Half-year Report

RNS Number : 5735Y

Polar Capital Global Health Tst PLC

10 May 2019

 

POLAR CAPITAL GLOBAL HEALTHCARE TRUST PLC

Unaudited Results Announcement for the Six Months to 31 March 2019

LEI: 549300YV7J2TWLE7PV84

9 May 2019

HIGHLIGHTS IN DETAIL

Performance	For the six months to 31 March 2019	For the year to 30 September 2018
Net asset value per ordinary share (total return) (note 1)	-3.04%	+19.80%
Benchmark index MSCI ACWI/Healthcare Index (total return in Sterling with dividends reinvested)	-2.31%	+17.24%
Since restructuring
Net asset value per ordinary share (total return) (note 2)	+9.66%	+13.10%
Benchmark index total return	+10.52%	+13.13%
Expenses
Ongoing charges (note 3)	0.98%	1.08%

Financials	(Unaudited) As at 31 March 2019	(Audited) As at 30 September 2018	Change
Total net assets (Group and Company)	£285,221,000	£296,263,000	-3.7%
Net asset value per ordinary share	233.53p	241.91p	-3.5%
Net asset value per ZDP share	105.41p	103.87p	+1.5%
Price per ordinary share	216.00p	223.00p	-3.1%
Discount per ordinary share	-7.5%	-7.8%
Price per ZDP share	107.00p	104.50p	+2.4%
Net gearing	6.76%	8.29%
Ordinary shares in issue (excluding those held in treasury)	122,135,000	122,470,000	-0.3%
Ordinary shares held in treasury	2,014,256	1,679,256	+19.9%
ZDP shares in issue	32,128,437	32,128,437	-

Dividends paid and declared in the period:	Pay Date	Amount per Ordinary share	Record Date	Ex-Date	Declared date
The Company has paid the following dividend relating to the financial year ended 30 September 2018:	28 February 2019	1.00p	8 February 2019	7 February 2019	19 December 2018
Dividends for the current financial year ending 30 September 2019 will be paid in August 2019 and February 2020, the first of which will be declared in July 2019. All data sourced from Polar Capital LLP/HSBC

Note 1	NAV total return is calculated as the change in NAV from the start of the period, assuming that dividends paid to shareholders are reinvested on the payment date in ordinary shares at their net asset value.
Note 2	The Company's portfolio was restructured on 20 June 2017. The total return NAV performance since restructuring is calculated by reinvesting the dividends in the assets of the Group and Company from the relevant payment date.
Note 3	Ongoing charges represents the total expenses of the Company, excluding finance costs, transaction costs, tax and non recurring expenses expressed as a percentage of the average daily net asset value, in accordance with AIC guidance issued in May 2012. From 3 January 2018, the research cost borne by the Company is included in the ongoing charges calculation.

For further information please contact:

Tracey Lago Company Secretary Polar Capital Global Healthcare Trust Plc

Tel: [phone]

INTERIM MANAGEMENT REPORT

INVESTMENT MANAGER'S REPORT

For the six months to 31 March 2019, the Company's NAV declined by 3.0%, slightly behind the benchmark that declined by 2.3% over the same period. The healthcare sector modestly underperformed the wider market over the period, outperforming during the first three months and then giving up those gains during the second three.

Global equity markets were very volatile during the six months to the end of March thanks to a variety of different factors. The sell-offs in October and December were quite sobering, leading most major indices into negative territory for the calendar year. The primary drivers were a reversal of monetary policy and the transition from quantitative easing to quantitative tightening; anti-globalisation and trade friction impacting the supply chain and global growth; and eroding confidence in the EU, both economically and politically.

Thankfully, the New Year brought with it renewed optimism. Concerns about slowing global growth encouraged a more dovish outlook from central banks, a tone that was well received by the equity markets. This increased appetite for risk transpired despite no firm resolutions on either Brexit or the US/China trade war dispute.

While backward looking, the temperamental, almost nervous nature of the market further underpins our view that large-cap healthcare companies should be a relatively attractive place to invest in the near to medium term. With technology at the fore, we continue to believe we can find companies within our investment universe that are capable of delivering mid to high single-digit, organic, top-line growth, operating leverage as well as high single to low double-digit total shareholder returns. We also believe valuations are attractive on both a relative and an absolute basis.

Market review

During the period, subsector performance within healthcare more or less reflected investor appetite for risk across the broader market. Large-cap pharmaceuticals were a relative safe haven during the first three months, with the riskier small and mid-cap universe experiencing significant, downward pressure. Further, and despite robust underlying fundamentals, subsectors that had performed well in 2018, namely medical devices and managed care, appeared to suffer from profit-taking. As we moved into 2019, however, some of those trends reversed with the riskier asset classes in small and mid-caps outperforming their larger counterparts.

We think it also important to reflect on politics given the conclusion of the US mid-term elections in November 2018. In line with expectations, the Democrats took control of the House of Representatives while the Republicans held on to their majority in the Senate. We believe the outcome to be a modest positive for the healthcare sector, given the potential for legislative gridlock and the avoidance of potentially draconian changes being written into healthcare law. We remain vigilant, however, as the affordability of healthcare remains high on the list of priorities, not just for the politicians but for many US citizens.

We remain constructive on the healthcare sector driven by a sound demographic backdrop, supportive valuations and an industry that is using technology to drive efficiencies. While innovative technologies are not the sole privilege of large-cap companies, we believe they are well positioned to capitalise on what is a rapidly changing environment. We also believe that M&A will continue to be a near and medium-term theme in our investment universe.

Technology: Changing the way healthcare is being managed, delivered and paid for

The most direct way to invest in the theme of cost control in the US healthcare system in the medium term is through managed care companies given they hold the purse strings. It is these companies that are using technology to drive changes in the way healthcare is managed, whether utilising data analytics to improve clinical and financial performance or to drive value-based negotiations with providers and manufacturers.

Technology is also being used to alter the way healthcare is delivered, with Telehealth an excellent example, allowing a patient to interact with a healthcare professional in a virtual setting rather than the more traditional physician's office. Not only is the interaction more convenient, it is likely to be more efficient and at a lower cost, something that benefits both the consumer and the payer (either government or insurance company). Surgical robots are another great example, they are not only changing the way certain procedures are performed but also enabling companies with these differentiated technologies to take market share.

We are also seeing companies take more innovative approaches to commercialisation. Differentiated medical devices and therapeutics are being launched at price points that are attractive to consumers, not just to circumvent the short-term access barriers that can be put in place by payers, but to rapidly gain market share. This strategy is gaining traction and proving to be successful in areas such as blood glucose monitoring and the treatment of chronic migraine. Last but not least, manufacturers are using technology to gather data on how products and devices are performing in the real world that can be used to drive not just reimbursement discussions, but also access discussions.

M&A activity looks set to continue across the sector

The global healthcare industry is highly fragmented, populated with strong balance sheets and often has management teams open to inorganic solutions to either complement internal assets or address portfolio shortfalls. M&A activity has been buoyant during the reporting period and we expect the trend to continue for the foreseeable future.

No two situations are identical, with recent deals highlighting a wide variation in business needs and priorities. Starting in January 2019 we saw two significant deals with contrasting rationales. Firstly, Bristol-Myers Squibb announced its intention to acquire US biotechnology company, Celgene. While the portfolios of the two companies are complementary, and Celgene does expand Bristol's late-stage pipeline, the near-term financial returns and cost synergies should not be underappreciated as a driver behind the transaction. By contrast, Eli Lilly announced the acquisition of US biotechnology company Loxo Oncology, a deal driven by Lilly's desire to obtain first-in-class and best-in-class oncology assets.

Other transactions worth highlighting in the period are Danaher's acquisition of GE's biopharma business and Roche's acquisition of US biotechnology company, Spark Therapeutics. GE's biopharma business is a high-performing asset in attractive end markets and is expected to generate attractive near and medium-term returns. The Spark Therapeutics transaction, by contrast, is more strategic and gives Roche access to a gene therapy platform.

Politics: Weighing on sentiment but unlikely to materially shift the near-term landscape

Healthcare continues to be a major political issue in the United States and the two topics that are garnering the most attention are drug pricing and Medicare for All.

In terms of drug pricing, the near-term focus appears to be on affordability and transparency. At the risk of oversimplifying, the aim is to reduce the out-of-pocket costs that US consumers face when they collect a prescription at the pharmacy counter. One way to achieve that goal is to remove the controversial rebates that exist in Medicare and managed Medicaid and so move to a more transparent system based on lower net prices. We believe this regulatory intervention is feasible in the near term and is something that manufacturers support given it should drive utility of the most innovative medicines.  Adopting a similar approach in the commercial market, however, is more complicated and appears to be less likely in the short term.

The second area of focus is Medicare for All, the idea that the US will move to a single, government-run system that will cover every US citizen.  This idea has some support in the Democratic Party and is favoured by some of the candidates in the Democratic Party Presidential primary election.   The attraction of Medicare for All reflects the popularity of the original Medicare program, but it is the cost of implementation and potential consequences that are less appealing. Independent research pegs the potential cost at $32.6trn over 10 years which has obvious implications for taxes and the Federal budget. Other less appealing implications are those of lost private health insurance, reduced choice and the potential for delays in treatment. In conclusion, Medicare for All has political appeal for some but is highly unlikely to become a reality anytime soon.

Portfolio Review

As a reminder, the portfolio was restructured in June 2017 following shareholders' approval for a change in the investment mandate. We are now focussed on capital growth by investing in a diversified global portfolio of healthcare companies with no restriction on subsector weighting. The Company's portfolio comprises a single pool of investments, but for operational purposes we have divided them into a growth and an innovation portfolio.

All investments in the growth portfolio have a market capitalisation greater than $5bn at the time of investment. The majority of the Company's assets are allocated here and it is expected to comprise 25-40 large-cap healthcare stocks. There were 26 at the end of the reporting period.

The innovation portfolio provides exposure to healthcare companies with a market capitalisation of less than $5bn and is invested across a range of biotechnology, medical device, healthcare services and healthcare IT companies. At the end of the reporting period, there were 19 companies in the innovation portfolio.

Growth portfolio

Our investment strategy for the growth portfolio has been to identify large companies with proactive management teams that have differentiated assets. Over the course of the reporting period, there was a wide dispersion of returns between the different healthcare subsectors. The best performing sub-sectors were life sciences and tools, healthcare equipment and pharmaceuticals. The sub-sectors that struggled were drug retail, managed care and biotechnology.

On an absolute basis, the most significant contributor was US pharmaceutical major, Merck & Co. Merck is not only building a terrific moat around its immuno-oncology franchise, led by key asset Keytruda, but also has strong momentum with its vaccines business, with HPV vaccine Gardasil enjoying material consensus upgrades in recent months. Other contributors during the period were US biotech Incyte, and US life science and tools company Danaher. Incyte's performance reflects not just confidence in the underlying business but improving expectations for the company's late-stage pipeline. Danaher continues to execute in end markets that are robust and also benefitted from the announcement of a major acquisition, GE's biopharma business, that was well received by the market.

The largest negative contributors were CVS Health Corporation, Jazz Pharmaceuticals and Quest Diagnostics. During the period, CVS closed the acquisition of US insurance company Aetna, a deal that should allow NewCo to add new services for consumers, become even more focussed on delivery of care and drive cost savings and efficiencies via greater control of patient flow. Unfortunately, near-term headwinds in the company's long-term care and pharmacy businesses triggered FY19 guidance that disappointed the market. Jazz Pharmaceuticals underperformed not because of its base business, which continues to perform strongly, but because of the performance of its recently acquired oncology assets. In particular, the company's leukaemia drug Vyxeos struggled to meet market expectations in 2018 leading the company to alter its commercial strategy. Quest Diagnostics performed poorly during the reporting period, reflective of a business that is facing unexpected near-term volume headwinds, on top of pricing pressure driven by changes to the US reimbursement environment.

Innovation portfolio

The innovation portfolio has been invested across a number of companies in different subsectors. The performance of these smaller stocks is driven in part by investor appetite for risk but also by stock-specific news flow, both of which can cause share price volatility.

The most significant absolute contributor to the portfolio over the reporting period was Quotient, followed by Renalytix and Loxo Oncology. Quotient continues to make progress with its disruptive blood-screening platform, MosaiQ, and is consistently meeting stated timelines and objectives. With some parallels to Quotient, Renalytix is also making steady progress with the development of its key platform technology, an artificial intelligence-enabled clinical diagnostic solution for kidney disease, one of the most common and costly chronic medical conditions globally. Loxo Oncology's contribution to performance was helped, in part, by its acquisition by Eli Lilly in January.   

Detractors from performance during the period were Consort Medical, C4X Discovery and Diurnal Group. Consort Medical, essentially a contract manufacturing business, experienced delays to a couple of customer projects. While frustrating, we do not see the delays impacting our view of Consort Medical's fundamentals. There is also no change to the equity story at C4X Discovery, with the shares appearing to suffer from a lack of news flow and investor apathy. Diurnal Group underperformed following a disappointing update for one of its lead assets, Chronocort, which is being developed to treat a hormone-related disease known as congenital adrenal hyperplasia (CAH). We do not believe that the programme is dead but have sympathy with those questioning its commercial viability.

Outlook

We continue to believe the healthcare sector provides an attractive investment opportunity and valuations are supportive on both a relative and absolute P/E basis. On a relative basis, the sector is trading at a discount to the market which compares to a premium historically (according to Ned Davis Research); on an absolute basis, the sector is trading below the long-term average - once again supportive.

In terms of growth profile, if one looks at the period 2007-2020E, the global healthcare sector is expected to deliver a superior earnings growth profile versus the broader market over the same period (according to Citi Research). If the healthcare sector can deliver superior earnings versus the broader market over the medium term, it seems reasonable to argue that the sector deserves to trade at a premium versus the broader market.

We continue to believe that certain characteristics of most large healthcare companies - robust cash flows, strong balance sheets and well-established market positions - are particularly appealing given the uncertain macro and economic backdrop, especially as certain macro concerns look set to linger over the course of this year: the US/China trade war has yet to be resolved; Brexit remains a work in progress; economic growth in Europe is anaemic; and an inverting yield curve is stimulating the "are we heading towards a recession?" debate.

In terms of healthcare, it is hard to envisage dramatic changes to the near-term landscape from a regulatory perspective, but we are acutely aware that news flow relating to drug pricing and Medicare for All could impact sentiment. With regards to drug pricing, nothing has fundamentally changed, with the pharmaceutical and biotechnology sectors still needing to develop differentiated therapies that will be reimbursed and utilised. As for the Medicare for All debate, we feel there are many challenges ahead rendering it highly unlikely that the US will move to a single-payer system, disintermediating the managed care industry.

We continue to be optimistic about the growth prospects for the medical devices and life sciences and tools subsectors. Within medical devices, there is an innovation renaissance driving not just attractive top-line growth but also allowing for mix improvements and operating leverage. The growth prospects for the life sciences and tools subsector are also attractive but driven more by the dynamism of the end markets, not just in biopharma and biopharma processing but also in areas such as environmental, food safety, and chemical and energy.

We remain underweight in the large-cap pharmaceutical subsector but increased our relative weighting towards the end of the reporting period. This is a decision that reflects not just their defensive qualities, but also a view that there remains opportunity for differentiated medicines to be commercially successful. Possibly more so than any other subsector, stock selection is critical in pharmaceuticals given the potential for a wide dispersion of returns. Our modest overweight in biotechnology is driven, in part, by a few primarily UK-based companies that sit in our innovation portfolio.

The managed care sector in the US is the most powerful way to invest in the theme of cost control and efficiencies in the medium term. It is a subsector that is heavily investing in technology to move away from the more traditional fee-for-service model towards a system based on value and outcomes. If management teams can execute, then the sector can deliver double-digit earnings growth in the medium term, an intuitively attractive opportunity. In the near term, however, political rhetoric is a headwind that may continue to temper enthusiasm and depress multiples and we will manage our exposure to these stocks accordingly.

James Douglas, Daniel Mahony and Gareth Powell

9 May 2019

Portfolio as at 31 March 2019 

(Figures in brackets denote the comparative ranking as at 30 September 2018)

Ranking		Stock	Sector	Country	Market Value £'000		% of total net assets
2019	2018				31 March 2019	30 September 2018	31 March 2019	30 September 2018
1	(1)	Johnson & Johnson	Pharmaceuticals	United States	23,171	21,718	8.1%	7.3%
2	(4)	Novartis	Pharmaceuticals	Switzerland	16,410	14,728	5.8%	5.0%
3	(5)	Merck & Co	Pharmaceuticals	United States	16,043	13,677	5.6%	4.6%
4	(17)	Abbott	Healthcare Equipment	United States	15,345	9,001	5.4%	3.0%
5	(12)	Alexion Pharmaceuticals	Biotechnology	United States	13,406	9,698	4.7%	3.3%
6	(18)	Takeda Pharmaceutical	Pharmaceuticals	Japan	13,159	8,807	4.6%	3.0%
7	(-)	Pfizer	Pharmaceuticals	United States	13,037	-	4.6%	-
8	(16)	Novo Nordisk	Pharmaceuticals	Denmark	11,057	9,093	3.9%	3.1%
9	(8)	HCA	Healthcare Facilities	United States	10,711	11,419	3.8%	3.9%
10	(-)	Koninklijke Philips	Healthcare Equipment	Netherlands	10,012	-	3.5%	-
Top 10 investments					142,351		50.0%
11	(9)	AstraZeneca	Pharmaceuticals	United Kingdom	9,715	10,895	3.4%	3.7%
12	(24)	Bio-Rad Laboratories	Life Sciences Tools & Services	United States	9,444	6,359	3.3%	2.1%
13	(13)	Grifols	Biotechnology	Spain	8,947	9,505	3.1%	3.2%
14	(2)	Medtronic	Healthcare Equipment	Ireland	8,913	17,538	3.1%	5.9%
15	(22)	Incyte Genomics	Biotechnology	United States	8,733	7,010	3.1%	2.3%
16	(-)	Varian Medical Systems	Healthcare Equipment	United States	8,427	-	3.0%	-
17	(23)	Danaher	Healthcare Equipment	United States	8,407	6,615	2.9%	2.2%
18	(-)	Regeneron Pharmaceuticals	Biotechnology	United States	8,402	-	2.9%	-
19	(19)	PRA Health Sciences	Life Sciences Tools & Services	United States	8,368	8,409	2.9%	2.8%
20	(20)	Becton Dickinson	Healthcare Equipment	United States	7,861	8,208	2.8%	2.8%
Top 20 investments					229,568		80.5%
21	(7)	Agilent Technologies	Life Sciences Tools & Services	United States	7,405	12,331	2.6%	4.2%
22	(-)	Resmed	Healthcare Equipment	United States	7,181	-	2.5%	-
23	(-)	Teleflex	Healthcare Equipment	United States	7,012	-	2.5%	-
24	(25)	Quotient	Healthcare Supplies	United Kingdom	6,610	5,823	2.3%	2.0%
25	(-)	Baxter	Healthcare Equipment	United States	6,242	-	2.2%	-
26	(29)	Alnylam Pharmaceuticals	Biotechnology	United States	6,132	5,186	2.1%	1.8%
27	(-)	Otsuka	Pharmaceuticals	Japan	4,221	-	1.5%	-
28	(26)	Consort Medical	Healthcare Equipment	United Kingdom	4,145	5,555	1.5%	1.9%
29	(-)	Renalytix	Healthcare Equipment	United Kingdom	3,645	-	1.3%	-
30	(-)	Horizon Pharma	Pharmaceuticals	United States	3,460	-	1.2%	-
Top 30 investments					285,621		100.2%
31-44	-	14 other investments			18,110		6.3%
Total Investments					303,731		106.5%
Other Net Liabilities					(18,510)		(6.5%)
Total Net Assets					285,221		100.0%

Geographical Exposure at	31 March 2019	30 September 2018
United States	68.4%	69.5%
United Kingdom	11.2%	11.6%
Japan	6.1%	4.8%
Switzerland	5.8%	5.0%
Denmark	4.1%	3.1%
Netherlands	3.5%	-
Ireland	3.1%	9.1%
Spain	3.1%	3.2%
Italy	0.8%	0.6%
Sweden	0.4%	0.8%
Norway	-	0.4%
Other net liabilities	(6.5%)	(8.1%)
Total	100.0%	100.0%
Sector Exposure at	31 March 2019	30 September 2018
Pharmaceuticals	39.7%	33.2%
Healthcare Equipment	32.5%	20.3%
Biotechnology	17.8%	22.8%
Life Sciences Tools & Services	9.5%	9.9%
Healthcare Facilities	3.9%	3.9%
Healthcare Supplies	2.3%	2.0%
Healthcare Technology	0.5%	0.9%
Education Services	0.3%	0.3%
Managed Healthcare	-	11.4%
Healthcare Services	-	3.4%
Other net liabilities	(6.5%)	(8.1%)
Total	100.0%	100.0%

Market Cap at	31 March 2019	30 September 2018
Large (>US$5bn)	93.9%	95.1%
Medium (US$1bn - US$5bn)	2.1%	3.2%
Small (<US$1bn)	10.5%	9.8%
Other net liabilities	(6.5%)	(8.1%)
	100.0%	100.0%

INTERIM MANAGEMENT REPORT (continued)

CORPORATE MATTERS

The Board

As reported in our Annual Report for the year ended 30 September 2018, our plan is to refresh our entire Board over a two-year period and to do this in two phases. Phase one is complete with Neal Ransome (our Audit Committee Chair) and Lisa Arnold having joined the Board in December 2017 and February 2018 respectively. Phase two is expected to complete at the AGM in early 2020. We believe that phasing it in this way allows us to manage the transition in a sensible and pragmatic manner.

Principal Risks and Uncertainties

A detailed explanation of the Company's principal risks and uncertainties, and how they are managed through mitigation and controls, can be found on pages 28 to 30 of the Annual Report for the year ended 30 September 2018. The principal risks and uncertainties are categorised into four main areas; Business, Portfolio Management, Infrastructure and External, and the Directors consider that the principal risks and uncertainties faced by the Company for the remaining six months of the financial year have not changed. There continues to be uncertainty surrounding Brexit which the Board continues to monitor.

Going Concern

The Board monitors the financial position of the Group and Company and confirms that there continues to be a reasonable expectation that there are adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial results of the Group and Company.

Related Party Transactions

In accordance with DTR 4.2.8R, there have been no new related party transactions during the six-month period to 31 March 2019.

There have therefore been no changes in any related party transaction described in the last Annual Report that could have a material effect on the financial position or performance of the Group or Company in the first six months of the current financial year or to the date of this report.

Research Costs

As detailed in the Chairman's Statement in the Annual Report 2018, the cost of external research has been materially less than in previous years. The Board continues to hold the view that access to the best healthcare research is critical in achieving investment outperformance and has again agreed a mutual budget arrangement with Polar Capital.

As with calendar year 2018, the Company will absorb the cost of specialist and bespoke research while Polar Capital will be responsible for the cost of written research otherwise termed 'Waterfront' research. We believe that this is a fair and equitable approach which will continue to be monitored through 2019 and will be considered again before the budget is re-set for 2020.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors of Polar Capital Global Healthcare Trust plc, who are listed in the Shareholder Information Section, confirm to the best of their knowledge that:

·      The condensed set of financial statements has been prepared in accordance with IAS34 as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as at 31 March 2019; and

·      The Interim Management Report includes a fair review of the information required by the Disclosure Guidance and Transparency Rules 4.2.7R and 4.2.8R.

The half year financial report for the six-month period to 31 March 2019 has not been audited or reviewed by the Auditors. The half year financial report was approved by the Board on 9 May 2019.

On behalf of the Board

James Robinson

Chairman

Statement of Comprehensive Income

For the half year ended 31 March 2019

		Group			Group			Group
		(Unaudited) Half year ended 31 March 2019			(Unaudited) Half year ended  31 March 2018			(Audited) Year ended  30 September 2018
		Revenue	Capital	Total	Revenue	Capital	Total	Revenue	Capital	Total
		return	return	return	return	return	return	return	return	return
	Notes	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Investment income	2	2,605	-	2,605	1,938	103	2,041	3,877	102	3,979
Other operating income	2	19	-	19	208	-	208	459	-	459
(Losses)/gains on investments held at fair value		-	(9,378)	(9,378)	-	(9,381)	(9,381)	-	49,559	49,559
Losses on derivatives		-	-	-	-	(204)	(204)	-	(19)	(19)
Other currency gains/(losses)		-	13	13	-	(243)	(243)	-	(259)	(259)
Total income		2,624	(9,365)	(6,741)	2,146	(9,725)	(7,579)	4,336	49,383	53,719
Expenses
Investment management fee		(250)	(998)	(1,248)	(235)	(942)	(1,177)	(478)	(1,910)	(2,388)
Other administrative expenses		(279)	9	(270)	(286)	(57)	(343)	(607)	(182)	(789)
Total expenses		(529)	(989)	(1,518)	(521)	(999)	(1,520)	(1,085)	(2,092)	(3,177)
Profit/(loss) before finance costs and tax		2,095	(10,354)	(8,259)	1,625	(10,724)	(9,099)	3,251	47,291	50,542
Finance costs		(7)	(522)	(529)	-	(483)	(483)	(3)	(983)	(986)
Profit/(loss) before tax		2,088	(10,876)	(8,788)	1,625	(11,207)	(9,582)	3,248	46,308	49,556
Tax		(306)	-	(306)	(217)	(3)	(220)	(437)	(3)	(440)
Net profit/(loss) for the period and total comprehensive income		1,782	(10,876)	(9,094)	1,408	(11,210)	(9,802)	2,811	46,305	49,116
Earnings/(losses) per ordinary share (basic) (pence)	3	1.46	(8.88)	(7.42)	1.15	(9.14)	(7.99)	2.29	37.77	40.06

The total column of this statement represents the Group and 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 Group does not have any other income or expense that is not included in net profit for the period/year. The net profit/(loss) for the period/year disclosed above represents the Group's total comprehensive Income.

There are no dilutive securities and therefore the Earnings per Share and the Diluted Earnings per Share are the same.

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period/year.

Balance Sheets

For the half year ended 31 March 2019

	Note	Group			Company
		(Unaudited) 31 March  2019 £'000	(Unaudited) 31 March  2018 £'000	(Audited) 30 September 2018 £'000	(Unaudited) 31 March 2019 £'000	(Unaudited) 31 March 2018 £'000	(Audited) 30 September 2018 £'000
Non current assets
Investments held at fair value		303,731	242,684	320,321	303,731	242,684	320,321
Investment in subsidiary		-	-	-	50	50	50
Current assets
Receivables		4,908	504	459	4,908	504	459
Overseas tax recoverable		674	515	557	674	515	557
Cash and cash equivalents		14,670	30,545	13,851	14,620	30,495	13,801
		20,252	31,564	14,867	20,202	31,514	14,817
Total assets		323,983	274,248	335,188	323,983	274,248	335,188
Current liabilities
Fair value of open derivative contracts		-	(284)	-	-	(284)	-
Payables		(3,149)	(2,488)	(3,841)	(3,149)	(2,488)	(3,841)
Bank overdraft		(1,746)	(25)	(1,712)	(1,746)	(25)	(1,712)
		(4,895)	(2,797)	(5,553)	(4,895)	(2,797)	(5,553)
Non current liabilities
Zero dividend preference shares		(33,867)	(32,881)	(33,372)	-	-	-
Loan from subsidiary		-	-	-	(33,867)	(32,881)	(33,372)
Total liabilities		(38,762)	(35,678)	(38,925)	(38,762)	(35,678)	(38,925)
Net assets		285,221	238,570	296,263	285,221	238,570	296,263
Equity attributable to equity shareholders
Called up share capital		31,037	31,037	31,037	31,037	31,037	31,037
Share premium reserve		80,685	80,685	80,685	80,685	80,685	80,685
Capital redemption reserve		6,575	6,575	6,575	6,575	6,575	6,575
Special distributable reserve		5,502	6,225	6,225	5,502	6,225	6,225
Capital reserves		158,183	111,544	169,059	158,183	111,544	169,059
Revenue reserve		3,239	2,504	2,682	3,239	2,504	2,682
Total equity		285,221	238,570	296,263	285,221	238,570	296,263
Net asset value per ordinary share (pence)	4	233.53	194.80	241.91	233.53	194.80	241.91
Net asset value per ZDP share (pence)	4	105.41	102.34	103.87	-	-	-

The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own income statement in the financial statements. The parent company's profit for the half year was £1,782,000 (31 March 2018: £1,408,000 and 30 September 2018: £2,811,000).

Statement of Changes in Equity

For the half year ended 31 March 2019

		Group and Company Half year ended 31 March 2019 (Unaudited)
		Called up share capital £'000	Capital redemption reserve £'000	Share premium reserve £'000	Special distributable reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total Equity £'000
Total equity at 1 October 2018		31,037	6,575	80,685	6,225	169,059	2,682	296,263
Total comprehensive (expense)/income:
(Loss)/profit for the half year ended 31 March 2019		-	-	-	-	(10,876)	1,782	(9,094)
Transactions with owners, recorded directly to equity:
Shares bought back and held in treasury		-	-	-	(723)	-	-	(723)
Equity dividends paid		-	-	-	-	-	(1,225)	(1,225)
Total equity at 31 March 2019		31,037	6,575	80,685	5,502	158,183	3,239	285,221
		Group and Company Half year ended 31 March 2018 (Unaudited)
		Called up share capital £'000	Capital redemption reserve £'000	Share premium reserve £'000	Special distributable reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total Equity £'000
Total equity at 1 October 2017		31,037	6,575	80,685	6,754	122,754	2,324	250,129
Total comprehensive (expense)/income:
(Loss)/profit for the half year ended 31 March 2018		-	-	-	-	(11,210)	1,408	(9,802)
Transactions with owners, recorded directly to equity:
Shares bought back and held in treasury		-	-	-	(529)	-	-	(529)
Equity dividends paid		-	-	-	-	-	(1,228)	(1,228)
Total equity at 31 March 2018		31,037	6,575	80,685	6,225	111,544	2,504	238,570
		Group and Company  Year ended 30 September 2018 (Audited)
		Called up share capital £'000	Capital redemption reserve £'000	Share premium reserve £'000	Special distributable reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total Equity £'000
Total equity at 1 October 2017		31,037	6,575	80,685	6,754	122,754	2,324	250,129
Total comprehensive income:
Profit for the year ended 30 September 2018		-	-	-	-	46,305	2,811	49,116
Transactions with owners, recorded directly to equity:
Shares bought back and held in treasury		-	-	-	(529)	-	-	(529)
Equity dividends paid		-	-	-	-	-	(2,453)	(2,453)
Total equity at 30 September 2018		31,037	6,575	80,685	6,225	169,059	2,682	296,263

Cash Flow Statement

For the half year ended 31 March 2019

	Group and Company
	(Unaudited) Half year ended 31 March 2019 £'000	(Unaudited) Half year ended 31 March 2018 £'000	(Audited) Year ended 30 September 2018 £'000
Cash flows from operating activities
(Loss)/profit before finance costs and tax	(8,259)	(9,099)	50,542
Adjustment for non-cash items:
Losses/(gains) on investments held at fair value through profit or loss	9,378	9,381	(49,559)
Adjusted profit before tax	1,119	282	983
Adjustments for:
Purchases of investments, including transaction costs	(145,874)	(147,923)	(329,500)
Sales of investments, including transaction costs	148,026	178,898	343,187
Movement of open derivative contracts	-	284	-
Decrease/(increase) in receivables	58	185	(4)
(Decrease)/increase in payables	(139)	24	202
Overseas tax deducted at source	(423)	(302)	(564)
Net cash generated from operating activities	2,767	31,448	14,304
Cash flows from financing activities
Cost of shares repurchased	(723)	(529)	(529)
Interest paid	(34)	(2)	(14)
Equity dividends paid	(1,225)	(1,228)	(2,453)
Net cash used in from financing activities	(1,982)	(1,759)	(2,996)
Net increase in cash and cash equivalents	785	29,689	11,308
Cash and cash equivalents at the beginning of the period	12,139	831	831
Cash and cash equivalents at the end of the period	12,924	30,520	12,139

Notes to the Financial Statements

For the half year ended 31 March 2019

   1.       General Information

The consolidated financial statements comprise the unaudited results of the Company and its wholly-owned subsidiary PCGH ZDP plc (together referred to as the Group) for the six-month period to 31 March 2019.

The Group and Company unaudited financial statements to 31 March 2019 have been prepared using the accounting policies used in the Group and Company's financial statements to 30 September 2018. These accounting policies are based on International Financial Reporting Standards ("IFRS"), which comprise standards and interpretations approved by the International Accounting Standards Board ("IASB") and the International Accounting Standards Committee ("IASC"), as adopted by the European Union.

The financial information in this half year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. 

The financial information for the periods ended 31 March 2019 and 31 March 2018 have not been audited. The figures and financial information for the year ended 30 September 2018 are an extract from the latest published accounts and do not constitute statutory accounts for that year. Full statutory accounts for the year ended 30 September 2018, prepared under IFRS, including the report of the auditors which was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies.

The Group and Company's accounting policies have not varied from those described in the financial statements for the year ended 30 September 2018.

The Group and Company's financial statements are presented in Pounds Sterling and all values are rounded to the nearest thousand pounds (£'000), except where otherwise stated.

The Directors believe it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Group and Company comprise mainly of securities that are readily realisable and accordingly, the Group and Company have adequate financial resources to meet their liabilities as and when they fall due and to continue in operational existence for the foreseeable future.

2. DIVIDENDS and OTHER Income	(Unaudited) For the half year ended 31 March 2019 £'000	(Unaudited) For the half year ended 31 March 2018 £'000	(Audited) For the year ended 30 September 2018 £'000
Investment income
Revenue:
Franked: listed investments
Dividend income	312	274	491
Unfranked: listed investments
Dividend income	2,293	1,664	3,386
Total investment income allocated to revenue	2,605	1,938	3,877
Capital:
Dividends from REITs allocated to capital	-	103	102
Total investment income allocated to capital	-	103	102
Other operating income
Option premium income	-	201	437
Bank interest	19	7	22
Total other operating income	19	208	459

3. Earnings/(LOSS) per share	(Unaudited) For the half year ended 31 March 2019 £'000	(Unaudited) For the half year ended 31 March 2018 £'000	(Audited) For the year ended 30 September 2018 £'000
Net profit/(loss) for the period:
Revenue	1,782	1,408	2,811
Capital	(10,876)	(11,210)	46,305
Total	(9,094)	(9,802)	49,116
Weighted average number of shares in issue during the period	122,466,319	122,602,712	122,602,712
Revenue	1.46p	1.15p	2.29p
Capital	(8.88p)	(9.14p)	37.77p
Total	(7.42p)	(7.99p)	40.06p

As at 31 March 2019 there were no potentially dilutive shares in issue (31 March 2018 and 30 September 2018: same).

4. Net asset value per share	(Unaudited) For the half year ended 31 March 2019	(Unaudited) For the half year ended 31 March 2018	(Audited) For the year ended 30 September 2018
(i) Ordinary shares
Net assets attributable to ordinary shareholders (£'000)	285,221	238,570	296,263
Ordinary shares in issue at end of period (excluding those held in treasury)	122,135,000	122,470,000	122,470,000
Net asset value per ordinary share (pence)	233.53	194.80	241.91

As at 31 March 2019 there were no potentially dilutive shares in issue (31 March 2018 and 30 September 2018: same).

(ii) ZDP shares
Calculated entitlement of ZDP shareholders (£'000)	33,867	32,881	33,372
ZDP shares in issue at the end of the year	32,128,437	32,128,437	32,128,437
Net asset value per ZDP share (pence)	105.41	102.34	103.87

5.   DIVIDENDS

The first interim dividend for the year ending 30 September 2019 will be declared in July 2019 and will be paid on 31 August 2019; it is anticipated that the second and final interim dividend for the year ending 30 September 2019 will be declared in or around December 2019 and will be paid on 28 February 2020.

6.   Related party transactions

There have been no related party transactions that have materially affected the financial position or the performance of the Company during the six-month period to 31 March 2019.

7. POST BALANCE SHEET EVENTS

After the period end, a further 365,000 ordinary shares were bought back and held in Treasury. Following these share buybacks, the total number of shares in issue was 124,149,256 of which 2,379,256 shares were held in treasury. No other significant events occurred after the end of the reporting period to the date of this report requiring disclosure.

shareholder information

DIRECTORS AND CONTACTS

Directors

James Robinson (Chairman)

Neal Ransome (Audit Committee Chairman)

Lisa Arnold

Anthony Brampton

Investment Manager and AIFM 

Polar Capital LLP

Authorised and regulated by the Financial Conduct Authority

Portfolio Managers

Dr James Douglas, Dr Daniel Mahony and Mr Gareth Powell

Company Secretary

Polar Capital Secretarial Services Limited

represented by Tracey Lago, ACIS

Registered Office and address for contacting the Directors

16 Palace Street, London SW1E 5JD

020 7227 2700

Depositary, Bankers and Custodian

HSBC Bank Plc, 8 Canada Square, London E14 5HQ

Registered Number

Incorporated in England and Wales with company number 7251471 and registered as an investment company under section 833 of the Companies Act 2006

Company Website

www.polarcapitalhealthcaretrust.com 

FORWARD LOOKING STATEMENTS

Certain statements included in this half-year financial report incorporating the interim management report 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 28 to 30 of the Annual Report for the year ended 30 September 2018. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Polar Capital Global Healthcare Trust plc or any other entity and must not be relied upon in any way in connection with any investment decision. The Company undertakes no obligation to update any forward-looking statements.

HALF YEAR REPORT 

The Company has opted not to post half year reports to shareholders. Copies of this announcement will be available from the Company Secretary at the Registered Office, 16 Palace Street, London SW1E 5JD and from the Company's website at www.polarcapitalhealthcaretrust.com

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

 

END

 

 

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