Half Yearly Report

RNS Number : 2988E

Polar Cap Gbl Healthcare Growth&IT

09 May 2013

 



POLAR CAPITAL GLOBAL HEALTHCARE GROWTH AND INCOME TRUST PLC

(the "Company")

Unaudited Results for the half year ended 31 March 2013

This announcement contains regulated information

9 May 2013

Key Points

Financial Highlights				(Unaudited) Half Year ended			(Audited) Year ended
				31 March 2013			30 September 2012		% Change
Net asset value per ordinary share	Undiluted			149.74p			123.33p		21.41%
	Diluted			142.22p			119.74p		18.77%
Share Price
Ordinary shares				143.00p			123.25p		16.02%
Subscription shares (note 1)				36.50p			17.88p		104.14%
Shares in issue
		Ordinary		100,050,000			97,899,999		2.19%
		Subscription		17,800,000			17,800,000		-
Benchmark Index
MSCI ACWI/Healthcare Index (total return in Sterling with dividends reinvested)									22.20%
Net asset value (undiluted) per ordinary share (total return)									22.39%
Ongoing charges for the half year ended 31 March 2013 (note 2)									1.15%
(Ongoing charges for the half year ended 31 March 2012: 1.09%)
Dividends:
			Pay date	Amount per ordinary share		Record date		Ex-date	Declared date
The Company has paid the following dividend relating to the financial year ended 30 September 2012:			30 Nov. 2012	0.50p		9 Nov.  2012		7 Nov. 2012	31 Oct. 2012
The Company has paid the following dividend relating to the current financial year:			28 Feb. 2013	0.50p		8 Feb. 2013		6 Feb. 2013	23 Jan. 2013
The Company has declared the following dividend relating to the current financial year:			31 May 2013	0.50p		17 May 2013		15 May 2013	9 May 2013

Note 1. - Subscription shares were issued free to investors on 15 June 2010 on the basis of one subscription share for every five ordinary shares.

Note 2. - 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 2013 your Company generated a total return of 22.39% which was slightly ahead of our benchmark, the MSCI Global Healthcare Index (Total Return) which rose by 22.20% over the same period. Since the Company's inception in June 2010 we have achieved a total return of 59.90% compared to the benchmark return of 58.33%. These gains have been achieved notwithstanding our structural underweight position in biotechnology which has been the best performing area of healthcare.  Meanwhile our share price closed the period at 143.0p which represents a small premium of 0.5% to our diluted net asset value. Encouragingly our share price has exhibited comparatively lower volatility which means that we are achieving very satisfactory risk adjusted returns.

Dividends

Dividends totalling 1.0p have been paid or declared in respect of the six months ended 31 March 2013 which compares with 0.92p 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.

Outlook

We seem to be in the midst of a broad re-rating of the healthcare sector which is now outperforming the broader stock market averages. Previously the sector tended to display defensive characteristics by showing resilience in weak markets but now seems to be outperforming in stronger markets as well.  With share prices having appreciated a lot in recent months it would be unrealistic to expect similar gains in the second half of the year.  However with Central Banks around the globe still committed to monetary expansion it is difficult to see a great deal of downside either. The latest to join the party is the Bank of Japan whose recent declaration of intent has already boosted the Japanese stock market in which around 8% of our portfolio is invested.

James Robinson

Chairman

8 May 2013

Investment Manager's Report

For the six months to 31 March 31 2013, the Company delivered a total return of 22.39%, which was slightly ahead of the benchmark performance of 22.20% over the same period.

Stock market performance over the last 6 months was divided into two distinct phases.  While calendar 2012 was a reasonably good year for global stock markets, performance in the last three months of the year was pretty lacklustre.  The US Presidential election in early November followed by investor anxiety over the implications of a fiscal cliff in the United States created considerable uncertainty.  However, the first three months of 2013 have exceeded expectations and stock market performance has been strong across the board.  The performance of the Company mirrored the broader stock market indices - virtually all of the returns from the Company's investment portfolio came in the second three months of the half year.

From a healthcare perspective, the re-election of President Obama alleviated any lingering concerns that the Affordable Care Act, often referred to as "Obamacare", would not be implemented. The President has made it clear that implementing this Act is a key priority for the second term of his Presidency and so the US healthcare reforms are now set to go ahead as expected with a significant expansion of healthcare access in 2014.  We think that this will drive a number of positive investment opportunities in the healthcare sector.

The beginning of calendar 2013 signalled a marked change in market sentiment.  The catalysts seemed to include a last-minute solution to the U.S. fiscal cliff issue, public announcements suggesting a commitment to continued intervention from Central Banks and the perception that macro-economic risk had diminished.  Moreover, economic indicators in the United States, especially employment data, began to improve at the beginning of the year suggesting that the global economy may begin to strengthen in 2013.

Given these market conditions, we would have expected healthcare to have lagged behind other more cyclical sectors.  However, healthcare ended March as the best-performing sector year-to-date.  Moreover, this performance was broad-based across healthcare sub-sectors and by market capitalisation.  In our view, healthcare's outperformance provides some tangible evidence that investors are beginning to re-evaluate the sector.  The strongest sub-sector was biotechnology - an area where our investment portfolio is underweight.  While we like 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 our exposure in this sub-sector.  Our stated intention has been to manage the investment portfolio reasonably cautiously and to limit exposure to more volatile areas of healthcare. 

As we have written previously, our key investment thesis when the Company was formed in 2010 was that the pharmaceutical sector was set for a significant re-rating.  In our view, we have begun to approach the "end of the beginning" of this process.  The so-called "patent cliff" is now behind most of the major pharmaceutical companies as the peak of drug patent expirations was in 2012.  Cost-cutting efforts across the industry have meant that the earnings impact from patent expirations has been lower than anticipated.  Moreover, cash flow remains strong and pharmaceutical companies have continued to return cash to shareholders in the form of buy-backs and dividends.  As a result, the Price/Earnings multiple for the sector has begun to expand and generalist investors are beginning to re-visit the sector.

In our view, the next phase of healthcare performance will be driven by a realisation that large pharmaceutical companies can return to growth - either from sales in emerging markets or from successful pipeline progress (or both).  We think there is a growing body of evidence that suggests drug pipelines are improving - providing a major reason for a revival in the biotechnology sector's fortunes over the last 18 months.  In our view, clinical news flow over the next two years will be critical for confirming a resurgence of the pharmaceutical industry.  Importantly, however, there is likely to be a greater dispersion of returns in the pharmaceutical sector with the companies delivering positive clinical news flow likely to outperform.

We will continue to maintain a high weighting in the large cap pharmaceutical sector - we expect at least 60% of the portfolio to be invested in the larger drug stocks throughout the life of the Company.  Our goal since the start of the Company has been to deliver a total return in the region of 10-12% per annum throughout the life of the Company.  Clearly, the Company's performance has exceeded this goal in the first six months of the fiscal year - helped in no small part by the weakness of sterling versus the dollar.  Our current expectation is that the Company's investment performance should revert to the targeted level of return over the balance of 2013.

Our income portfolio

The overall portfolio has essentially maintained the 80:20 split between the income and growth portfolios that we described in the original prospectus. The largest weighting in the income portfolio is in pharmaceuticals, where the Company has significant positions in most of the major global pharmaceutical companies. Large pharmaceutical companies continue to offer good dividend yields but given the strong share price performance these yields have fallen over the last two years. We continue to see the potential for low- to mid-single digit dividend growth across the pharmaceutical sector.

The rest of the income portfolio is diversified across a number of medical device and healthcare service names that generate a good dividend yield.  We also have a series of investments in healthcare real estate investment trusts (REITs).  As expected, turnover in the income portfolio has been reasonably low, although we continue to look for new income-producing names.

The major contributors to portfolio performance during the reporting period were Pfizer, Novartis, Roche, Sanofi and Eli Lilly.  Pfizer continues to be the largest position in the portfolio - the stock was up 25% over the reporting period and was therefore the most significant contributor to performance.  We began to reduce the weighting in Pfizer over the last few weeks of the reporting period.  In our view, the company's focus on cost control and capital allocation, particularly the divestment of non-core assets, has begun to be reflected in its valuation.

On a relative basis, Merck was a significant underperformer although it still delivered a positive performance over the reporting period. In December, the company reported disappointing data from a major clinical trial, called HPS2-THRIVE, which was studying the use of its drug Tredaptive to reduce serious cardiovascular events in high-risk patients.  This news combined with 2013 being Merck's "patent cliff" year (asthma drug, Singulair, lost patent protection in 2012) caused the shares to underperform.  However, in the mid-term, we see upside potential from two new drug candidates, one for osteoporosis and one for insomnia, which could help turn Merck back into an earnings growth story from 2014. 

The most significant change to the income portfolio over the reporting period was an increase in our position in AstraZeneca.  AstraZeneca has the lowest Price to Earnings multiple of all the major pharmaceutical stocks and investor expectations are extremely muted, arguably with good reason given that it faces some major patent expiries over the next 4 years.  However, the new CEO recently presented his longer-term strategic vision at the company's capital markets day and this has helped to improve investor and sell-side analyst sentiment. It is not going to be possible to "fix" AstraZeneca overnight - we think the company may need to complete a number of smaller transactions before convincing the market that it is back on track to sustainable earnings growth. Management remains committed to the dividend, which is well covered by cash flow in the mid-term, and we think the stock may continue to steadily appreciate in the coming months. 

Our growth portfolio

In the growth portfolio, we currently have 41 holdings in a range of biotechnology, device, service and pharmaceutical stocks.  There is a bias towards smaller market capitalisation stocks - nearly 52% of the growth book is invested in companies with a market capitalisation less than US$1 billion.  The turnover in this part of the portfolio has been, and is likely to be, much higher than the income portfolio. 

Within the growth book, we have built a small diversified portfolio of investments in companies with a market capitalisation below US$200 million at the date of purchase. We now have investments in thirteen companies that account for 4.2% of the entire investment portfolio. We view these investments as high risk/reward opportunities where we can take some liquidity risk and a longer-term investment horizon - two benefits of a closed-end fund.  Given the longer-term investment horizon, we do not expect to add any new holdings to this part of the portfolio as the Trust is expected to wind up in 2018.

The best performer in the growth portfolio was one of these micro-cap stocks, Oxford Pharmascience.  The company is a drug re-formulation company that has developed a technology that can mask the taste of a drug - the drug formulation does not dissolve in the mouth but is rapidly dissolved in the low pH conditions of the stomach. Towards the end of last year the company announced agreements with two major pharmaceutical companies and also completed the scale-up of its taste-masked ibuprofen.  On the back of these positive developments the stock more than doubled over the course of the reporting period.

As noted above, our weighting in biotechnology names is low - at the end of March our weighting in biotechnology stocks for the entire portfolio was 4.3% compared to a benchmark weighting of 10.0%.  We had winners and losers in the biotechnology sector during the reporting period.  We participated in the IPO of Intercept Pharmaceuticals, which is developing drug candidates for the treatment of various liver diseases - the stock has more than doubled since the IPO.  On the negative side, we sold our position in Alexion Pharmaceuticals in December following a poor run of performance from the middle of September.  Alexion has been one of the best growth stories in biotechnology over the last 5 years but with a market capitalisation now approaching US$20 billion the stock looks to be fairly valued.

Other notable positive contributors in the growth book included Asahai Intecc, a Japanese medical device company, and HCA Holdings, the largest private hospital group in the United States.  The biggest detractor in the quarter was HMS Holdings.  This is a healthcare IT company that has software to help State and Federal governments identify over-billing by hospitals.  Given the complexity of implementing U.S. healthcare reform, many States have delayed the implementation of their contracts with HMS and so the company missed revenue and earnings expectations last year.

Outlook

Given the strong run in the first quarter, our outlook for the stock market is reasonably cautious in the near-term.  However, our view on healthcare remains positive with fundamentals improving as we head into the expansion under healthcare reform in the U.S. in 2014. 

In the United States, it has been estimated that roughly 45 million people currently have no health insurance coverage.  We estimate that approximately 20 million of these people will gain coverage in 2014 under the Affordable Care Act.  Therefore we expect a positive impact on volumes and utilisation in the United States next year.  In particular, we think operating margins for healthcare providers are set to expand from both an increase in volume and a reduction in bad debt expense.

We believe this will be another solid year for the pharmaceutical sector - especially if clinical news flow supports the concept that drug pipelines are improving. The "patent cliff" is now in the rear view mirror for most of the major companies and the focus is now on the growth potential of the sector over the next 3-5 years.  In broader healthcare, our focus remains on the identification of companies that can help cut the costs of healthcare - the ageing population makes this a critical economic issue for governments across the world. Companies that have products and services to address this problem are set to grow irrespective of government austerity measures, in our opinion. 

In summary, our investment thesis and approach for the portfolio remains unchanged, we continue to find healthcare companies that we think are undervalued as investors still underestimate the growth opportunities for both large and small companies in the sector. We think healthcare is very well positioned compared to other sectors in terms of growth and valuation.  Therefore, we remain optimistic that the portfolio will continue to perform well on a relative and absolute basis over the balance of 2013.

Dr Daniel Mahony and Mr Gareth Powell

8 May 2013

Polar Capital LLP

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 Report and Financial Statements for the year ended 30 September 2012. 

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 U.S. markets or exposed to the U.S. 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 2013 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 report for the six months ended 31 March 2013 has not been audited or reviewed by the auditors.

The financial report for the six months ended 31 March 2013 was approved by the Board on 8 May 2013 and the responsibility statement was signed on its behalf by J P Robinson, Chairman of the Board.

James Robinson

Chairman

8 May 2013

Consolidated Statement of Comprehensive Income for the half year ended 31 March 2013
			(Unaudited)					(Unaudited)							(Audited)
			Half year ended 31 March 2013					Half year ended 31 March 2012							Year ended 30 Sept 2012
			Revenue	Capital		Total		Revenue	Capital	Total					Revenue	Capital			Total
			return	return		return		return	return		return				return	return			return
Notes			£'000	£'000		£'000		£'000	£'000		£'000				£'000	£'000			£'000
Investment income	2		2,362		313	2,675		2,316	149				2,465		4,174	149			4,323
Other operating income	2		164		-	164		310	-				310		407	-			407
Gains on investments held at fair value			-		25,638	25,638		-	11,128				11,128		-	20,512			20,512
Other movements on written options			-		-	-		-	78				78		-	74			74
Other currency losses			-		(70)	(70)		-	(121)				(121)		-	(162)			(162)
Total income			2,526	25,881		28,407		2,626	11,234			13,860			4,581	20,573			25,154
Expenses
Investment management fee			(110)	(439)		(549)		(92)	(363)			(455)			(188)	(752)		(940)
Other administrative expenses			(202)	-		(202)		(139)	-			(139)			(310)	-		(310)
Total expenses			(312)	(439)		(751)		(231)	(363)			(594)			(498)	(752)		(1,250)
Profit before finance costs and tax			2,214	25,442		27,656		2,395	10,871			13,266			4,083	19,821			23,904
Finance costs			-	-		-		-	-			-			-	-			-
Profit before tax			2,214	25,442		27,656	2,395		10,871			13,266			4,083		19,821		23,904
Tax			(260)	(25)		(285)	(261)		(3)			(264)			(481)		8		(473)
Net profit for the period and total comprehensive income			1,954	25,417		27,371		2,134	10,868			13,002			3,602	19,829			23,431
Earnings per ordinary share (basic) (pence)		3	1.95	25.42		27.37		2.18	11.10				13.28		3.68		20.25		23.93
Earnings per ordinary share (diluted) (pence)		3	1.88		24.51	26.39		2.15	10.95					13.10	3.61		19.85		23.46
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.
The net profit for the period of the Company was £27,371,000 (31 March 2012:  £13,002,000 and 30 September 2012:  £23,431,000).
The Group does not have any Other Comprehensive Income and hence the net profit, as disclosed above, is the same as the Group's total Comprehensive Income.
The notes on pages 15 to 18 form part of these financial statements.

Consolidated Statement of Changes in Equity for the half year ended 31 March 2013
	(Unaudited) Half year ended 31 March 2013
	Called up share capital	Share premium reserve	Special distributable reserve	Capital reserves	Revenue reserve	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 30 September 2012	24,653	7,360	64,792	22,278	1,655	120,738
Total comprehensive income:
Profit for the half year to 31 March 2013	-	-	-	25,417	1,954	27,371
Transactions with owners, recorded directly to equity:
Issue of 2,150,001 ordinary shares	538	2,170	-	-	-	2,708
Share issue costs	-	(6)	-	-	-	(6)
Equity dividends paid	-	-	-	-	(1,001)	(1,001)
Total equity at 31 March 2013	25,191	9,524	64,792	47,695	2,608	149,810
	(Unaudited) Half year ended 31 March 2012
	Called up share capital	Share premium reserve	Special distributable reserve	Capital reserves	Revenue reserve	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 30 September 2011	24,653	7,365	64,792	2,449	1,165	100,424
Total comprehensive income:
Profit for the half year ended 31 March 2012	-	-	-	10,868	2,134	13,002
Transactions with owners, recorded directly to equity:
Share issue costs	-	(10)	-	-	-	(10)
Equity dividends paid	-	-	-	-	(900)	(900)
Total equity at 31 March 2012	24,653	7,355	64,792	13,317	2,399	112,516
	(Audited) Year ended 30 September 2012
	Called up share capital	Share premium reserve	Special distributable reserve	Capital reserves	Revenue reserve	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000
Total equity at 30 September 2011	24,653	7,365	64,792	2,449	1,165	100,424
Total comprehensive income:
Profit for the year ended 30 September 2012	-	-	-	19,829	3,602	23,431
Transactions with owners, recorded directly to equity:
Share issue costs	-	(5)	-	-	-	(5)
Equity dividends paid	-	-	-	-	(3,112)	(3,112)
Total equity at 30 September 2012	24,653	7,360	64,792	22,278	1,655	120,738
The notes on pages 15 to 18 form part of these financial statements.

14

Consolidated Balance Sheet as at 31 March 2013
		(Unaudited)	(Unaudited)	(Audited)
		31 March 2013	31 March 2012	30 September 2012
	Notes	£'000	£'000	£'000
Non current assets
Investments held at fair value		149,328	112,107	120,332
Current assets
Receivables		480	1,659	482
Overseas tax recoverable		139	132	130
Cash and cash equivalents		162	4,070	112
		781	5,861	724
Total assets		150,109	117,968	121,056
Current liabilities
Payables		(159)	(5,450)	(291)
Fair value of open derivative contracts		-	(2)	-
Bank overdraft		(140)	-	(27)
		(299)	(5,452)	(318)
Net assets		149,810	112,516	120,738
Equity attributable to equity shareholders
Called up share capital		25,191	24,653	24,653
Share premium reserve		9,524	7,355	7,360
Special distributable reserve		64,792	64,792	64,792
Capital reserves		47,695	13,317	22,278
Revenue reserve		2,608	2,399	1,655
Total equity		149,810	112,516	120,738
Net asset value per ordinary share (pence)	4	149.74	114.93	123.33
Net asset value per ordinary share (diluted) (pence)	4	142.22	112.63	119.74
The notes on pages 15 to 18 form part of these financial statements.

Consolidated Cash Flow Statement for the half year ended 31 March 2013
	(Unaudited)		(Audited)
	Half year ended	Half year ended	Year ended
	31 March 2013	31 March 2012	30 September 2012
	£'000	£'000	£'000
Cash flows from operating activities
Profit before finance costs and tax	27,656	13,266	23,904
Adjustment for non-cash items:
Gain on investments held at fair value through profit or loss	(25,638)	(11,128)	(20,512)
Adjusted profit before finance costs and tax	2,018	2,138	3,392
Adjustments for:
Purchases of investments, including transaction costs	(33,601)	(32,239)	(59,915)
Sales of investments, including transaction costs	30,243	29,034	53,759
Decrease/(increase) in receivables	2	(617)	(163)
(Decrease)/increase in payables	(132)	84	(243)
Overseas tax deducted at source	(294)	(259)	(467)
Net cash used in operating activities	(1,764)	(1,859)	(3,637)
Cash flows from financing activities
Proceeds from issue of share capital (net of issue costs)	2,702	(10)	(5)
Equity dividends paid	(1,001)	(900)	(3,112)
Net cash from/(used in) financing activities	1,701	(910)	(3,117)
Net decrease in cash and cash equivalents	(63)	(2,769)	(6,754)
Cash and cash equivalents at the beginning of the period	85	6,839	6,839
Cash and cash equivalents at the end of the period	22	4,070	85
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 2013
1	General Information
	The consolidated financial statements comprise the unaudited results for Polar Capital Global Healthcare Growth & Income Trust Plc and its subsidiary, Polar Capital Global Healthcare Finance Limited, for the six month period to 31 March 2013.  The unaudited financial statements to 31 March 2013 have been prepared using the accounting policies used in the Group's financial statements to 30 September 2012. 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 2013 and 31 March 2012 have not been audited. The figures and financial information for the year ended 30 September 2012 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 2012, prepared under IFRS, including the report of the auditors, which was unqualified, did not draw attention to any matters by way of emphasis and which did not contain a statement under section 498 of the Companies Act 2006, have been delivered to the Registrar of Companies.
	The Group's accounting policies have not varied from those described in the financial statements for the year ended 30 September 2012.
	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)		(Audited)
			For the half year ended 31 March 2013	For the half year ended 31 March 2012	For the year ended 30 September 2012
	Investment income		£'000	£'000	£'000
	Revenue:
	Franked: Listed investments
	Dividend income		454	454	757
	Unfranked: Listed investments
	Dividend income		1,908	1,862	3,417
	Total investment income allocated to revenue		2,362	2,316	4,174
	Capital:
	Special dividends allocated to capital		157	31	31
	Dividends from REITs allocated to capital		156	118	118
	Total investment income allocated to capital		313	149	149
	Other operating income
	Option premium income		164	309	406
	Bank interest		-	1	1
	Total other operating income		164	310	407
3	Earnings per ordinary share
		(Unaudited)			(Audited)
		For the half year ended 31 March 2013		For the half year ended 31 March 2012	For the year ended 30 September  2012
	Basic earnings per share	£'000		£'000	£'000
	Net profit for the period:
	Revenue	1,954		2,134	3,602
	Capital	25,417		10,868	19,829
	Total	27,371		13,002	23,431
	Weighted average number of shares in issue during the period	99,990,934		97,899,999	97,899,999
	Revenue	1.95p		2.18p	3.68p
	Capital	25.42p		11.10p	20.25p
	Total	27.37p		13.28p	23.93p
		(Unaudited)			(Audited)
		For the half year ended 31 March 2013		For the half year ended 31 March 2012	For the year ended 30 September 2012
	Diluted earnings per share	£'000		£'000	£'000
	Net profit for the period:
	Revenue	1,954		2,134	3,602
	Capital	25,417		10,868	19,829
	Total	27,371		13,002	23,431
	Diluted number of shares in issue during the period	103,717,006		99,280,849	99,906,976
	Revenue	1.88p		2.15p	3.61p
	Capital	24.51p		10.95p	19.85p
	Total	26.39p		13.10p	23.46p
	The calculation of the diluted total, revenue, and capital returns per ordinary share 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.
4	Net asset value per ordinary share
		(Unaudited)			(Audited)
		As at 31 March 2013		As at 31 March 2012	As at 30 September  2012
		£'000		£'000	£'000
	Undiluted:
	Net assets attributable to ordinary shareholders (£'000)	149,810		112,516	120,738
	Ordinary shares in issue at end of period	100,050,000		97,899,999	97,899,999
	Net asset value per ordinary share (pence)	149.74		114.93	123.33
	Diluted:
	Net assets attributable to ordinary shareholders (£'000)	167,610		130,316	138,538
	Ordinary shares in issue at end of period if subscription shares converted	117,850,000		115,699,999	115,699,999
	Net asset value per ordinary share (pence)	142.22		112.63	119.74
	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 2012:  115,699,999 and 30 September 2012:  115,699,999).
5	Dividends
	An interim dividend of 0.50 pence per Ordinary share will be paid on 31 May 2013 to shareholders on the register at 17 May 2013. A first interim dividend in respect of the current financial year of 0.50 pence per Ordinary Share was paid on 28 February 2013. In total, dividends of 1.00 pence per share have been declared for the six months ended 31 March 2013.
6	Related party transactions
	There have been no related party transactions that have materially affected the financial position or the performance of the Group during the six month period to 31 March 2013.

PORTFOLIO 

		Stock			Country	Market Value £'000		% of total net assets
						31	30	31	30
						March	September	March	September
						2013	2012	2013	2012
1	(1)	Pfizer			United States	12,270	10,383	8.2%	8.6%
2	(2)	Merck & Co			United States	9,897	9,773	6.6%	8.1%
3	(3)	Novartis			Switzerland	9,844	9,481	6.6%	7.9%
4	(4)	GlaxoSmithKline			United Kingdom	9,600	7,409	6.4%	6.1%
5	(5)	Roche Holding			Switzerland	8,453	6,368	5.6%	5.3%
6	(15)	AstraZeneca			United Kingdom	8,244	1,773	5.5%	1.5%
7	(7)	Eli Lilly			United States	7,292	5,871	4.9%	4.9%
8	(8)	Astellas Pharma			Japan	6,025	5,365	4.0%	4.4%
9	(9)	Sanofi			France	5,697	4,758	3.8%	3.9%
10	(12)	Takeda Pharmaceutical			Japan	5,285	2,862	3.5%	2.4%
Top 10 investments						82,607		55.1%
11	(10)	Bristol-Myers Squibb			United States	4,338	4,385	2.9%	3.6%
12	(11)	Johnson & Johnson			United States	4,292	3,412	2.9%	2.8%
13		AbbVie			United States	3,754	-	2.5%	-
14	(13)	Consort Medical			United Kingdom	2,723	2,485	1.8%	2.1%
15		Teva Pharmaceutical			Israel	2,612	-	1.7%	-
16	(14)	Sonic Healthcare			Australia	2,210	1,913	1.5%	1.6%
17	(24)	HCA Holdings			United States	1,598	1,030	1.1%	0.9%
18	(20)	National Health Investors			United States	1,508	1,115	1.0%	0.9%
19	(23)	Omega Healthcare			United States	1,500	1,055	1.0%	0.9%
20	(21)	Senior Housing Property Trust			United States	1,413	1,079	1.0%	0.9%
Top 20 investments						108,555		72.5%
21	(19)	Covidien			Ireland	1,385	1,140	0.9%	0.9%
22	(16)	Health Care REIT			United States	1,341	1,430	0.9%	1.2%
23	(64)	Oxford Pharmascience			United Kingdom	1,305	364	0.9%	0.3%
24		Cerner			United States	1,247	-	0.8%	-
25	(30)	Healthcare Reality Trust REIT			United States	1,121	856	0.7%	0.7%
26		Religare Health Trust			India	1,065	-	0.7%	-
27	(40)	Medical Properties Trust			United States	1,055	647	0.7%	0.5%
28	(29)	Cyberonics			United States	1,017	860	0.7%	0.7%
29	(50)	Asahi Intecc			Japan	1,013	549	0.7%	0.5%
30		Sigma Pharmaceutical			Australia	1,009	-	0.7%	-
Top 30 investments						120,113		80.2%
31	(28)	Medical Facilities			Canada	988	901	0.7%	0.7%
32		TeamHealth			United States	958	-	0.7%	-
33	(47)	Endologix			United States	957	577	0.7%	0.5%
34	(42)	SABRA Health Care REIT			United States	955	619	0.6%	0.5%
35	(34)	Air Methods			United States	953	739	0.6%	0.6%
36		Universal Health			United States	925	-	0.6%	-
37	(32)	Novadaq Technologies			Canada	847	830	0.6%	0.7%
38	(57)	Coltene Holding			Switzerland	795	465	0.5%	0.4%
39	(63)	Basilea Pharmaceuticals			Switzerland	794	390	0.5%	0.3%
40	(52)	NIB Holdings			Australia	779	540	0.5%	0.4%
Top 40 investments						129,064		86.2%
41	(38)	United Drug			Ireland	775	655	0.5%	0.5%
42	(45)	Acadia Healthcare			United States	774	590	0.5%	0.5%
43		Tesaro			United States	768	-	0.5%	-
44	(44)	Insulet			United States	766	601	0.5%	0.5%
45		Pacira Pharmaceuticals			United States	760	-	0.5%	-
46		Alnylam Pharmaceuticals			United States	757	-	0.5%	-
47	(33)	Biomarin Pharmaceutical			United States	738	748	0.5%	0.6%
48	(46)	Jazz Pharmaceuticals			Ireland	736	587	0.5%	0.5%
49	(53)	Five Star Quality Care			United States	736	529	0.5%	0.4%
50	(49)	Brookdale Senior Living			United States	713	559	0.5%	0.5%
Top 50 investments						136,587		91.2%
51	(36)	Synairgen			United Kingdom	708	693	0.5%	0.6%
52		Intercept Pharmaceutical			United States	706	-	0.5%	-
53		Mylan			United States	686	-	0.5%	-
54	(48)	Epistem			United Kingdom	676	564	0.5%	0.5%
55		Extendicare			Canada	656	-	0.4%	-
56	(51)	Healthcare Services Group			United States	647	543	0.4%	0.4%
57	(55)	Spectranetics			United States	644	482	0.4%	0.4%
58	(59)	Emeritus			United States	641	454	0.4%	0.4%
59	(54)	Trius Therapeutics			United States	611	489	0.4%	0.4%
60		Vocera			United States	606	-	0.4%	-
Top 60 investments						143,168		95.6%
61	(56)	Meridian Biosciences			United States	601	475	0.4%	0.4%
62		Ablynx			Belgium	576	-	0.4%	-
63	(58)	Hutchison China Meditech			China	506	462	0.3%	0.4%
64	(66)	Summit			United Kingdom	488	352	0.3%	0.3%
65	(43)	Optos			United Kingdom	472	613	0.3%	0.5%
66	(65)	AmSurg			United States	451	358	0.3%	0.3%
67	(67)	Photocure			Norway	447	335	0.3%	0.3%
68	(60)	Futura Medical			United Kingdom	418	441	0.3%	0.4%
69	(68)	Leisureworld Senior Care			Canada	415	309	0.3%	0.3%
70	(69)	HCP			United States	328	275	0.2%	0.2%
Top 70 investments						147,870		98.7%
71	(70)	Newron Pharmaceuticals			Italy	293	263	0.2%	0.2%
72	(72)	Stentys			France	266	220	0.2%	0.2%
73	(61)	Circle Holdings			United Kingdom	250	413	0.2%	0.3%
74	(73)	EOS Imaging			France	242	176	0.2%	0.1%
75	(71)	CML Healthcare			Canada	212	252	0.1%	0.2%
76	(74)	Sul America			Brazil	167	116	0.1%	0.1%
77	(75)	Oxford Biomedica			United Kingdom	28	48	-	-
Total equities						149,328		99.7%
Other net assets						482		0.3%
Net assets						149,810		100.0%

Geographical Exposure as at		31 March 2013		30 Sept. 2012
		%		%
United States		47.0		53.8
United Kingdom		16.7		12.6
Switzerland		13.2		15.0
Japan		8.2		7.3
France		4.2		4.2
Australia		2.7		2.0
Canada		2.1		1.9
Ireland		1.9		1.9
Israel		1.7		-
India		0.7		-
Belgium		0.4		-
China		0.3		0.4
Norway		0.3		0.3
Italy		0.2		0.2
Brazil		0.1		0.1
Cash		0.3		0.3
Total		100.0		100.0
Sector Exposure		31 March 2013		30 Sept. 2012
		%		%
Pharmaceuticals		68.4		62.1
Specialized REITs		6.8		5.8
Healthcare Equipment		5.9		12.3
Healthcare Facilities		5.5		4.3
Biotechnology		4.3		5.4
Healthcare Services		3.3		3.6
Healthcare Supplies		2.0		1.7
Healthcare Distributors		1.2		0.5
Healthcare Technology		1.2		-
Life Sciences Tools & Services		0.5		2.1
Life & Health Insurance		0.5		0.4
Multi-line Insurance		0.1		0.1
Managed Healthcare		-		1.4
Cash		0.3		0.3
Total		100.0		100.0
Market Cap		31 March 2013		30 Sept. 2012
		%		%
Large (greater than US$5bn)		73.3		75.5
Medium (US$1bn - US$5bn)		10.9		10.0
Small (less than US$1bn)		15.8		14.5
		100.0		100.0

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 share on 15 June 2010 was 98p (after launch costs).

Investors may purchase 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 2013, the Company had in issue 100,050,000 ordinary shares of 25p each and 17,800,000 subscription shares of 1p each.

The Company has not bought back any ordinary or subscription shares for cancellation in the half year up to 31 March 2013.

The subscription shares give the holders the right, but not the obligation, to subscribe for one ordinary share at 100p per ordinary share on 31 January 2014 after which the subscription rights will lapse.

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.  No borrowings have been made and no arrangements made for any banking loans.  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.  The fee is calculated and payable at the liquidation of the Company expected at the seventh AGM in January 2018.

Company Registration Number

7251471 (Registered in England)

The Company is an investment company as defined under Section 833 of the Companies Act 2006.

Directors

J P Robinson,   (Chairman)

J C Aston, OBE                                                  

A D Brampton

A B Milford                                        

Investment Manager

Polar Capital LLP

4 Matthew Parker Street, London SW1H 9NP

Authorised and regulated by the Financial Conduct Authority.

Telephone: [phone] 

www.polarcapital.co.uk

Fund Managers

Dr Daniel Mahony and Mr Gareth Powell

Secretary

Polar Capital Secretarial Services Limited represented by N P Taylor.

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 June 2013. 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 2012 and the prospectus published by the Company on 30 January 2012.  No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Polar Capital Global Healthcare Growth and Income Trust plc or any other entity, and must not be relied upon in any way in connection with any investment decision.  The Company undertakes no obligation to update any forward-looking statements.

 

END

 

 

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