Half year results

RNS Number : 5235G
Polar Cap Gbl Healthcare Growth&IT
08 May 2014
 



 

POLAR CAPITAL GLOBAL HEALTHCARE GROWTH AND INCOME TRUST PLC (the "Company")

Unaudited Results for the half year ended 31 March 2014

 

This announcement contains regulated information

 

8 May 2014

Financial Highlights For the half year ended 31 March 2014

Performance (note 1)


Net asset value per Ordinary Share (total return)

13.5%

Benchmark Index

MSCI ACWI/Healthcare Index (total return in Sterling with dividends reinvested)

11.8%

Financials


31 March 2014

30 Sept

 2013

%

Change

158.14p

148.54p

 6.5


158.14p

141.50p

 11.8

147.25p

144.00p

2.3

121,720,000

104,850,000

16.1

Expenses

Ongoing charges for the half year ended 31 March 2014 (note 4)

(Ongoing charges for the half year ended 31 March 2013: 1.15%)

 1.02%

Dividends paid and declared  in the period:

Pay Date

Amount

Record Date

Ex-Date

Declared

date

The Company has paid the following
dividend relating to the financial year
ended 30 September 2013:

29 Nov

2013

0.55p

 

8 Nov

2013

6 Nov

 2013

31 Oct

2013

The Company has paid the following
dividend relating to the current financial year:

7 March

2014

 

0.55p

 

21 Feb

2014

19 Feb

 2014

28 Jan

2014

The Company has declared the following dividend relating to the current financial year:

31 May

2014

 

0.55p

 

16 May
2014

14 May
2014

8 May
2014

Note 1 -     The total return NAV performance for the period is calculated by reinvesting the dividends in the assets of the Company from the relevant pay date  and adjusting for the subscription share dilution.  The undiluted and diluted NAVs became the same following the subscription share conversion on 31 January 2014.

.Note 2 -    Following the final conversion date of 31 January 2014 17,800,000 new ordinary shares were issued at 100p each to the holders of the subscription shares. The subscription shares were originally issued free to investors on 15 June 2010 on the basis of one subscription share for every five ordinary shares.

Note 3 -      The issued share capital comprises 122,650,000 ordinary shares of which 930,000 are held in treasury by the Company.

Note 4 -     Ongoing charges represents the total expenses of the fund, excluding finance costs, expressed as a percentage of the average daily net asset value, in accordance with AIC guidance issued in May 2012.

 

 

Chairman's Statement

Performance

During the six months to 31 March 2014 your Company generated a Net Asset Value total return of 13.5% which was ahead of our benchmark, the MSCI Global Healthcare Index (Total Return) which rose by 11.8% over the same period. Since the Company's inception in June 2010 we have achieved a total return of 86.1% compared to the benchmark return of 81.5%. Our managers should be congratulated on these excellent performance numbers which have been achieved notwithstanding our structural underweight position in biotechnology which has been the best performing area of healthcare since the Company was launched. Meanwhile our share price closed the period at 147.25p which represents a discount of 6.9% to our net asset value compared to a premium of 1.7% at the beginning of the period.

Share Capital

On 31 January 15,206,136 Subscription Shares were converted into Ordinary Shares at £1 per share. A trustee was appointed to administer the remaining 2,593,864 unexercised Subscription Shares which were subsequently exercised during February. As part of this process the Company bought back 650,000 Ordinary Shares into Treasury which was followed by a further purchase of 280,000 Ordinary Shares in March. At the end of the period the Company had 122,650,000 Ordinary Shares in issue, of which 930,000 are currently held in Treasury. Your Board will continue to watch the Ordinary Share discount to underlying assets closely and will consider further share buybacks where it considers this to be in the best interests of shareholders as a whole.

Dividends

Dividends totalling 1.1p have been paid or declared in respect of the six months ended 31 March 2014 which compares with 1.0p for the corresponding period last year. Following the pattern set last year the dividends paid in February, May and November are likely to be smaller than the dividend paid in August. The Company's policy remains to increase the dividend on an annual basis progressively but there can be no guarantee that this will be achieved.

Alternative Investment Fund Managers Directive (AIFMD)

In my Chairman's Statement in December I informed shareholders that we had agreed in principle to appoint Polar Capital LLP as our Alternative Investment Fund Manager. Since then we have also agreed in principle to appoint HSBC as our depositary to oversee the Company's custody and cash management operations. It is anticipated that the new arrangements will be in place by July 2014.

Outlook

We have recently seen a significant correction in the biotechnology sector which has prompted questions as to whether the prolonged rally in healthcare has now come to an end. Our managers believe that a correction in biotechnology was probably overdue and would not be surprised to see the sector recover from this setback. From the Company's perspective the pharmaceutical sector is of much greater significance as it accounts for around two-thirds of our portfolio. Our manager believes that large pharmaceutical companies will be beneficiaries of current and forthcoming innovation through their in-licensing and M&A strategies with biotechnology and we are also increasingly optimistic about the strength of pipeline development at several of these companies where any success should have a favourable impact on share prices.

James Robinson

Chairman

7 May 2014

Investment Manager's Report

For the half year ended 31 March 2014

 

For the six months to March 31 2014, the Company delivered a total return of 13.5%, which was ahead of the reported benchmark performance of 11.8% over the same period.

Global stock markets performed reasonably well over the last 6 months with investor focus primarily on growth sectors as the appetite for risk increased. The healthcare sector was a good performer over this period but this was driven in large part by certain sub-sectors, notably biotechnology and speciality pharmaceuticals. However, towards the end of March, the dynamics in the stock market changed. The release of minutes from the Federal Reserve meeting, suggesting that tightening in the US could occur sooner than the market had been expecting, led to a swift sell off in growth stocks - especially in biotechnology and technology.

The implementation of President Obama's healthcare reform finally began in October 2013 and was probably the most important fundamental issue during the reporting period. The key part of healthcare reform is an increase in the number of people with health insurance through an expansion of Medicaid, the programme run by States for the poor, and the initiation of the healthcare insurance exchange programme. The latter enables individuals to obtain coverage from private healthcare providers with a government subsidy for those earning less than 400% of the Federal poverty level.

The exchange programme was initially mired in controversy due to website problems that prevented individuals from enrolling and led some to conclude that healthcare reform would be cancelled. These problems have since been ironed out and by the end of March it was reported that 7 million Americans had enrolled through this programme. We estimate that nearly 15 million people who were without any coverage last year now have health insurance. As a result, we would expect patient volumes to pick up in the second half of the year, which will have a positive impact for all healthcare companies but especially for hospitals and other healthcare providers.

The biotechnology sector has been one of the strongest performing areas in the stock market over the last two years and this continued through the six months to the end of March. Over the reporting period, we saw a number of biotechnology companies come to the market with an initial public offering (IPO). In the past, an ebullient IPO market for biotechnology has been a sign that supply is about to outstrip demand. As a result, we were not too alarmed to see the sector run out of steam towards the end of March, coinciding with the change in market sentiment, but the speed of the decline was a surprise.

The decline in the biotechnology sector has continued into April and we think certain stocks are now looking attractive on a risk/reward basis, however since the launch of the Company, we have maintained a low weighting in biotechnology. While we see investment opportunities in the high risk/reward biotechnology sector, not least because we see biotechnology companies as the key drivers of innovation in drug development, we have limited the portfolio's exposure to this sub-sector.

The key investment thesis supporting the launch of the Company in 2010 was that the pharmaceutical sector was significantly undervalued and looked primed for a multi-year recovery. We expected this recovery to occur in three phases - (1) large drug companies would manage the earnings impact of patent expirations much better than expected, (2) emerging markets would provide a mid-term growth driver and (3) R&D productivity would improve raising the prospects of a return to long-term growth. We believe that we are at least halfway through the re-rating process and this has been reflected in the rise in valuations across the sector seen over the last 4 years.

Most companies have now passed through their major patent expirations and the impact on earnings, while negative, has in general been well managed. For most companies, we think the patent cliff is now in the rear-view mirror and no longer a major concern for investors. Our thesis on emerging markets has not quite played out as anticipated. Large pharmaceutical companies reported emerging markets sales growth in the region of 10%pa from 2010 to 2012. However, over the last year we have begun to see the sales growth rate decline due to weakening currency and increased government pricing pressure - we expect sales growth in the mid- to high-single digits going forward.

The improvement in R&D productivity has probably begun to change faster than we had anticipated in 2010 - in large part driven by innovation in the biotechnology sector. Over the last two years we have seen a series of positive clinical trial announcements and, more importantly, an increase in the number of new drug approvals in the United States. In particular, there have been some significant advances in the treatment of different types of cancer. The pharmaceutical sector has been a beneficiary of this progress largely through in-licensing and M&A with the biotechnology sector.

Our income portfolio

For the overall portfolio, we have maintained the 80:20 split between the income and growth portfolios. The emphasis on income has resulted in a low portfolio weighting in some of the best performing sub-sectors of healthcare over the last year, such as biotechnology and speciality pharmaceuticals. However, this approach to portfolio construction has reduced the volatility and lowered the risk of the portfolio.

The largest weighting in the income portfolio is in pharmaceuticals, where the Company has significant positions in most of the major global pharmaceutical companies. The pharmaceutical stocks continue to offer some of the best dividend yields in the healthcare sector. However, as the sector has re-rated over the last four years, as shown by the increase in the price to earnings ratio, the dividend yields for these stocks have fallen. Nevertheless, we continue to see the potential for mid-single digit dividend growth in the mid-term.

The rest of the income portfolio is diversified across a number of medical device and healthcare service companies in combination with a small portfolio of investments in healthcare real estate investment trusts (REITs). As expected, turnover in the income portfolio has been low over the reporting period, although we continue to look for new income-producing names.

The major contributors to portfolio performance during the reporting period were AstraZeneca, Merck and Eli Lilly. All three of these stocks had lagged behind the peer group and were out of favour in the first half of calendar 2013.

In particular, AstraZeneca has been one of the best positions in the portfolio over the reporting period. We increased our weighting in AstraZeneca in February last year as we believed that the company was not being given sufficient credit for its R&D pipeline - at the time this was a contrarian view. There has been a growing realisation that AstraZeneca may have a better pipeline of oncology drug candidates than was previously believed.

This view is supported by Pfizer's announcement in the last week that it had made a written proposal to merge with AstraZeneca.  While there are some tax advantages to this combination, we think that creating a company with a broader R&D pipeline is a key consideration behind Pfizer's approach.  The AstraZeneca board has dismissed Pfizer's indicative offer of £50 per share but we would not be surprised to see Pfizer return with an improved offer over the next few weeks.

On a relative basis, Sanofi was the most significant underperformer of the large pharmaceutical peer group over the reporting period to the end of March. The company seems to be making slower progress than most of its peers in terms of strengthening its drug pipeline. Our holdings in US Healthcare REITs were also detractors to performance - the potential end to tapering by the US Federal Reserve had a negative impact on these stocks as they tend to be sensitive to moves in interest rates.

Our growth portfolio

In the growth portfolio, we had 40 holdings in a range of biotechnology, device, service and pharmaceutical stocks at the end of March 2014. There is a bias towards smaller market capitalisation stocks  with 56% of the growth book invested in companies with a market capitalisation less than $1 billion.

The most significant positive contributor in the growth book, by a significant margin, was Intercept Pharmaceuticals. This US-based biotechnology company has been held in the portfolio since its IPO in 2012. The lead development programme for the company was the use of obeticholic acid (OCA) as a treatment for primary biliary cirrhosis, a liver disease. Phase III data in this indication are expected later in 2014. This compound is also being investigated in earlier stage clinical studies as a treatment for other liver diseases such as portal hypertension, non-alcoholic steatohepatitis (NASH) and bile acid diarrhoea.

At the beginning of January, Intercept announced very positive data from the trial investigating the use of the compound in NASH. While only half of the patients in the clinical trial had completed treatment, an independent review body stopped the trial early on the basis of efficacy. If a drug candidate shows overwhelming efficacy in an ongoing clinical trial it is considered unethical to continue treating patients with a placebo. In our experience this is a very rare event as the data have to reach a very high level of statistical significance. Given the strong move in the shares, which moved from $72 to $445 in two days, the position was sold from the portfolio.

The largest negative contributor was Summit, which had a very strong move in September last year but gave back a significant proportion of these gains in October. The company raised additional capital in February to fund the development of its drug candidate to treat Duchenne Muscular Dystrophy (DMD). We participated in this fund-raising as we believe that the company is still significantly undervalued.

Outlook

Our investment thesis on the pharmaceutical industry has started to evolve. As investor concerns regarding patent expirations have dissipated, the key questions now relate to mid- and long-term growth potential. Drug pipelines seem to be improving across the sector, not least because of the way the large companies have looked to the innovators in the biotechnology sector as a source of new drug candidates. However, we think that we will begin to see a great dispersion of returns going forward based on the perceived strength of each company's pipeline and, therefore, its earnings growth potential.

This view is consistent with the business development activity across the sector. Large companies continue to compete with each other to in-license the best drug candidates from smaller biotechnology companies. In addition, we have seen management teams looking to dispose of business units that they see as non-essential and acquire assets that can help build strength and scale in their key growth areas. The most recent example of this was a three-way asset swap between Eli Lilly, GlaxoSmithKline and Novartis that was announced after the end of the reporting period. The industry seems to be "moving the chairs around" as companies prioritise their growth objectives and look to build competitive advantages accordingly.

We see these developments as a positive for the sector as a whole but it seems likely that certain companies will fare better than others in these endeavours. Therefore, while we will continue to maintain a large portfolio weighting in the pharmaceutical sector, our challenge will be to ensure that we pick the right stocks for the portfolio.

On a broader healthcare perspective, we continue to see a lot of innovation occurring within smaller companies in the biotechnology and medical technology sectors. We are also very interested in the emerging area of digital health that has the potential to disintermediate and disaggregate the current healthcare system - this has the potential to create new risks and opportunities within the sector. Our investment focus remains on companies that have products or services can help cut the costs of healthcare - a critical issue for governments given the aging population.

In summary, our investment approach for the Trust remains unchanged - we expect at least 60% of the portfolio to remain invested in large pharmaceutical companies throughout the life of the Company. While the healthcare sector has performed very well over the last three years, we still believe we can deliver on the goal of a total return of 10-12% per annum to the end of the life of the Company.

 

Dr Daniel Mahony and Mr Gareth Powell

Polar Capital LLP

7 May 2014

 

Statement of Directors' Responsibilities

Risks and Uncertainties

The Directors consider that the principal risks and uncertainties faced by the Company for the remaining six months of the financial year, which could have a material impact on performance, are consistent with those outlined in the Report and Financial Statements for the year ended 30 September 2013.

These principal risks can be summarised as market volatility, stock pricing and liquidity risk, currency and interest rate risk, counterparty risk, and differing economic cycles between different markets.

The investment manager's report comments on the outlook for market related risks.

The Company's risk management framework is a structured process for identifying, assessing and managing the risks associated with the Company's business. The investment portfolio is diversified by geography, which mitigates risk, but is focused on the healthcare sector and has a high proportion of investments listed on US markets or exposed to the US Dollar.

Directors' Responsibility Statement

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

•   the condensed set of financial statements have been prepared in accordance with International Accounting Standard 34 as adopted by the European Union;

•   the Interim Management Report (constituting the Investment Manager's report) includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7R;

•   in accordance with DTR 4.2.8R there have been no new related party transactions during the six month period to 31 March 2014 and therefore nothing to report on any material effect by such transactions on the financial position or performance of the Company during that period. There have 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 Company in the first six months of the current financial year.

The half year financial report for the six months ended 31 March 2014 has not been audited or reviewed by the auditors.

The financial report for the six months ended 31 March 2014 was approved by the Board on 7 May 2014 and the responsibility statement was signed on its behalf by J P Robinson, Chairman of the Board.

 

James Robinson

Chairman

7 May 2014

 

Statement of Comprehensive Income

For the half year ended 31 March 2014

 

Notes

(Unaudited)

Half year ended

31 March 2014

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

Investment income

2

2,749

155

2,904

Other operating income

2

259

-

259

Gains on investments held at fair value


-

19,628

19,628

Other movements on written options


-

(1)

(1)

Other currency gains/(losses)


-

10

10

Total income


3,008

19,792

22,800

Expenses





Investment management fee


(140)

(561)

(701)

Other administrative expenses


(223)

-

(223)

Total expenses


(363)

(561)

(924)

Profit before finance costs and tax


2,645

19,231

21,876

Finance costs


-

-

-

Profit before tax


2,645

19,231

21,876

Tax


(293)

(3)

(296)

Net profit for the period and
total comprehensive income


2,352

19,228

21,580

Earnings per ordinary share
(basic) (pence)

3

2.13

17.43

19.56

Earnings per ordinary share
(diluted) (pence)

3

2.13

17.43

19.56

 

 

Notes

(Unaudited)

(Audited)

Half year ended

31 March 2013

Year ended

30 September 2013

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

Investment income

2

2,362

313

2,675

4,607

314

4,921

Other operating income

2

164

-

164

244

-

244

Gains on investments held at fair value

-

25,638

25,638

-

25,749

25,749

Other movements on written options

-

-

-

-

-

-

Other currency gains/(losses)


-

(70)

(70)

-

(188)

(188)

Total income


2,526

25,881

28,407

4,851

25,875

30,726

Expenses








Investment management fee


(110)

(439)

(549)

(244)

(975)

(1,219)

Other administrative expenses


(202)

-

(202)

(373)

-

(373)

Total expenses


(312)

(439)

(751)

(617)

(975)

(1,592)

Profit before finance costs and tax

2,214

25,442

27,656

4,234

24,900

29,134

Finance costs


-

-

-

-

-

-

Profit before tax


2,214

25,442

27,656

4,234

24,900

29,134

Tax


(260)

(25)

(285)

(482)

(25)

(507)

Net profit for the period and
total comprehensive income


1,954

25,417

27,371

3,752

24,875

28,627

Earnings per ordinary share (basic) (pence)

3

1.95

25.42

27.37

3.68

24.38

28.06

Earnings per ordinary share (diluted) (pence)

3

1.88

24.51

26.39

3.51

23.28

26.79

 

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 notes on pages 15 to 18 form part of these financial statements.

Statement of Changes in Equity

For the half year ended 31 March 2014

 


(Unaudited) Half year ended 31 March 2014

 

Called up share capital

£'000

Share premium reserve

£'000

Special distributable reserve

£'000

Capital reserves

£'000

Revenue reserve

£'000

Total

£'000

 

 26,391

 15,417

 64,792

 47,153

 1,994

 155,747

 

Total comprehensive income:







 

 -

 -

 -

 19,228

 2,352

 21,580

 

Transactions with owners, recorded directly to equity:





 

Issue of ordinary shares on
exercise of subscription shares

 4,272

13,499

 -

 -

 -

17,771

 

Repurchase of Ordinary shares
to be held in Treasury

 -

 -

(1,358)

 -

 -

(1,358)

 

Equity dividends paid

 -

 -

 -

 -

(1,248)

(1,248)

 

30,663

28,916

63,434

66,381

3,098

192,492

 


(Unaudited) Half year ended 31 March 2013

 

Called up share capital

£'000

Share premium reserve

£'000

Special distributable reserve

£'000

Capital reserves

£'000

Revenue reserve

£'000

Total

£'000

 

 24,653

 7,360

 64,792

 22,278

 1,655

 120,738

 

Total comprehensive income:







 

 -

 -

 -

25,417

1,954

27,371

 

Transactions with owners, recorded directly to equity:





 

Issue of ordinary shares

 538

 2,164

 -

 -

 -

2,702

 

Equity dividends paid

 -

 -

 -

 -

(1,001)

(1,001)

 

25,191

9,524

64,792

47,695

2,608

149,810


(Audited) Year ended 30 September 2013

 

Called up share capital

£'000

Share premium reserve

£'000

Special distributable reserve

£'000

Capital reserves

£'000

Revenue reserve

£'000

Total

£'000

 

 24,653

 7,360

 64,792

 22,278

 1,655

 120,738

 

Total comprehensive income:







 

 -

 -

 -

 24,875

 3,752

 28,627

 

Transactions with owners, recorded directly to equity:





 

Issue of ordinary shares

 1,738

 8,057

 -

 -

 -

9,795

 

Equity dividends paid

 -

 -

 -

 -

(3,413)

(3,413)

 

Total equity at 30 September 2013

 26,391

 15,417

 64,792

 47,153

 1,994

 155,747

 

 

 

Balance Sheet

As at 31 March 2014

Notes

(Unaudited)

31 March 2014

£'000

(Unaudited)

31 March 2013

£'000

(Audited)

30 September 2013

£'000





Investments held at fair value


191,970

149,328

155,308





Receivables


797

480

3,197

Overseas tax recoverable


173

139

137

Cash and cash equivalents


336

162

844



1,306

781

4,178


193,276

150,109

159,486





Payables


(611)

(159)

(3,739)

Fair value of open derivative contracts


(72)

-

-

Bank overdraft


(101)

(140)

-



(784)

(299)

(3,739)


192,492

149,810

155,747





Called up share capital


30,663

25,191

26,391

Share premium reserve


28,916

9,524

15,417

Special distributable reserve


63,434

64,792

64,792

Capital reserves


66,381

47,695

47,153

Revenue reserve


3,098

2,608

1,994


192,492

149,810

155,747

Net asset value per ordinary share (pence)

4

158.14

149.74

148.54

Net asset value per ordinary share (diluted) (pence)

4

158.14

142.22

141.50

The notes on pages 15 to 18 form part of these financial statements.

Cash Flow Statement

For the half year ended 31 March 2014

(Unaudited)

Half year

ended

31 March 2014

£'000

(Unaudited)

Half year

ended

31 March 2013

£'000

(Audited)

Year ended

30 September 2013

£'000




Profit before tax

21,876

27,656

29,134

Adjustment for non-cash items:




Gain on investments held at fair value through profit or loss

(19,628)

(25,638)

(25,749)

Adjusted profit before tax

2,248

2,018

3,385

Adjustments for:




Purchases of investments, including transaction costs

(33,696)

(33,601)

(55,857)

Sales of investments, including transaction costs

15,994

30,243

47,375

Decrease in receivables

4

2

18

Increase/(decrease) in payables

8

(132)

(30)

Overseas tax deducted at source

(332)

(294)

(514)

(15,774)

(1,764)

(5,623)




Proceeds from issue of share capital (net of issue costs)

17,771

2,702

9,795

Cost of repurchase of Ordinary shares

(1,358)

-

-

Equity dividends paid

(1,248)

(1,001)

(3,413)

15,165

1,701

6,382

(609)

(63)

759

Cash and cash equivalents at the beginning of the period

844

85

85

Cash and cash equivalents at the end of the period

235

22

844

 

The notes on pages 15 to 18 form part of these financial statements.

 

Notes to the Financial Statements

For the half year ended 31 March 2014

1      General Information

The unaudited financial statements to 31 March 2014 have been prepared using the accounting policies used in the Company's financial statements to 30 September 2013. 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 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 2014 and 31 March 2013 have not been audited. The figures and financial information for the year ended 30 September 2013 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 2013, 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 accounting policies have not varied from those described in the financial statements for the year ended 30 September 2013.

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

2      Dividends and other income

(Unaudited)

For the half

year ended

31 March 2014

£'000

(Unaudited)

For the half

year ended

31 March 2013

£'000

(Audited)

For the

year ended

30 September 2013

£'000




Revenue:




Franked: Listed investments




Dividend income

626

454

890

Unfranked: Listed investments




Dividend income

2,123

1,908

3,717

Total investment income allocated to revenue

2,749

2,362

4,607

Capital:




Special dividends allocated to capital

-

157

157

Dividends from REITs allocated to capital

155

156

157

Total investment income allocated to capital

155

313

314




Option premium income

258

164

243

Bank interest

1

-

1

Total other operating income

259

164

244

 

3      Earnings per ordinary share

(Unaudited)

For the half

year ended

31 March 2014

£'000

(Unaudited)

For the half

year ended

31 March 2013

£'000

(Audited)

For the

year ended

30 September 2013

£'000




Net profit for the period:




Revenue

2,352

1,954

3,752

Capital

19,228

25,417

24,875

Total

21,580

27,371

28,627

Weighted average number of shares in issue during the period

110,337,730

99,990,934

102,032,603

Revenue

2.13p

1.95p

3.68p

Capital

17.43p

25.42p

24.38p

Total

19.56p

27.37p

28.06p

 

(Unaudited)

For the half

year ended

31 March 2014

£'000

(Unaudited)

For the half

year ended

31 March 2013

£'000

(Audited)

For the

year ended

30 September 2013

£'000




Net profit for the period:




Revenue

2,352

1,954

3,752

Capital

19,228

25,417

24,875

Total

21,580

27,371

28,627

Diluted number of shares in issue during the period

110,337,730

103,717,006

106,864,230

Revenue

2.13p

1.88p

3.51p

Capital

17.43p

24.51p

23.28p

Total

19.56p

26.39p

26.79p

 

4      Net asset value per ordinary share               


(Unaudited)

For the half

year ended

31 March 2014

£'000

(Unaudited)

For the half

year ended

31 March 2013

£'000

(Audited)

For the

year ended

30 September 2013

£'000




Net assets attributable to ordinary shareholders (£'000)

192,492

149,810

155,747

Ordinary shares in issue at end of period

121,720,000

100,050,000

104,850,000

Net asset value per ordinary share (pence)

158.14

149.74

148.54




Net assets attributable to ordinary shareholders (£'000)

192,492

167,610

173,547

Ordinary shares in issue at end of period if subscription shares converted

121,720,000

117,850,000

122,650,000

Net asset value per ordinary share (pence)

158.14

142.22

141.50

 

For the comparative periods shown, the diluted net asset value per Ordinary Share has been calculated on the assumption that 17,800,000 Subscription Shares in issue were converted at 100 pence per share, resulting in a total number of shares in issue of 117,850,000 (31 March 2013) and 122,650,000 (30 September 2013).

5.     Share capital                                                                                                  

During the six month period to 31 March 2014, holders of 15,206,136 Subscription Shares exercised their right to convert those shares into Ordinary Shares at a price of 100 pence per share. Following the subsequent appointment of a trustee, the remaining 2,593,864 Subscription Shares were exercised on the same terms and sold in the market.                                                                                                

In addition, 930,000 Ordinary Shares were repurchased into Treasury. The Ordinary Shares held in Treasury have no voting rights and are not entitled to dividends.                                                                                 

6.     Dividends                                                                                                                                       

The second interim dividend of 0.55 pence per Ordinary share will be paid on 30 May 2014 to shareholders on the register at 16 May 2014. A first interim dividend of 0.55 pence per Ordinary Share was paid on 7 March 2014. In total dividends of 1.10 pence per Ordinary Share have been declared for the six months ended 31 March 2014.                                                                                                  

7.     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 2014.

Company Information

Profile

The Company was incorporated on 12 May 2010. On 15 June 2010, it issued Ordinary Shares plus one Subscription Share for every five Ordinary Shares which were admitted to trading on the Main Market of the London Stock Exchange. The original subscription price for each Ordinary Share was £1 and the Net Asset Value ("NAV") per Ordinary Share on 15 June 2010 was 98p (after launch costs).

On 31 January 2014, 17,800,000 Subscription Shares were converted into Ordinary Shares on the exercise of the subscription rights to purchase one Ordinary Share at 100p per Ordinary Share for each Subscription Share.

Investors may purchase Ordinary Shares through their stockbroker, bank or other financial intermediary.

Investment Objective

The Company's investment objective is to generate capital growth and income by investing in a global portfolio of healthcare stocks.

Investment Policy

The Company seeks to achieve this objective by investing in a diversified global portfolio consisting primarily of listed equities issued by healthcare companies involved in pharmaceuticals, medical services, medical devices and biotechnology. The portfolio is diversified by geographic location and  size of investee companies.

The full details of the investment policy are set out in the annual report.

Benchmark

The Benchmark is the MSCI ACWI/Healthcare Index total return in Sterling with dividends reinvested.

Capital Structure

At 31 March 2014, the Company had in issue 122,650,000 Ordinary Shares of 25p each of which 930,000 Ordinary Shares are held in Treasury.

Life

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 January 2018.

Gearing

It is not intended that the Company incur borrowings to provide long-term structural debt. However, the Company may borrow up to 15% of its NAV at the time of drawdown for tactical deployment when the Board believes that gearing will enhance returns to shareholders.

Management

The investment manager is Polar Capital LLP and Dr Daniel Mahony and Mr Gareth Powell have managed the portfolio since launch. The Manager is entitled to a fee at the rate of 0.85% per annum of the lower of the Company's market capitalisation and the Company's net asset value. 80% of the management fee is charged to the capital account.

The investment manager is also entitled to a performance fee paid in cash. The fee is equal to 10% of the excess return over the performance fee hurdle. The hurdle is 100p increased or decreased by reference to the return on the Benchmark plus 15p. The performance is adjusted for these purposes to take into account the dividends paid by the Company and the conversion of the subscription shares in early 2014. The fee is calculated and payable at the liquidation of the Company expected at the seventh AGM in January 2018.  No performance fee is currently due and no accrual has been made.

 

Directors

J P Robinson, Chairman

J C Aston, OBE
A D Brampton
A B Milford

Company Registration Number

7251471 (Registered in England) The Company is an investment company as defined under Section 833 of the Companies Act 2006.

 

Investment Manager

Polar Capital LLP, 4 Matthew Parker Street, London SW1H 9NP

Authorised and regulated by the Financial Conduct Authority.

Telephone: 020 7227 2700
www.polarcapital.co.uk

Fund Managers

Dr Daniel Mahony and Mr Gareth Powell

Secretary

Polar Capital Secretarial Services
Limited represented by N P Taylor FCIS

Registered Office

4 Matthew Parker Street
London SW1H 9NP

Company Website

www.polarcapitalhealthcaretrust.co.uk

The Company maintains a website which provides a wide range of information on the Company, monthly factsheets issued by the investment manager and copies of announcements, including the annual and half year reports when issued.

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.

 

COPIES

The Interim Report will be published on the Company's website at www.polarcapitalhealthcaretrust.co.uk and will be posted to shareholders in late May 2014. Copies of this statement are also available from the Company's registered office at 4 Matthew Parker Street London SW1H 9NP

 

ENDS

                                                                                                                                                                                                                               

Forward-looking Statements

Certain statements included in this half year 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 Annual Report for the financial period ended 30 September 2013. 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.

 

 

 

Portfolio

As at 31 March 2014

 



Country

Market Value (£'000)

% of total net assets

31

March

2014

30

September

2013

31

March

2014

30

September

2013

1

(3)

Merck & Co

United States

14,988

10,288

 7.8%

 6.6%

2

(5)

Roche Holding

Switzerland

14,396

9,161

 7.5%

 5.9%

3

(1)

Novartis

Switzerland

13,241

11,383

 6.9%

 7.3%

4

(7)

GlaxoSmithKline

United Kingdom

13,084

8,784

 6.8%

 5.6%

5

(2)

Eli Lilly

United States

12,357

10,878

 6.4%

 7.0%

6

(4)

AstraZeneca

United Kingdom

11,628

9,647

 6.0%

 6.2%

7

(6)

Pfizer

United States

10,258

8,864

 5.3%

 5.7%

8

(8)

Sanofi

France

8,759

7,632

 4.6%

 4.9%

9

(13)

Abbvie

United States

7,840

3,869

 4.1%

 2.5%

10

(10)

Astellas Pharma

Japan

6,060

5,349

 3.1%

 3.4%

112,611


 58.5%


11

(9)

Johnson & Johnson

United States

5,892

5,353

 3.0%

 3.4%

12

(11)

Bristol-Myers Squibb

United States

4,985

4,571

 2.6%

 2.9%

13

(12)

Takeda Pharmaceutical

Japan

4,274

4,375

 2.2%

 2.8%

14

(14)

Consort Medical

United Kingdom

3,262

3,045

 1.7%

 2.0%

15

(15)

Summit

United Kingdom

2,343

2,946

 1.2%

 1.9%

16

(17)

Sonic Healthcare

Australia

2,218

2,159

 1.2%

 1.4%

17

(22)

Novadaq Technologies

Canada

1,737

1,331

 0.9%

 0.9%

18

(18)

Oxford Pharmascience

United Kingdom

1,725

1,680

 0.9%

 1.1%

19

(19)

Agilent Technologies

United States

1,677

1,583

 0.9%

 1.0%

20

(21)

Omega Healthcare

United States

1,508

1,383

 0.8%

 0.9%

142,232


 73.9%


21

(20)

HCA Holdings

United States

1,417

1,576

 0.7%

 1.0%

22

(26)

Covidien

Ireland

1,369

1,167

 0.7%

 0.8%

23

(30)

Asahi Intecc

Japan

1,344

1,125

 0.7%

 0.7%

24

(25)

Religare Health Trust

Singapore

1,280

1,174

 0.7%

 0.8%

25

(49)

Spectranetics

United States

1,270

725

 0.7%

 0.5%

26

(24)

National Health Investors

United States

1,269

1,230

 0.7%

 0.8%

27

(47)

Medical Properties Trust

United States

1,242

752

 0.6%

 0.5%

28

(28)

Senior Housing Property Trust

United States

1,212

1,153

 0.6%

 0.7%

29

(31)

Medical Facilities

Canada

1,176

1,004

 0.6%

 0.6%

30

(62)

Cardio3 BioScience

Belgium

1,174

467

 0.6%

 0.3%

154,985


 80.5%


31


Quintiles Transnational Holdings

United States

1,157

-

 0.6%

-

32

(23)

Cerner

United States

1,157

1,298

 0.6%

 0.8%

33

(39)

Insulet

United States

1,137

895

 0.6%

 0.6%

34

(52)

Newron Pharmaceuticals

Italy

1,135

660

 0.6%

 0.4%

35

(46)

Synairgen

United Kingdom

1,130

768

 0.6%

 0.5%

36


Universal Health

United States

1,115

-

 0.6%

-

37

(34)

Acadia Healthcare

United States

1,083

974

 0.6%

 0.6%

38

(36)

Team Health

United States

1,074

937

 0.6%

 0.6%

39

(27)

Health Care REIT

United States

1,072

1,155

 0.6%

 0.7%

40

(37)

UDG Healthcare

Ireland

1,053

911

 0.5%

 0.6%

166,098


 86.4%


41

(29)

Pacira Pharmaceuticals

United States

1,049

1,149

 0.5%

 0.7%

42


Brookdale Senior Living

United States

1,005

-

 0.5%

-

43

(67)

Leisureworld Senior Care

Canada

986

316

 0.5%

 0.2%

44

(33)

Vocera Communications

United States

977

976

 0.5%

 0.6%

45

(44)

Air Methods

United States

961

789

 0.5%

 0.5%

46


Novo Nordisk

Denmark

956

-

 0.5%

-

47

(71)

HCP

United States

930

253

 0.5%

 0.2%

48

(45)

Coltene Holding

Switzerland

920

779

 0.5%

 0.5%

49


LDR Holding

United States

881

-

 0.5%

-

50

(41)

Healthcare Reality Trust REIT

United States

869

856

 0.5%

 0.5%


175,632


 91.4%


51

(69)

Circle Holdings

United Kingdom

868

290

 0.5%

 0.2%

52

(56)

Hutchison China Meditech

China

858

616

 0.4%

 0.4%

53

(50)

Sabra Health Care REIT

United States

836

710

 0.4%

 0.5%

54

(59)

Futura Medical

United Kingdom

834

532

 0.4%

 0.3%

55

(51)

Ablynx

Belgium

790

668

 0.4%

 0.4%

56

(55)

NIB Holdings

Australia

782

627

 0.4%

 0.4%

57

(38)

Conatus Pharmaceuticals

United States

778

900

 0.4%

 0.6%

58

(32)

Endologix

United States

771

995

 0.4%

 0.6%

59

(53)

Sigma Pharmaceuticals

Australia

739

658

 0.4%

 0.4%

60


Dynavax Technologies

United States

734

-

 0.4%

-

183,622


 95.5%


61


AtriCure

United States

726

-

 0.4%

-

62


Sorin

Italy

717

-

 0.4%

-

63

(54)

Optos

United Kingdom

692

637

 0.4%

 0.4%

64

(57)

Healthcare Services Group

United States

669

610

 0.3%

 0.4%

65


Intermune

United States

664

-

 0.3%

-

66

(66)

Photocure

Norway

633

392

 0.3%

 0.3%

67


Receptos

United States

605

-

 0.3%

-

68

(60)

AmSurg

United States

575

499

 0.3%

 0.3%

69

(58)

Meridian Biosciences

United States

559

584

 0.3%

 0.4%

70

(63)

Epistem

United Kingdom

480

459

 0.2%

 0.3%


189,942


 98.7%


71

(61)

Extendicare

Canada

467

493

 0.2%

 0.3%

72


Revance Therapeutic

United States

463

-

 0.2%

-

73

(70)

EOS Imaging

France

392

282

 0.2%

 0.2%

74

(64)

Virtus Health

Australia

345

405

 0.2%

 0.3%

75

(72)

Stentys

France

240

223

 0.1%

 0.1%

76

(73)

Sul America

Brazil

121

134

 0.1%

 0.1%


191,970


 99.7%



(72)


-



191,898


 99.7%



594


 0.3%



192,492


 100.0%


 

Geographical Exposure at

31 March 2014

%

30 September 2013

%

United States

 45.6

 45.1

United Kingdom

 18.7

 18.5

Switzerland

 14.8

 13.7

Japan

 6.1

 6.9

France

 4.9

 5.2

Canada

 2.3

 2.2

Australia

 2.1

 2.5

Ireland

 1.2

 1.4

Belgium

 1.0

 0.7

Italy

 1.0

 0.4

Singapore

 0.7

 0.8

Denmark

 0.5

-

China

 0.4

 0.4

Norway

 0.3

 0.3

Brazil

 0.1

 0.1

Israel

-

 1.5

Cash

 0.3

 0.3

 100.0

 100.0

 

Sector Exposure at

31 March 2014

%

30 September 2013

%

Pharmaceuticals

 69.7

 68.6

Healthcare Equipment

 6.0

 6.2

Specialised REITs

 5.3

 5.6

Biotechnology

 4.9

 4.7

Healthcare Facilities

 4.7

 4.3

Healthcare Services

 2.6

 3.0

Healthcare Supplies

 2.3

 2.0

Life Sciences Tools & Services

 1.7

 1.3

Healthcare Technology

 1.1

 1.5

Healthcare Distributors

 0.9

 1.0

Life & Health Insurance

 0.4

 0.4

Multi-line Insurance

 0.1

 0.1

Drug Retail

-

 0.5

Managed Healthcare

-

 0.5

Cash

 0.3

 0.3

 100.0

 100.0

 

Market Cap at

31 March 2014

%

30 September 2013

%

Large (>US$5bn)

 73.4

 72.2

Medium (US$1bn - US$5bn)

 10.6

 11.0

Small (<US$1bn)

 16.0

 16.8

 100.0

 100.0

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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