Half Yearly Report

RNS Number : 5287G

Polar Cap Gbl Healthcare Growth&IT

13 May 2011

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

Unaudited Results for the period from incorporation on 12 May 2010 to 31 March 2011

12 May 2011

Key Points

Financial Highlights
		31 March 2011	15 June 2010*	% Change
			(*date of listing and commencement of operations)
Net asset value per ordinary share (note 1)	undiluted	103.5p	98.0p	+5.6
	diluted	102.9p	98.0p	+5.0

Share Price
Ordinary shares (note 2)		99p	100.0p	-1.0
Subscription shares (note 3)		11.75p	-	-

Shares in issue
	Ordinary	91,000,000	89,000,000	+2.2
	Subscription	17,800,000	17,800,000	-

Benchmark Index
MSCI ACWI/Healthcare Index (total return in Sterling with dividends reinvested)				+6.1
Net asset value per ordinary share (total return) (note 4)				+6.4

Total Expense Ratio (see note 9 to the financial statements)		1.37%

Dividends
The Company has paid the following dividends:
Pay date	Amount per ordinary share	Record date	Ex-date	Declared date
30 November 2010	0.4p	5 November 2010	3 November 2010	26 October 2010
28 February 2011	0.4p	11 February 2011	9 February 2011	20 January 2011
The Company has declared the following dividends:
31 May 2011	0.4p	13 May 2011	11 May 2011	3 May 2011

Note 1. - The Net Asset Value ("NAV") as at 15 June 2010 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. - The share price of the ordinary shares at the close of the market on 15 June 2010 was 101.25p per share. The share price return has been calculated on the 100p per ordinary share paid by investors.

Note 3.- Subscription shares were issued free to investors on the 15 June 2010 on the basis of one subscription share for every five ordinary shares

Note 4. - The total return NAV is calculated by reinvesting the dividend in the assets of the Company from the relevant pay dates, from a starting NAV per ordinary share of 98.0p

Corporate Highlights

· The Company was incorporated on 12 May 2010 and issued 89,000,000 ordinary shares and 17,800,000 subscription shares, which were admitted to trading on the Main Market of the London Stock Exchange, on 15 June 2010.

· The Company obtained on 27 September 2010 a block listing facility for a further 8,899,999 ordinary shares which may be used subject to guidelines laid down by the Board. 2,000,000 ordinary shares have been issued at a premium to NAV in the period.

· The Company has declared three interim dividends; the third dividend of 0.4p will be payable on 31 May 2011.

The Chairman, Mr James Robinson commented

· "I am delighted to present to you our first report since the launch of the Company on the London Stock Exchange on 15 June 2010. The Board would like to take this opportunity to thank all of the shareholders who have supported the Company at and since the Initial Public Offering (IPO)."

Outlook - Fund Managers Dr Daniel Mahony and Mr Gareth Powell commented:

· "We think 2011 is shaping up to be a much better year than both 2010 and 2009 with the opportunity to invest in growth stocks having improved and we are probably the most optimistic on the outlook for the entire healthcare sector than we have been for at least the last five years."

· "We believe companies that offer products and services that can deliver better (or even the same) healthcare for less money are set to generate strong growth and excellent returns for investors."

Chairman's Statement

Introduction

I am delighted to present to you our first report since the launch of the Company on the London Stock Exchange on 15 June 2010. The Board would like to take this opportunity to thank all of the shareholders who have supported the Company at and since the Initial Public Offering (IPO).

The Company raised £89 million on the IPO and since then we have raised approximately £2 million through the issuance of 2 million ordinary shares at a premium to net asset value.

Performance

Our fund managers describe in their report how the initial funds raised have been invested and the development of the portfolio over the initial period. While shareholder returns in sterling terms have been adversely affected by the headwind of a weakening US Dollar, we have nevertheless seen growth in the Net Asset Value per share both in absolute terms and relative to our benchmark.

Performance in share price terms has been slightly less good as our shares were selling at a small discount to Net Asset Value at period end. However those shareholders who invested at launch and continue to hold both ordinary and subscription shares will have seen a positive return overall.

Dividends

Our aim is to pay interim dividends totalling not less than 3p per ordinary share in the period from 15 June 2010 to 30 September 2011 and to increase the dividend on an annual basis progressively. We are on track to meet our initial target with a third interim dividend having been declared of 0.4p for payment on 31 May 2011. The fourth dividend which is scheduled to be paid on 31 August 2011 will likely be considerably larger.

Outlook

Our fund managers continue to believe in a recovery in the healthcare sector despite some of the short term issues that have held back healthcare and pharmaceutical shares over the period. Since the end of March we have seen a useful increase in our Net Asset Value and your Board believes that our fund managers remain well placed to take advantage of further opportunities as they arise.

James Robinson

Chairman

12 May 2011

Investment Manager's Report

Since launch, the Company has delivered an NAV total return of 6.4%, against our benchmark which over the same period rose by 6.1%.

The portfolio has been structured in line with the intention stated in the prospectus. Close to 80% of the assets are invested in what we refer to as the income portfolio with the remaining 20% invested in the growth portfolio. While there is a heavy bias towards the pharmaceutical sector, the portfolio is well diversified across different sub-sectors of healthcare.

When we began gauging investor interest for the Company about 12 months ago, our core investment thesis was that healthcare was unloved, undervalued and under-owned. In particular, we felt that the pharmaceutical sector was significantly undervalued and priced as though it was set for a long-term decline. We saw this as a compelling, counter-consensus investment opportunity - although the caveat was that the timing of the inflection point was difficult to predict. In many ways, this is still the situation today - we remain confident in a sector recovery but the near-term issues have held back any major shift in investor sentiment. As a result, the returns from pharmaceutical stocks since the Company's Initial Public Offering ("IPO") in June have not been particularly inspiring.

Our income portfolio

The largest weighting in the income portfolio is in pharmaceuticals, where we have built significant positions in most of the major global pharmaceutical companies. These large pharmaceutical companies continue to offer some of the best dividend yields in the healthcare sector. In terms of other income generating stocks, we have diversified the portfolio with investments in a number of medical device and healthcare services names that also generate a good dividend yield. We have also made a series of investments in healthcare Real Estate Investment Trusts ("REITs") based in the US.

Pfizer is the largest position in the portfolio and has been one of the best performing large pharmaceutical stocks since the Company's IPO - the stock was up over 30% from 15 June 2010 to 31 March 2011. The growing investor confidence in Pfizer gives us cause to believe that sentiment for the entire sector can change. Pfizer's cholesterol lowering drug, Lipitor (the best-selling drug globally), loses patent protection in November. Despite the expected hit to the top-line, there is growing confidence in the company's ability to generate earnings growth in 2012. If Pfizer can show growth after such a major patent cliff then this may be the significant inflection point for the sector.

Pfizer's new Chief Executive Officer ("CEO") also seems to be taking a fresh look at the business and rumours have circulated suggesting that the company may look to break itself up - supporting our view that pharmaceutical company CEOs are taking a much closer look at the allocation of capital. The market reaction to this speculation has been very positive - investors are clearly optimistic that certain large pharmaceutical companies can unlock value by breaking themselves up.

Other notable drivers of performance in the income book include the healthcare REITs and a small UK company, Consort Medical. The Company's small portfolio of healthcare REIT stocks are in general US-based and own properties such as hospitals, nursing homes, medical office buildings and assisted living facilities. With US healthcare reform set to extend insurance coverage to at least another 30-40 million Americans in 2014 and an aging baby-boomer population beginning to retire, we believe there are many growth opportunities for the healthcare REIT sector. While we hold these stocks principally for the yield, we have also made some good capital returns.

The best performer in the income portfolio has been Consort Medical. Consort Medical has two business divisions - its Bespak division manufactures inhaler devices used for respiratory drugs (such as GSK's asthma drug Advair) and the King Systems division commercialises products used in anaesthesiology. We identified this company as a turnaround story last year believing that it could return to double digit growth by 2012/2013 with a dividend yield in the region of 5% underpinned by solid cash flow. While we were concerned at the time that we were too early and that the stock could be range-bound in the near-term, these fears have proven unfounded as the shares moved from our entry price of 375p to 565p by the end of March 2011.

Our growth portfolio

Our broader view on healthcare is based on what we refer to as the three "I"s of healthcare - addressing inefficiency through innovation and infrastructure. The fundamental driver for healthcare is demographics - an aging population that needs (and demands) more healthcare makes this a long-term secular growth sector, in our view. However, in an age of government austerity, the key question is how society will pay for this. The answer, in our opinion, is to improve the efficiency of healthcare systems. We believe companies that offer products and services that can deliver better (or even the same) healthcare for less money are set to generate strong growth and excellent returns for investors.

For the growth component of the portfolio, which represents nearly 20% of our investments, we currently have 33 holdings in a range of biotechnology, device, service and pharmaceutical stocks. The turnover in this part of the portfolio has been, and is likely to be, much higher than in the income portfolio. There is a significant bias towards larger market capitalisation names - nearly 70% of the growth book is invested in companies with a market capitalisation greater than $5 billion. We have made some investments in small unprofitable companies but have limited the size of such positions. Our weighting in biotechnology names is also very low.

Notable out-performers have been Valeant Pharmaceuticals, Alexion Pharmaceuticals and Optos. Valeant is a speciality pharmaceutical company that has embarked on an aggressive acquisition strategy over the last 12 months and the stock has nearly tripled in value since June 2010. The company's focus is to strip out costs, especially R&D, and focus on creating leverage by acquiring additional drugs to market through its sales channel. Alexion is a classic US biotechnology company in that it has developed and commercialised a drug, Soliris, to treat a previously unmet medical need. Alexion is already a profitable company but we think Soliris will be the next biotechnology blockbuster. We bought the stock last summer and it has appreciated by 75% to the end of March. Optos is a small UK-based company that sells an innovative technology for diagnosing eye diseases. We have known the management for a long time and followed their efforts to initiate a turn-around of the business, which are beginning to bear fruit. Since we acquired the stock in early September it has more than doubled.

Outlook

In terms of outlook for healthcare, we think 2011 is shaping up to be a much better year than both 2010 and 2009 and the opportunity to invest in growth stocks in the space seems to have improved. We think the service sector in the US looks particularly buoyant. The major headwinds for healthcare over the last 2 years have been healthcare reform (especially in the US), a decline in utilisation and concerns regarding government austerity measures and potential spending cuts to healthcare. Healthcare utilisation is linked to employment in the United States - if the economy continues to stabilise and the jobs market improves we see the potential for a return to top-line growth and operating leverage for a number of companies in the sector. We also think that government austerity measures have expedited moves to address healthcare inefficiency - there is a willingness to pay a premium for new technologies that improve clinical outcomes and/or reduce the costs of healthcare.

The changes happening at Pfizer are potentially the most significant in the pharmaceutical sector that we have seen in a number of years and this is forcing investors to look at the sector again, particularly in light of the attractive valuations currently on offer. In summary, we are probably the most optimistic on the outlook for the entire healthcare sector than we have been for at least the last five years.

Dr Daniel Mahony and Mr Gareth Powell

Polar Capital LLP

12 May 2011

Risks and uncertainties

The Directors consider that the principal risks and uncertainties faced by the group for the remaining six months of the financial year, which could have a material impact on performance, are consistent with those outlined in the prospectus issued by the Company dated 26 May 2010. Information on the principal risks will be given in the Business Review within the Company's first Annual Report and Accounts for the period ended 30 September 2011. Information on the risk factors facing the Company is given on pages 7 to 14 of the prospectus.

The Investment Manager's report comments on the outlook for market related risks.

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 and give a true and fair view of the financial position of the Company and the Group as at 31 March 2011 and the results for the period from 12 May 2010 to 31 March 2011 as required by the FSA's Disclosure and Transparency Rules 4.2.4R;

· 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 changes in any related party transaction described in the prospectus dated 26 May 2010 that could have a material effect on the financial position or performance of the Company in the period from 12 May 2010 to 31 March 2011 of the current financial year and there have been no new related party transactions.

The financial report for the period from 12 May 2010 to 31 March 2011 was approved by the Board on 12 May 2011 and the responsibility statement was signed on its behalf by J P Robinson, Chairman of the Board.

James Robinson

Chairman

12 May 2011

POLAR CAPITAL GLOBAL HEALTHCARE GROWTH & INCOME TRUST PLC
Consolidated Statement of Comprehensive Income for the period from 12 May 2010 to 31 March 2011 (Unaudited)
		Period to 31 March 2011
Notes		Revenue	Capital	Total
		return	return	return
		£'000	£'000	£'000
3	Investment income	2,714	265	2,979
4	Other operating income	382	-	382
5	Gains on investments held at fair value	-	3,964	3,964
6	Other movements on written options	-	(5)	(5)
7	Other currency losses	-	(515)	(515)
	Total income	3,096	3,709	6,805

	Expenses
8	Investment management fee	(119)	(474)	(593)
9	Other administrative expenses	(344)	-	(344)
	Total expenses	(463)	(474)	(937)

	Profit before finance costs and tax	2,633	3,235	5,868
	Finance costs	-	-	-
	Profit before tax	2,633	3,235	5,868

10	Tax	(304)	(5)	(309)

	Net profit for the period and total comprehensive income	2,329	3,230	5,559

11	Earnings per ordinary share (basic) (pence)	2.61	3.62	6.23

11	Earnings per ordinary share (diluted) (pence)	2.60	3.60	6.20

	The total column of this statement represents the Consolidated 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.
	All items in the above statement derive from continuing operations.
	The Company was incorporated on 12 May 2010 and started trading on 15 June 2010.
	All income is attributable to the equity holders of Polar Capital Healthcare Growth & Income Trust plc.
	The Company does not have any Other Comprehensive Income.
	The notes on pages 13 to 21 form part of these financial statements.

POLAR CAPITAL GLOBAL HEALTHCARE GROWTH & INCOME TRUST PLC
Consolidated Statement of Changes in Equity for the period from 12 May 2010 to 31 March 2011 (Unaudited)
	Called up share capital	Share premium reserve	Special distributable reserve	Capital reserves	Revenue reserve	Total

	£'000	£'000	£'000	£'000	£'000	£'000
Group
Total equity at 12 May 2010	-	-	-	-	-	-
Total comprehensive income:
Profit for the period to 31 March 2011	-	-	-	3,230	2,329	5,559
Transactions with owners, recorded directly to equity:
Issue of 91,000,000 ordinary shares	22,750	66,560	-	-	-	89,310
Issue of 17,800,00 subscription shares	178	(178)	-	-	-	-
Transfer of Share Premium to Special Distributable Reserve		(64,792)	64,792	-	-	-
Equity dividends paid	-	-	-	-	(712)	(712)
Total equity at 31 March 2011	22,928	1,590	64,792	3,230	1,617	94,157

The notes on pages 13 to 21 form part of these financial statements.

	POLAR CAPITAL GLOBAL HEALTHCARE GROWTH & INCOME TRUST PLC
	Consolidated Balance Sheet as at 31 March 2011 (Unaudited)
Notes		31 March 2011
Notes		£'000
	Non current assets
12	Investments held at fair value	91,347
	Current assets
13	Other receivables	762
	Cash and cash equivalents	2,903
		3,665
	Total assets	95,012
	Current liabilities
14	Other payables	(803)
12	Fair value of open derivative contracts	(52)
		(855)
	Net assets	94,157
	Equity attributable to equity shareholders
15	Called up share capital	22,928
16	Share premium reserve	1,590
17	Special distributable reserve	64,792
18	Capital reserves	3,230
19	Revenue reserve	1,617
	Total equity	94,157

20	Net asset value per ordinary share (pence)	103.47
20	Net asset value per ordinary share (diluted) (pence)	102.90

	The notes on pages 13 to 21 form part of these financial statements.

POLAR CAPITAL GLOBAL HEALTHCARE GROWTH & INCOME TRUST PLC
Consolidated Cash Flow Statement for the period 12 May 2010 to 31 March 2011 (Unaudited)
	Period to 31 March 2011
	£'000
Cash flows from operating activities
Profit before finance costs and tax	5,868
Adjustment for non-cash items:
Foreign exchange losses	515
Adjusted profit before finance costs and tax	6,383

Adjustments for:
Increase in investments	(91,347)
Increase in receivables	(636)
Increase in payables	855
	(91,128)

Net cash used in operating activities before tax	(84,745)
Overseas tax deducted at source	(435)
Net cash used in operating activities	(85,180)

Cash flows from financing activities
Issue of share capital	89,310
Equity dividends paid	(712)
Net cash from financing activities	88,598

Net increase in cash and cash equivalents	3,418
Cash and cash equivalents at the beginning of the period	-
Effect of foreign exchange rate changes	(515)
Cash and cash equivalents at the end of the period	2,903

The notes on pages 13 to 21 form part of these financial statements

Notes to the Financial Statements

POLAR CAPITAL GLOBAL HEALTHCARE GROWTH & INCOME TRUST PLC
Notes to the Accounts for the period from 12 May 2010 to 31 March 2011 (Unaudited)

1.	General Information
	The Company was incorporated on 12 May 2010 and started trading on 15 June 2010 and has a fixed life expected to expire in January 2018.
	The consolidated financial statements on pages 9 to 12 comprise the unaudited results of the Company and its subsidiary, Polar Capital Global Healthcare Finance Limited. The financial information for the period comprises non-statutory accounts within the meaning of sections 434 to 436 of the Companies Act 2006. The financial statements for the period from 12 May 2010 to 31 March 2011 have not been reviewed or audited by the Company's auditors.
	The financial statements, as defined above, have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
	The Company's presentational currency is pounds sterling. Pounds sterling is also the functional currency because it is the currency which is most relevant to the majority of the Company's shareholders and creditors and the currency in which the majority of the Company's operating expenses are paid.

2.	Accounting Policies
	The principal accounting policies followed are set out below:
(a)	Basis of Preparation
	The financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the 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 interim financial statements, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.
	The financial position of the Company at 31 March 2011 is shown in the balance sheet on page 11. The assets of the Company consist of securities that are readily realisable. The Directors consider that the Company has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly, the Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements.

(b)	Presentation of the Statement of Comprehensive Income
	In order to better reflect the activities of an investment trust company and in accordance with the guidance set out by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of revenue and capital nature has been presented alongside the Statement of Comprehensive Income.
	In accordance with the Company's status as a UK investment company under section 833 of the Companies Act 2006, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Company's compliance with certain requirements set out in section 1158 Corporation Tax Act 2010.

(c)	Income
	Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income on an ex-dividend basis.
	Special dividends are recognised on an ex-dividend basis and may be considered to be either revenue or capital items.
	The facts and circumstances are considered on a case by case basis before a conclusion on appropriate allocation is reached.
	Where the Company has received dividends in the form of additional shares rather than in cash, the amount of the cash dividend foregone is recognised in the revenue return column of the Statement of Comprehensive Income. Any excess in value of shares received over the amount of the cash dividend foregone is recognised in the capital return column of the Statement of Comprehensive Income.
	The fixed returns on debt securities and non-equity shares are recognised under the effective interest rate method.
	Bank interest and other income receivable are accounted for on an accruals basis.
	Stock lending fees, net of agent's fees and commissions, are accounted for on an accruals basis and recognised in the revenue return column of the Statement of Comprehensive Income.
	Underwriting commission is recognised when the issue takes place and is credited to the revenue return column of the Statement of Comprehensive Income in so far as it relates to the shares the Company is not required to take up.
	Where the Company is required to take up the proportion of the shares underwritten, an equal proportion of the commission is credited to the capital return column of the Statement of Comprehensive Income.

(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.
	All expenses have been presented as revenue items except as follows:
	Expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of investments can be demonstrated. In this respect the investment management fees have been charged to the Statement of Comprehensive Income in line with the Board's expected long-term split of returns, in the form of capital gains and income from the 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, are 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 outperformance of the Benchmark and is expected to be attributable largely, if not wholly, to capital performance.
(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 31 March 2011. 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 accounts and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
	Investment trusts which have approval as such under section 1158 of the Corporation Taxes Act 2010 are not liable for taxation on capital gains.
	The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
	Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted at the balance sheet date.
	Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(g)	Investments Held at Fair Value Through Profit or Loss
	When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant market, the investments concerned are recognised or derecognised on the trade date and are initially measured at fair value.
	On initial recognition the Company has designated all of its investments as held at fair value through profit or loss as defined by IFRS.
	All investments are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
	Investments in unit trusts or OEICs are valued at the closing price, the bid price or the single price as appropriate, released by the relevant investment manager.
	All investments, classified as fair value through profit or loss, are further categorised into the following fair value hierarchy:
	Level 1 : Unadjusted prices quoted in active markets for identical assets and liabilities.
	Level 2: Having inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices).
	Level 3: Having inputs for the asset or liability that are not based on observable market data.
	Changes in fair value of all investments held at fair value and realised gains and losses on disposal are recognised in the capital return column of the Statement of Comprehensive Income.

(h)	Other Receivables
	Other receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value 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 accounts when they are paid or, in the case of final dividends, when they are approved by the shareholders.

(k)	Other Payables
	Other payables are not interest-bearing and are stated at their nominal value.

(l)	Foreign Currency Translation
	Transactions in foreign currencies are translated into sterling at the rate of exchange ruling on the date of each transaction. Monetary assets, monetary liabilities and equity investments in foreign currencies at the balance sheet date are translated into sterling at the rates of exchange ruling on that date. Realised profits or losses on exchange, together with differences arising on the translation of foreign currency assets or liabilities, are taken to the capital return column of the Statement of Comprehensive Income.
	Foreign exchange gains and losses arising on investments held at fair value are included within changes in fair value.

(m)	Capital Reserves
	Capital reserve arising on investments sold includes:
	- gains/losses on disposal of investments
	- exchange differences on currency balances
	- 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.

3	Investment income				Period to 31 March 2011 £'000
	Revenue:
	Franked: Listed investments
	Dividend income				595

	Unfranked: Listed investments
	Dividend income				2,119

	Total investment income				2,714

	Capital:
	Special dividends allocated to capital				209
	Dividends from REITs allocated to capital				56
	Total dividends allocated to capital				265

4	Other operating income				Period to 31 March 2011 £'000
	Option premium income				380
	Bank interest				2
	Total other operating income				382

	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 £5,000 has been recognized in the capital return for the period in respect of these options.

5	Gains on investments held at fair value				Period to 31 March 2011 £'000
	Net losses on disposal of investments at historic cost				(184)
	Valuation gains on investments held during the period				4,148
					3,964

6	Other movements on written options				Period to 31 March 2011 £'000
	Other movements on written options				(5)

	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 31 March 2011 £'000
	Exchange losses on currency balances				(515)

8	Investment management fee				Period to 31 March 2011 £'000
	Management fee
	- charged to revenue				119
	- charged to capital				474
	Investment management fee payable to Polar Capital LLP.				593
	No performance fee is payable and no fee has been accrued in respect of the current accounting period. Management fees are allocated 20% to revenue and 80% to capital. The performance fee (when payable) is allocated 100% to capital.

9	Other administrative expenses (including VAT where appropriate)				Period to 31 March 2011 £'000
	Directors' fees				83
	Auditors' remuneration:	For audit services			37
		For other services			7
	Other expenses				217
					344
	In addition, the London office of PricewaterhouseCoopers LLP received fees of £23,500 in acting as reporting accountants for the prospectus issued by the Company during the period. These fees are included within issue costs charged to the Share Premium Reserve. The total expense ratio is 1.37% if the management fee shown in Note 8 is added to the other administrative expenses, and based on the average equity shareholders' funds over the period from 15 June 2010 to 31 March 2011.

10	Taxation				Period ended 31 March 2011 £'000
	a) Analysis of tax charge for the period:
	Overseas tax				309
	Total tax for the period (see note 10b)				309

	b) Factors affecting tax charge for the period:
	The charge for the period can be reconciled to the profit per the Company Statement of Comprehensive Income as follows:
	Profit before tax				5,868
	Tax at the UK corporation tax rate of 28%				1,643
	Tax effect of non-taxable dividends				(804)
	Gains on investments that are not taxable				(964)
	Unrelieved current period expenses and deficits				124
	Expenses and finance costs not deductible for tax purposes				5
	Overseas tax suffered				309
	Tax relief on overseas tax suffered				(4)
	Total tax for the period (see note 10a)				309

	c) Factors that may affect future tax charges:
	There is an unrecognised deferred tax asset comprising:
	Unrelieved management expenses				116
					116
	It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and deficits and therefore no deferred tax asset has been recognized. Due to the Company's tax status as an investment trust and the intention to continue meeting the conditions required to obtain approval of such status in the foreseeable future, the Company has not provided tax on any capital gains arising on the revaluation or disposal of investments held by the Company.

11	Earnings per ordinary share
			Period ended 31 March 2011
			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)		2,329	3,230	5,559
	Weighted average ordinary shares in
	issue during the period from 15 June 2010 to 31 March 2011		89,311,419	89,311,419	89,311,419
	From continuing operations
	Basic - ordinary shares (pence)		2.61	3.62	6.23

	The calculation of diluted earnings per share is based on the following data:
	Net profit for the period (£'000)		2,329	3,230	5,559
	Diluted number of shares in issue during the period		89,612,402	89,612,402	89,612,402
	From continuing operations
	Diluted - ordinary shares (pence)		2.60	3.60	6.20

	The calculation of the diluted total, revenue and capital returns are carried out in accordance with IAS 33 "Earnings per Share". For the purposes of calculating diluted returns per ordinary share, the number of ordinary shares is the weighted average used in the basic calculation plus the number of ordinary shares deemed to be issued for no consideration on exercise of all subscription shares by reference to the average share price of the ordinary shares during the year.

12	Investments and derivatives
	(a) Investments
					31 March 2011 £'000
	Additions at cost				119,057
	Proceeds on disposal				(31,674)
	Losses on disposal				(184)
	Cost at 31 March 2011				87,199
	Add: Valuation gains				4,148
	Valuation at 31 March 2011				91,347

	(b) Fair value of open derivative contracts
					31 March 2011 £'000
	Sanofi-Aventis Call Option 52 closing 15 April 2011				(5)
	Bayer AG Put Option 54 closing 15 April 2011				(17)
	Roche Holdings Call Option 140 closing 15 April 2011				(1)
	Johnson & Johnson Put Option 57.5 closing 21 May 2011				(9)
	Roche Holdings Put Option 125 closing 20 May 2011				(7)
	Novartis Put Option 49 closing 20 May 2011				(13)
	Fair value at 31 March 2011				(52)

	(c) Fair value hierarchy
	Level 1 assets				91,295
	Valuation at 31 March 2011				91,295
	All Level 1 assets are traded on a recognised Stock Exchange.

	(d) Subsidiary companies
	As at 31 March 2011, the Company has one non-trading subsidiary, which is registered in England and Wales: Polar Capital Global Healthcare Finance Limited

13	Other receivables
					31 March 2011 £'000
	Sales for future settlement				219
	Spot foreign exchange contracts awaiting settlement				124
	Overseas tax recoverable				126
	Prepayments and accrued income				293
					762
	The carrying values of other receivables approximate their fair value.

14	Other payables
					31 March 2011 £'000
	Purchases for future settlement				443
	Spot foreign exchange contracts awaiting settlement				124
	Accruals				236
					803
	The carrying values of other payables approximate their fair value.

15	Called up share capital
					31 March 2011 £'000
	91,000,000 ordinary shares of 25p each				22,750
	17,800,000 subscription shares of 1p each				178
	At 31 March 2011				22,928
	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 15 June 2010. A subscription share carries the right to subscribe in cash for one ordinary share at a price of 100p on 31 January 2014. On 14 February 2011 2,000,000 ordinary shares of 25p each were issued at a price of 102.25p

16	Share premium reserve
					31 March 2011 £'000
	Issue of 89,000,000 ordinary shares at 100p each				66,750
	Bonus issue of 17,800,000 subscription shares at 1p each				(178)
	Issue costs				(1,731)
	Transfer to special distributable reserve				(64,792)
	Issue of 2,000,000 ordinary shares at 102.25p each				1,545
	Issue costs				(4)
	At 31 March 2011				1,590
	On 18 August 2010 the Company received the approval of the Court to cancel the share premium account and create a special distributable reserve. The share premium reserve therefore represents share premium received after this date.

17	Special distributable reserve
					31 March 2011 £'000
	Transfer from share premium reserve				64,792
	At 31 March 2011				64,792
	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, provided that it has first revoked its investment company status by notice to the Registrar of Companies.

18	Capital reserves
					31 March 2011 £'000
	Net losses on disposal of investments				(184)
	Valuation gains on investments held during the period				4,148
	Other movements on derivatives held during the period				(5)
	Exchange losses on currency balances				(515)
	Capital dividends				265
	Irrecoverable tax on special capital dividends				(5)
	Investment management fee				(474)
	Closing balance				3,230

19	Revenue reserve
					31 March 2011 £'000
	Revenue profit for the period from 12 May 2010 to 31 March 2011				2,329
	Interim dividends paid				(712)
	Closing balance				1,617

20	Net asset value per ordinary share
					31 March 2011
	Undiluted:
	Net assets attributable to ordinary shareholders (£'000)				94,157
	Ordinary shares in issue at end of period				91,000,000
	Net asset value per ordinary share (pence)				103.47

	Diluted:
	Net assets attributable to ordinary shareholders (£'000)				111,957
	Ordinary shares in issue at end of period if subscription shares converted				108,800,000
	Net asset value per ordinary share (pence)				102.90

	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 100p per share resulting in a total number of ordinary shares in issue of 108,800,000.

PORTFOLIO as at 31 March 2011

	Stock	Country	Market Value	% of total investments
1	Pfizer	United States	9,186	9.8%
2	GlaxoSmithKline	United Kingdom	8,323	8.8%
3	Sanofi Aventis	France	7,446	7.9%
4	Bristol Myers Squibb	United States	6,760	7.2%
5	Roche Holding	Switzerland	6,263	6.7%
6	Eli Lilly	United States	6,164	6.5%
7	Merck & Co	United States	5,251	5.6%
8	AstraZeneca	United Kingdom	4,295	4.6%
9	Novartis	Switzerland	3,883	4.1%
10	Abbott Labs	United States	2,142	2.3%
Top 10 investments			59,713	63.5%
11	Consort Medical	United Kingdom	1,978	2.1%
12	Sonic Healthcare	Australia	1,735	1.8%
13	Wellpoint	United States	1,088	1.2%
14	Fresenius Medical Care	Germany	1,053	1.1%
15	Unitedhealth	United States	987	1.1%
16	Health Care REIT	United States	981	1.0%
17	Celgene	United States	969	1.0%
18	St Jude Medical	United States	959	1.0%
19	Covidien	Ireland	923	1.0%
20	Senior Housing Property	United States	861	0.9%
Top 20 investments			71,247	75.7%
21	Coltene Holding	Switzerland	852	0.9%
22	Valeant Pharmaceuticals	Canada	829	0.9%
23	National Health Investors	United States	747	0.8%
24	HCP	United States	710	0.8%
25	Watson Pharmaceutical	United States	699	0.7%
26	Omega Healthcare	United States	696	0.7%
27	Cerner	United States	694	0.7%
28	Allergan	United States	664	0.7%
29	Amerisourcebergen	United States	641	0.7%
30	Alexion Pharmaceuticals	United States	615	0.7%
Top 30 investments			78,394	83.3%
31	Optos	United Kingdom	603	0.7%
32	Meridian Biosciences	United States	597	0.6%
33	Mckesson HBOC	United States	592	0.6%
34	Cremer	Brazil	574	0.6%
35	LTC Properties REIT	United States	570	0.6%
36	Extendicare Real Estate	Canada	569	0.6%
37	Johnson & Johnson	United States	555	0.6%
38	Abiomed	United States	544	0.6%
39	Waters	United States	542	0.6%
40	Amgen	United States	500	0.5%
Top 40 investments			84,040	89.3%
41	NIB Holdings	Australia	459	0.5%
42	Sabra Healthcare REIT	United States	457	0.5%
43	Community Health System	United States	449	0.5%
44	Healthcare Realty Trust	United States	425	0.5%
45	Healthcare Services Growth	United States	420	0.5%
46	Nichiiko Pharmaceutical	Japan	414	0.4%
47	Amsurg	United States	388	0.4%
48	Sun Healthcare Group	United States	365	0.4%
49	Asahi Intecc	Japan	363	0.4%
50	Stentys	France	331	0.4%
Top 50 investments			88,111	93.8%
51	Vertex Pharmaceuticals	United States	329	0.3%
52	CMIC	Japan	323	0.3%
53	Emeritus	United States	317	0.3%
54	Medivir 'B'	Sweden	314	0.3%
55	Futura Medical	United Kingdom	288	0.3%
56	Zoll Medical	United States	279	0.3%
57	Davita	United States	267	0.3%
58	Healthcare Locums	United Kingdom	262	0.3%
59	Align Technology	United States	255	0.3%
60	Cyberonics	United States	198	0.2%
Top 60 investments			90,943	96.7%
61	Sul America	Brazil	195	0.2%
62	HCA Holdings	United States	106	0.1%
63	Oxford Biomedica	United Kingdom	103	0.1%
Total equities			91,347	97.1%
Options - (Put & Call)			(52)	(0.1%)
Total Investments			91,295	97.0%
Other net assets			2,862	3.0%
Net Assets			94,157	100.0%

Geographical Exposure as at 31 March 2011
United States	52.1%
United Kingdom	16.8%
Switzerland	11.7%
France	8.3%
Australia	2.3%
Canada	1.5%
Japan	1.1%
Germany	1.1%
Ireland	1.0%
Brazil	0.8%
Sweden	0.3%
Cash	3.0%
Total	100.0%

Sector Exposure as at 31 March 2011
Pharmaceuticals	65.1%
Health Care Equipment	8.8%
Specialised REITs	6.4%
Health Care Services	4.4%
Biotechnology	3.0%
Health Care Supplies	2.4%
Managed Health Care	2.2%
Health Care Facilities	1.3%
Health Care Distributors	1.3%
Health Care Technology	0.7%
Life Sciences Tools & Services	0.6%
Life & Health Insurance	0.5%
Multi-line Insurance	0.3%
Cash	3.0%
Total	100.0%

Market Capitalisation as at 31 March 2011	%
Large (greater than 5$bn)	81.5
Medium (1$bn - 5$bn)	7.8
Small (less than 1$bn)	10.7
Total	100.0%

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Polar Capital Global Healthcare Trust (PCGH)

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