Interim Results
Polar Capital Technology Trust PLC
10 December 2002
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
10 December 2002
• Net assets fall by 27% against falls of 31.9% in the Dow Jones World
Technology index and of 22.8% in the FTSE World index
• Business conditions in the technology industry remain difficult but
there are tentative signs of stabilisation
• Liquidity levels much reduced around the end of the half year
• Classic seasonal rally underway which could persist into the New Year
• Assets recovered strongly in November
FINANCIAL HIGHLIGHTS
Half year ended Year ended Movement
31 October 2002 30 April 2002 %
Total net assets £209,812,000 £287,229,000 -27.0%
Net assets
per ordinary share (undiluted) 140.8p 192.8p -27.0%
per ordinary share (diluted) 134.5p 178.5p -24.6%
Price
per ordinary share 119.5p 165.0p -27.6%
per warrant 30.5p 66.5p -54.1%
For further information please contact:
Brian Ashford-Russell
Polar Capital Technology Trust PLC
Tel: 020 7592 1500 or 07796 172173
Peter Binns / Jacqui Graves
Binns & Co PR Limited
Tel: 020 7786 9600
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Chairman's Statement
The half year to 31 October 2002 witnessed a continuation of the disappointing
sequence of loss making periods that began in the summer of 2000. The company's
net assets fell by 27% to £209.8m. Although we outperformed our benchmark by
10% over the period, this can be of only modest comfort to shareholders.
For a good part of the previous two years, technology investors have suffered in
relative isolation. However, the last six months have been notable for the way
in which the bear market has broadened out to encompass almost every sector of
the market. Indeed, the FTSE World Index fell by 22.8% (in sterling terms) over
the half year.
Stock markets have been subjected to an apparently endless torrent of bad news.
The global economy softened markedly over the summer as companies everywhere
continued to rein in their spending and consumer sentiment deteriorated amidst a
growing number of job losses. Investor sentiment has been undermined by a
series of high profile corporate accounting scandals while the prospect of war
in Iraq has reduced the general appetite for risk as well as raising the price
of oil. Corporate earnings have disappointed while trust in the quality of
those earnings has been undermined. Some areas of the market have come under
particular pressure, notably the insurance sector the capital base of which has
been eroded by the collapse in share values over recent years.
The technology industry has had its own problems. Although the sector's
structural imbalances are gradually being addressed, the road to recovery is
inevitably a tortuous one. Nowhere is this more evident than in the
telecommunications market where carriers continue to slash their spending
budgets in an attempt to rebuild their balance sheets. The weakness in overall
capital spending has also badly impacted the software and computing markets and
even the hitherto resilient consumer has been showing signs of retrenchment.
Over the half year only cash and, to a lesser extent, Japan proved to be
defensive investments. Our outperformance was largely based on our adoption of
a cautious investment stance going into the summer. This led us to maintain
liquidity for much of the period above 20%, to increase our weighting in life
sciences particularly at the expense of semiconductors and to add to our
Japanese exposure. We also maintained a very low weighting in Europe which was
by far the worst performing geographical area over the period.
The bear market in both technology and other sectors gathered downward momentum
in September. With investor sentiment as negative as we could remember, we
began gradually to reinvest some of our liquidity. By late October, our cash
position had been much reduced and further purchases were made in early
November. Although the fundamental outlook for the technology industry remains
clouded, we believe that the deflation of the late 1990s technology bubble is
now largely complete and that the sector's performance over the next few years
is likely to follow that of the overall market much more closely.
October saw the beginning of what we expect to be a classic seasonal rally, one
which should allow share prices to climb higher into the New Year. Although the
global economic outlook is by no means exciting, the immediate future does not
look as cataclysmic as the bears would suggest. Fourth quarter earnings may
enjoy some benefit from a seasonal pick up in business and the aggressive cost
cutting of recent quarters should allow even a modest improvement in volumes to
translate to much better earnings. Given the many very real issues that
confront both the economy and stock markets, a strong secular bull market still
seems some way away. However, we do anticipate a return to some degree of
normality and an end to the horrendous compression in share prices of the last
half year.
Richard Wakeling
9 December 2002
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Group Statement of Total Return (incorporating the Revenue Account)
for the half year ended 31 October 2002
(Unaudited) (Unaudited) (Audited)
Half year ended 31 October Half year ended 31October Year ended 30 April 2002
2002 2001
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total capital losses on
investments - (77,096) (77,096) - (120,747) (120,747) - (113,975) (113,975)
Income from fixed asset
investments 876 - 876 1,520 - 1,520 2,252 - 2,252
Other interest receivable and
similar income 645 - 645 520 - 520 879 - 879
Gross revenue from capital
gains/(losses) 1,521 (77,096) (75,575) 2,040 (120,747) (118,707) 3,131 (113,975) (110,844)
Management fees (1,116) - (1,116) (1,457) - (1,457) (2,494) - (2,494)
Other administrative expenses (410) - (410) (407) - (407) (597) - (597)
Net loss on ordinary
activities before interest
payable and taxation (5) (77,096) (77,101) 176 (120,747) (120,571) 40 (113,975) (113,935)
Interest payable and similar
charges (248) - (248) (235) - (235) (513) - (513)
Net loss on ordinary
activities before taxation (253) (77,096) (77,349) (59) (120,747) (120,806) (473) (113,975) (114,448)
Taxation on ordinary
activities (72) - (72) (59) - (59) (135) - (135)
Net loss on ordinary
activities after taxation (325) (77,096) (77,421) (118) (120,747) (120,865) (608) (113,975) (114,583)
Loss per ordinary share
(pence) Undiluted (0.22p) (51.74p) (51.96p) (0.08p) (81.28p) (81.36p) (0.41p) (76.61p) (77.02p)
The revenue columns of this statement represent the revenue accounts of the
Group
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Balance Sheets
as at 31 October 2002 (Unaudited) (Unaudited) (Audited)
Group Company Group Company Group Company
Interim Interim Interim Interim Year End Year End
October October 2002 October 2001 October 2001 April 2002 April 2002
2002
£'000 £'000 £'000 £'000 £'000 £'000
Fixed asset investments
Listed at market value 205,909 205,909 278,416 278,416 274,337 274,337
205,909 205,909 278,416 278,416 274,337 274,337
Unlisted at directors'
valuation:
Subsidiary undertaking - 3,434 - 4,234 - 3,325
Other United Kingdom 345 345 430 430 345 345
Overseas 10 10 296 296 10 10
206,264 209,698 279,142 283,376 274,692 287,017
Current assets
Debtors 3,654 6,389 5,575 8,347 8,664 11,481
Cash 33,925 27,756 29,408 22,402 37,689 31,547
37,579 34,145 34,983 30,749 46,353 43,028
Creditors: amounts falling
due within one year (23,074) (23,074) (10,651) (10,651) (1,163) (1,163)
Net current assets 14,505 11,071 24,332 20,098 45,190 41,865
Total assets less current
liabilities 220,769 220,769 303,474 303,474 319,882 319,882
Creditors: amounts falling
due after more than one year (10,957) (10,957) (22,526) (22,526) (32,653) (32,653)
Total net assets 209,812 209,812 280,948 280,948 287,229 287,229
Capital and reserves
Called up share capital 37,250 37,250 37,249 37,249 37,249 37,249
Share premium 87,959 87,959 87,955 87,955 87,955 87,955
Warrant reserve 8,558 8,558 8,560 8,560 8,560 8,560
Warrant exercise reserve 567 567 567 567 566 566
Other capital reserves 129,535 132,969 199,858 204,092 206,631 209,956
Revenue reserve (54,057) (57,491) (53,241) (57,475) (53,732) (57,057)
Equity shareholders' funds 209,812 209,812 280,948 280,948 287,229 287,229
Net asset value per ordinary
share - undiluted 140.81p 140.81p 188.56p 188.56p 192.78p 192.78p
- diluted 134.53p 134.53p 174.91p 174.91p 178.48p 178.48p
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Group Cash Flow Statement
for the half year ended 31 October 2002
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 October 2002 31 October 2001 30 April 2002
£'000 £'000 £'000
Net cash inflow from operating activities 339 253 986
Net cash outflow from servicing of finance (128) (158) (336)
Net tax recovered - 7 -
Net cash outflow from financial investment (3,423) (9,790) (6,863)
Net cash outflow before financing (3,212) (9,688) (6,213)
Net cash inflow/(outflow) from financing 5 (439) 4,830
Decrease in cash (3,207) (10,127) (1,383)
Reconciliation of operating revenue to net cash inflow from operating
activities
Net (loss)/gain before interest payable and taxation (5) 176 40
Decrease in accrued income 45 45 84
Decrease in debtors 22 126 1,009
Increase/(decrease) in creditors 348 (29) (28)
Overseas withholding tax suffered (71) (65) (119)
339 253 986
Reconciliation of net cash flow to movement in net funds
Decrease in cash (3,207) (10,127) (1,383)
Movement in long term loans - (21) (4,355)
Change in net debt resulting from cash flows (3,207) (10,148) (5,738)
Exchange movements 218 375 298
Movement in net debt in the year (2,989) (9,773) (5,440)
Net funds at the beginning of the period 5,036 10,476 10,476
Net funds at end of the period 2,047 703 5,036
Represented by:
Bank balances and short term deposits 33,925 29,408 37,689
Debt falling due within one year (20,921) (6,179) -
Debt falling due after more than one year (10,957) (22,526) (32,653)
2,047 703 5,036
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Notes
1. Management fees
Polar Capital Partners Ltd. ('Polar Capital') were appointed investment
managers in February 2001. As part of the investment management
contract with Polar Capital the Company has contractually agreed for the full
amount of compensation paid to Henderson plus legal and other professional
advisers fees and costs together with extra fees paid to the directors for
work incurred in the change of investment manager to be recovered from Polar
Capital.
These costs amounted to £3,466,000 and will be offset against the management
and any performance fees payable to Polar Capital over the 10 quarters from
February 2001. The period of reduced fees can be altered upwards so ensuring
the minimum fee paid to Polar Capital in any one quarter does not fall
beneath £500,000.
2. Loss per ordinary share
Revenue loss per ordinary share is based on the net loss after taxation
attributable to the ordinary shares of £325,000 (31 October 2001 - losses of
£118,000; 30 April 2002 losses of £608,000) and on 148,996,157 (31 October
2001 - 147,553,562; 30 April 2002 - 148,773,940) ordinary shares, being the
weighted average number of shares in issue during the year.
Basic capital loss per ordinary share is based on net capital losses of
£77,096,000 (31 October 2001 - losses of £120,747,000; 30 April 2002 losses
of £113,975,000) and the weighted average number of shares in issue during
the year as shown above.
3. Net asset value per ordinary share
Undiluted net asset value per ordinary share is based on net assets
attributable to ordinary shares of £ 209,812,000 (31 October 2001 -
£280,948,000; 30 April 2002 - £287,229,000) and on 149,000,162 (31 October
2001 and 30 April 2002 - 148,995,345) ordinary shares, being the number of
ordinary shares in issue at the end of the period.
Diluted net asset value per ordinary share is calculated on the assumption
that the 27,140,659 warrants in issue at 31 October 2002 (31 October 2001 and
30 April 2002 - 27,145,476) were converted into ordinary shares at the
exercise price of 100p. Dilution is assumed to occur only if the undiluted
net asset value is greater than the conversion price of 100p.
4. Dividend
In accordance with stated policy no interim dividend has been declared for
the period (31 October 2001 and 30 April 2002 - nil).
5. Accounts for the period ended 30 April 2002
The figures and financial information for the period ended 30 April 2002 are
extracted from the latest published accounts of the Group and do not
constitute statutory accounts for that year. These accounts have been
delivered to the Registrar of Companies and included the report of the
auditors which was unqualified and did not contain a statement under either
section 237(2) or 237 (3) of the Companies Act 1985.
7. Interim Report
The interim report was approved by the directors on 9 December 2002 and will
be posted to shareholders in January 2003. They will be available from the
Secretary at the Registered Office, Cayzer House, 30 Buckingham Gate, London
SW1E 6NN.
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Portfolio Review
Equity Investments over 1% - at 31 October 2002
North America
£'000 Stock Activity % of net assets
7,040 Dell Computer PCs 3.4%
6,307 International Business Machines Computer hardware and services 3.0%
5,639 Microsoft PC software 2.7%
5,584 Medtronic Medical devices 2.6%
4,056 Johnson & Johnson Medical products 2.0%
3,954 Electronic Arts Gaming software 1.9%
3,819 First Data Payments processing 1.8%
3,493 Pfizer Life sciences 1.7%
3,422 Amgen Biotechnology 1.6%
3,109 Cisco Systems Networking equipment 1.5%
3,068 Symantec Software and computer technology 1.4%
2,676 Micron Technology DRAMs 1.3%
2,636 Texas Instruments Semiconductors 1.3%
2,504 Kla-Tencor Semiconductor production equipment 1.2%
2,482 Accenture Support services 1.2%
2,312 Oracle Database software 1.1%
2,229 Automatic Data Processing Processing services 1.1%
2,197 BEA Systems Software and computer technology 1.0%
2,140 Qualcomm Wireless equipment 1.0%
68,667 Total investments over 1% 32.8%
29,446 Other investments 14.0%
98,113 Total North American investments 46.8%
Europe
£'000 Stock Activity % of net assets
6,329 Nokia Mobile telephony 3.0%
4,782 I Shares Bloomberg Eurotechnolgy Exchange traded fund 2.4%
4,022 Logitech Computer peripherals 2.0%
3,555 Sage Group Software & computer technology 1.8%
3,546 ST Microelectronics Semiconductors 1.7%
3,025 ASM Lithography Holdings Semiconductor production equipment 1.4%
2,837 Galen Holdings Pharmaceuticals 1.4%
2,742 Thomson Multimedia Electronics 1.3%
2,263 Abacus Polar Component distribution 1.2%
33,101 Total investments over 1% 16.2%
21,548 Other investments 10.2%
54,649 Total European investments 26.4%
Asia
£'000 Stock Activity % of net assets
3,280 Nippon Telegraph & Telephone Communications carrier 1.6%
3,106 Venture Manufacturing Electronic manufacturing services 1.5%
2,787 Hon Hai Precision Components 1.3%
2,742 NGK Spark Semiconductor packaging 1.3%
2,512 NTT DoCoMo Wireless communications carrier 1.2%
2,309 Taiwan Semiconductor Wafer foundry 1.1%
2,278 Disco Semiconductor production equipment 1.1%
2,170 Konica Media and photography 1.0%
21,184 Total investments over 1% 10.1%
8,645 Other investments 4.1%
29,829 Total Asian investments 14.2%
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
Portfolio Review
Classification of Investments - at 31 October 2002
TOTAL TOTAL
North Europe Asia 31 October 30 April
America 2002 2002
% % % % %
Computing 9.9 1.1 1.3 12.3 9.2
Components 4.8 3.9 7.5 16.2 21.6
Software 11.7 4.4 - 16.1 15.2
Services 3.8 2.0 0.3 6.1 13.4
Communications 1.7 4.0 2.8 8.5 8.0
Life Sciences 9.7 2.2 1.0 12.9 10.7
Consumer, Media and Internet 3.5 4.4 1.3 9.2 7.3
Other Technology 1.7 4.2 - 5.9 7.3
Unquoted Investments - 0.2 - 0.2 0.1
EQUITY INVESTMENTS 46.8 26.4 14.2 87.4 92.8
Fixed Interest - 11.3 - 11.3 2.9
Net Current Assets - 16.5 - 16.5 15.7
Loans - - (15.2) (15.2) (11.4)
OTHER NET ASSETS - 27.8 (15.2) 12.6 7.2
GRAND TOTAL
(net assets of £209,812,000) 46.8 54.2 (1.0) 100.0 100.0
At 30 April 2002
(net assets of £ 287,229,000) 54.3 39.0 6.7 100.0 100.0
Portfolio Distribution by Market Capitalisation
as at 31 October 2002
Market Capitalisation % of invested assets
< $500m 23.5%
$500m-$2bn 11.5%
$2bn-$10bn 24.7%
$10bn-$20bn 3.0%
$20bn-$50bn 10.0%
> $50bn 27.3%
POLAR CAPITAL TECHNOLOGY TRUST PLC
Unaudited Interim Results for the Six Months ended 31 October 2002
INDEX CHANGES (total return) over the half year to 31 October 2002
Local Currency Sterling Adjusted
Technology Indices: % %
Dow Jones World Technology -26.6 -31.9
PSE (USA) Technology -25.8 -30.9
MS Eurotec (based in US dollars) -47.3 -50.9
FTSE Techmark 100 -34.1 -34.1
Euro NM -46.3 -45.1
Japan JASDAQ -18.4 -20.4
DS Asia Electronics -18.1 -23.7
Market Indices:
S&P 500 Composite -17.0 -22.7
FTSE All-Share -21.7 -21.7
FTSE World Europe (ex UK) - -25.3
Tokyo SE (Topix) -20.0 -21.9
FTSE World Pacific Basin (ex - -19.6
Japan)
FTSE World - -22.8
EXCHANGE RATES 31 October 2002 30 April 2002
US$ to £ 1.5645 1.4573
Japanese Yen to £ 191.67 187.12
Euro to £ 1.5798 1.6173
This information is provided by RNS
The company news service from the London Stock Exchange ESEFE
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