receive an e-mail providing
the website address where the documents can be viewed
and downloaded. Paper copies will still be available on
request. Nominee Shareholders Where notification has been
provided in advance the Company will arrange for copies of
shareholder communications to be provided to the operators
of nominee accounts. Nominee service providers are
encouraged to advise investors that they may attend general
meetings when invited by the Chair.
Nominee Shareholders
Where notification has been provided in advance
the Company will arrange for copies of shareholder
communications to be provided to the operators of nominee
accounts. Nominee service providers are encouraged to advise
investors that they may attend general meetings when invited
by the Chair.
Additional Information
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 102
Shareholder Information
Capital Gains Tax
Information on Capital Gains Tax is available on the HM Revenue
& Customs website – www.hmrc.gov.uk/cgt/ index.
When shares are disposed of a capital gain may result if the
disposal proceeds exceed the sum of the base cost of the
shares disposed and any other allowable deductions such as
share dealing costs. The exercise of a right of a subscription
share holder to subscribe for ordinary shares should not give
rise to a capital gain, however a capital gain may arise on the
eventual disposal of those shares.
The calculations required to compute capital gains may be
complex and depend on personal circumstances. Shareholders
are advised to consult their personal financial advisor for
further information regarding a possible tax liability in respect
of their shareholdings.
Further information on the subscription shares is provided in
the subscription share section below.
The Company was launched on 15 June 2010 with the issue
of ordinary shares at £1 per share with subscription shares
attached (on a one for five basis).
Subscription Shares Tax Implications
The base ‘cost’ for UK tax purposes of the subscription
shares is a proportion of the issue price paid for the ordinary
shares to which the subscription shares were attached. The
apportionment is made by reference to the respective market
values of the ordinary shares and subscription shares at the
close of business on 15 June 2010, the day the ordinary and
subscription shares were admitted to trading. The market
value for UK tax purposes of the Company’s ordinary shares
and subscription shares on such date were as follows:
Ordinary Shares 101.0p Subscription Shares 14.875p
If you have exercised the subscription rights attaching to
your subscription shares, the resulting ordinary shares are
treated for UK tax purposes as the ‘same’ asset as the
subscription shares in respect of which the subscription rights
are exercised. The base ‘cost’ for UK tax purposes of the
resulting ordinary shares will be the base cost attributed to
the exercised subscription shares, increased by the amount of
subscription monies paid.
Statement by the Depositary
The statement of the Depositary’s responsibilities in respect
of the Company and its report to Shareholders for the year
ended 30 September 2021 are available on the Company’s
website. The Depositary, having carried out such procedures
as it considered necessary, was satisfied that in all material
respects the Company was managed in accordance with the
applicable FCA rules and AIFMD.
Statement by the AIFM
The statement by the AIFM in respect of matters to be
disclosed to investors for the year ended 30 September 2021
is available on the Company’s website.
Disability Act
Copies of this Annual Report and Financial Statements or
other documents issued by the Company are available from
the Company Secretary. If needed, copies can be made
available in a variety of formats, either Braille or on audio
tape or larger type as appropriate.
You can contact our Registrars, Equiniti Limited, who have
installed textphones to allow speech and hearing impaired
people who have their own textphone to contact them
directly by ringing 0870 600 3950 without the need for
an intermediate operator. Specially trained operators are
available during normal business hours to answer queries
via this service. Alternatively, if you prefer to go through a
‘typetalk’ operator (provided by the Royal National Institute
for the Deaf), you should dial 18001 followed by the number
you wish to dial.
AIC
The Company is a member of the Association of Investment
Companies (‘AIC’) and the AIC website www.theaic.co.uk
contains detailed information about investment trusts
including guides and statistics.
Calendar
Year End 30 September
Half Year End 31 March
Dividend Payments end August
end February
Annual General Meeting 11 February 2022 @ 2pm
Additional Information continued
Annual Report and Financial Statements 2021 • Polar Capital Global Healthcare Trust plc 103
Shareholder Information
Company Registration Number
7251471 (Registered in England)
The Company is an investment company as defined under
Section 833 of the Companies Act 2006.
Directors
Lisa Arnold (Chair)
Neal Ransome (Audit Committee Chair)
Andrew Fleming
Jeremy Whitley
Registered Office and Contact Address
for Directors
16 Palace Street
London
SW1E 5JD
Investment Manager and AIFM
Polar Capital LLP
16 Palace Street
London
SW1E 5JD
Authorised and regulated by the Financial Conduct Authority.
Telephone: 020 7227 2700
Website: www.polarcapital.co.uk
Portfolio Co-Managers
Dr. James Douglas
Mr. Gareth Powell
Company Secretary
Polar Capital Secretarial Services Limited
Represented by Tracey Lago, FCG
Depositary, Bankers and Custodian
HSBC Bank Plc
8 Canada Square
London
E14 5HQ
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London
SE1 2RT
Solicitors
Herbert Smith Freehills LLP
Exchange House
Primrose Street
London
EC2A 2HS
Stockbrokers
Panmure Gordon & Co
One New Change
London
EC4M 9AF
Identification Codes
Ordinary shares
SEDOL: B6832P1
ISIN: GB00B6832P16
TICKER: PCGH
GIIN: ID3ME4.99999.SL.826
LEI: 549300YV7J2TWLE7PV84
Registrar
Shareholders who have their shares registered in their own
name, not through a share savings scheme or ISA, can
contact the registrars with any queries on their holding. Post,
telephone and Internet contact details are given below.
In correspondence you should refer to Polar Capital Global
Healthcare Trust plc, stating clearly the registered name and
address and, if available, the full account number.
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Shareholder helpline: 0800 876 6889
(or +44 121 415 0804 from overseas)
Contact Information
Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2021 104
Shareholder Information
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 these results constitutes, or shall be taken to
constitute, an invitation or inducement to invest in Polar
Capital Global Healthcare Trust plc or any other entity, and
must not be relied upon in any way in connection with any
investment decision.
The Company undertakes no obligation to update any
forward-looking statements.
Forward-looking Statements
Designed and printed by Perivan 262237
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Annual Report and Financial Statements for the year ended 30 September 20212021