Annual Financial Report

RNS Number : 4170B

Polar Capital Global Financials Tst

04 March 2014

 



THIS ANNOUNCEMENT CONTAINS REGULATED INFORMATION

Polar Capital Global Financials Trust plc

Results Announcement for the period ended 30 November 2013

3 March 2014

Financial Highlights                                                         

For the period ended 30 November 2013

Performance

Net asset value (undiluted) per ordinary share (total return)	+3.73%
Benchmark Index
MSCI World Financials Index (total return in Sterling with dividends reinvested)	+6.44%

Financials

		30 November 2013	1 July 2013*	% Change
Net asset value per ordinary share (note 1)	Undiluted	101.66p	98.00p	+3.7%
Share price
Ordinary shares		105.75p	100.00p	+5.8%
Subscription shares (note 2)		16.75p	-	-
Shares in issue	Ordinary	166,750,000	153,000,000	+9.0%
	Subscription	30,600,000	30,600,000	-

Expenses

Ongoing Charges (note 3)

1.16%

-

Dividends

An interim dividend of 0.68p in respect of the period under review will be paid on 31 March 2014 to shareholders on the register on 14 March 2014.

Note 1     The Net Asset Value ('NAV') as at 1 July 2013 was 98.0p per ordinary share based on the subscription price of 100.0p per ordinary share and launch costs of 2.0p per ordinary share.

Note 2     Subscription shares were issued free to investors on 1 July 2013 on the basis of one subscription share for every five ordinary shares.

Note 3     Ongoing Charges represent the total expenses of the Company, excluding finance costs, expressed as a percentage of the average daily net asset value, in accordance with AIC guidance issued in May 2012.

*Date of listing and commencement of operations.

Chairman's Statement

I am pleased to present to you our first annual report since the launch of the Company on the London Stock Exchange on 1 July 2013. It covers the period to 30 November 2013.

Performance

As set out in our prospectus, the Company's investment objective is to generate a growing dividend income, together with capital appreciation, by investing primarily in a global portfolio of listed or quoted securities issued by companies in the banking, insurance, property and other financial sectors. During the period under review, the Company has delivered a NAV total return of 3.7%*.   In the same period, our Benchmark (MSCI World Financials Index Total return in Sterling) rose by 6.4%.  Our share price closed the period at 105.75p, which represents a total return of 5.8% and a premium of 4.0% to the net asset value.

In addition to the initial costs of establishing the investment portfolio, the underperformance reflected the background of sharply rising markets and currency volatility at the time of the Company's launch. The Board is pleased to note that the Company's investment performance has already begun to recover the initial underperformance, and, as at 28 February 2014, had achieved a NAV total return of 4.93% since launch, compared with the Benchmark return of 4.95%.

At the financial year end the Company's assets were well diversified with 50% in banks and the balance spread across the diversified financials, insurance and real estate sectors. In addition, the Company has used its discretion to invest in debt securities in order to support its income objectives, with 9% of the Company's assets invested in subordinated debt securities issued by European financial companies.

Share Capital

Your Company raised £153m before expenses in the Initial Public Offering (IPO), through an issue of 153,000,000 ordinary shares at £1 each. 30,600,000 subscription shares were issued at the same time, on the basis of one subscription share for every five ordinary shares. The Board regards this as a highly successful launch for an investment company operating in a sector which had been out of favour for a number of years. We are delighted that investors have confirmed the Board's view that the launch represented a timely opportunity to reopen the sector, by combining an appealing investment theme with a first class asset management capability and an attractive structure.

Demand for the Company's shares has been strong since its launch. The Board has used the discretion it has to issue new ordinary shares to meet this demand and to help manage the share price premium to NAV. As at 30 November 2013, there were 166,750,000 ordinary shares in issue, with 13,750,000 shares placed since the IPO, issued at a premium to the prevailing NAV of between 2% and 5%. The Board believes that it is in the interests of shareholders to expand the Company's capital, thereby improving the liquidity of its shares and reducing its Ongoing Charges. The Board is also delighted to note the quality and breadth of the Company's shareholder base with strong representation from a broad cross section of institutional investors.

There is no formal discount control mechanism.  However, the Board will monitor any discount that may appear in normal market conditions and will consider if buying the ordinary shares and/or the subscription shares is in the best interests of shareholders.

Revenue and Dividends

In the period to 30 November 2013, our total income amounted to £1.84m derived from dividends from the investment portfolio, interest on cash balances and income from writing options.

*based on a starting NAV of 98p

In our prospectus we indicated that a maiden dividend for the period to 30 November 2013 would comprise substantially all the Company's distributable income. Accordingly the Board has declared an interim maiden dividend of 0.68p per ordinary share. This will be paid on 31 March 2014 to ordinary shareholders on the register on 14 March 2014, with the shares trading ex-dividend from 12 March 2014.

The Board expects that it will be able to fulfill the dividend commitment in the prospectus of paying a total dividend in respect of the first full financial year of 3.1p per ordinary share. While the Company is aiming for a policy of dividend growth, there can be no guarantee that this will be achieved.

Costs

The Board places a high priority on controlling the Company's costs. At launch we had initially estimated an Ongoing Charges ratio of 1.27% of net assets.  I am pleased to report that the actual outcome is 1.16% due, in part, to the scale of the initial launch and the subsequent issue of new shares.

Alternative Investment Fund Managers Directive (AIFMD)

The Board is taking advice on the implications of AIFMD for the Company and is pleased to confirm that it has agreed in principle to appoint Polar Capital LLP as the Alternative Investment Fund Manager, and HSBC to the role of Depository, pursuant to the new regulations. These appointments are subject to final approval.

Directors

I would like to thank Katrina Hart and Joanne Elliott for becoming Directors of this new venture. We see our role as a Board to provide oversight of the activities of the investment manager and other services provided in a challenging and constructive way and to look after the interests of all our shareholders and stakeholders.

Outlook

Although the US Federal Reserve's tapering programme and difficulties in certain emerging markets have created heightened volatility in global equity markets, the Board remains encouraged by the relative prospects for the financials sector, given years of balance sheet enhancement efforts, stronger capital bases, restructuring and rationalisation, earnings recovery and stronger economic growth. At the end of the financial period, the Company held approximately 4% cash in the portfolio which represents in our view a full commitment to the sector given the need for a small amount of tactical cash and the steady issue of new shares that the Company has undertaken since launch.

The Board concurs with the manager's view that developed market financials remain historically undervalued and that a re-rating is warranted from low levels. In addition the Board feels that the sell-off in emerging market financials will provide opportunities given the underlying earnings and growth momentum. 2014 may well be a year of higher equity market volatility after a period of strong performance. However, we believe that this volatility will not put at risk the fundamental story for global financials while offering opportunities for our Investment Manager's stock picking skills.

Annual General Meeting

The Company's first Annual General Meeting (AGM) to be held on 7 May 2014 at 12.30pm at the offices of Panmure Gordon, One New Change, London, EC4M 9AF will provide shareholders with an opportunity to meet the Board and to hear a presentation from the Investment Manager. I look forward to meeting as many shareholders as possible at the AGM.

Robert Kyprianou

Chairman

3 March 2014

Investment Manager's Report

For the period ended 30 November 2013

Performance

The five month period covered by this report from the launch of the Trust to the end of November was a good one for financial markets with the MSCI World Index rising by 4.9%. Not surprisingly, against this background it was also a good one for the financial sector with financial shares marginally outperforming broader equity market indices as illustrated by our Benchmark Index, the MSCI World Financials Index, which rose by 6.4%.

Although the assets raised from the launch were invested relatively quickly, within the first few days of July, this was set against a background of very sharply rising equity markets and volatility in sterling versus other currencies. As a result the Trust's net asset value performance initially lagged the rise in our Benchmark Index and although performance has been better in the intervening period it has not been quite good enough, so far, to catch up all of the initial underperformance.

Our investment style is to pay almost no attention to the makeup of benchmark indices, picking stocks for their merits and our belief that they offer an attractive investment opportunity and, overall, will meet the income requirement of the Trust. As a result the portfolio differs quite materially from our Benchmark Index, the MSCI World Financials Index. For example, there are no Australian banks or US REITs in the portfolio (which represent a not insignificant percentage of the Benchmark). Conversely, we have a greater exposure to emerging markets with holdings in India, for example, which are not represented in the Benchmark Index. Performance may therefore diverge materially at times from that of our Benchmark but historically this approach has generated significantly better performance for other funds we manage.

Market review

Regionally the strongest performance over the latter part of 2013 was in Europe and in particular Spain, Italy and Greece where share prices rose sharply, recovering from very low valuations on the back of better economic data. It was also where we had our largest exposure at 33.7% of the Trust, if one includes Eastern Europe. Increased confidence regarding banks' balance sheets and falling government bond yields has been critical to the improved sentiment towards the sector.

The largest investments we have in Europe are banks listed in the UK, France, Norway and Switzerland such as DNB and BNP Paribas but we also have some exposure to some of the southern European countries. As examples, we hold Azimut, an Italian asset manager, and Hellenic Exchanges, the Greek stock exchange, both of which have performed well. We also have a holding in BBVA, Spain's second largest bank, but which we reduced following strong share price performance.

Our second largest geographic exposure is to North America. US banks which constitute the largest part of this and are the largest holdings in the Trust performed well, although significantly less so when taking into account the approximate 7% fall in the US dollar relative to sterling over the latter half of 2013. The driver behind their strong performance was better than expected earnings, largely a consequence of lower loan losses as opposed to strong loan growth. Furthermore many have been releasing loan loss reserves they had built up during the downturn.

A trend that has been witnessed throughout the past year, not only in financials, is the outperformance of small and mid-cap stocks. For example in the US, mid-cap banks have significantly outperformed larger banks. US financials still look cheap against the broader equity market but this is very much concentrated in the larger banks, which explains their position in the largest holdings of the Trust, and where we added to holdings during the period under review.

Our largest US bank holdings are JP Morgan, Wells Fargo and PNC where we still see very good value. Our exposure to smaller US banks is primarily a holding in First Republic, a San Francisco headquartered bank. Other larger holdings include ACE, the property-casualty insurer, Blackstone, the alternative asset manager, and Discover Financial Services, which is the sixth largest credit-card issuer in the US and amongst other businesses, owns Diners Club International.

Asian and emerging market financials performed poorly over the period. Expectations that the Federal Reserve would start to withdraw some of the extraordinary monetary stimulus that has been in place since 2009 led to concerns that it would result in a flight of liquidity out of many emerging markets. Those countries perceived as especially reliant on flows to fund current account deficits were hit hardest. There were some sharp falls in share prices compounded by weakness in currencies.

Our largest emerging market holding is Jammu & Kashmir, an Indian bank which saw its share price recover quite quickly, post a sharp fall in line with other Indian banks, helped by upbeat comments by the company. Other larger holdings include Komercni, a Czech bank, and Sberbank, Russia's largest bank. We reduced our exposure to emerging markets earlier in the period by selling holdings in, for example, Raiffeissen, an Austrian headquartered bank with operations across Eastern Europe after a sharp rise in its share price as well as holdings in OTP, a Hungarian bank and Axis bank, an Indian bank.

Sectorally, reflecting the underlying rise in most developed equity markets, our holdings in asset managers and other market sensitive companies performed very well. Our holdings in non-life insurance companies also performed well.  However, real estate investment trusts (REITs) performed poorly over the latter part of 2013. Our exposure to the sector is through a number of Singaporean listed REITs, all of which trade on attractive dividend yields, and the opportunity was taken to add to our holdings on weakness. Just under 10% of the Trust is invested in a portfolio of subordinated debt securities issued by European financial companies. Despite rising government bond yields over the period, they have performed better than expected due to the more positive outlook from a credit standpoint. Our largest holding is in a Tier-1 bond issued by Lloyds Banking Group.  More recently we took advantage of the decision by Nationwide to strengthen its balance sheet to purchase its Capital Core Deferred Shares issued for this purpose.

Outlook

Financials have lagged the rally in equity markets since the beginning of 2009 largely due to the headwinds the banking sector has faced with respect to capital, regulation and to a lesser extent fines and litigation. This was exacerbated by the crisis in the Eurozone. But in the last eighteen months or so as there has been greater clarity on capital requirements, a pickup in economic growth and, with balance sheets having been strengthened significantly since the crisis, financials have performed much more strongly.

Looking forward the prospect of higher US interest rates has caused some significant weakness in emerging markets, their currencies and REITs globally. However, for the rest of the sector it has been seen, along with better economic data as positive for sentiment and earnings and has therefore led to higher share prices.

Financials historically have been seen as negatively correlated with interest rates. For example in anticipation of a rise in interest rates, for whatever reason, bank share prices would come under pressure on the expectation that a rise in interest rates would lead to higher loan losses as more companies or individuals would default (from slower economic growth and/or increased interest charges), resulting in lower earnings.

But today most financials, with the exception of REITs, conversely should be beneficiaries of interest rate rises. For the banking sector, not only would a rise in interest rates most likely be seen as positive, reflecting a stronger economic growth outlook and therefore higher loan growth, but it should also result in net interest margins (the difference between what a bank receives in interest on loans it has made and what it has to pay out to its depositors) expanding and therefore leading to increased profitability.

The reason for this is that one of the unintended consequences of quantitative easing is that the interest income that banks earn from their assets whether they be loans or securities (government and corporate bonds) has fallen with the decline in interest rates over the last few years. Whereas they have also been able to reduce their funding costs (what they pay their depositors etc.) they have not been able to reduce them to the same degree resulting in their net interest margins being squeezed.

Therefore any rise in interest rates should result in the interest income that banks earn increasing faster than what they have to pay out. It is also unlikely that loan losses will rise materially as banks have significantly tightened their underwriting criteria i.e. they have only lent to those companies and individuals who can afford to (or don't need to) borrow.

So, the combination of higher loan growth (with only limited if any increase in loan losses) plus wider net interest margins leading to higher net interest income and likely higher fee income (from the sale of insurance or investment products, fees for loans etc.) will lead to higher earnings. Set against their much stronger balance sheets and therefore increased dividend paying ability of the sector, banks should continue to do well.

The pattern described above, and its timings, will not be uniform globally but US banks (as well as Hong Kong and Taiwanese) are probably best positioned for this outcome.  However, to varying degrees, most banks should be beneficiaries.  The profitability of Eurozone banks, conversely, has been and may well, for the foreseeable future, continue to be driven more by their funding costs, which have fallen, than the prospect of higher interest rates.

Despite the rally in the share prices of Eurozone and other developed market banks, they remain well below historic levels of valuation and the financial sector's overall sensitivity to the economy means that it should perform well if economic data continues to improve.  Catalysts for better share price performance include the upcoming asset quality review and stress tests being carried out by the European Central Bank on the European Banking sector.

Furthermore, some of the falls in share prices of emerging market financials look overdone as the underlying operating trends have not deteriorated to the extent implied by these falls and earnings are underpinned by high profitability and stronger loan growth. As a result we remain upbeat on the outlook for the sector.

N Brind and J Yakas

3 March 2014

Portfolio

As at 30 November 2013

	Investment	Sector	Geographical Exposure	Market Value £'000	% of net assets
1	JP Morgan Chase	Banks	North America	4,978	2.9%
2	PNC Financial Services	Banks	North America	4,627	2.7%
3	Wells Fargo	Banks	North America	4,163	2.5%
4	DNB	Banks	Europe	3,976	2.3%
5	BNP Paribas	Banks	Europe	3,926	2.3%
6	Barclays	Banks	United Kingdom	3,869	2.3%
7	UBS	Banks	Europe	3,823	2.3%
8	Societe Generale	Banks	Europe	3,694	2.2%
9	ACE	Insurance	Europe	3,608	2.1%
10	Citigroup	Banks	North America	3,554	2.1%
Top 10 investments				40,218	23.7%
11	Sampo	Insurance	Europe	3,421	2.0%
12	Toronto-Dominion Bank	Banks	North America	3,279	1.9%
13	Jammu & Kashmir	Banks	Asia (ex-Japan)	3,268	1.9%
14	Sberbank of Russia	Banks	Eastern Europe	3,152	1.9%
15	Azimut	Diversified Financials	Europe	3,090	1.8%
16	KBC	Banks	Europe	3,055	1.8%
17	Swedbank	Banks	Europe	3,051	1.8%
18	Sumitomo Mitsui Financial	Banks	Japan	3,018	1.8%
19	US Bancorp	Banks	North America	2,933	1.7%
20	Discover Financial Services	Diversified Financials	North America	2,928	1.7%
Top 20 investments				71,413	42.0%
21	Allianz	Insurance	Europe	2,790	1.7%
22	AXA	Insurance	Europe	2,725	1.6%
23	Marsh & McLennan	Insurance	North America	2,708	1.6%
24	Cielo	Diversified Financials	Latin America	2,698	1.6%
25	Bank of Georgia	Banks	Eastern Europe	2,698	1.6%
26	HSBC	Banks	Asia (ex-Japan)	2,692	1.6%
27	Hellenic Exchanges	Diversified Financials	Eastern Europe	2,676	1.6%
28	Blackstone	Diversified Financials	North America	2,591	1.5%
29	Close Brothers	Diversified Financials	United Kingdom	2,556	1.5%
30	Frasers Centrepoint Trust	Real Estate	Asia (ex-Japan)	2,543	1.5%
Top 30 investments				98,090	57.8%
31	Direct Line Insurance	Insurance	United Kingdom	2,524	1.5%
32	Komercni Banka	Banks	Eastern Europe	2,465	1.5%
33	Siam Commercial Bank	Banks	Asia (ex-Japan)	2,455	1.4%
34	First Republic Bank	Banks	North America	2,417	1.4%
35	Credit Suisse	Banks	Europe	2,370	1.4%
36	CapitaMall REIT	Real Estate	Asia (ex-Japan)	2,273	1.3%
37	Frasers Commercial Trust	Real Estate	Asia (ex-Japan)	2,115	1.3%
38	Fortune REIT	Real Estate	Asia (ex-Japan)	2,106	1.2%
39	PartnerRe	Insurance	North America	2,057	1.2%
40	Turkiye Sinai Kalkinma Bank	Banks	Eastern Europe	2,051	1.2%
Top 40 investments				120,923	71.2%
41	Solar Capital	Diversified Financials	North America	2,012	1.2%
42	Affiliated Managers	Diversified Financials	North America	1,956	1.2%
43	Oaktree Capital	Diversified Financials	North America	1,951	1.2%
44	Lloyds Bank 13% Bond	Fixed Income	Fixed Income	1,886	1.1%
45	New York Community Bancorp	Banks	North America	1,841	1.1%
46	Barclays Bank 14% Bond	Fixed Income	Fixed Income	1,774	1.1%
47	Cloverie PLC Zurich VRN Bond	Fixed Income	Fixed Income	1,766	1.0%
48	Lancashire	Insurance	United Kingdom	1,751	1.0%
49	Investec Bank 9.625% Bond	Fixed Income	Fixed Income	1,718	1.0%
50	Bajaj Finance	Diversified Financials	Asia (ex-Japan)	1,669	1.0%
Top 50 investments				139,247	82.1%
51	Chailease	Diversified Financials	Asia (ex-Japan)	1,652	1.0%
52	BBVA	Banks	Europe	1,606	1.0%
53	Old Mutual 8% Bond	Fixed Income	Fixed Income	1,597	0.9%
54	E Sun Financial	Banks	Asia (ex-Japan)	1,593	0.9%
55	Bank Rakyat Indonesia	Banks	Asia (ex-Japan)	1,521	0.9%
56	Security Bank	Banks	Asia (ex-Japan)	1,467	0.9%
57	Phoenix Life 7.25% Bond	Fixed Income	Fixed Income	1,418	0.8%
58	Brasil Insurance	Insurance	Latin America	1,251	0.7%
59	Friends Life 8.25% B ond	Fixed Income	Fixed Income	1,225	0.7%
60	Novae	Insurance	United Kingdom	1,184	0.7%
Top 60 investments				153,761	90.6%
61	Societe Generale 9.375% Bond	Fixed Income	Fixed Income	1,137	0.7%
62	F&C Asset Management 6.75% Bond	Fixed Income	Fixed Income	1,116	0.7%
63	Arrow Global	Diversified Financials	United Kingdom	1,066	0.6%
64	Sparebank Nord-Norge	Banks	Europe	955	0.6%
65	Sparebank SR Bank	Banks	Europe	922	0.5%
66	Cembra Money Bank	Diversified Financials	Europe	844	0.5%
67	Tungsten	Diversified Financials	United Kingdom	809	0.5%
68	City of London Investment Group	Diversified Financials	United Kingdom	805	0.5%
69	Nationwide Building Society 10.25% Bond	Fixed Income	Fixed Income	750	0.4%
70	Bank Tabungan Pensiunan	Banks	Asia (ex-Japan)	484	0.3%
Top 70 investments				162,649	95.9%
71	W&G Investment	Diversified Financials	United Kingdom	27	-
72	Co Operative Bank 5.75% Bond	Fixed Income	Fixed Income	1	-
Total Equities & Bonds				162,677	95.9%
Options - (Put and Call)				(27)	-
Total Investments				162,650	95.9%
Other net assets (excluding Options)				6,871	4.1%
Net assets				169,521	100.0%

Geographical Exposure	30 November 2013
North America	25.9%
Europe	25.9%
Asia (ex-Japan)	15.2%
United Kingdom	8.6%
Eastern Europe	7.8%
Latin America	2.3%
Japan	1.8%
Fixed Income	8.4%
Other net assets	4.1%
Total	100.0%

Sector Exposure	30 November 2013
Banks	50.7%
Diversified Financials	17.3%
Insurance	14.2%
Real Estate	5.3%
Fixed Income	8.4%
Other net assets	4.1%
Total	100.0%

Market Cap	30 November 2013
Large (>US$5bn)	72.1%
Medium (US$0.5bn - US$5bn)	26.8%
Small (<US$0.5bn)	1.1%
Total	100.0%

Strategic Report

The Company is required by the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 to set out a report to shareholders outlining a fair review of the strategy and performance of the Company during the period ended 30 November 2013, the position of the Company at the period end and a description of the principal risks and uncertainties.

Full details of the Investment Manager's activities and its views are given in the Investment Manager's Report. The Board considers that the Chairman's Statement and the Investment Manager's Report should be read in conjunction with this Strategic Report and the Report of the Directors which follows.

Future Developments

The Board remains positive on the longer-term outlook for the global financials sector and the Company will continue to pursue its investment objective in accordance with the stated investment policy and strategy. The outlook for 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 Chairman's Statement and the Investment Manager's Report comment on the outlook.

Investment Objective and Policy

Objective

The Company's investment objective is to generate a growing dividend income together with capital appreciation.

Policy

The Company seeks to achieve its objective by investing primarily in a global portfolio consisting of listed or quoted securities issued by companies in the financials sector operating in the banking, insurance, property and other sub-sectors.

The portfolio is diversified by geography, industry sub-sector and stock market capitalisation.

The Company may have a small exposure to unlisted and unquoted companies, but in the aggregate, this is not expected to exceed 10 per cent of total assets at the time of investment.

The Company will not invest more than 10 per cent of total assets, at the time of investment, in other listed closed-ended investment companies and no single investment will normally account for more than 10 per cent of the portfolio at the time of investment.

The Company may employ levels of borrowing from time to time with the aim of enhancing returns, subject to an overall maximum of 15 per cent of net assets at the time the relevant borrowing is taken out. Actual levels of borrowing may change from time to time based on the Investment Manager's assessment of risk and reward.

The Company may invest through equities, index-linked and other debt securities, cash deposits, money market instruments, foreign currency exchange transactions, forward transactions, index options and other instruments including instruments. Forward transactions, derivatives (including put and call options on individual positions or indices) and participation notes may be used to gain exposure to the securities of companies falling within the Company's investment policy or to seek to generate income from the Company's position in such securities, as well as for efficient portfolio management. Any use of derivatives for investment purposes is made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments. The Company may hedge exposure to foreign currencies if considered appropriate for efficient portfolio management.

Benchmark

The Company compares the Investment Manager's performance against the MSCI World Financials Index, total return, in Sterling with net dividends reinvested. This Index is used to measure the performance of the Company, which does not seek to replicate the index in constructing its portfolio. The portfolio may, therefore, diverge substantially from the constituents of this Index. Although the Company has a benchmark, this is neither a target nor an ideal investment strategy. The purpose of the Benchmark is to set a reasonable return for shareholders above which the Investment Manager is entitled to a share of the extra performance it has delivered.

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 comprise both specific financial and shareholder related measures.

KPI	Control process	Outcome
The provision of investment returns to ordinary shareholders measured by long-term NAV total return relative to the Benchmark Index.	The Board reviews at each meeting the performance of the portfolio and considers the views of the Investment Manager.	The Company's undiluted NAV total return, over the period ended 30 November 2013, was 3.73% while the Benchmark Index over the same period increased by 6.44%. The underperformance is explained in the Chairman's statement and the Investment Manager's Report.
The achievement of the dividend policy.	Financial forecasts are reviewed to track income and distributions.	No dividends were paid during the period under review but it is intended that two interim dividends per year will be paid in future. A maiden dividend of 0.68p per ordinary share has been declared comprising substantially all the income arising in the period to 30 November 2013 in line with the expectations set out in the prospectus.
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 reducing volatility for shareholders.	The Board receives regular information of 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. A daily NAV per share, diluted when appropriate, calculated in accordance with the AIC guidelines is issued to the London Stock Exchange.	The discount/premium of the ordinary share price to the NAV per ordinary share over the period ended 30 November 2013 ranged from a maximum discount of 0.9% to a premium of 11.3%. Since the IPO on 1 July 2013, the Company issued a further 13,750,000 shares in the period ended 30 November 2013 as reported in the Chairman's Statement on page 02. A further 7,950,000 ordinary shares have been issued between 30 November 2013 and 3 March 2014 (the date of this report).   The Company did not buy back any ordinary or subscription shares in the period ended 30 November 2013, and there have been no purchases in the period between 30 November 2013 and 3 March 2014.
To qualify and meet the requirements for Sections 1158 and 1159 of the Corporation Tax Act 2010.	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.	Investment trust status has been granted to the Company in respect of the accounting period ended 30 November 2013 and subsequent periods, subject to the Company continuing to satisfy the conditions of Section 1158 of the Corporation Taxes Act 2010 and other associated ongoing requirements. The Directors believe that the conditions and other ongoing requirements have been met in respect of the period ended 30 November 2013 and they believe that the Company will continue to meet the requirements.
To monitor and manage ongoing charges	The Board receives regular financial information which discloses expenses against budget.	Ongoing Charges for the period ended 30 November 2013 was 1.16% of the average daily net asset value.

Principal Risks and Uncertainties

In delivering long-term returns to shareholders the identification and monitoring of risk is crucial. In addition to the detailed internal controls set out in the corporate governance report the Board seeks to identify, assess and monitor risks to the Company. The Board maintains a Risk Map and reporting structure with investment limits and restrictions appropriate to the investment objective to monitor and mitigate as far as practical such risks. The Board has identified two principal groups of risks.

The first group relate primarily to economic uncertainties and the Company's particular sphere of activity of investing in worldwide stock markets.

·      As the Company's assets comprise mainly listed equities the principal risks to the performance of the business are associated with equity markets and foreign exchange rates. Both share prices and exchange rates may move rapidly and adversely impact the value of the Company's portfolio.

·      While the portfolio is diversified across a number of stock markets worldwide, the investment mandate is focused on a single sector and thus the portfolio may be more sensitive to investor sentiment than a non sector specific investment portfolio.

·      Financials companies are subject to many factors that could adversely affect their performance, profitability and share prices including changes in financial market conditions, interest rates, national and international regulations issued by governments and regulators and the worldwide economic environment.

·      There is significant exposure to the economic cycles of the markets in which the underlying investments operate.

The Board mitigates this group of risks through the regular reporting and monitoring of the investment performance including financial information, analytical performance data and attribution presented by the Investment Manager at Board meetings. The composition and diversification of the portfolio including the sales and purchases of investments is also considered. The Board discusses individual investments with the Investment Manager as well as the Investment Manager's general views on the various markets and the financials sector in particular. The Board also considers the investment strategy and has regard to the degree of risk which the Investment Manager incurs in order to generate the investment returns.

The second group of business risks take the form of financial, including accounting and taxation, operational,  legal and regulatory requirements.

·      The financial risks which arise from the Company's investment activities expose it to risks such as market price, credit, liquidity, foreign currency and interest rates.

·      The operational and accounting risks cover disruption to or failure of systems and processes provided by the Investment Manager including: any sub contractors to which the Investment Manager has delegated a task; the valuation of investments; the keeping of safe custody records and systems provided by the custodian or sub custodians and; the risk that suppliers may deliver sub standard services that may have an impact on the Company or its shareholders.

·      The taxation risks are that the Company may fail to obtain qualification as an investment trust and that the Company may fail to recover, as far as possible, withholding taxes levied on overseas investment income.

·      Legal and regulatory risks include compliance with the FCA's Prospectus Rules, Listing Rules and Transparency and Disclosure Rules; meeting the provisions of the Companies Act 2006 and other UK, European and overseas legislation affecting UK companies and compliance with accounting standards.

·      The ordinary shares of the Company are listed on the London Stock Exchange and the share price is determined by supply and demand.   The shares may trade at a discount or at a premium to the Company's underlying NAV and this discount or premium may fluctuate.

·      Gearing, either through bank debt or the use of derivatives may be utilised from time to time according to Board and the Investment Manager's assessment of risk and reward.  Whilst the use of gearing is intended to enhance the NAV total return, it will have the opposite effect when the return on the Company's investment portfolio is negative.

·      The Company's investment portfolio is actively managed.  The Managers' investment style focuses primarily on the investment opportunity of individual stocks and, accordingly, may not follow the makeup of the Benchmark.   This may result in returns which are not in line with the Benchmark.

The Board seeks to manage this second group of risks by obtaining information from the Investment Manager or professional advisers and, where necessary, the commissioning of topical reports for discussion. The Board, having considered the reports, will take any remedial action or make such changes as it considers appropriate.

The policies for managing the risks posed by exposure to market prices, interest rates, foreign currency exchange rates, credit and liquidity are set out in note 23 to the financial statements.

Management Company and Management of the Portfolio

The Company has no employees and the Directors are all appointed on a non-executive basis.  The Company is reliant on third party service providers for its executive functions.

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 is attractive to shareholders. The Directors believe that a strong working relationship with the Investment Manager will achieve the optimum return for shareholders.

The Company entered into an Investment Management Agreement dated 11 June 2013 with Polar Capital LLP (the Investment Manager) which is authorised and regulated by the Financial Conduct Authority to act as investment manager of the Company with sole responsibility for the discretionary management of the Company's assets (including uninvested cash) and to advise the Company on a day to day basis in accordance with the investment policy of the Company, all subject to the overall control and supervision of the Board.

The Investment Manager also agreed to procure or provide the day to day administration of the Company and general secretarial functions. The Investment Manager has, with the consent of the Directors, delegated the provision of certain of these administrative functions to HSBC Securities Services (UK) Limited and to Polar Capital Secretarial Services Limited.

The fees of HSBC Securities Services (UK) Limited and Polar Capital Secretarial Services Limited for providing such services are for the account of the Company.

Investment Team

The Investment Manager provides a team of financials specialists and the portfolio is managed jointly by Mr Nick Brind, the lead manager, and Mr John Yakas. The Investment Manager also has other specialist and geographically focused investment teams which may contribute to idea generation.

Termination Arrangements

The Investment Management Agreement is terminable by either the Investment Manager or the Company giving to the other not less than 12 months' written notice, such notice not to be served earlier than the second anniversary of the agreement (11 June 2015). The Investment Management Agreement 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 Investment Management Agreement.

In the event the Investment Management Agreement 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 management 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 Investment Management Agreement, the Investment Manager is entitled to a management fee together with reimbursement of reasonable expenses incurred by it in the performance of its duties. The management fee is payable monthly in arrears at the rate of 0.85% per annum of the lower of the Company's market capitalisation and the Company's Net Asset Value on the relevant day.

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. Any performance fee will be paid at the end of the Company's expected life (except in the case of an earlier termination of the Investment Management Agreement) and will be an amount equal to 10% of the excess return (based on the Adjusted Net Asset Value per ordinary share at that time) over the performance fee hurdle.

The performance fee hurdle is 100 pence, increased by the percentage growth in the Benchmark Index plus 1.25 pence per annum (reduced pro rata for periods of less than one full year) over the period from the day following Admission to the date on which it is resolved to wind up the affairs of the Company.

For the purposes of calculating the performance fee, the Company's Adjusted Net Asset Value will be based on the Net Asset Value adjusted as follows:

(A)           the amount of any dividends paid by the Company shall be 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;

(B)           any dilutive effect caused by the exercise by shareholders of subscription rights in relation to subscription shares shall be deemed to have been added back to the Company's Net Asset Value at the time of issue of the ordinary shares resulting from such exercise, so as to negate the effect of the dilution;

(C)           any enhancement to the Terminal NAV arising from any issue of ordinary shares at a premium to the Net Asset Value per ordinary share prevailing at the time of such issue since Admission shall be deducted; and

(D)           any enhancement to the Terminal NAV arising from the repurchase of ordinary shares pursuant to a tender offer at a discount to Net Asset Value per ordinary share prevailing at the time of such repurchase since Admission shall be deducted.

If at the end of the Company's expected life the amount available for distribution to shareholders is less than 100 pence per ordinary share, no performance fee will be payable. If the amount is more than 100 pence per ordinary share but payment of the performance fee in full would reduce it below that level, then the performance fee will be reduced (but to not less than nil) such that shareholders receive exactly 100 pence per share.

No performance fee has been accrued for the period ended 30 November 2013.

Service Providers

Apart from the arrangements with Polar Capital LLP to provide investment, company secretarial and administrative services including accounting, portfolio valuation and trade settlement, the Company also contracts directly with HSBC Bank plc which acts as global custodian for all the Company's investments.

The Company used the services of Panmure Gordon (UK) Limited as corporate broker during the period. The Company also retains Equiniti Limited as registrars and PricewaterhouseCoopers LLP as independent auditors. Each of these contracts was entered into after full and proper consideration 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.

HSBC Securities Services (UK) Limited has been retained by the Investment Manager to provide accounting, valuation and trade settlement services.

Corporate Responsibility

Socially responsible investing and exercise of voting powers

The Board has instructed the Investment Manager to take into account the published corporate governance of the companies in which it invests.

The Company has also considered the Investment Manager's Stewardship Code and Proxy Voting Policy. The Voting Policy is for the Investment Manager to vote at all general meetings of companies in favour of resolutions proposed by the management where it believes that the proposals are in the interests of shareholders. However, in exceptional cases, where it believes that a resolution could be detrimental to the interests of shareholders or the financial performance of the Company, appropriate notification will be given and abstentions or a vote against will be lodged.

During the period under review, no votes were cast at company meetings. Since the end of the period under review, the Investment Manager has voted at three company meetings, in each case following the recommendation of the management of that company on the casting of votes.

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).

Environment

The Company's core activities are undertaken by its Investment Manager which seeks to limit the use of non-renewable resources and reduce waste where possible.

Diversity, Gender Reporting and Human Rights Policy

The Company has no employees and a Board comprised of two female and one male Non-executive Directors.

If any new appointments are made to the Board, the Board will continue to have regard to the benefits of diversity, including gender, when seeking to make any such appointment(s).

The Company has not adopted a policy on human rights as it has no employees or operational control of its assets.

Approved by the Board on 3 March 2014

By order of the Board

Sue Allen FCIS

Polar Capital Secretarial Services Limited

Company Secretary

Report of the Directors including the Report on Corporate Governance

The Directors present their Report including the Report on Corporate Governance together with the Audited Financial Statements for the Company prepared under International Financial Reporting Standards as adopted by the European Union (IFRSs) for the period ended 30 November 2013.

Incorporation

The Company was incorporated on 17 May 2013 with two directors, Mr John Mansell and Mr Neil Taylor, who both resigned on 7 June 2013 and who received no fees for their services.

On incorporation, 1 million ordinary shares were allotted to Polar Capital Partners Limited at par to enable the Company to commence business and to exercise its borrowing powers under section 761 of the Companies Act 2006. Pursuant to a special resolution of the Company passed on 7 June 2013, these ordinary shares were reclassified as deferred subscriber shares and cancelled as part of the High Court sanctioned cancellation of the share premium account on 4 September 2013.

Principal Activities 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 its ordinary shares and subscription shares are listed and traded on the London Stock Exchange.

The close company provisions do not apply.

The business of the Company is to generate for shareholders a growing dividend income and capital appreciation through access to a discretionary managed diversified global portfolio consisting primarily of listed or quoted equities issued by companies in the financials sector operating in the banking, insurance, property and other sub-sectors. The portfolio is diversified by geographic location and size of investee companies.

The portfolio is managed within a framework of investment limits and restrictions determined by the Board which strives to meet the investment objective while seeking to spread and mitigate risk.

The Company has no employees or premises and the Board is comprised of Non-executive Directors. The day to day operations and functions of the Company have been delegated to third parties.

The attention of shareholders is drawn to the Chairman's Statement on pages 02 and 03 and the Strategic Report on pages 11 to 16 which provide further commentary on the activities and outlook for the Company.

Investment Trust Status

Investment Trust status permits the accumulation of capital within the portfolio without any liability to UK Capital Gains Tax.

The Company has applied for and received confirmation from HM Revenue and Customs that on the basis of the information provided, the Company has been accepted as an approved investment trust for accounting periods commencing on or after 1 July 2013 subject to the Company continuing to meet the eligibility conditions of Section 1158 Corporation Tax Act 2010 and the ongoing requirements for approved companies in Chapter 3 of Part 2 Investment Trust (Approved Company) (Tax) Regulations 2011 (Statutory Instrument 2011/2999).

The Directors are of the opinion that the Company has conducted and will continue to conduct its affairs so as to maintain its status as an investment trust.

Life of the Company

The Articles of Association require the Directors to put forward at the seventh Annual General Meeting 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. The seventh AGM is expected to be held in April 2020, but no later than 31 May 2020.

Financial Review

The performance of the Company's assets as measured by the change in the Net Asset Value per ordinary share and the change in the Benchmark Index is set out on page 01.

Assets

At 30 November 2013 the total net assets of the Company amounted to £169,521,000. At 30 November 2013, there were 72 separate investments as detailed on pages 07 to 09.

Revenue and Expenses

The revenue and expenses for the period ended 30 November 2013 are shown in the Statement of Comprehensive Income on page 41. The notes to the financial statements on pages 45 to 63 provide an analysis of these items.

Dividends

No dividends were declared during the period under review but an interim dividend of 0.68p per share has been declared in respect of the period under review. This will be paid on 31 March 2014 to shareholders on the register on 14 March 2014. Thereafter the Company aims to pay two interim dividends in respect of each financial year, in March and September. These interim dividends will not necessarily be of equal amounts because the dividends from the Company's underlying investments are expected to arrive irregularly throughout the financial year.

The Company aims to increase the dividend (on an annual basis) progressively, but there is no guarantee that this will be achieved. Shareholders should recognize 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 aim a "special dividend" will be declared and paid.

Capital Structure and Voting Interests

Issued

The Company's share capital is divided into ordinary shares of 5p each and subscription shares of 1p each. At 30 November 2013 there were 166,750,000 ordinary shares in issue and 30,600,000 subscription shares. Since 30 November 2013, and up to 3 March 2014 7,950,000 ordinary shares have been issued.

Changes since incorporation

The Company published a prospectus on 11 June 2013 for the creation and issue of ordinary shares of 5p at 100p each and subscription shares of 1p each. On 1 July 2013 the Company issued 153,000,000 ordinary shares and, on the basis of one subscription share for every five ordinary shares, 30,600,000 subscription shares. Each subscription share carries the single opportunity to subscribe for one ordinary share at 115p per ordinary share on 31 July 2017.

The Directors were given authority under the Placing Programme contained in the Prospectus to allot ordinary shares in the period after the Company's initial public offering (IPO) up until the date of its first Annual General Meeting, such that the maximum number of ordinary shares in issue would be 250,000,000.

Subsequent to the admission of the Company's shares to the Official List of the London Stock Exchange on 1 July 2013, the Company has issued 21,700,000 ordinary shares under the Placing Programme as set out below:

Date	Number of shares	Price
13/09/13	1,500,000	£1.0155
17/09/13	2,800,000	£1.0215
20/09/13	2,000,000	£1.03675
17/10/13	1,100,000	£1.0375
24/10/13	1,600,000	£1.0375
30/10/13	1,000,000	£1.0465
18/11/13	1,500,000	£1.0350
21/11/13	1,250,000	£1.0350
28/11/13	1,000,000	£1.0385
08/01/14	400,000	£1.0535
16/01/14	450,000	£1.0705
20/01/14	500,000	£1.0600
24/01/14	1,800,000	£1.0500
29/01/14	1,450,000	£1.0265
04/02/14	1,700,000	£1.0160
11/02/14	850,000	£1.0405
26/02/2014	800,000	£1.0470

Ordinary shares may be issued when the issue price is in excess of the NAV and, after costs, there is a benefit to existing shareholders.  All the shares listed above were issued at premia of between 2%-5%.

There have been no changes to the number of subscription shares in issue during the period.

Voting rights

Ordinary shares carry voting rights which are exercised on a show of hands at a meeting, or on a poll, where each share has one vote.

Subscription shares do not carry any rights to attend or vote at meetings of shareholders of the Company but the rights attached to the subscription shares may only be altered or abrogated with the sanction of the subscription shareholders.

Details for the lodging of proxy votes are given when a notice of meeting is issued.

Transferability

Any shares in the Company may be held in uncertificated form and, subject to the Articles of Association ("Articles"), title to uncertificated shares may be transferred by means of a relevant system.

The Articles can be changed by an ordinary shareholder resolution passed at a general meeting of the Company. Where the change would affect the rights of the subscription shareholders, their consent is also required.

Subject to the Articles, any member may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any other form which the Board may approve. The instrument of transfer must be executed by or on behalf of the transferor and (in the case of a partly-paid share) the transferee.

The Board may, in its absolute discretion and without giving any reason, decline to register any transfer of any share which is not a fully paid share. The Board may also decline to register a transfer of a certificated share unless the instrument of transfer: (i) is duly stamped or certified or otherwise shown to the satisfaction of the Board to be exempt from stamp duty and is accompanied by the relevant share certificate and such other evidence of the right to transfer as the Board may reasonably require; (ii) is in respect of only one class of share; and (iii) if joint transferees, is in favour of not more than four such transferees.

The Board may decline to register a transfer of any of the Company's certificated shares by a person with a 0.25% interest (as defined in the Articles) if such a person has been served with a restriction notice (as defined in the Articles) after failure to provide the Company with information concerning interests in those shares required to be provided under the Companies Act 2006, unless the transfer is shown to the Board to be pursuant to an arm's length sale (as defined in the Articles).

Powers to issue shares and make market purchases of ordinary and subscription shares

As described in the Company's prospectus published on 11 June 2013, the Directors were given authority under the Placing Programme to allot ordinary shares in the period after the Company's initial public offering (IPO) up until the date of its first Annual General Meeting, such that the maximum number of ordinary shares in issue would be 250,000,000. Statutory pre-emption rights were disapplied in respect of such allotments in compliance with the Companies Act 2006. Ordinary shares will only be issued at a price which represents a premium to NAV (after taking account of expenses). The Directors will be seeking renewed authority to allot equity securities up to a nominal value of £873,500, being 10% of the Company's issued ordinary share capital, at the Annual General Meeting to be held on 7 May 2014.  Further details regarding the proposed authority will be included in the separate Notice of Meeting.

As described in the prospectus, the Company's Board has authority to make market purchases of up to 14.99% of the Company's ordinary share and subscription share capital. The Board made no purchases of either during the period and will also be seeking similar authorities from shareholders at the Annual General Meeting.

Major interests in ordinary shares

Declarations of interests in the voting rights of the Company at 30 November 2013 are set out below.

Shareholder	Type of holding	Number of ordinary  shares	Number of S subscription shares	Percentage of voting rights*
Brewin Dolphin Limited	Indirect	20,215,799	3,389,195	12.12%
Rathbone Brothers plc	Indirect	19,854,102	3,949,570	11.91%
Investec Wealth & Investment Limited	Indirect	14,760,635	-	8.85%
JM Finn & Company	Direct	14,176,100	-	8.50%
Quilter Cheviot Limited	Direct	10,504,253	2,097,838	6.30%
Caledonia Investments plc	Direct	10,000,000	-	6.00%

* The above percentages are calculated by applying the ordinary shareholdings as notified to the issued ordinary share capital at 30 November 2013 of 166,750,000 ordinary shares.

Since the period end, the undernoted have sent notifications that their holdings in the Company have changed, the details of which are set out below:

Shareholder	Type of holding	Number of ordinary shares	Number of Subscription shares	Percentage of voting rights*
Brewin Dolphin Limited	Indirect	21,253,139	3,269,527	12.17%
Rathbone Brothers plc	Indirect	19,539,802	3,892,430	11.18%
Investec Wealth &  Investment Limited	Indirect	15,357,470	-	8.79%
Quilter Cheviot Limited	Direct	14,085,527	2,087,938	8.06%

*The above percentages are calculated by applying the ordinary shareholdings as notified to the issued ordinary share capital at 28 February 2014 of 174,700,000.

Each subscription share carries the right to subscribe for one ordinary share at 115p per ordinary share on 31 July 2017.

Greenhouse Gas Emissions

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 in which it invests. Consequently, it has no GHG emissions to report from its operations nor does it have responsibility for any other emissions.

Independent Auditors

PricewaterhouseCoopers LLP have expressed their willingness to continue in office as the Company's independent auditors. A resolution to appoint PricewaterhouseCoopers LLP as independent auditors to the Company will be proposed at the forthcoming AGM.

The fee in respect of the audit of the 2013 annual financial statements has been agreed at £23,000.

Annual General Meeting ('AGM')

The Annual General Meeting will be held on 7 May 2014 at 12.30pm at the offices of Panmure Gordon, One New Change, London, EC4M 9AF. Shareholders are encouraged to attend the AGM as it provides an opportunity for them to hear a presentation from the Investment Manager and meet the Directors.

The separate Notice of Annual General Meeting contains resolutions to receive the Report of the Directors and audited financial statements, approve the Directors' remuneration policy and implementation report, elect all the Directors who were appointed on 7 June 2013, appoint the auditors and empower the Directors to set their fees. The Directors are also seeking powers to allot ordinary shares for cash and to buy back ordinary shares and subscription shares for cancellation. The full text of the resolutions and an explanation of each is contained in the separate Notice of Annual General Meeting.

Report on Corporate Governance

The Directors are accountable to shareholders for the governance of the Company's affairs. The UK Listing Rules require all listed companies to disclose how they have applied the principles and complied with the provisions of the UK Corporate Governance Code (the 'UK Code') which was effective during the financial year, issued by the Financial Reporting Council. The UK Code can be viewed at www.frc.org.uk

As an investment company most of the day to day responsibilities are delegated to third parties as the Company has no employees and all the Directors are Non-executive. Many of the provisions of the UK Code are not directly applicable to the Company and the Board has determined that reporting against the AIC Code of Corporate Governance ('AIC Code'), which incorporates the UK Code, provides the most appropriate information to shareholders.

The Financial Reporting Council confirmed in 2010 that by following the AIC Code and the Corporate Governance Guide for Investment Companies produced by the AIC, boards of investment companies should fully meet their obligations in relation to the UK Code and the UK Listing Rules.

Copies of these codes can be obtained from the relevant organisations. The Company's policies on corporate governance can be found on its website.

The corporate governance report describes how the principles of the AIC Code have been applied.

Background and Development

The Board has considered the principles and recommendations of the AIC Code by reference to the AIC Corporate Governance Guide for Investment Companies ('AIC Guide'). The AIC Code, as explained by the AIC Guide, addresses all the principles set out in the UK Code, as well as setting out additional principles and recommendations on issues that are of specific relevance to the Company.

Application of the AIC Code's Principles

The Board believes that the Company's current practices are consistent in all material respects with the principles of the AIC Code and where non-compliance occurs, an explanation has been provided. The Board will continue to observe the principles and recommendations set out in the AIC Code in future.

It should be noted that, as an investment company where the Directors are Non-executive, most of the Company's day to day duties are delegated to third parties. The Company has agreed policies and operating procedures with the suppliers of these services.

Involvement of the Independent Directors in the launch

As part of the process of establishing the Company, both the Investment Manager and Corporate Broker were involved in finding individuals who would be prepared to act as Directors and had the appropriate background and skills to manage the Company once established. The present Directors were appointed on 7 June 2013 and participated in the process of listing the Company, agreeing its investment mandate and awarding contracts to the Investment Manager and other third party suppliers.

Directors and Board; Independence and Composition

The Board is responsible to shareholders for the overall management of the Company's affairs and currently consists of three Non-executive Directors. John Mansell and Neil Taylor acted as Directors for the period from 17 May 2013 to 7 June 2013.

Each Director has different qualities and areas of expertise on which they may lead where issues arise.

The current Directors' biographies, set out on page 17, demonstrate the breadth of investment, commercial and professional experience relevant to their positions as Directors of the Company. The Directors' Remuneration Report is set out on pages 32 to 34.

The Board believes that retaining Directors with sufficient experience of the Company, industry and the markets is of benefit to shareholders. While the Board recognises the value of progressive refreshing of and succession planning for Company boards, given the expected seven year life of the Company, the Board believes that there is no need for a policy on the length of service for Directors.

The Board will consider the contribution and performance of each Director as part of the Director and Board performance evaluation, which will be carried out on an annual basis in future. Given the short period of time for which the Directors had served as at 30 November 2013, the Board has decided to hold its first performance evaluation in 2014 when sufficient time will have elapsed for a considered view to be taken of the performance of the Board overall and of each individual Director.

All the Directors are considered independent of the Investment Manager and have no relationship or conflicts which are likely to affect their judgement.

Election of Directors at the AGM

As this is the first AGM since incorporation of the Company, all the Directors stand for election under the provisions of the Articles of Association. The Board supports each of the Directors standing for election.

The appointment date and background of each Director is given on page 17.

Directors' Interests and Conflicts of Interests

The Chairman of the Company is a Non-executive Director and has no conflicting relationships.

The share interests of the Directors in the ordinary and subscription shares of the Company are set out in the table on page 34.

Directors have a duty to avoid a situation in which they have or could have a conflict of interest or possible conflict with the interests of the Company. Under the Companies Act 2006 public companies may authorise conflicts or potential conflicts if the Articles of Association contain provisions to this effect and the Company's Articles of Association contain such provisions.

Each Director has provided the Company with a statement of all conflicts of interest and potential conflicts of interest. These have been approved by the Board and recorded in a register. The Board may impose conditions on authorising any conflict or potential conflict situations. Each Director has agreed to notify the Chairman and the Company Secretary of any changes to his or her circumstances which would impact on the notified conflicts or potential conflicts and obtain approval before entering into any situation which might give rise to a conflict or potential conflict with the interests of the Company.

Directors are reminded at each Board meeting of their obligations to notify any changes in their statement of conflicts and also to declare any benefits from third parties in their capacity as a Director of the Company which might give rise to a conflict or potential conflict with the Company's interests. No Director has declared receipt of any benefits other than his emoluments in his or her capacity as a Director of the Company.

In deciding whether to authorise a situation, Directors take into account their duty to promote the Company's success.  Only Directors not involved in the conflict or potential conflict participate in the authorisation process.

As part of its period end review, the Board 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.

No Director has any links with the Investment Manager and there were no contracts during or at the end of the period in which a Director of the Company is or was materially interested and which is or was significant in relation to the Company's business or to the Director.

Role and Responsibilities

The Board

The Board meets regularly and as required. In the period to 30 November 2013 there were numerous Board and committee meetings dealing with the establishment of the Company and there was one scheduled Board meeting dealing with the ongoing stewardship of the Company and other matters, including the setting and monitoring of investment strategy and performance, review of financial statements, and shareholder issues including investor relations. The level of share price discount or premium to the Net Asset Value together with policies for re-purchase or issuance of new shares are kept under review along with matters affecting the industry and the evaluation of third party service providers. A number of committee meetings were held during the period for the specific purpose of dealing with the commencement of operations and the issue of ordinary shares in the Company.

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 such advice was sought during the period.

The number of formal meetings of the Board and its Committees held during the period and the attendance of individual Directors are shown below.

Period ended 30 November 2013

	Board	Audit Committee	Management Engagement Committee
Number of scheduled meetings	1	1	1
Robert Kyprianou	1	1	1
Katrina Hart	1	1	1
Joanne Elliott	1	1	1

Investment Manager

The Board has delegated to external suppliers many of the day to day administrative functions of the Company. The key supplier is the Investment Manager and the Board has contractually delegated the management of the portfolio to the Investment Manager, Polar Capital LLP. It is the Investment Manager's sole responsibility to take decisions as to the purchase and sale of individual investments. The Investment Manager has responsibility for asset allocation and sub-sector selection within the investment policy and the limits established and regularly reviewed by the Board. The Board has directly appointed the custodian and the registrars, both of which the Investment Manager monitors and the Investment Manager provides or procures the provision of accountancy services, company secretarial and administrative services.

The Investment Manager also ensures that all Directors receive in a timely manner all relevant management, regulatory and financial information. Representatives of the Investment Manager attend each Board meeting enabling the Directors to probe further on matters of concern or seek clarification on certain issues.

The Directors have access to the advice and services of the corporate company secretary through its appointed representative who 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.

Senior Independent Director

Due to the structure of the Board it is considered unnecessary to identify a senior Non-executive. The Board considers that each Director has different qualities and areas of expertise on which they may lead where issues arise and to whom concerns may be conveyed. Members of the Board may be contacted through the registered office of the Company.

Board Committees

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 has 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 acting as the Nomination Committee will, when considering new or further appointment of directors, consider the balance of skills, knowledge and experience as well as gender diversity of the whole Board and also consider the use of external consultants when drawing up a list of candidates.

The Board also creates ad hoc committees from time to time to enact policies or actions agreed in principle by the whole Board. Copies of the terms of reference for each of the Audit and Management Engagement Committees are available on the Company's website.

Audit Committee

The Audit Committee comprises all the independent Non-executive Directors under the chairmanship of Joanne Elliott and would usually meet three times a year. The Board is satisfied that at least one of the Committee's members has recent and relevant financial experience. The experience and qualification of the Committee members are set out in the biographical details on page 17.

None of the members of the Committee has any involvement in the preparation of the financial statements of the Company, as this has been contracted to the Investment Manager. The Chairman of the Committee will be present at the AGM to answer questions relating to the financial statements.

The Audit Committee is responsible for reviewing the scope of the annual audit, the annual financial statements and the interim report, including significant accounting policies and any changes thereto. It also considers the terms of appointment of the auditors and their remuneration. The terms of reference of the Audit Committee provide for it to consider all services provided by the auditors to ensure that there is clear separation of audit and non-audit work and the cost of non-audit work is justified and not disproportionate to fees for the audit services to the extent that the independence of the auditors would be compromised. It meets with representatives of the Investment Manager and receives reports on the quality and effectiveness of the accounting records and management information maintained on behalf of the Company. The Committee also considers the internal controls and risk management systems applicable to the Company.

The Audit Committee has direct access to the auditors and to the key senior staff of the Investment Manager and it reports its findings and recommendations to the Board which retains the ultimate responsibility for the financial statements of the Company.

The Audit Committee's policy on the provision of non-audit services 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 not disproportionate to the audit fees to the extent that the independence of the auditors would be compromised.

Audit Committee Meetings

During the period ended 30 November 2013 the Audit Committee met once.

Audit Work

During the course of the meeting the Committee discussed with the auditors the scope of the annual audit work. It will consider the results of the annual audit including the findings of the auditors. The auditors have the opportunity to speak to the Committee without the representatives of the Investment Manager being present.

Auditors

The Audit Committee considered the independence, effectiveness and performance of PricewaterhouseCoopers LLP, the Company's external auditor throughout the period. Details of fees paid to the auditors are given in note 9 on page 50. The independence and effectiveness of the auditors and the nature of the services provided have therefore been assessed.

The Audit Committee is satisfied with the auditor's effectiveness and does not consider it necessary to require the external auditors to tender for the audit work. There are no contractual obligations restricting the choice of external auditor. Under Company Law the reappointment of the external auditor is subject to shareholder approval at the Annual General Meeting and the Audit Committee has recommended that the Board supports the reappointment of the auditors at the AGM.

Given both the size and the life expectancy of the Company, the Audit Committee does not anticipate commencing a tender process prior to the seventh AGM (expected to be held in April 2020) at which a resolution to place the Company into liquidation will be put.

Internal Controls

The Audit Committee as part of its work has reviewed the Company's internal financial controls and those of the Investment Manager that relate to the services provided to the Company.

Significant Issues in relation to the Financial Statements

The Audit Committee has considered the report and financial statements including the valuation of investments where appropriate.

The Committee has also considered matters referred to it by the Board, in particular: the key performance indicators for Investment Trust status on page 12, the valuation process for investments on page 47, and the Statement of Going Concern on page 36.

There has been nothing brought to the Audit Committee's attention in respect of the financial statements for the period ended 30 November 2013, which was material or significant or that the Committee felt should be brought to shareholders' attention.

Management Engagement Committee

The Management Engagement Committee comprises all the independent Non-executive Directors under the chairmanship of Katrina Hart and will usually meet once a year and at such other times as may be necessary.

The Management Engagement Committee is responsible for the review of the relationship with the Investment Manager including the annual review of the Investment Management and other services and resources supplied by the Investment Manager, prior to making its recommendation to the Board, whether the retention of the Investment Manager is in the interests of shareholders.

Management Engagement Committee meetings

During the period ended 30 November 2013 the Management Engagement Committee met once to consider arrangements for the appointment of the Alternative Investment Fund Manager.

Subsequent to the period end and having initially appointed the Investment Manager in June 2013, the Board, (through the Management Engagement Committee) met again and reviewed the performance of the Investment Manager in managing the portfolio over the period since launch and considered its continued appointment. The review also considered the quality of the other services provided by the Investment Manager.

The Board 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 on the existing terms.

Directors' Professional Development

All of the Directors were appointed during the period under review and received induction from the Investment Manager. Directors are also provided on a regular basis with key information on the Company's policies, regulatory and statutory obligations and internal controls. Changes affecting Directors' responsibilities are advised to the Board as they arise. Directors may also participate in the Investment Manager's online training as well as regularly participating in professional and industry seminars, including the programme for directors run by the AIC.

Performance Evaluation

The Board

The Board will establish an annual review of the contribution and performance of each Director as part of the Director and Board performance evaluation. Given the short period of time during which the Directors had served in the period under review, the Board has decided to hold its first performance evaluation in 2014, when sufficient time will have elapsed for a considered view to be taken of the performance of the Board overall, and the contribution of each individual Director. The review of the Chairman's performance will be conducted by the full Board led by the Chairman of the Audit Committee.

The Directors keep under review the size and structure of the Board, as well as succession planning, bearing in mind the balance of skills, knowledge and experience existing on the Board and the Company's expected seven year life.

Reappointment as a Director will not be automatic but will follow a formal evaluation process. The Board acknowledges the rationale of the UK Code for the rigorous review of Directors serving over six years and annual re-appointment after nine years. Nevertheless the Board shares the view of the AIC that length of service will not necessarily compromise the independence or contribution of directors of investment trusts where continuity and experience can significantly strengthen a board.

The Company does not have a policy on length of service for Directors due to the expected seven year life. All Directors are appointed for an initial term of three years, subject to reappointment and Companies Act provisions.

The Investment Manager

The Board reviews the performance of the Investment Manager at each Board meeting and the Company's performance against the Benchmark and a peer group of investment companies and funds with similar investment objectives.

The investment team provided by the Investment Manager, led by Mr Nick Brind, has experience of investing in the financials sector. In addition, the Investment Manager has other investment resources which support the investment team and has experience in managing and administering other investment trust companies.

The Management Engagement Committee reviews the terms of the contract with the Investment Manager.

The Board also monitors through the Investment Manager the performance of its other service providers including the custodian and registrar.

Accountability and Audit

The Statement of Directors' Responsibilities in respect of the financial statements is set out on pages 35 and 36 and the Independent Auditors' Report is on pages 37 to 40. Additional responsibility statements given by the Directors on Going Concern basis; the annual report and financial statements when taken as a whole are Fair, Balanced and Understandable; and other matters are set out on pages 35 and 36.

Internal Controls

The Board has overall responsibility for the Company's system of internal control and for reviewing its effectiveness. The Company has no employees as its operational functions are carried out by third parties as described on page 15.

The Audit Committee does not consider it necessary for the Company to establish its own internal audit function as the Investment Manager, overseen by the Board, is responsible for monitoring all accounting and internal control operations.

The Investment Manager is responsible for the day to day investment management decisions on behalf of the Company and for the provision of accounting and administrative services including company secretarial services. The Investment Manager has an internal control framework to provide reasonable but not absolute assurance on the effectiveness of the internal controls operated on behalf of its clients. The Investment Manager is authorised and regulated by the Financial Conduct Authority and its compliance department monitors compliance with the FCA rules.

The Board has established an ongoing process for identifying, evaluating and managing any major risks faced by the Company. The process is documented through the use of a Risk Map which is subject to regular review by the Board and accords with the Revised Guidance for Directors on the Combined Code published in October 2005 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 Company are safeguarded, proper accounting records are maintained and the financial information used in the Company and for publication is reliable. Controls covering the risks identified, including financial, operational, compliance and risk management are monitored by a series of regular reports covering investment performance, attribution analysis, reports from various third parties and from the Investment Manager including risks not directly the responsibility of the Investment Manager.

The Board has received a formal report from the Investment Manager with details of any known internal control failures and has also considered reports on the Investment Manager's internal controls and systems operated by other third party suppliers. The Board considers ad hoc reports from the Investment Manager and information is supplied to the Board as required.

The process was active throughout the period 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 will continue to monitor the system of internal controls in order to provide assurance that they operate as intended.

The Investment Manager has delegated the provision of accounting, portfolio valuation and trade processing to HSBC Securities Services (UK) Limited but remains responsible to the Company for these functions and provides the Board with information on these services.

The Board undertakes an annual review of the Company's system of internal control 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 period ended 30 November 2013 and up to the date of this  annual report.

The Board has adopted a zero tolerance approach to bribery and corruption in its business activities and uses the anti-bribery policy formulated and implemented by Polar Capital LLP which has been sent to all suppliers of both Polar Capital LLP and the Company.

Relations with Shareholders

The Board and the Investment Manager consider maintaining good communications with shareholders and engaging with larger shareholders through meetings and presentations a key priority. Shareholders are kept informed by the publication of annual and interim reports which include financial statements. These reports are supplemented by interim management statements, the daily release of the net asset value per share to the London Stock Exchange and the publication by the Investment Manager of a monthly factsheet.

All this information together with the Investment Manager's presentations is available from the Company's website at www.polarcapitalglobalfinancialstrust.com

The Board is keen that the AGM be a participative event for all shareholders who attend. The Investment Manager will make a presentation and shareholders are encouraged to attend. The Chairmen of the Board and of the Committees will attend the AGM and are available to respond to queries and concerns from shareholders.

At least twenty working days' notice of the AGM will be given to shareholders and separate resolutions are proposed in relation to each substantive issue.

Where the vote is decided on a show of hands, the proxy votes received will be relayed to the meeting and subsequently published on the Company's website. Proxy forms have a 'vote withheld' option. The Notice of Annual General Meeting sets out the business of the AGM together with the full text of any special resolutions.

Shareholders may submit questions for the AGM in advance of the meeting or make general enquiries of the Company via the company secretary at the Registered Office of the Company.

The Board monitors the share register of the Company; it also reviews correspondence from shareholders and maintains regular contact with major shareholders. Shareholders who wish to raise matters with a Director may do so by writing to them at the Registered Office of the Company.

Statement of Compliance

The AIC Code comprises 21 principles. The Board consider that for the period under review the Directors, Board and Company have complied with the recommendations of the AIC Code in so far as they apply to the Company's business. For the reasons set out in the AIC Guide the Board considers these provisions are not relevant to the position of the Company, being an externally managed investment company;

·      As all Directors are Non-executive and day to day management has been contracted to third parties the Company does not have a separate role for a Chief Executive from that of Chairman of the Board

·      As there are no executive Directors it does not comply with the UK Code in respect of executive directors' remuneration

·      The Company does not have an internal audit function as it relies on the systems of control operated by third party suppliers in particular those of the Investment Manager

·      Due to the structure of the Board it is considered unnecessary to identify a senior independent Non-executive. 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.

Additionally, and on a one off basis due to the short period of time that the Company has been operational, an evaluation of the Board as a whole, the Chairman and the individual Directors has not yet taken place. This process will be completed during 2014 and reported on in the next Annual Report, when sufficient time will have elapsed for a considered view to be taken. Thereafter, the full evaluation will be carried out on an annual basis.

By order of the Board S E Allen FCIS

Polar Capital Secretarial Services Limited

Company Secretary

3 March 2014

Statement of Directors' Responsibilities

In respect of the Annual Report, Directors' Remuneration Report and Financial Statements

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration 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 Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by 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 Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements;

·      prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the 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 Company and enable them to ensure that the Financial Statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the Company's website although day to day maintenance has been delegated to Polar Capital LLP. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. The work carried out by the Auditors does not involve consideration of these matters and, accordingly, the Auditors accept no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website.

The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

Disclosure of Information to the Auditors

As far as the Directors are aware and to the best of their knowledge, having made enquiries, there is no relevant audit information of which the Auditors are unaware and the Directors have taken steps to make themselves aware of any relevant audit information and to establish that the Auditors are aware of such information.

Going Concern

The Board has, through the Audit Committee, considered the Company's position as at 30 November 2013 and the factors impacting the forthcoming year are set out in the Chairman's Statement and the Manager's Report on pages 02 to 06 and in the Strategic Report and in the Report of the Directors which incorporates the corporate governance statements.

The financial position of the Company, its cash flows, and its liquidity position is described in the Strategic Report section on pages 11 to 16 and the financial statements. Note 23 to the financial statements includes the Company's policies and process for managing its capital; its financial risk management objectives and details of financial instruments and hedging activities. Exposure to credit risk and liquidity risk are also disclosed.

The Company has a portfolio of investments listed and traded on stock exchanges around the world, the majority of which can be sold within five working days, providing considerable financial resources, and after making enquiries the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future despite the continued uncertain economic outlook. Accordingly, the Directors continue to adopt the going concern basis in preparing the annual report and financial statements.

Responsibility Statement Under the Disclosure and Transparency Rules

Each of the Directors of Polar Capital Global Financials Trust plc, who are listed on page 17, confirm that, to the best of their knowledge:

·      the Financial Statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

·      the Chairman's Statement, Investment Manager's Report, Strategic Report and Report of the Directors (together constituting the Management Report) includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

Robert Kyprianou

Chairman

3 March 2014

Statement of Comprehensive Income

For the period from 17 May 2013 to 30 November 2013

	Notes	Period to 30 November 2013
		Revenue return £'000	Capital return £'000	Total return £'000
Investment income	3	1,820	-	1,820
Other operating income	4	22	-	22
Gains on investments held at fair value	5	-	4,860	4,860
Other movements on written options	6	-	(16)	(16)
Other currency losses	7	-	(666)	(666)
Total income		1,842	4,178	6,020
Expenses
Investment management fee	8	(111)	(444)	(555)
Other administrative expenses	9	(206)	-	(206)
Total expenses		(317)	(444)	(761)
Profit before tax		1,525	3,734	5,259
Tax	10	(191)	85	(106)
Net profit for the year and total comprehensive income		1,334	3,819	5,153
Earnings per ordinary share (basic) (pence)	11	0.85	2.43	3.28
Earnings per ordinary share (diluted) (pence)	11	0.85	2.43	3.28

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with IFRS as adopted by the European Union.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The Company was incorporated on 17 May 2013 and started trading on 1 July 2013.

The notes on pages 45 to 63 form part of these financial statements.

Statement of Changes in Equity

For the period from 17 May 2013 to 30 November 2013

	Called up share capital £'000	Share premium reserve £'000	Special distributable reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 17 May 2013	-	-	-	-	-	-
Total comprehensive income:
Profit for the period ended 30 November 2013	-	-	-	3,819	1,334	5,153
Transactions with owners, recorded directly to equity:
Issue of ordinary shares	8,338	156,030	-	-	-	164,368
Issue of subscription shares	306	(306)	-	-	-	-
Transfer of Share Premium to Special Distributable Reserve	-	(144,094)	144,094	-	-	-
Total equity at 30 November 2013	8,644	11,630	144,094	3,819	1,334	169,521

The notes on pages 45 to 63 form part of these financial statements.

Balance Sheet

At 30 November 2013

	Notes	30 November 2013 £'000
Non current assets
Investments held at fair value through profit or loss	12	162,677
Current assets
Receivables	13	3,031
Cash and cash equivalents	14	5,459
		8,490
Current liabilities
Payables	15	(1,619)
Fair value of open derivative contracts	12	(27)
		(1,646)
Net assets		169,521
Equity attributable to equity shareholders
Called up share capital	16	8,644
Share premium reserve	17	11,630
Special distributable reserve	18	144,094
Capital reserves	19	3,819
Revenue reserve	20	1,334
Total equity		169,521
Net asset value per ordinary share (pence)	21	101.66
Net asset value per ordinary share (diluted) (pence)	21	101.66

The financial statements on pages 41 to 63 were approved and authorised for issue by the Board of Directors on 3 March 2014 and signed on its behalf by:     

Robert Kyprianou               

Chairman

The notes on pages 45 to 63form part of these financial statements.

Registered number: 8534332

Cash Flow Statement                        

For the period from 17 May 2013 to 30 November 2013

	Notes	Period to 30 November 2013 £'000
Cash flows from operating activities
Profit before tax		5,259
Adjustment for non-cash items:
Gain on investments held at fair value through profit or loss		(4,860)
Scrip dividends received		(16)
Amortisation on fixed interest securities		5
Adjusted profit before finance costs and tax		388
Adjustments for:
Purchases of investments, including transaction costs		(169,262)
Sales of investments, including transaction costs		11,382
Increase in receivables		(964)
Increase in payables		668
Overseas taxation deducted at source		(106)
Net cash used in operating activities		(157,894)
Cash flows from financing activities
Proceeds from issue of shares (net of issue costs)		163,353
Net cash generated from financing activities		163,353
Cash and cash equivalents at the end of the period	14	5,459

The notes on pages 45 to 63form part of these financial statements.

Notes to the Financial Statements

For the period from 17 May 2013 to 30 November 2013

1.             General Information

The Company was incorporated on 17 May 2013 and started trading on 1 July 2013 and has a fixed life expected to expire no later than April 2020.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies under IFRS.

The Board has determined that pounds sterling is the Company's functional currency and the presentational currency of the financial statements because it is the currency which is most relevant to the majority of the Company's shareholders and creditors and is the currency in which the majority of the Company's operating expenses are paid.

The principal accounting policies, which have been consistently applied throughout the period, are set out below:

2.             Accounting Policies

(a)           Basis of Preparation

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.

Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by the Association of Investment Companies (AIC) in January 2009 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.

(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.

(c)            Income

Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income on an ex-dividend basis. Special dividends are recognised on an ex-dividend basis and may be considered to be either revenue or capital items. The facts and circumstances are considered on a case by case basis before a conclusion on appropriate allocation is reached.

Where the Company has received dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the revenue return column of the Statement of Comprehensive Income. Any excess in value of shares received over the amount of cash dividend foregone is recognised in the capital return column of the Statement of Comprehensive Income.

The fixed returns on debt securities and non-equity shares are recognised under the effective interest rate method.

Bank interest is accounted for on an accruals basis. Interest outstanding at the period end is calculated on a time apportionment basis using market rates of interest.

(d)           Written Options

The 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 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 and Finance Costs

All expenses, including the management fee, are accounted for on an accruals basis and are recognised when they fall due.

Expenses are allocated wholly to the revenue column of the Statement of Comprehensive Income 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 are 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 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.

Finance costs are calculated using the effective interest rate method and are accounted for on an accruals basis and, in line with the management fee expense, charged 20% to the revenue account and 80% 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.  A provision will be recognized when outperformance has been achieved in accordance with the calculations detailed on page 15.

(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 period since incorporation to 30 November 2013. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Statement of Comprehensive Income is the "marginal basis". Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column. Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Investment trusts which have approval as such under section 1158 of the Corporation 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

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy and information is provided internally on that basis to the Company's Board of Directors. Accordingly, upon initial recognition the investments are designated by the Company as "held at fair value through profit or loss". They are included initially at fair value which is taken to be their cost, excluding expenses incidental to purchase which are written off to capital at the time of acquisition. Subsequently the investments are valued at fair value, which is either the bid price or last traded price depending on the convention of the exchange in which the investment is quoted, for investments traded in active markets.

Written options are valued at fair value using quoted bid prices.

All purchases and sales are accounted for on a trade date basis.

(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, 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

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)          Share Capital

Ordinary shares are classified as equity.  Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity, as a deduction, net of tax, from the proceeds.

(n)           Capital Reserves

Capital reserve arising on investments sold includes:

- gains/losses on disposal of investments
- exchange differences on currency balances
- 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.

(o)           Accounting Standards

(i)  Standards, amendments and interpretations becoming effective in the period to 30 November 2013:

No new standards relevant to the Company's operations became effective during the current accounting period.

(ii) Standards, amendments and interpretations to existing standards become effective in future accounting periods and have not been adopted early by the Company:

·      IFRS 7 (amendment), 'Financial Instruments - Disclosures' (effective for periods beginning on or after 1 January 2014). Amendments enhancing disclosures about offsetting financial assets and financial liabilities.

·      IFRS 9, 'Financial Instruments' (effective for financial periods beginning on or after 1 January 2015), replaces IAS 39 and simplifies accounting for financial assets, replacing the current multiple measurement categories with a single principle-based approach to classification. All financial assets to be measured at either amortised cost or fair value. The Company will apply IFRS 9 from 1 December 2015 subject to endorsement by the EU.

·      IAS 32, 'Financial Instruments Presentation' (effective for periods beginning on or after 1 January 2014).Aims to provide clarity on the offsetting of financial assets and liabilities on the balance sheet.

(iii)  The following standards, amendments and interpretations to existing standards become effective in future accounting periods, but are not relevant for the Company's operations:

·      IFRS 10, 'Consolidated Financial Statements' (effective for periods beginning on or after 1 January 2014).

·      IFRS 12, 'Disclosure of Interests in Other Entities' (effective for periods beginning on or after 1 January 2014).

·      IFRS 10, 12 and IAS 27 (amendment), 'Consolidation for Investment Entities' (effective for periods beginning on or after 1 January 2014).

·      IAS 27 (revised), 'Separate Financial Statements' (effective for periods beginning on or after 1 January 2014).

·      IAS 36 (amendment), 'Impairment of assets' (effective for periods beginning on or after 1 January 2014).

·      IAS 39 (amendment), 'Financial Instruments: Recognition and Measurement' (effective for periods beginning on or after 1 January 2014).

·      IFRIC 21, 'Levies' (effective for periods beginning on or after 1 January 2014).

(p)           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 Company has only one operating segment and as such no distinct segmental reporting is required.

(q) Critical Accounting Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. 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 judgments about carrying values of assets and liabilities that are not readily apparent from other sources. There are not considered to be any critical estimates and assumptions likely to cause material adjustment to the carrying values of assets and liabilities.

3              Investment income

	Period to 30 November 2013  £'000
UK dividends	227
Overseas dividends	1,144
Scrip dividends	16
Interest on debt securities	433
Total investment income	1,820

4              Other operating income

	Period to 30 November 2013 £'000
Option premium income	20
Bank interest	2
Total other operating income	22

Option premium income for the period arises from writing short-dated covered-call options and put options in the expectation that the options will not be exercised or, in overall terms, any losses that may arise following exercise will be outweighed by the premiums received. A loss of £16,000 has been recognised in the capital return for the period in respect of these options.

5          Gains on investments held at fair value

	Period to 30 November 2013 £'000
Net losses on disposal of investments based on historic cost	(1,775)
Valuation gains on investments held during the period	6,635
	4,860

6          Other movements on written options

	Period to 30 November 2013 £'000
Other movements on written options	(16)

This movement arises from differences between the change in fair value of written options and the amount of premium income recognised in the revenue return, in accordance with the policy explained in note 2(d).

7              Other currency losses

	Period to 30 November 2013 £'000
Exchange losses on currency balances	(666)

8              Investment management fee

	Period to 30 November 2013 £'000
Management fee
- charged to revenue	111
- charged to capital	444
Investment management fee payable to Polar Capital LLP.	555

Management fees are allocated 20% to revenue and 80% to capital.

9              Other administrative expenses (including VAT where appropriate)

	Period to 30 November 2013 £'000
Directors' fees	43
Auditors' remuneration:
For audit services	23
For taxation compliance services	1
Other expenses	139
	206

10           Taxation

	Period to 30 November 2013
	Revenue return £'000	Capital return £'000	Total return £'000
a) Analysis of tax charge for the period:
Overseas tax	106	-	106
Tax relief in capital	85	(85)	-
Total tax for the period (see note 10b)	191	(85)	106
b) Factors affecting tax charge for the period:
The charge for the period can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit before tax	1,525	3,734	5,259
Tax at the UK corporation tax rate of 23%	351	859	1,210
Tax effect of non-taxable dividends	(245)	-	(245)
Gains on investments that are not taxable	-	(961)	(961)
Unrelieved current period expenses and deficits	-	1	1
Overseas tax sufferedqq	106	-	106
Tax relief on overseas tax suffered	(21)	16	(5)
Total tax for the period (see note 10a)	191	(85)	106

c)             Factors that may affect future tax charges:

The Company has an unrecognised deferred tax asset of £1,000 based on a prospective corporation tax rate of 20%.  The reduction in the standard rate of corporation tax was substantively enacted in July 2013 and will be effective from 1st April 2015.

The deferred tax asset has arisen due to the cumulative excess of deductible expenses over taxable income. Given the composition of the Company's portfolio, it is not likely that this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the financial statements.

Given the Company's intention to continue to meet the conditions required to retain its status as an Investment Trust Company, no provision has been made for deferred tax on any capital gains or losses arising on the revaluation or disposal of investments.

11        Earnings per ordinary share

	Period to 30 November 2013
	Revenue return	Capital return	Total return
The calculation of basic earnings per share is based on the following data:
Net profit for the period (£'000)	1,334	3,819	5,153
Weighted average ordinary shares in issue during the period from 1 July 2013 to 30 November 2013	157,239,869	157,239,869	157,239,869
From continuing operations
Basic - ordinary shares (pence)	0.85	2.43	3.28

The Company has in issue 30,600,000 subscription shares which are convertible into ordinary shares. The subscription shares were issued on 1 July 2013. Further details of the conversion terms are given in note 16 on page 54.

There was no dilutive effect on the earnings per ordinary share in respect of the conversion rights attending to the subscription shares as the conversion price is higher than the ordinary share price of the Company.

12        Investments and derivatives

(a)           Investments

	30 November 2013 £'000
Additions at cost	170,256
Proceeds on disposal	(12,434)
Losses on disposal	(1,775)
Amortisation on fixed interest securities	(5)
Cost at 30 November 2013	156,042
Add: Valuation gains	6,635
Valuation at 30 November 2013	162,677

The following transactions costs, including stamp duty and broker commissions were incurred during the period:

	30 November 2013 £'000
On acquisitions	198
On disposals	29
	227

(b)           Fair value of open derivative contracts

	30 November 2013 £'000
Standard Chartered Put Option 1400 closing 20 December 2013	(2)
JP Morgan Chase Put Option 50 closing 21 December 2013	-
Citigroup Call Option 52.5 closing 21 December 2013	(7)
Citigroup Put Option 48 closing 21 December 2013	(1)
BBVA Call Option 7.93 closing 20 December 2013	(17)
Fair value at 30 November 2013	(27)

(c)            Fair value hierarchy

The Company's financial instruments within the scope of IFRS 13 that are held at fair value comprise its investment portfolio and derivative financial instruments comprising written options.

The investments are categorised into a hierarchy consisting of the following three levels:

Level 1 - valued using quoted prices in active markets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

Details of the valuation techniques used by the Company are given in note 2(g) on page 47.

The following table sets out the fair value measurements using the IFRS 13 hierarchy at 30 November 2013:

	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Financial assetsand liabilities held at fair value through profit or loss
Equity investments	143,352	4,937	-	148,289
Interest bearing securities	14,388	-	-	14,388
Derivatives	(27)	-	-	(27)
Total	157,713	4,937	-	162,650

13           Receivables

	30 November 2013 £'000
Securities sold awaiting settlement	1,052
Net proceeds due from issue of shares	1,015
Spot foreign exchange contracts awaiting settlement	228
Dividends and interest receivable	726
Taxation recoverable	10
	3,031

The Directors consider that the carrying amounts of receivables approximates to their fair value.

14           Cash and cash equivalents

	30 November 2013 £'000
Cash at bank	5,344
Cash held at derivative clearing houses	115
	5,459

15           Payables

	30 November 2013 £'000
Securities purchased awaiting settlement	978
Spot foreign exchange contracts awaiting settlement	229
Accruals	412
	1,619

The Directors consider that the carrying amounts of payables approximates to their fair value.

16        Called up share capital

	30 November 2013 £'000
166,750,000 ordinary shares at 5p each	8,338
30,600,000 subscription shares at 1p each	306
At 30 November 2013	8,644

The subscription shares were issued as a bonus issue to ordinary shareholders at a rate of one bonus subscription share for every 5 ordinary shares held on 1 July 2013. A subscription share carries the right to subscribe in cash for one ordinary share at a price of 115p on 31 July 2017.

Following the initial issue of 153,000,000 shares on 1 July 2013, a further 13,750,000 ordinary shares were subsequently issued in the period for a net consideration of £14,064,000.

17           Share premium reserve

	30 November 2013 £'000
Issue of 153,000,000 ordinary shares  at 100p each	145,350
Bonus issue of 30,600,00 subscription shares at 1p each	(306)
Transfer to special distributable reserve	(144,094)
Issue of 1,500,000 ordinary shares at 101.55p each	1,448
Issue of 2,800,000 ordinary shares at 102.15p each	2,720
Issue of 2,000,000 ordinary shares at 103.675p each	1,973
Issue of 1,100,000 ordinary shares at 103.75p each	1,086
Issue of 1,600,000 ordinary shares at 103.75p each	1,580
Issue of 1,000,000 ordinary shares at 104.65p each	997
Issue of 1,500,000 ordinary shares at 103.50p each	1,478
Issue of 1,250,000 ordinary shares at 103.50p each	1,231
Issue of 1,000,000 ordinary shares at 103.85p each	989
Issue costs	(2,822)
At 30 November 2013	11,630

On 4 September 2013 the Company received the approval of the High Court to cancel the share premium account and create a special distributable reserve.

18        Special distributable reserve

	30 November 2013 £'000
Transfer from share premium reserve	144,094
At 30 November 2013	144,094

Surpluses to the credit of the special distributable reserve can be used to purchase the Company's own shares. In addition the Company may use this reserve for the payment of dividends.

19           Capital reserves

	30 November 2013 £'000
Net losses on disposal of investments	(1,775)
Valuation gains on investments held during the period	6,635
Other movements on derivatives held during the period	(16)
Exchange losses on currency balances	(666)
Investment management fee	(444)
Tax relief due from revenue	85
At 30 November 2013	3,819

The balance on the capital reserve represents a profit of £6,635,000 on investments held and a loss of £2,816,000 on investments sold.

20           Revenue reserve

	30 November 2013 £'000
Revenue profit for the period from 17 May 2013 to 30 November 2013	1,334
At 30 November 2013	1,334

21           Net asset value per ordinary share

	30 November 2013
Undiluted:
Net assets attributable to ordinary shareholders (£'000)	169,521
Ordinary shares in issue at end of period	166,750,000
Net asset value per ordinary share (pence)	101.66

There is no dilutive effect on the net asset value per ordinary share in respect of the conversion rights attaching to the subscription shares as the conversion price is higher than the NAV per share of the Company at the period end.

22           Transactions with the investment manager and related party transactions

(a)           Transactions with the manager

Under the terms of an agreement dated 11 June 2013 the Company has appointed Polar Capital LLP ("Polar Capital") to provide investment management, accounting, secretarial and administrative services. Details of the fee arrangement for these services are given in the Strategic Report. The total fees, paid under this agreement to Polar Capital in respect of the period ended 30 November 2013 were £555,000 of which £232,000 was outstanding at the period-end.

(b) Related party transactions

The Company has no employees and therefore no key management personnel other than the Directors. The Company paid £43,000 to the Directors and the Remuneration Report is presented on pages 32 to 34.

23           Derivatives and other financial instruments

Risk management policies and procedures for the Company

The Company invests in equities, debt securities and other financial instruments for the long term to further the investment objective set out on page 11.

This exposes the Company to a range of financial risks that could impact on the assets or performance of the Company.

The main risks arising from the Company's pursuit of its investment objective are market risk, liquidity risk and credit risk and the Directors' approach to the management of them is set out below.

The 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.

- Borrowings, the main purpose of which is to enhance returns.

- Cash, liquid resources and short-term debtors and creditors that arise directly from the Company's operations.

- Derivative transactions which the Company enters into may include equity or index options, index futures contracts, and forward foreign exchange contracts. The purpose of these is to manage the market price risks and foreign exchange risks arising from the Company's investment activities.

The overall management of the risks is determined by the Board and its approach to each risk identified is set out below. The Board and the Investment Manager co-ordinate the risk management and the Investment Manager assesses the exposure to market risk when making each investment decision.

(a)           Market Risk

Market risk comprises three types of risk: market price risk (see note 23(a)(i)), currency risk (see note 23(a)(ii)), and interest rate risk (see note 23(a)(iii)).

(i)            Market Price Risk

The Company is an investment company and as such its performance is dependent on the valuation of its investments. Consequently market price risk is the most significant risk that the Company faces.

Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's operations. It represents the potential loss the Company might suffer through holding market positions in the face of price movements.

A detailed breakdown of the investment portfolio is given on pages 7 to 10. Investments are valued in accordance with the accounting policies as stated in note 2(g).

At the period end, the Company's portfolio included five derivative instruments, all of which matured in December 2013.

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 financial sub sector. The allocation of assets to international markets, together with stock selection covering small, medium and large companies, and the use of options, are other factors which act to reduce price risk. The Investment Manager actively monitors market prices throughout the period and reports to the Board, which meets regularly in order to consider investment strategy.

Market price risks exposure

The Company's exposure to changes in market prices at 30 November 2013 on its investments was as follows:

	30 November 2013  £'000
Investments held at fair value through profit or loss	162,677
Current liability investments at fair value (written options)	(27)
	162,650

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the period and the value of shareholders' funds to an increase or decrease of 10% in the fair values of the Company's investments. This level of change is considered to be reasonably possible based on observation of current market conditions and historic trends. The sensitivity analysis is based on the Company's investments at the balance sheet date, with all other variables held constant.

	30 November 2013
	Increase in fair value £'000	Decrease in fair value £'000
Statement of Comprehensive Income - profit after tax
Revenue return	(28)	28
Capital return	16,154	(16,154)
Change to the profit after tax for the period	16,126	(16,126)
Change to equity attributable to shareholders	16,126	(16,126)

(ii)           Currency Risk

The Company's total return and net assets can be significantly affected by currency translation movements as the majority of the Company's assets and revenue are denominated in currencies other than sterling.

Management of the risk

The Investment Manager mitigates the risk 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 Company's monetary assets, liabilities and investments that are priced in currencies other than sterling.

	30 November 2013 £'000
Monetary Assets:
Cash and short term receivables
Taiwan dollars	400
Japanese yen	253
US dollars	159
Brazilian real	52
Euros	51
Philippine peso	8
Indonesian rupiah	7
Singapore dollars	1
Monetary Liabilities:
Payables
Japanese yen	(228)
Euro	(17)
US dollar	(8)
Foreign currency exposure on net monetary items	678
Non-Monetary Items:
Investments held at fair value through profit or loss
US dollars	54,179
Euros	28,120
Swiss francs	7,036
Singapore dollars	6,931
Norwegian krona	5,854
Hong Kong dollars	4,798
Brazilian real	3,949
Canadian dollars	3,279
Taiwan dollars	3,245
Swedish krone	3,051
Japanese yen	3,018
Czech krone	2,465
Thai baht	2,455
Turkish lira	2,051
Indonesian rupiah	2,005
Philippine peso	1,467
Total net foreign currency exposure	134,581

Foreign currency sensitivity

The following tables illustrate the sensitivity of net profit for the period and net assets with regard to the Company's monetary financial assets and liabilities and exchange rates. The sensitivity analysis is based on the Company's monetary currency financial instruments held at the balance sheet date and assumes a 10% appreciation or depreciation in Sterling against the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of exchange rates during the period.

If Sterling had weakened by 10% this would have had the following effect:

	30 November 2013 £'000
Statement of Comprehensive Income - profit after tax
Revenue return	119
Capital return	68
Change to the profit after tax for the period	187
Change to equity attributable to shareholders	187

Conversely if Sterling had strengthened by 10% this would have had the following effect:

	30 November 2013 £'000
Statement of Comprehensive Income - profit after tax
Revenue return	(119)
Capital return	(68)
Change to the profit after tax for the period	(187)
Change to equity attributable to shareholders	(187)

In the opinion of the Directors, while these are regarded as reasonable estimates, neither of the above sensitivity analyses are representative of the period as a whole since the level of exposure changes frequently as part of the currency risk management process used to meet the Company's objectives.

(iii) Interest Rate Risk

The Company will be affected by interest rate changes as it holds interest-bearing financial assets. Interest rate changes will also have an impact on the valuation of investments, although this forms part of price risk, which is 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

The exposure, at 30 November 2013, of financial assets and liabilities to interest rate risk is shown by reference to:

- Floating interest rates (i.e. giving cash flow interest rate risk) - when the rate is due to be re-set; and

-    Fixed interest rates (i.e. giving fair value interest rate risk) - when the financial instrument is due for repayment.

-   

	30 November 2013
	Within one year £'000	More than one year £'000	Total £'000
Exposure to floating interest rates:
Cash and cash equivalents	5,459	-	5,459
Non current asset investments held at fair value through profit or loss	-	9,847	9,847
Exposure to fixed interest rates:
Non current asset investments held at fair value through profit or loss	-	4,541	4,541
Total exposure to interest rates	5,459	14,388	19,847

The weighted average interest rate for the fixed rate financial assets was 6.9% and the effective period for which the rate was fixed was 8 years.

The above amounts are not necessarily representative of the exposure to interest rates in the year ahead, as the level of cash and investment in fixed interest securities varies during the period according to the performance of the stock market, events within the wider economy and the Investment Manager's decisions on the best use of cash or borrowings over the period.

Interest rate sensitivity

The following table illustrates the sensitivity of the return after taxation for the period and net assets to an increase or decrease of 25 basis points in interest rates in regard to the Company's monetary financial assets, which are subject to interest rate risk. This level of change is considered to be reasonably possible based on observation of current market conditions.

The sensitivity analysis is based on the Company's monetary financial instruments held at the balance sheet date, with all other variables held constant.

	30 November 2013
	Increase in rate £'000	Decrease in rate £'000
Effect on revenue return	14	(14)
Effect on capital return	-	-
Effect on net profit and on equity attributable to shareholders	14	(14)

In the opinion of the Directors, the above sensitivity analyses may not be representative of the period as a whole, since the level of exposure may change.

 (b) Liquidity Risk

Liquidity risk is the possibility of failure of the Company to realise sufficient assets to meet its financial liabilities.

 

Management of the risk

The Company's assets mainly comprise readily realisable securities which may be sold to meet funding requirements as necessary.

Liquidity risk exposure

At 30 November 2013 the financial liabilities comprised of:

	30 November 2013 £'000
Due within 1 month:
Balances due to brokers	1,207
Accruals	412
	1,619

(c) Credit Risk

Credit risk is the exposure to loss from the failure of a counterparty to deliver securities or cash for acquisitions or disposals of investments or to repay deposits.

Management of the risk

The Company manages credit risk by using brokers from a database of approved brokers and by dealing through Polar Capital. All cash balances are held with approved counterparties.

HSBC Bank plc is the custodian of the Company's assets. The Company's assets are segregated from HSBC's own trading assets and are therefore protected in the event that HSBC were to cease trading.

These arrangements were in place throughout the current period.

Credit risk exposure

The maximum exposure to credit risk at 30 November 2013 was £8,480,000 comprising:

	30 November 2013 £'000
Balances due from brokers	2,295
Accrued income	726
Cash and cash equivalents	5,459
	8,480

All of the above financial assets are current, their fair values are considered to be the same as the values shown and the likelihood of a material credit default is considered low. None of the Company's financial assets are past due or impaired. All deposits were placed with credit banks that had ratings of A or higher.

(d) Capital Management Policies and Procedures

The Company's capital management objectives are:

The Company's capital, or equity, is represented by its net assets which amounted to £169,521,000 for the period ended 30 November 2013, which are managed to achieve the Company's investment objective set out on page 11.

The Board monitors and reviews the broad structure of the 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 (ie the level of share price discount or premium) and

(ii)           the determination of dividend payments.

The Company is subject to externally imposed capital requirements through the Companies Act with respect to its status as a public company. In addition, in order to pay dividends out of profits available for distribution by way of dividend, the Company has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.

Status of announcement 

The figures and financial information contained in this announcement are extracted from the Audited Annual Report for the period ended 30 November 2013 and do not constitute statutory accounts for the period. The Annual Report and Financial Statements include the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or Section 498(3) of the Companies Act 2006.  

The Directors Remuneration Report and certain other helpful shareholder information has not been included in this announcement but  forms part of the Annual Report which will be available on the Company's website and will be sent to shareholders in December.

(www.polarcapitalglobalfinancialstrust.com).

Neither the contents of the company's website nor the contents of any website accessible from hyperlinks on the company's website (or any other website) is incorporated into, or forms part of, this announcement.

The Annual Report and Financial Statements for the period ended 30 November 2013 have not yet been delivered to the Registrar of Companies.

 AGM 

The Annual Report and separate Notice of Meeting for the Annual General Meeting  will be posted to shareholders in March 2014 and will be available thereafter the company secretary at the Registered Office, 4 Matthew Parker Street, London SW1H 9NP or from the Company's website.

 The AGM will be held on 7 May 2014 at 12.30pm at the offices of Panmure Gordon, One New Change, London EC4M 9AF.

 Forward Looking Statements

Certain statements included in this Annual Report and Financial Statements contain forward-looking information concerning the Company's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which the Company operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within the Company's control or can be predicted by the Company. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the principal risks
and uncertainties included in the Strategic Report Section on pages 13 to 14 of this Annual Report and
Financial Statements.

No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Polar Capital Global Healthcare Growth and Income 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.

 

END

 

 

FR SSEFUDFLSEFD