POLAR CAPITAL GLOBAL HEALTH.TST PLC

549300YV7J2TWLE7PV842021-10-012022-09-30549300YV7J2TWLE7PV842021-10-012022-09-30polarcapital:RevenueReturnMemberiso4217:GBP549300YV7J2TWLE7PV842021-10-012022-09-30polarcapital:CapitalReturnMember549300YV7J2TWLE7PV842020-10-012021-09-30polarcapital:RevenueReturnMember549300YV7J2TWLE7PV842020-10-012021-09-30polarcapital:CapitalReturnMember549300YV7J2TWLE7PV842020-10-012021-09-30iso4217:GBPxbrli:shares549300YV7J2TWLE7PV842021-09-30ifrs-full:IssuedCapitalMember549300YV7J2TWLE7PV842021-09-30ifrs-full:CapitalRedemptionReserveMember549300YV7J2TWLE7PV842021-09-30ifrs-full:SharePremiumMember549300YV7J2TWLE7PV842021-09-30polarcapital:SpecialDistributableReserveMember549300YV7J2TWLE7PV842021-09-30ifrs-full:CapitalReserveMember549300YV7J2TWLE7PV842021-09-30ifrs-full:RetainedEarningsMember549300YV7J2TWLE7PV842021-09-30549300YV7J2TWLE7PV842021-10-012022-09-30ifrs-full:IssuedCapitalMember549300YV7J2TWLE7PV842021-10-012022-09-30ifrs-full:CapitalRedemptionReserveMember549300YV7J2TWLE7PV842021-10-012022-09-30ifrs-full:SharePremiumMember549300YV7J2TWLE7PV842021-10-012022-09-30polarcapital:SpecialDistributableReserveMember549300YV7J2TWLE7PV842021-10-012022-09-30ifrs-full:CapitalReserveMember549300YV7J2TWLE7PV842021-10-012022-09-30ifrs-full:RetainedEarningsMember549300YV7J2TWLE7PV842022-09-30ifrs-full:IssuedCapitalMember549300YV7J2TWLE7PV842022-09-30ifrs-full:CapitalRedemptionReserveMember549300YV7J2TWLE7PV842022-09-30ifrs-full:SharePremiumMember549300YV7J2TWLE7PV842022-09-30polarcapital:SpecialDistributableReserveMember549300YV7J2TWLE7PV842022-09-30ifrs-full:CapitalReserveMember549300YV7J2TWLE7PV842022-09-30ifrs-full:RetainedEarningsMember549300YV7J2TWLE7PV842022-09-30549300YV7J2TWLE7PV842020-09-30ifrs-full:IssuedCapitalMember549300YV7J2TWLE7PV842020-09-30ifrs-full:CapitalRedemptionReserveMember549300YV7J2TWLE7PV842020-09-30ifrs-full:SharePremiumMember549300YV7J2TWLE7PV842020-09-30polarcapital:SpecialDistributableReserveMember549300YV7J2TWLE7PV842020-09-30ifrs-full:CapitalReserveMember549300YV7J2TWLE7PV842020-09-30ifrs-full:RetainedEarningsMember549300YV7J2TWLE7PV842020-09-30549300YV7J2TWLE7PV842020-10-012021-09-30ifrs-full:IssuedCapitalMember549300YV7J2TWLE7PV842020-10-012021-09-30ifrs-full:CapitalRedemptionReserveMember549300YV7J2TWLE7PV842020-10-012021-09-30ifrs-full:SharePremiumMember549300YV7J2TWLE7PV842020-10-012021-09-30polarcapital:SpecialDistributableReserveMember549300YV7J2TWLE7PV842020-10-012021-09-30ifrs-full:CapitalReserveMember549300YV7J2TWLE7PV842020-10-012021-09-30ifrs-full:RetainedEarningsMember FC IFC 264615 PCGH RA 2022 106pp Text Web 264615 PCGH RA 2022 pp001-pp022 264615 PCGH RA 2022 pp023-pp039 264615 PCGH RA 2022 pp040-pp050 264615 PCGH RA 2022 pp051-pp063 264615 PCGH RA 2022 pp064-pp072 264615 PCGH RA 2022 pp073-pp076 264615 PCGH RA 2022 pp077-pp096 264615 PCGH RA 2022 pp097-pp098 264615 PCGH RA 2022 pp099-pp100 264615 PCGH RA 2022 pp101-end IBC BC Annual Report and Financial Statements for the year ended 30 September 2022 Polar Capital Global Healthcare Trust plc 2022 Annual Report and Financial Statements for the year ended 30 September 2022 Contents Overview Your Business at a Glance 1 Highlights 2 Performance 3 Chair’s Statement 4 Board of Directors 6 Investment Team 8 Manager’s Report Investment Manager’s Report 11 Ten Largest Investments 21 Full Investment Portfolio 22 Environmental, Social and Governance Corporate Responsibility for ESG 24 Investment Perspective 26 ESG Dashboard 28 Governance Strategic Report 30 Section 172 of the Companies Act 2006 37 Report of the Directors 40 Report on Corporate Governance 42 Audit Committee Report 51 Directors’ Remuneration Report 58 Statement of Directors’ Responsibilities 63 Independent Auditors’ Report 64 Financial Statements and Notes Statement of Comprehensive Income 73 Statements of Changes in Equity 74 Balance Sheets 75 Cash Flow Statements 76 Notes to the Financial Statements 77 Shareholder Information Alternative Performance Measures (APMs) 97 Glossary of Terms 99 Corporate Information – AGM 101 Corporate Information – Other 102 Contact Information 106 Purpose The purpose of the Group, comprising the Company and the wholly owned subsidiary PCGH ZDP Plc, is to provide a vehicle for investors in which assets are invested across a diversiﬁed global portfolio of healthcare stocks which aim to deliver long term capital growth to Shareholders. The purpose is achieved through implementation of the Investment Objective and investment policies incorporating parameters to ensure excessive risk is not undertaken. Investment Objective The generation of capital growth through investments in a global portfolio of healthcare stocks. See more at: polarcapitalhealthcaretrust.co.uk We were delighted to be awarded winner of the Biotech and Healthcare specialist sector at the Investment Week - Investment Company of the Year Awards in November 2022. Designed and printed by Perivan 264615 This document is printed on Galerie Satin, a paper sourced from well managed, responsible, FSC® certiﬁed forests and other controlled sources. The pulp used in this product is bleached using an elemental chlorine free (ECF) process. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 1 Overview Your Business at a Glance Who we are The Group comprises the Company, Polar Capital Global Healthcare Trust Plc and the subsidiary, PCGH ZDP Plc. Management The Company is an investment trust led by an experienced Board of independent non-executive Directors with a variety of expertise in investment and healthcare matters and with experience in the regulatory and legal framework within which the Group operates. The role of the Board is to provide oversight of the Company’s activities and to seek to ensure that the appropriate controls are in place to deliver the Investment Objective and to manage the risks associated with such activities. The Investment Manager is Polar Capital LLP (“Polar Capital”) and the appointed Co- Managers are Dr James Douglas and Mr Gareth Powell supported by the wider Polar Capital Healthcare Team. Polar Capital LLP is also the Alternative Investment Fund Manager for the purposes of AIFM Regulations and is authorised and regulated by the Financial Conduct Authority. Life The Group was formed on 30 March 2017 as part of a reconstruction of the Company which included the creation of the subsidiary, PCGH ZDP Plc, the change of name on 20 June 2017 from Polar Capital Global Healthcare Growth and Income Trust plc and a change in objective from the creation of income and growth, to growth alone. The Company was originally launched on 15 June 2010. In the absence of any prior alternative proposals, the articles of association of the Company require the Directors to put forward at the ﬁrst Annual General Meeting to be held after 1 March 2025 a resolution to place the Company into voluntary liquidation. Capital structure At 30 September 2022 the Company had in issue 124,149,256 Ordinary shares of 25 pence each of which 2,879,256 were held in treasury (2021:124,149,256 Ordinary shares of which 2,879,256 were held in treasury). During the year ended 30 September 2022 no shares were issued or bought back. Benchmark The benchmark since launch has been the MSCI ACWI Health Care Index (total return in sterling with dividends reinvested). Dividend policy The Company’s focus remains on capital growth, and while the Company continues to aim to pay two dividends per year these are expected to be a small part of shareholder total return. Gearing The Company maintains long-term structural gearing in the form of a loan from the wholly owned subsidiary PCGH ZDP Plc. No additional short-term borrowings have been made and there are no arrangements made for any bank loans. The Company may borrow up to 15% of its Net Asset Value at the time of drawdown for tactical deployment when the Board believes (on the recommendation of the Manager) that gearing will enhance returns to shareholders. Fees The Investment Manager is entitled to a management fee at the rate of 0.75% per annum of the lower of the Group market capitalisation and the Company’s adjusted net asset value. 80% of the management fee is charged to the capital account and 20% is charged to income. The Investment Manager may receive a performance fee paid in cash when various performance parameters are met. No performance fee has been accrued or is due to be paid for the year ended 30 September 2022 (2021: nil). Further details are included in the Strategic Report. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20222 Overview Highlights Financial Highlights Net Asset Value per Ordinary Share (Total Return) Benchmark Index Total Net Assets (Group and Company) Net Asset Value per Ordinary Share Price per Ordinary Share Share Price Total Return Highlights in detail for the year to 30 September 2022 Performance Net asset value per Ordinary share (total return) 5.59% Benchmark Index (MSCI ACWI/Health Care Index (total return in sterling with dividends reinvested)) 6.93% Since restructuring Net asset value per Ordinary share (total return) since restructuring ~ 60.79% Benchmark index total return since restructuring 64.05% Expenses 2022 2021 Ongoing charges 0.84% 0.83% Financials As at 30 September 2022 As at 30 September 2021 Change % Total net assets (Group and Company) £404,833,000 £385,728,000 5.0% Net asset value per Ordinary share 333.83p 318.07p 5.0% Net asset value per ZDP share^ 116.91p 113.50p 3.0% Price per Ordinary share 315.00p 288.00p 9.4% Discount per Ordinary share 5.6% 9.5% Price per ZDP share^ 114.00p 113.50p 0.4% Net gearing 7.41% 6.04% Ordinary shares in issue (excluding those held in treasury) 121,270,000 121,270,000 - Ordinary shares held in treasury 2,879,256 2,879,256 - ZDP shares in issue^ 32,128,437 32,128,437 - Dividends The Company has paid or declared the following dividends relating to the ﬁnancial year ended 30 September 2022: Pay date Amount per Ordinary share Record Date Ex-Date Declared Date First interim: 31 August 2022 1.00p 5 August 2022 4 August 2022 14 July 2022 Second interim: 28 February 2023 1.10p 3 February 2023 2 February 2023 9 December 2022 Total (2021: 2.00p) 2.10p * See Alternative Performance Measures on pages 97 and 98. ~ The Company’s portfolio was restructured on 20 June 2017. The total return NAV performance since restructuring is calculated by reinvesting the dividends in the assets of the Company from the relevant payment date. ^ For information purposes. NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% NET ASSET VALUE PER ORDINARY SHARE (TOTAL RETURN) NET ASSET VALUE PER ORDINARY SHARE 2021 2022 333.83p 2021 2022 6.93% BENCHMARK INDEX PRICE PER ORDINARY SHARE 2021 2022 315.00p 2021 2022 £404.8m TOTAL NET ASSETS (GROUP AND COMPANY) SHARE PRICE TOTAL RETURN 318.07p 13.40% 2021 2022 288.00p £385.7m (TR: Total Return, rebased to 100 at June 2010) 5.59% 19.46% 2021 2022 10.11% 24.55% Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 3 Overview Performance since launch (15 June 2010) Performance since reconstruction (20 June 2017) Performance 0 100 200 300 400 500 600 Sep 2022 Mar 2022 Sep 2021 Mar 2021 Sep 2020 Mar 2020 Sep 2019 Mar 2019 Sep 2018 Mar 2018 Sep 2017 Mar 2017 Sep 2016 Mar 2016 Sep 2015 Mar 2015 Sep 2014 Mar 2014 Sep 2013 Mar 2013 Sep 2012 Mar 2012 Sep 2011 Mar 2011 Sep 2010 Jun 2010 MSCI ACWI Health Care Index in sterling with dividends reinvested (TR) (TR: Total Return, rebased to 100 at launch on 15 June 2010) Company reconstruction 20 June 2017 Ordinary Share Price (TR) NAV per share (TR) MSCI ACWI Health Care Index in sterling with dividends reinvested (TR) (TR: Total Return, rebased to 100 at reconstruction on 20 June 2017) Ordinary Share Price (TR) NAV per share (TR) 50 100 150 200 Mar 2025 Sep 2024 Mar 2024 Sep 2023 Mar 2023 Sep 2022 Mar 2022 Sep 2021 Mar 2021 Sep 2020 Mar 2020 Sep 2019 Mar 2019 Sep 2018 Mar 2018 Sep 2017 Jun 2017 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20224 Overview Chair’s Statement Lisa Arnold Chair Dear Shareholders On behalf of the Board I am pleased to provide to you the Company’s Annual Report for the year ended 30 September 2022. Performance The portfolio performed well over the ﬁnancial year delivering absolute returns of 5.59%, despite the challenging market and economic conditions, especially following Russia’s invasion of Ukraine which commenced in late February 2022. Whilst ahead of the overall market and the peer group, performance did slightly lag the benchmark (MCSI Global Healthcare Index) by 1.3%. In the ﬁnancial year, the share price total return increased by 10.1% as the discount narrowed. At the ﬁnancial year end the discount was 5.6% compared to the prior year of 9.5%. Further detail is provided within the Investment Manager’s Report on pages 11 to 20. Outlook The industry fundamentals remain strong, valuations are still attractive, and with the macro and political background supportive, we remain very optimistic for the outlook for healthcare. Further information on the underlying themes and drivers for the sector are provided in the Investment Manager’s report on pages 14 to 16. The Board continues to monitor performance and remains conﬁdent that the Company is well placed to generate attractive returns for shareholders. Board The Board is aware of the FCA’s Diversity and Inclusion Policy published in April 2022 and, whilst the current Board composition does not currently meet the following target requirements, a minimum of 40% female Board members and at least one non-white ethnic minority Board member, it does meet the requirement to have a senior female Board role in the form of myself as Chair. We will continue to keep this under consideration as part of the Board’s future succession plans and will provide full disclosures in next year’s annual report as required under the FCA’s policy. Further details are provided in the ESG Statement on page 25 and the Report on Corporate Governance on page 47. Dividends The Company’s focus remains on capital growth and consequently dividends are expected to represent a relatively small part of shareholders’ total return. The Company has a policy to pay two small dividends per year but it is recognised that these will not necessarily be of equal amounts and may be reduced. In August 2022 the Company paid an interim dividend of 1.00p per ordinary share. The Board has declared a further interim dividend of 1.10p per ordinary share payable to shareholders on the register as at 3 February 2023. This will bring the total dividend paid for the ﬁnancial year under review to 2.10p per ordinary share, a small increase on the previous ﬁnancial year. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 5 Overview Environmental, Social and Governance (“ESG”) During the year under review, the Board continued its ESG journey and further extended its engagement with the Investment Manager on the progress that has been made in integrating ESG into their investment approach and processes. As stated previously the Board believes the Manager is best placed to integrate ESG factors into the decision making process, with the Board providing oversight and challenge, to gain assurance that the process is being executed as expected. This year, particular focus has been on how ESG has inﬂuenced our Manager’s decision making and the methodology used to assess current and potential investee companies. Whilst there is still some way to go in terms of quality, comparable data for all companies, the Manager has recently introduced an ESG dashboard which allows us to review the ratings of investee companies within the portfolio and to inform discussions between the Board and Manager at Board meetings. As at 30 September 2022, based on MSCI ESG ratings, the portfolio and the benchmark were both AAA rated. The Board also receives information on the progress that has been made at the corporate side of Polar Capital’s business. Please refer to the ESG statement on pages 24 to 28 which incorporates both the investment and corporate approaches. Share Capital The Company has 121,270,000 ordinary shares in issue as at the date of writing and no shares have been bought back or issued during the ﬁnancial year under review. The Company’s share price on 30 September 2022 was 315.00p (2021: 288.00p). The Company’s market capitalisation at the ﬁnancial year end was £382.0m (2021: £349.3m). The Company’s share price traded in a discount range of 3.9% to 15.5% throughout the year, ending at a discount of 5.6% compared to 9.5% at the start of the year. The Board has reconﬁrmed the authority given to the Manager to use discretion to purchase shares in the market when deemed appropriate to do so. Subsidiary Undertaking The Company is parent to a wholly owned subsidiary, PCGH ZDP Plc. The subsidiary was created as part of the Company’s restructure in 2017; the purpose of the subsidiary is to issue zero dividend preference (“ZDP”) shares and provide a loan to the parent in the form of structural gearing. The subsidiary has a ﬁxed life whereby the loan will be repaid and the ZDP shares will be redeemed in June 2024 at which time the entity will be liquidated. Further information can be found on the Company’s website www.polarcapitalglobalhealthcaretrust. co.uk. Annual General Meeting The Company’s twelfth Annual General Meeting (“AGM”) will be held at 16 Palace Street at 2pm on Thursday 9 February 2023. The notice of AGM has been provided to shareholders and will also be available on the Company’s website. Detailed explanations on the formal business and the resolutions to be proposed at the AGM is contained within the Shareholder Information section on page 101 and in the Notice of AGM. We look forward to welcoming you to the Company‘s AGM on 9 February 2023 should you choose to attend. Lisa Arnold Chair 9 December 2022 ANNUAL GENERAL MEETING on 9 February 2023 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20226 Overview Board of Directors Lisa Arnold Chair Neal Ransome Independent Non-Executive Director and Audit Committee Chair Appointed to the Board on 1 February 2018 and as Chair of the Board with effect from 26 February 2020, a member of the Audit and Management Engagement Committees. Skills and experience Lisa was formerly a global pharmaceuticals and healthcare analyst for NatWest Markets from 1987 and continued her healthcare career in roles with UBS Warburg, Commerzbank and Lehman Brothers. Lisa has held a number of independent adviser and non-executive roles including nine years with the Medicines and Healthcare Products Regulatory Agency (MHRA) and eight years as a non-executive director of Futura Medical plc. Other appointments Lisa holds a number of pension trustee directorships and is the chair of the Allied Domecq Pension Fund and chair of the investment committee of the Sainsbury’s Pension Fund. She is also a non-executive director of PIMCO Europe Limited where she chairs the audit committee. PCGH Share Interests 20,000 (0.02% of ISC) Annual Remuneration £41,000 Rationale for supporting re-election Lisa has had a long career as a global pharmaceuticals and healthcare analyst ahead of her taking on non-executive director positions. Since joining the Board and taking on the Chair Lisa has delivered investment and strategic experience along with her detailed and effective leadership skills. Through Lisa’s pension fund roles, particularly with the early adoption of TCFD, she has a comprehensive understanding of the importance and challenges of ESG and climate related issues. In her role as Chair, Lisa has continued to work closely with the corporate brokers and the Managers to improve communication both internally and externally for the beneﬁt of all and, in particular, when considering a shareholder perspective. Lisa continues to lead the Board with an inclusive and engaging manner and her nomination for re-election as Chair and non-executive Director is supported by both the Board and the Managers. Appointed to the Board on 13 December 2017 and, with effect from 28 February 2018, as Chair of the Audit and Management Engagement Committees. Skills and experience Neal is a chartered accountant with an MA in Modern History from Oxford University. Neal was a partner at PwC from 1996 to 2013. He led PwC’s Pharmaceutical and Healthcare M&A practice for 17 years and was also chief operating ofﬁcer of PwC’s Advisory Services business. Other appointments Neal is currently chairman of ProVen VCT plc and Octopus AIM VCT Plc. PCGH Share Interests 10,073 (0.01% of ISC) Annual Remuneration £35,000 (including Audit Committee Chair supplement) Rationale for supporting re-election Neal has recent and relevant ﬁnancial expertise with a strong accounting background which enables him to perform in-depth analyses of the Company’s performance and Financial Statements. In addition to his ﬁnancial expertise, Neal has a wealth of experience in evaluating pharmaceutical and healthcare companies having previously led PwC’s Pharmaceutical and Healthcare M & A practice. Neal is Chair of the Company’s Audit Committee, a role in which he has had extensive experience on other boards. Neal’s re-election as a non-executive Director and Audit Committee Chair is supported by the Board and the Managers. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 7 Overview Andrew Fleming Non-Executive Director Jeremy Whitley Non-Executive Director Appointed to the Board on 1 December 2019, also a member of the Audit and Management Engagement Committees. Skills and experience Andrew is chair of Saltus Asset Management Limited and was previously chief executive of Waverton Investment Management. He started his career at Gartmore where he was a main board director and head of equities. Andrew went on to hold senior positions at ABN Amro and was chief executive of Kames Capital for nine years. He was a director and chairman of JP Morgan Japanese Investment Trust plc retiring in December 2018 and is a director of Keystone Positive Change Investment Trust plc which has a dual mandate including an impact focus. Other appointments Andrew is chair of Saltus Asset Management and CTVC Limited. He is also a trustee of the Rank Foundation and chairs its Investment Committee. PCGH Share Interests 10,000 (0.01% of ISC) Annual Remuneration £29,500 Rationale for supporting re-election Andrew continues to share his investment and management experience and is a key participant in Board meetings. He has worked with the Board and the Managers to ensure the continuation and continued improvement of service. In addition to his extensive investment and commercial management expertise he also has prior ESG experience having launched one of Europe’s ﬁrst ESG funds some 20 years ago and was a very early advocate and signatory of the UNPRi principles. Andrew’s re-election as a non-executive Director is supported by the Board and Managers. Appointed to the Board on 1 December 2019, also a member of the Audit and Management Engagement Committees. Skills and experience Jeremy was formerly Head of UK and European Equities at Aberdeen Asset Management, a position he held from 2009 to 2017. Previous roles there included being a senior investment manager on the Global equities team as well as the Asian equities team, based in Singapore, where he was lead manager of the Edinburgh Dragon Trust. He began his investment career at SG Warburg & Co in 1988. Other appointments Jeremy is Chairman of The Scottish Oriental Smaller Companies Trust plc and a non-executive director of JP Morgan Indian Investment Trust plc. PCGH Share Interests 20,000 (0.02% of ISC) Annual Remuneration £29,500 Rationale for supporting re-election Jeremy’s experience, not least from his prior roles at Abrdn Asset Management, has enabled him to bring a global perspective to the regular review of the portfolio and he has been a strong advocate for clear performance attribution analysis. Jeremy also brings to the Board experience from other investment trust management houses. Jeremy’s re-election as a non-executive Director is supported by the Board and the Managers. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 20228 Overview James Douglas, PhD – Co-Manager Gareth Powell, CFA – Co-Manager James joined Polar Capital in September 2015 as a senior analyst for the healthcare team. He has 23 years of industry experience and has been an integral part of the management team for the Company since restructure. Skills and experience Prior to joining Polar Capital, he was in equity sales specialising in global healthcare at Morgan Stanley, RBS and HSBC. James also has equity research experience garnered from his time at UBS, where he worked as an analyst in the European pharmaceutical and biotechnology team. Before moving across to the ﬁnancial sector, he worked as a consultant for Evaluate Pharma. James received both his PhD and his ﬁrst class honours degree in Medicinal Chemistry from Newcastle University and holds an ACCA diploma in Financial Management (DipFM). Gareth joined Polar Capital to set up the healthcare team in 2007. He has over 24 years’ investment experience in the healthcare sector with 18 years as a Portfolio Manager. Skills and experience Prior to joining Polar Capital Gareth worked at Framlington, where he began his career in investment management in 1999. He joined the healthcare team in 2001 and helped launch the Framlington Biotech Fund, which he managed from 2004 until his departure. Gareth studied Biochemistry at Oxford and is a CFA charterholder. David Pinniger, CFA David joined Polar Capital’s healthcare team in August 2013 and is the Lead Manager of the Polar Capital Biotechnology Fund. He has over 22 years’ investment experience in the healthcare sector. Skills and experience Prior to joining Polar Capital, David spent ﬁve years as a Portfolio Manager of the International Biotechnology Trust at SV Life Sciences. He also previously spent three years working at venture capital ﬁrm Abingworth as an analyst managing biotechnology investments held across the ﬁrm’s venture and specialist funds, and four years at Morgan Stanley as an analyst covering the European pharmaceuticals and biotechnology sector. David received a ﬁrst class honours degree in Human Sciences from Oxford University in 1999 and is a CFA charterholder Deane Donnigan, Pharm D Deane joined Polar Capital in June 2013 as a senior analyst for the healthcare team. She has 37 years’ industry experience of which over 21 are in healthcare asset management. Skills and experience She trained as a clinical pharmacist having graduated with a post baccalaureate Doctor of Pharmacy, from the University of Georgia. In 1990, she accepted a position with Emory University Hospital in Atlanta, Georgia as a clinical specialist in Drug Information and Adult Internal Medicine. In 1997, Deane left the US to begin her career in fund management at Framlington in the UK. Having started as an analyst, she spent 14 years at Framlington, eventually becoming Lead Portfolio Manager on both the Framlington Healthcare and Biotechnology funds. Brett Pollard, PhD Brett Pollard joined the Polar Capital Healthcare team in September 2021 as an investment analyst. Prior to Polar Capital, Brett was Managing Director of Strategy and Corporate Development at Scapa plc, with responsibility for investor relations. Since 2001 he has worked across the healthcare sector and within equity capital markets as a healthcare analyst, most recently at Numis. Brett also has worked in and led ﬁnancial communications, corporate development, investor relations and operations. Skills and experience Studied cell and molecular biology at the University of St. Andrews; PhD in molecular virology. Investment Team Daniel Mahony, PhD Daniel joined Polar Capital to set up the healthcare team in 2007 and was a key member of the team until October 2021. Dan has since moved to being a consultant to the healthcare team and continues to consult on all healthcare products. He has 31 years of industry experience, comprising more than 24 years’ investment experience in the healthcare sector. Skills and experience Prior to joining Polar Capital, he was head of the European healthcare research team at Morgan Stanley. Daniel received his PhD from Cambridge University in 1995 and a ﬁrst class honours degree in Biochemistry from Oxford University in 1991. Damiano Soardo, CFA Damiano joined the healthcare team in October 2020 as an Investment Analyst. Damiano is responsible for supporting the fund managers by performing analysis of business models, industry trends and ﬁnancials. Previously, Damiano worked in the Operations department when he joined Polar Capital in February 2016 and subsequently moved to the Risk team in January 2019. Skills and experience Prior to joining Polar Capital, he worked as a technical consultant at a FinTech company. Damiano has an MSc in Mathematics and Foundations of Computer Science from the University of Oxford and is a CFA charterholder. Audrey Stynes Audrey joined the healthcare team in April 2019 as the team assistant. Aside from organising the team’s administration and communication workload both internally and externally, she coordinates presentations and marketing material in addition to generating bespoke reports that inform daily fund management activities for the team at large. Previously, Audrey worked in the Product and Operations department when she joined Polar Capital in March 2018. Skills and experience Audrey graduated with a BA (1st Class Hons) in Early Childhood Education from the Dublin Institute of Technology and a MA in Early Childhood Education and Care from the Dublin Institute of Technology, Oslo University College, University of Malta and the University of Gothenburg. Tara Raveendran, PhD Tara joined Polar Capital in September 2021 as a consultant focused on independent research for the team. Prior to joining Polar Capital, she was the Head of Healthcare & Life Sciences Research at Shore Capital. Previously Tara spent over 15 years working in equity research, specialising in European pharmaceuticals, biotechnology and medtech at Lehman Brothers and Jefferies. She has also worked with a number of healthcare-focused startups through her life sciences consultancy, SSquared Consulting, most recently working with the UK government’s Vaccine Taskforce. Skills and experience BSc in Biochemistry and PhD in Structural Biology from Imperial College, London. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 9 Overview The demand for products and services is growing signiﬁcantly. Innovation continues at a rapid pace and valuations are attractive. Manager’s Report Manager’s Report Track record and an experienced team Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202210 Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 11 Manager’s Report Investment Manager’s Report The objective of Polar Capital Global Healthcare Trust plc (“the Company”) is to generate long-term capital appreciation by investing in a globally diversiﬁed portfolio of healthcare companies. The Company’s diversiﬁcation strategy, coupled with its focus on large-capitalisation healthcare companies with robust, medium-term growth outlooks, helps drive the positive risk/ return proﬁle of the underlying assets, relative to the more volatile areas of healthcare. Further, the broad investment remit affords the opportunity to invest in growth areas regardless of the economic, political and regulatory environment. Importantly, the Company also has the opportunity to invest in earlier-stage, more innovative and disruptive companies that tend to be lower down the market-capitalisation and liquidity scales. This is a key advantage of the Company’s structure as a closed-end company. Regardless of size, subsector or geography, stock selection is central to the process, as we look to identify companies where there is a disconnect between valuations and the near and medium-term growth drivers. In terms of structure, the majority of the Company’s assets (calculated on a gross basis and referred to as the Growth portfolio) will be invested in companies with a market capitalisation >$5bn at the time of investment, with the balance invested in companies with a market capitalisation <$5bn (a maximum of 20% of gross assets and referred to as the Innovation portfolio). At the end of the reporting period, 30 companies in the portfolio were Growth investments (94.5% of net assets) and 11 were Innovative investments (12.8%). Structural debt, in the form of Zero Dividend Preference Shares, offers access to additional liquidity and the opportunity to enhance returns. Dr James Douglas Co-Manager Gareth Powell Co-Manager Market Capitalisation Market Capitalisation at 30 September 2022 30 September 2021 Large (>US$10bn) 78.5% 78.9% Medium (US$5bn - US$10bn) 16.0% 14.8% Small (<US$5bn) 12.8% 12.2% Other net liabilities (7.3%) (5.9%) 100.0% 100.0% Source: Polar Capital. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202212 Manager’s Report Investment Manager’s Report continued Over the ﬁnancial year to the end of 30 September 2022, the Company delivered a NAV per share total return of 5.59%, 1.34% behind its benchmark, the MSCI All Country World/ Healthcare Total Return Index. The absolute performance of the healthcare sector was positive, up 6.93% over the reporting period, with the sector comfortably outperforming the broader market, as tracked by the MSCI All Country World Net Total Return Index (all ﬁgures above are in sterling terms) which was down 4.04%. Despite being faced with a cocktail of rising inﬂation, hawkish central banks and the war in Ukraine, equity markets were remarkably resilient during the ﬁrst six months of the ﬁnancial year. Unfortunately, that resilience faded heavily in the latter half of the period as inﬂationary and supply-chain pressures accelerated, economic activity started to slow and the markets started to digest the possibility of a recession. Reﬂecting on performance, strong stock selection across the market-capitalisation spectrum was offset by the negative allocation effect of having a relative overweight position in small and mid-capitalisation stocks. Distributors, managed care, healthcare services and pharmaceuticals all performed strongly over the period. Pharmaceuticals had a relatively strong year, primarily driven by companies’ resilience to inﬂationary pressure given their high gross and operating margins, coupled with the essential nature of their products. At the other end of the scale, the past 12 months have been difﬁcult for the healthcare supplies, life sciences tools and services, equipment and facilities subsectors. The US-based multinationals had the strain on their earnings of signiﬁcant upward pressure from the appreciation of the US dollar. The struggles witnessed in the healthcare facilities subsector reﬂect rising wage inﬂation coupled with volumes that have been hampered by COVID-19-related stafﬁng shortages. As set out in last year’s annual report, the focus was very much on three key investment themes that accelerated through the COVID-19 crisis; disrupting the delivery of healthcare, outsourcing and prevention, all of which remain relevant today. The dynamism within the healthcare market has, however, shifted our focus to areas we feel will be more relevant for the year ahead. More speciﬁcally, delivery disruption, accelerating utilisation and consolidation. Disrupting the delivery of healthcare continues to be a critical component when it comes to generating much-needed efﬁciencies, with recent momentum likely to continue in the near and medium term. Increased utilisation could be a signiﬁcant revenue driver as the healthcare industry works its way through the ever-expanding backlog of patients who require medical attention. Last, but not least, we expect the recent wave of consolidation in the industry to continue as management teams look to use generally strong company balance sheets to either expand their pipelines, access innovative technologies and platforms or accelerate near-term revenue and earnings momentum. After a period of relative calm, US healthcare reform came to prominence again in 2022 with a healthcare reconciliation package signed into law in August 2022. Included within the Inﬂation Reduction Act, the major healthcare provisions include price negotiations for certain Medicare drugs towards the end of the decade, mechanisms to control drug-pricing inﬂation and caps on out-of-pocket spend for US seniors. Encouragingly, the Act also extended premium subsidies to ensure ongoing access to healthcare cover, a positive not just for US citizens but for the pockets of the industry that beneﬁt from either providing healthcare insurance plans or from sustained utilisation. With reform now very much in the rear-view mirror, investors can focus their attention on a healthcare sector that is highly innovative, possesses strong fundamentals, is attractively valued and defensive. These are all extremely appealing characteristics in the current, challenging macroeconomic environment. Performance review Over the ﬁnancial year to the end of September 2022, the overall healthcare sector comfortably outperformed the broader market, with the MSCI All Country World/Healthcare Total Return Index returning 6.93% in sterling terms, compared to a decline in the broader equity market of 4.04%, as represented by the MSCI All Country World Net Total Return Index. The Company achieved a return on net assets of 5.59%, which was 1.34% behind its benchmark, but signiﬁcantly ahead of more volatile areas of healthcare such as smaller stocks and biotechnology. Global equity markets posted positive returns in the ﬁrst three months of the ﬁnancial year, but a sustained downtrend started in mid-January as investors grappled with a deteriorating macroeconomic environment characterised by persistent inﬂation, slowing growth and geopolitical tension. The Company entered the ﬁnancial year with approximately 6% net gearing and a large exposure to healthcare facilities, managed care, healthcare distributors and healthcare equipment and supplies, with the biggest underweight in the pharmaceuticals sector and a smaller underweight in life sciences tools and services. As the year progressed and the macroeconomic picture became more challenging, the portfolio was shifted to a more defensive position, with increased exposure to pharmaceuticals, biotechnology and healthcare facilities, and reduced allocation to healthcare equipment and supplies. Healthcare equipment was the biggest positive contributor to performance thanks to strong stock selection. Biotechnology and managed care were also positive. On the other hand, pharmaceuticals detracted the most due to negative allocation and stock-picking. Solid selection in healthcare facilities was not enough to offset the negative allocation effect, while distributors suffered due to poor stock selection. In summary, the underperformance relative to our benchmark during the ﬁnancial year was caused by adverse allocation which marginally outstripped the positive contribution from stock selection. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 13 Manager’s Report From a market-capitalisation perspective, small and mid- sized healthcare companies experienced a sharp downward correction starting in early November 2021. For context, the Russell 2000 Healthcare Index underperformed the S&P 500 Healthcare index by over 30%, in dollar terms, during the ﬁnancial year. Investors’ risk appetite deteriorated signiﬁcantly over the course of the period under review with inﬂation, high interest rates, a slowing global economy and geopolitical unrest the catalysts for a ﬂight to safety. Consequently, given the Company’s overexposure to small and mid-capitalisation stocks, the allocation effect was negative, although this was more than offset by strong stock selection. As for the larger-company investments, to which the Company was underweight relative to the benchmark, both allocation and selection were negatives. On a geographical basis, the largest positive contributors were Asia Paciﬁc ex-Japan, where both allocation and selection contributed positively, and Japan, where allocation was particularly favourable. Despite the good allocation effect, adverse selection and currency effects meant both Europe and North America detracted from performance. The active management of gearing did not have a meaningful contribution to performance. Top 10 Relative Contributors (%) Average Stock Weight Active Weight Stock Return Stock Return vs BM Total Attri- bution Cytokinetics 2.72 2.72 63.37 56.44 1.33 Moderna 0.00 -0.86 -62.97 -69.90 1.19 Acadia Healthcare 2.44 2.44 47.72 40.79 0.92 Molina Healthcare 2.21 1.98 46.51 39.58 0.88 Daiichi Sankyo Co 1.20 0.62 26.49 19.56 0.83 arGEN-X BV 2.01 1.80 44.97 38.04 0.77 Intuitive Surgical 0.00 -1.28 -31.84 -38.77 0.60 Medtronic 0.00 -1.84 -22.37 -29.30 0.60 DexCom 0.64 0.09 -29.01 -35.94 0.56 Biohaven Pharmaceutical Holding 1.32 1.32 31.15 24.22 0.53 Source: Polar Capital, as at 30 September 2022. Positive contributors to performance for the ﬁnancial year included Cytokinetics, Moderna, Acadia Healthcare, Molina Healthcare, and Daiichi Sankyo. Cytokinetics is a biotechnology company focused on developing drugs for cardiovascular and neuromuscular diseases of impaired muscle function. The stock performed strongly, due to the potential for the company’s differentiated and possibly commercially attractive assets. Following positive results from a Phase 3 clinical trial, Cytokinetics’ mecamtiv mecarbil, a drug for heart failure with reduced ejection fraction (HFrEF), is undergoing FDA review. An FDA Advisory Committee is scheduled for early December and a decision on its approval is expected in the ﬁrst quarter of 2023. Additionally, the company is continuing its trials for aﬁcamten in patients with obstructive hypertrophic cardiomyopathies (oHCM); the approval of Bristol-Myer Squibb’s Camzyos (mavacamten), which also targets the same disease, should bode well for the prospect of aﬁcamten. The lack of exposure to Moderna, an mRNA vaccine manufacturer that beneﬁtted signiﬁcantly from the COVID-19 pandemic, was a positive contributor. The stock dropped considerably over the ﬁnancial year as investors shifted their focus to the broader utility of the mRNA technology beyond COVID-19. Additionally, the stock was caught up in a widespread sell-off of high-growth biotechnology names whose terminal values have been eroded by rising interest rates and a slowing funding environment. Although Acadia Healthcare struggled in the ﬁrst few months of the ﬁnancial year in the wake of the Omicron variant and a tightening labour market, the company posted a solid set of FY21 results coupled with FY22 guidance that provided a strong sense of relief for investors. Strong execution continued in the new year, with 1Q22 and 2Q22 results ahead of expectations. Molina Healthcare, a managed care organisation, performed extremely well on the back of strong execution and favourable micro and macroeconomic factors. On the company-speciﬁc side, utilisation remained subdued despite the drop in COVID-19 cases, which meant the medical loss ratio (a measure of revenue spent to provide care for members) was tightly managed. Additionally, full ﬁnancial-year outlook was raised during the ﬁrst two earnings releases in 2022 and the company also gave a better than expected guidance for 2023. We believe the share performance also reﬂected a generally advantageous backdrop for managed care organisations, which tend to beneﬁt from higher interest rates and are less affected by inﬂationary and supply-chain pressures. Daiichi Sankyo, a Japanese pharmaceutical company with a focus on oncology, experienced a strong upward rerating, which reﬂected both increasing enthusiasm for recently launched Enhertu, an antibody drug conjugate (ADC) for the treatment of metastatic breast cancer, but also the rapid pace of development into additional indications for the drug. Further, the company had been subject to a litigation brought forward by Seagen, alleging that Daiichi Sankyo’s ADCs infringed a series of patents. When the ruling came out in favour of the Japanese company, the overhang on the stock was removed and the share price rose rapidly. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202214 Manager’s Report Investment Manager’s Report continued Bottom 10 Relative Contributors (%) Average Stock Weight Active Weight Stock Return Stock Return vs BM Total Attri- bution AbbVie 1.54 -1.75 49.94 43.01 -1.46 Avantor 2.51 2.26 -42.25 -49.18 -1.44 Eli Lilly & Co 0.09 -2.96 68.65 61.72 -1.34 Bio-Rad Laboratories 3.03 2.85 -32.61 -39.54 -1.24 Siemens Healthineers AG 2.44 2.22 -19.35 -26.28 -1.00 Merck & Co 0.00 -2.83 41.88 34.95 -0.86 UCB 2.05 1.88 -25.00 -31.93 -0.83 Horizon Therapeutics 2.78 2.52 -31.91 -38.84 -0.74 Medley 0.79 0.79 -44.42 -51.35 -0.63 Tenet Healthcare Corp 1.48 1.48 -6.44 -13.37 -0.60 Source: Polar Capital, as at 30 September 2022. Negative contributors to performance for the ﬁnancial year 2022 included AbbVie, Avantor, Eli Lilly, Bio-Rad Laboratories, and Siemens Healthineers. For the majority of the ﬁnancial year, the Company had no holdings in either AbbVie or Eli Lilly. Both companies beneﬁtted from a market rotation away from high-growth, smaller-capitalisation stocks, riskier assets towards more stable, larger-capitalisation stocks with an ability to weather an economic recession. The pharmaceutical majors ﬁt squarely into this camp. There were also stock-speciﬁc aspects that explain the positive performance of AbbVie and Eli Lilly. The former produced a series of solid sets of ﬁnancial results that were well received by the market, thanks to strong uptake for rheumatology and dermatology drugs Skyrizi and Rinvoq. Eli Lilly’s performance was a reﬂection of good execution and increased interest for the potential of its diabetes and obesity franchises given the exceptional results of Mounjaro (tirzepatide) in decreasing blood sugar levels and body weight. Avantor, a life sciences tools and services business, sold off heavily on a disappointing 2Q22 update. The company cited COVID-19 revenues rolling off, foreign exchange headwinds and lower than expected contributions from recent acquisitions MasterFlex and Ritter GmbH as the reasons for the weak set of numbers. The strong derating was also a sign of investors’ lack of conﬁdence in management’s ability to execute on deals and manage investors’ expectations. On a more positive note, the end markets for the life sciences tools and services industry remain buoyant, especially in areas such as bioprocessing. Like many other life sciences tools and services companies, Bio-Rad Laboratories was dragged down by the general market switch to less highly-rated companies. Despite the subsector’s ability to pass higher input costs to end customers, companies still had to contend with supply-chain disruption, inﬂation and fears that the challenging environment for access to capital for early-stage biopharmaceuticals will impact drug development timelines. The stock also suffered from the decline in value of its investment in Sartorius which was rumoured to be on the lookout for M&A deals, a prospect investors did not support. Siemens Healthineers, a European medical technology company with a strong presence in imaging, radiation oncology and diagnostics, experienced a turbulent period of performance following downgrades to its margin guidance for FY2022. The company also pointed to lower margins for its diagnostics division in the year ahead, making it even more ambitious to reach its long-range targets. Supply-chain challenges, the rising costs of materials and labour, and lockdowns in China were the main explanations for the revised outlook. The market also grew progressively more nervous about hospitals’ ability to invest in large capital equipment projects, such as imaging or radiation-oncology machines, during an economic downturn. Healthcare: Momentum and conviction building The 2021 Annual Report focused on three key themes that we believed were accelerating in a COVID-19 endemic world: • Disrupting healthcare delivery and shifting utilisation to lower-cost settings: This will be by far the most important structural shift in healthcare for the next 10-20 years and the enablers of this shift should enjoy signiﬁcant growth. • Outsourcing: A continuing theme with robust growth across clinical trial outsourcing and contract manufacturing. • Prevention: References diagnostics and vaccines, both of which provide tremendous value to healthcare systems as prevention is the most cost-effective way of delivering healthcare. The impact of COVID-19 has highlighted the value of diagnostics and vaccines. We continue to believe the above themes will be relevant for some time, but in a rapidly evolving environment the following trends may have more relevance and momentum in the near term: • Healthcare delivery disruption accelerating including the shift to value-based care: Not just driving patient volumes through lower-cost settings, but coordinating care to drive better outcomes. • Utilisation: Working through the ever-growing backlog of patients as healthcare systems globally learn to live with COVID-19. • Consolidation: Healthcare is highly fragmented and heavily populated with companies that have robust cashﬂows and strong balance sheets. M&A activity has increased of late and is highly likely to continue on the same path. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 15 Manager’s Report Accelerating healthcare delivery disruption, utilisation and consolidation: Key themes for the year ahead Shifting patient volumes away from hospitals to lower-cost outpatient settings such as ambulatory surgical centres (ASCs) and the home are central cogs when it comes to generating much-needed efﬁciencies in healthcare systems. ASCs are outpatient healthcare facilities that offer same-day surgical services, including diagnostic and preventive services. These facilities offer cost-effective services and are more convenient for consumers than more traditional hospital settings. The number of procedures offered in ASCs is expanding and already includes orthopaedics, ophthalmology, dermatology, urology, gastroenterology and pain management. For context, ASCs perform more than half of all US outpatient surgical procedures and they can expect to see greater volumes as the number of outpatient procedures is expected to increase by an estimated 15% by 2028. Further, over the next 10 years, surgeries are projected to grow 25% at ASCs and 18% at both hospital outpatient departments and physicians’ ofﬁces, according to a report published by Sg2, a US-based healthcare and hospital system consultancy. The combination of material cost savings (an average gallbladder surgery costs $12,000 when done at a hospital while the same procedure costs $2,200 at an ASC) and patient convenience underpins the medium-term future for an already accelerating trend. Home health also adds a critical dimension to the idea that the delivery of healthcare is being disrupted. Home health is usually less expensive, more comfortable for patients and can be just as effective as the care offered by hospitals and skilled nursing facilities. If managed appropriately, home health can also accelerate independence and self-sufﬁciency. In the US, for example, Medicare covers a number of services including skilled nursing care, physical therapy, social services and medical supplies. Based on a survey of physicians who serve predominantly Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, it is estimated that up to $265bn of care services for Medicare FFS and MA beneﬁciaries could shift from traditional facilities to the home by 2025 without a reduction in quality or access. That represents a three to fourfold increase in the quantity of care being delivered at home today for this population. Value-based care (VBC) rewards healthcare providers for quality of care via payment systems that incentivise high quality of care from clinicians and healthcare organisations alike. The potential beneﬁt to patients comes via improved coordination of care and engagement which in turn can drive more essential diagnostics, reduced hospital readmissions and better outcomes. If successful, the beneﬁts to patients are obvious but there are also beneﬁts to the healthcare systems. An effective VBC model could reduce costly hospital readmissions, improve preventative care and bolster the health of the general population. It all sounds sensible and effective but it is the alignment of incentives that really makes VBC work. Risk-sharing arrangements are key to ensuring providers reduce waste and work hard to drive better outcomes. Recent deal activity in the US adds even more conviction to this idea that VBC will be an important growth engine for the healthcare industry. In September 2022, UnitedHealth Group agreed a 10-year partnership with Walmart with the speciﬁc aim of driving VBC adoption for Walmart’s clinicians. Through the partnership, UnitedHealth Group’s Optum division will assist Walmart clinicians in delivering comprehensive VBC through data analytics and decision support tools. Not only will the initiative improve the provision of care, it will also go some way to addressing the key issue of affordability. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202216 Manager’s Report Investment Manager’s Report continued Across the world there is a consensus that there is a growing backlog of patients requiring medical attention, but it is the size of the backlog, for example, and the precise shape of the recovery curve that is tough to predict. The latest NHS ﬁgures point to a record 6.84 million people waiting for treatment, with 2.67 million of those having waited more than 18 weeks. Perhaps even more worrying is the hidden backlog with cancer targets continuing to be missed. Looking at the US, according to a study published in the Annals of Surgery, hospitals lost an estimated $22.3bn in revenue between March and May 2020, some of which we believe will likely be, or has already been, recaptured. On a more optimistic note, there is strong evidence to suggest healthcare systems have learnt to adapt and have been able to self-regulate, maintaining surgical procedure volumes even during the COVID-19 surges. That evidence is based on the observation that, despite a 48% drop in surgical procedure volumes in the US immediately after the March 2020 lockdowns, surgical volumes returned to 2019 rates in the vast majority of specialties, a rate maintained during the COVID-19 winter surges. The healthcare sector operates in the most fragmented of all industries, with consolidation a major long-term driver of efﬁciencies for companies that operate in different parts of healthcare. Unlike other industries, few subsectors see a small number of companies dominating markets, but the beneﬁts of such scale do matter in healthcare. Consolidation typically drives margin enhancement and often revenue growth, both of which are drivers of shareholder value. The most fragmented part of healthcare is on the services side, particularly within health insurance and all the different types of healthcare provider. Most recently, M&A activity has been picking up between large-capitalisation pharmaceutical and small/mid-capitalisation biotechnology companies, with the former typically offering signiﬁcant premiums to acquire the latter. There are several reasons for a pick-up in acquisitions. In 2020-21, following the wider market lows in March 2020, the biotechnology subsector enjoyed a strong run of outperformance and access to capital was easy through IPOs and secondary offerings. As such, small/mid-capitalisation biotechnology companies did not need an exit strategy as they could easily access capital to fund their research programmes. However, with the bursting of the bubble in unproﬁtable companies, access to funds has become much more challenging, particularly with the market selloff in 2022. The resulting collapse in prices for small/mid- capitalisation biotechnology stocks has created a much more attractive environment for the larger companies to consider M&A. Further, large pharmaceutical companies are looking to bolster revenues in the years 2025-30 with patent expiries set to impact growth. Pﬁzer, for example, has been explicit in saying they want to acquire $25bn in revenues by the end of the decade. In summary, there appears to be a clear rationale for an acceleration in M&A. If this comes to fruition, the innovation part of the Company’s portfolio should be the prime beneﬁciary of potential deal ﬂow. Inﬂation Reduction Act: Is peak policy risk behind us? On 16 August 2022, the Inﬂation Reduction Act was signed into law in the US. With regards to healthcare, there were two main areas of focus: drug pricing reform and access to care. As regards drug pricing, the Act includes several provisions to lower prescription drug costs for those with Medicare and reduce drug spending by the federal government: • Selective drug price negotiation authority for the US Department of Health & Human Services. • Rebates on drug price increases greater than inﬂation. • A $2,000 out-of-pocket cap for Medicare beneﬁciaries. The Act also includes a provision to extend health insurance subsidies to reduce monthly premium expenses for the next three years. These subsidies, expanded via the American Rescue Plan Act of 2021, were set to expire at the end of 2022. So, what are the implications? This Act deals mainly with Medicare, i.e. health insurance for the over 65’s. With regards to drug pricing for Medicare, the planned negotiation beginning in 2026 for a small number of products is only a small negative for the industry as it will impact the value of these products very close to their patent expiry. A positive is the $2,000 out-of-pocket cap which will be a signiﬁcant tailwind for both patients and the industry given the implications for enhanced affordability and increased volumes. Focusing on access to care, had the subsidies to reduce monthly insurance premium expenses expired, the Kaiser Family Foundation estimated that 13 million people receiving assistance for their marketplace insurance would have faced signiﬁcant increases in their monthly premiums. For people who enrolled in the federal marketplace, Healthcare.gov, premiums could have gone up by more than 50%. The decision to extend the subsidies by an additional three years is a clear positive for the healthcare insurance industry plus the facilities and providers. In summary, the Act is a modest positive for the broader healthcare industry, especially if the drug pricing reforms remain isolated to Medicare and there is no contagion into the wider commercial setting. Further, and potentially more importantly, we believe further legislation is unlikely. In essence, Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 17 Manager’s Report the Act is a clearing event for the sector, potentially removing a signiﬁcant overhang. Positioning and process: Constructive on biotechnology, facilities and managed care The sharp market correction towards the end of the ﬁnancial year, while frustrating, presented an opportunity to engage with a number of really exciting investments which are a direct play on the key themes of disruption and utilisation. As at 30 September 2022, three of the largest overweight subsector positionings were in biotechnology, healthcare facilities and managed healthcare. Despite what feels like an extremely challenging environment for early-stage biotechnology investing, we remain constructive on the sector. The industry continues to be innovative and highly productive with many of the Company’s investments in businesses with either late-stage assets or commercialised drugs or both. Drilling down into therapeutic categories, oncology is a key area of focus and an area that has seen an incredible amount of investment, innovation and, most importantly, success. While not an exhaustive list, other areas of interest include cardiovascular diseases, haemophilia, respiratory disorders and obesity. From a healthcare facilities perspective, the investments here are biased towards businesses providing access to healthcare services in the lowest-cost settings such as the home and outpatient facilities or ASCs. The Company also has exposure to behavioural health services, where we have sadly seen a huge jump in demand due to the pandemic. The constructive stance on managed care is based on a number of factors including healthy, growing end markets (with Medicare Advantage at the forefront), good earnings visibility and an earnings tailwind from rising Treasury yields. As insurance companies, managed care companies have large investment portfolios that beneﬁt from rising rates, creating a potential tailwind to EPS growth. Healthcare equipment is a subsector we have been constructive on historically given the current innovation wave, the rising demand for their products and services, and attractive valuations relative to the anticipated growth opportunities. As at the end of September, however, we were much more cautious on healthcare equipment given the difﬁcult macroeconomic climate. Supply-chain challenges coupled with rising input and freight costs have put pressure on operating margins, plus the strength of the dollar has created a material headwind for the near-term earnings proﬁles of US companies with exposure to ex-US markets. Looking ahead, however, we are optimistic that some of the supply- chain constraints will ease and the ever-growing backlog of patients will create a platform for accelerating top and bottom- line growth. Healthcare supplies is another subsector where we have adopted a more cautious stance during the reporting period. Much of the input pressure being experienced in the equipment subsector is relevant for supplies but the consumer is also a critical factor. Certain dental and ophthalmology end markets have a material discretionary component, an uncomfortable backdrop given the current macroeconomic climate. Our shifting stance on pharmaceuticals is also worth noting. Historically, we have adopted a material underweight in pharmaceuticals relative to the benchmark, taking the view that, collectively, they have fairly unexciting revenue and earnings growth proﬁles. However, the essential nature of their products coupled with relatively high gross and operating margins, makes them very attractive investments at a time when inﬂation is high, economic activity is slowing and unemployment is rising. As such, we have reduced our relative underweight versus the benchmark. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202218 Manager’s Report -15 -10 -5 0 5 10 Apparel, Accessories & Luxury Goods Biotechnology Healthcare Facilities Metal & Glass Containers Managed Healthcare Healthcare Supplies Healthcare Technology Healthcare Distributors Healthcare Services Life Sciences Tools & Services Healthcare Equipment Pharmaceuticals -15 -10 -5 0 5 10 15 Apparel, Accessories & Luxury Goods Biotechnology Healthcare Facilities Metal & Glass Containers Managed Healthcare Healthcare Supplies Healthcare Technology Healthcare Distributors Healthcare Services Life Sciences Tools & Services Healthcare Equipment Pharmaceuticals 30 September 2021 Subsector weightings relative to benchmark Source: Polar Capital. Subsector weightings relative to benchmark 30 September 2022 30 September 2021 -15 -10 -5 0 5 10 Apparel, Accessories & Luxury Goods Biotechnology Healthcare Facilities Metal & Glass Containers Managed Healthcare Healthcare Supplies Healthcare Technology Healthcare Distributors Healthcare Services Life Sciences Tools & Services Healthcare Equipment Pharmaceuticals -15 -10 -5 0 5 10 15 Apparel, Accessories & Luxury Goods Biotechnology Healthcare Facilities Metal & Glass Containers Managed Healthcare Healthcare Supplies Healthcare Technology Healthcare Distributors Healthcare Services Life Sciences Tools & Services Healthcare Equipment Pharmaceuticals Source: Polar Capital. Note: Sector exposure refers to the extent to which the Fund is overweight or underweight in each sector compared (relative) to the index (MSCI All Country World/Healthcare Total Return Index). Geographic Exposure at 30 September 2022 30 September 2021 United States 72.3% 69.0% Japan 6.9% 1.8% Switzerland 6.4% 2.5% United Kingdom 6.4% 7.3% Denmark 4.3% 4.6% Sweden 2.9% - France 2.6% 6.2% Netherlands 2.3% 5.2% Germany 2.2% 2.7% Ireland 1.0% 1.9% Australia - 2.4% Belgium - 2.3% Other net liabilities (7.3%) (5.9%) Total 100% 100% Geographical Exposure at 2022 Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Geographical Exposure at 2021 Sector Exposure at 2022 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Sector Exposure at 2021 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Geographical Exposure at 2022 Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Geographical Exposure at 2021 Sector Exposure at 2022 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Sector Exposure at 2021 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Geographical Exposure 2022 2021 From a geographical perspective, the Company continues to have an overweight stance in Europe as well as North America. The biggest change to the portfolio was moving Japan from being an underweight to an overweight via the addition of pharmaceutical stocks. Source: Polar Capital. Investment Manager’s Report continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 19 Manager’s Report Sector Exposure at 30 September 2022 30 September 2021 Pharmaceuticals 31.3% 23.0% Biotechnology 28.3% 14.8% Managed Healthcare 13.1% 11.8% Healthcare Equipment 12.1% 23.4% Healthcare Facilities 7.4% 7.2% Life Sciences Tools & Services 4.3% 5.4% Healthcare Supplies 2.9% 6.3% Metal & Glass Containers 2.4% 2.3% Healthcare Services 2.1% 1.8% Healthcare Distributors 1.9% 4.9% Healthcare Technology 1.5% 2.3% Apparel, Accessories & Luxury Goods - 2.7% Other net liabilities (7.3%) (5.9%) Total 100% 100% Geographical Exposure at 2022 Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Geographical Exposure at 2021 Sector Exposure at 2022 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Sector Exposure at 2021 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Geographical Exposure at 2022 Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Other net liabilities Belgium Australia Ireland Germany Netherlands France Sweden Denmark United Kingdom Switzerland Japan United States Geographical Exposure at 2021 Sector Exposure at 2022 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Sector Exposure at 2021 Other net liabilities Apparel, Accessories & Luxury Goods Healthcare Technology Healthcare Distributors Healthcare Services Metal & Glass Containers Healthcare Supplies Life Sciences Tools & Services Healthcare Facilities Healthcare Equipment Managed Healthcare Biotechnology Pharmaceuticals Sector Exposure 2022 2021 Source: Polar Capital. While the previous charts focus on subsector and geographical weightings, bottom-up stock selection is central to the team’s investment process. The healthcare industry is extremely complicated and dynamic, and subject to varied news ﬂow which lends itself to active management. We look to take advantage of dislocations between near-term valuations and medium-term returns. Our own in-house idea generation is complemented by input from external research, with conviction built through company meetings, investor conferences and dialogue with expert physician and consultant networks. The team also has a strong valuation discipline looking at a large number of metrics including sales and earnings revisions, price-to-earnings, enterprise values and free cash ﬂow. Zero Dividend Preference shares: A vehicle for enhancing returns In terms of a top-down strategy for the Company’s portfolio, active decisions are made on market capitalisation, subsector and geographical exposure, dependent on the current macro- outlook of the team which is formulated with the aid of third- party research and the monitoring of many key risk indicators. The debt raised through the original issuance of Zero Dividend Preference (ZDP) shares allows the ability to take on gearing with the aim of enhancing returns. Net gearing During the ﬁnancial year, gearing has averaged 6%, but it has been adjusted to reﬂect the risk outlook throughout the past 12 months. Net gearing was brought down from around 6% to 4.5% in the ﬁrst four months of the reporting period, on the back of macroeconomic concerns. Over the remainder of the year, gearing was increased as a more defensive positioning of the portfolio was achieved with higher exposure to large- capitalisation stocks. However, the sharp correction among the small and mid-capitalisation universe offered an opportunity to add new positions to the Innovation portfolio. We exited the 2022 ﬁnancial year with net gearing at 7.41%, a ﬁgure that reﬂects a balance between our constructive stance on the healthcare sector with more cautious posturing with regards broader equity markets. 3.00% 4.25% 5.50% 6.75% 8.00% Sept 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022 Dec 2021 Nov 2021 Oct 2021 Sept 2021 Source: Polar Capital, as at 30 September 2022. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202220 Manager’s Report Outlook for healthcare: Macro and micro stars are aligning The healthcare industry continues to undergo material, structural changes as it looks to use innovative products, technologies and services to meet the ever-growing demands of an ageing global population. It is those structural changes that are creating some exciting and robust growth opportunities. In the near-term, a substantial increase in utilisation could be the catalyst for positive revenue and earnings revisions as healthcare systems globally work their way through ever-growing surgery backlogs. Another positive, near-term dynamic is the disruption of the delivery of healthcare as systems globally look to treat in more cost-effective settings. The adoption of innovative technologies is facilitating the shift of patient volumes from the more traditional and more expensive hospital settings to lower-cost facilities such as ASCs and the home. A trend that inﬂected during the COVID-19 pandemic, we believe that the momentum will continue for many years to come. Last, but not least, we expect the recent wave of M&A activity to continue as companies look to use their free cashﬂow and balance sheets to inorganically complement internal assets. Not only are the industry fundamentals in good health but the macroeconomic and political environments are also very supportive, not just for defensive stocks but also for those that sit higher up the market-capitalisation scale, a scenario that very much suits the larger-capitalisation focus of the Company. A combination of rising inﬂation, slowing economic activity and growing unemployment is creating a constructive backdrop for defensive sectors, none more so than healthcare. Importantly, if inﬂation persists and we enter a more stagﬂationary environment, healthcare has shown an ability, historically, to outperform the broader market given the low earnings and share-price beta to economic indicators, the essential nature of its products and services and a relatively broad ability to absorb inﬂationary pressures given the sector’s high gross and operating margins. Last, but not least, we think the introduction of the Inﬂation Reduction Act in the US has removed some, if not all, healthcare reform uncertainty offering investors greater clarity on the near and medium-term investment landscape. Against a background of continued global economic challenges, the outlook for the healthcare sector remains robust. The demand for products and services is growing signiﬁcantly, innovation continues at a rapid pace and valuations are attractive. The positive fundamental investment drivers are currently matched with a macroeconomic backdrop which is extremely supportive for the sector. The healthcare sector has outperformed the broader market over the last 12 months and with the recent healthcare reform update having passed in the US as part of the Inﬂation Reduction Act, we are anticipating a period of sustained outperformance for the sector. James Douglas and Gareth Powell Co-Managers of the Polar Capital Global Healthcare Trust 9 December 2022 Investment Manager’s Report continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 21 Manager’s Report Ten Largest Investments As at 30 September Ranking Market Value £'000 % of total net assets 2022 2021 Stock Sector Country 2022 2021 2022 2021 1 (1) Johnson & Johnson Pharmaceuticals United States 35,964 29,093 8.9% 7.5% Johnson & Johnson is a global healthcare company that develops medical devices, pharmaceuticals, and consumer packaged goods. 2 (2) Managed Healthcare United States 29,655 24,053 7.3% 6.2% Unitedhealth is an American managed healthcare and insurance company working to build a modern, high-performing health system through improved access, affordability, outcomes and experiences. 3 (-) Biotechnology United States 24,932 - 6.2% - AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals worldwide. 4 (3) Pharmaceuticals United Kingdom 19,761 19,954 4.9% 5.2% AstraZeneca is a global pharmaceutical company pushing the boundaries of science to deliver life-changing medicines. 5 (-) Pharmaceuticals United States 16,997 - 4.2% - Eli Lily is a US-based pharmaceutical company that manufactures and distributes pharmaceuticals primarily in the areas of diabetes, oncology and auto-immune disorders. 6 (22) Biotechnology United States 14,673 8,974 3.6% 2.3% Cytokinetics, Incorporated, a late-stage biopharmaceutical company, focuses on discovering, developing, and commercializing muscle activators and inhibitors as potential treatments for debilitating diseases. 7 (10) Healthcare Equipment United States 14,092 10,810 3.5% 2.8% Boston Scientiﬁc is a medical device company with a focus on non-invasive treatment – primarily of cardiovascular, respiratory, neurological, digestive, urological and pelvic conditions. 8 (-) Pharmaceuticals Switzerland 14,091 - 3.5% - Novartis AG researches, develops, manufactures, and markets healthcare products worldwide. The company operates through two segments, Innovative Medicines and Sandoz. 9 (-) Managed Healthcare United States 13,908 - 3.4% - Humana engages in the provision of health insurance services and operates through the following segments: Retail, Group and Speciality and Healthcare Services. 10 (31) Healthcare Supplies Switzerland 12,040 7,678 2.9% 2.0% Alcon Inc., an eye care company, researches, develops, manufactures, distributes, and sells eye care products for eye care professionals and their patients worldwide. Total – 10 Largest Investments 196,113 48.4% Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 21 Manager’s Report Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202222 Manager’s Report Full Investment Portfolio As at 30 September Ranking Market Value £’000 % of total net assets 2022 2021 Stock Sector Country 2022 2021 2022 2021 1 (1) Johnson & Johnson Pharmaceuticals United States 35,964 29,093 8.9% 7.5% 2 (2) UnitedHealth Managed Healthcare United States 29,655 24,053 7.3% 6.2% 3 (-) Abbvie Biotechnology United States 24,932 - 6.2% - 4 (3) AstraZeneca Pharmaceuticals United Kingdom 19,761 19,954 4.9% 5.2% 5 (-) Eli Lilly Pharmaceuticals United States 16,997 - 4.2% - 6 (22) Cytokinetics Biotechnology United States 14,673 8,974 3.6% 2.3% 7 (10) Boston Scientiﬁc Healthcare Equipment United States 14,092 10,810 3.5% 2.8% 8 (-) Novartis Pharmaceuticals Switzerland 14,091 - 3.5% - 9 (-) Humana Managed Healthcare United States 13,908 - 3.4% - 10 (31) Alcon Healthcare Supplies Switzerland 12,040 7,678 2.9% 2.0% Top 10 investments 196,113 48.4% 11 (-) Biovitrum Biotechnology Sweden 11,758 - 2.9% - 12 (-) Daiichi Sankyo Pharmaceuticals Japan 11,459 - 2.9% - 13 (-) HCA Healthcare Facilities United States 10,872 - 2.7% - 14 (5) Sanoﬁ Pharmaceuticals France 10,513 13,629 2.6% 3.5% 15 (34) Genmab Biotechnology Denmark 10,197 5,712 2.5% 1.5% 16 (19) Acadia Healthcare Healthcare Facilities United States 10,082 9,595 2.5% 2.5% 17 (27) Avantor Life Sciences Tools & Services United States 9,824 8,637 2.4% 2.2% 18 (-) DexCom Healthcare Equipment United States 9,812 - 2.4% - 19 (9) Horizon Therapeutics Biotechnology United States 9,723 10,910 2.4% 2.8% 20 (-) Astellas Pharma Pharmaceuticals Japan 9,701 - 2.4% - Top 20 investments 300,054 74.1% 21 (-) Incyte Genomics Biotechnology United States 9,662 - 2.4% - 22 (24) AptarGroup Metal & Glass Containers United States 9,623 8,852 2.4% 2.3% 23 (16) Molina Healthcare Managed Healthcare United States 9,603 9,961 2.4% 2.6% 24 (17) ArgenX Biotechnology Netherlands 9,210 9,703 2.3% 2.5% 25 (-) Penumbra Healthcare Equipment United States 9,172 - 2.3% - 26 (-) Sartorius Healthcare Equipment Germany 9,070 - 2.2% - 27 (-) Seagen Biotechnology United States 8,886 - 2.2% - 28 (-) Option Care Health Healthcare Services United States 8,452 - 2.1% - 29 (-) United Therapeutics Biotechnology United States 8,060 - 2.0% - 30 (28) Bio-Rad Laboratories Life Sciences Tools & Services United States 7,879 8,439 1.9% 2.2% Top 30 investments 389,671 96.3% 31 (-) Revance Therapeutics Pharmaceuticals United States 7,647 - 1.9% - 32 (-) Tenet Healthcare Healthcare Facilities United States 7,582 - 1.9% - 33 (40) Zealand Pharma Biotechnology Denmark 7,437 3,807 1.8% 1.0% 34 (35) Uniphar Healthcare Distributors Ireland 4,171 5,438 1.0% 1.4% 35 (42) Axonics Healthcare Equipment United States 4,018 2,180 1.0% 0.6% 36 (41) Ship Healthcare Healthcare Distributors Japan 3,503 2,882 0.9% 0.7% 37 (38) Intelligent Ultrasound Healthcare Technology United Kingdom 3,049 3,811 0.8% 1.0% 38 (39) LivaNova Healthcare Equipment United Kingdom 2,950 3,810 0.7% 1.0% 39 (36) Medley Healthcare Technology Japan 2,901 4,404 0.7% 1.1% 40 (-) Surgery Partners Healthcare Facilities United States 1,326 - 0.3% - Top 40 investments 434,255 107.3% 41 (43) Quotient Healthcare Supplies Switzerland 164 2,123 - 0.5% Total equities 434,419 107.3% Other net liabilities (29,586) (7.3%) Net assets 404,833 100.0% Note - Sectors are from the GICS (Global Industry Classiﬁcation Standard). Environmental, Social and Governance Environmental, Social and Governance Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 23 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202224 Environmental, Social and Governance Corporate Responsibility for ESG As an investment trust with a wholly non-executive, independent Board of Directors we delegate the operational aspects of running the Company to third parties, primarily the Investment Manager. However, the ultimate responsibility to shareholders lies with the Board. We recognise that this includes elements of ESG and over recent years ESG has become ever more important to investors, from a cost, risk and impact perspective across all aspects of the Company. As an investment trust we currently have relatively few regulatory reporting requirements. We do however keep abreast of the ESG landscape, and the Managers report their assessment of the portfolio in ESG terms and the associated operations of the management house, Polar Capital. Over recent times the ESG dialogue with the Managers and third- party providers has increased greatly; what it is, how it is integrated and how it affects all elements of the business. We recognise however that this is not a short journey, and we have some way to go. We separate ESG into those areas that we as a Board can have a direct impact on, and those areas where we are reliant on others. ESG and Third Party Service Providers The Investment Manager (on behalf of all clients) receives assurance on an annual basis that, where required, third party service providers comply with the requirements of the Modern Slavery Act and adhere to a zero-tolerance policy to bribery and corruption. In light of the growing requirements surrounding ESG, including Taskforce for Climate-Related Financial Disclosures (“TCFD”), third party service providers have been engaged in providing copies of their ESG, Diversity and Inclusion, Stewardship and other related policies to the Company. The Board will continue to monitor the practices of service providers and seek to assure shareholders where appropriate that suitable policies and procedures are in place to effect positive change. Corporate Responsibility The Company’s core investment and administrative activities are undertaken by its Investment Manager which seeks to limit the use of non-renewable resources and reduce waste where possible. The Investment Manager has a corporate ESG policy, which is available in the document library of the Company’s website, and wherever possible and appropriate the parameters of such are considered and adopted by the investment team in relation to the Company’s management and portfolio construction. As detailed below, the Portfolio Managers are required to have consideration of ESG factors when reviewing new, continuing or exiting investments but they are not required to take an investment decision solely on the basis of ESG factors. The Board monitors the Investment Manager’s approach to ESG including policies for improvement of impact on the environment, and they themselves take into account ESG factors in the management of the Company. The Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 require companies listed on the Main Market of the London Stock Exchange to report on the greenhouse gas (‘GHG’) emissions for which they are responsible. The Company is an investment trust, with neither employees nor premises, nor has it any ﬁnancial or operational control of the assets which it owns. Consequently, it has no GHG emissions to report from its operations nor does it have responsibility for any other emissions. Information on the GHG emissions of the Investment Manager can be found within the ESG and Sustainability area of their website www.polarcapital.co.uk. Taskforce for Climate-Related Financial Disclosures (“TCFD”) The Company notes the TCFD recommendations on climate-related ﬁnancial disclosures. As stated above, the Company is an investment trust with no employees, internal operations or property. However, it is an asset owner and therefore we will work to develop appropriate disclosures about our portfolio. Information sources are developing and consultations on reporting requirements are underway. The Board will continue to work alongside its Investment Manager to provide more information as it becomes available. Polar Capital supports TCFD’s recommendations and is in the process of applying the guidance to ensure compliance going forward. Diversity and Gender Reporting The Board notes the targets published within the FCA policy, Diversity and Inclusion on Company Boards and Executive Committees (PS22/3), issued in April 2022. For ﬁnancial years commencing on or after 1 April 2022, the policy requires under new Listing Rules 9.8.6R(9) and 14.3.33R(1), all UK listed companies, on a comply or explain basis, to meet the following targets: • At least 40% of the Board are women; • At least one senior board position is held by a woman; • At least one member of the Board is from a minority ethnic background. As a fully independent non-executive Board of Directors, there are limited senior roles available in terms of the FCA’s Diversity and Inclusion targets. The Board considers the following roles are appropriate and sufﬁcient for a Company and Board of their size, Chair of the Board and Chair of the Audit Committee. There are no executive positions within the Company and as such no roles from which to appoint senior roles on the Board. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 25 Environmental, Social and Governance The Company has no employees and the Board is comprised of one female and three male Independent non-executive Directors. Lisa Arnold is Chair of the Board, and so the Company currently meets the second criteria outlined above. The Company does not currently meet the other two criteria. The composition of the Board is considered regularly to determine whether the needs of the Company in terms of experience and areas of expertise are met by the directors in ofﬁce. The Board will certainly take into account the FCA’s policy on Diversity and Inclusion in any future recruitment process, but it does not currently have any plans to change the composition of the Board. Modern Slavery Act As an investment company, the Company does not provide goods or services in the normal course of business and does not have any customers. Accordingly, the Company does not consider that it falls within the scope of the Modern Slavery Act 2015 and therefore does not meet the criteria requiring it to produce a statement under such Act. The Company considers its supply chains to be of low risk as its suppliers are typically professional advisers. A statement by the Manager under the Act has been published on the Managers’ website at www.polarcapital.co.uk. The Company has not adopted a policy on human rights as it has no employees or operational control of its assets. Anti-Bribery, Corruption and Tax Evasion The Board has adopted a zero-tolerance policy (which is available on the Company’s website) to bribery, corruption and the facilitation of tax evasion in its business activities. The Board uses the principles of the policies formulated and implemented by the Investment Manager and expects the same standard of zero-tolerance to be adopted by third-party service providers. The Company has implemented a Conﬂicts of Interest policy to which the Directors must adhere, in the event of divergence between the Investment Manager’s policy and the Company’s policy the Company’s policy shall prevail. The Company is committed to acting with integrity and in the interests of shareholders at all times. Risk and Responsibility The Board has a schedule of principal risks and uncertainties and addresses how these are mitigated on pages 34 to 36; additionally how the directors have undertaken their duties in compliance with s172 of the Companies Act 2006 is provided on pages 37 to 39. Lisa Arnold Chair 9 December 2022 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202226 Environmental, Social and Governance Investment Perspective The following section describes the approach that Polar Capital LLP, as Investment Manager to the Company, takes to ESG and how the policies and practices are applied to the investments made, or considered, in connection with managing the portfolio of the Company. The terms ‘our’, ‘we’, ‘us’ relate to Polar Capital and speciﬁcally the Polar Capital Healthcare team, on behalf of Polar Capital Global Healthcare Trust (the Company). Environmental, Social and Governance: Focusing on sustainability Sustainability is central to the team’s ESG philosophy. Healthcare is a long-term, secular growth industry as an ageing population around the world drives the demand and the need for increased healthcare provision. In 2018, global healthcare spending was $8.3trn, accounting for 10% of GDP. Sustainable healthcare delivery for growing and ageing populations is an important part of the United Nations 2030 Agenda for Sustainable Development; speciﬁcally, SDG 3 is to “ensure healthy lives and promote well-being for all at all ages.” Sustainability Process Although there is currently no ofﬁcial sustainability-related regulation for UK investment trusts, the Investment Management team aspires to follow the same rigorous process required under Article 8 of the SFDR (Sustainable Finance Disclosure Regulation). As the Investment Manager we have a well-deﬁned and disciplined process, using a variety of different resources including ﬁnancial reports, sustainability reports and third-party data. The following three-stage process is applied: • exclusionary screening • positive inclusion • ongoing monitoring of ESG proﬁle of investee companies Exclusionary Screening We perform an initial screening of the investment universe against norms-based standards such as the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and the International Labour Organisation’s conventions. Source: Polar Capital Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 27 Environmental, Social and Governance Positive Inclusion We ensure potential investments are aligned with at least one or more of our overall core sustainability characteristics: • improvement in clinical outcomes for patients through innovation • improvement in the affordability and accessibility of healthcare services • improvement in the efﬁciency of the delivery of healthcare services Ongoing Monitoring of the ESG Proﬁle of Investee Companies We use in-house research and third-party reports to continuously monitor the ESG proﬁles of the Company’s holdings. Depending on the subsector each investee company belongs to, a variety of key issues are assessed: • Environmental: Carbon Emissions; Toxic Emissions and Waste. • Social: Labour Management; Human Capital Development; Product Safety and Quality; Privacy and Data Security; Access to Healthcare. • Governance: Board Composition; Pay; Ownership; Accounting; Business Ethics; Tax Transparency. Although ongoing ESG analysis is an important part of our process, we believe that engaging directly with companies on their ESG philosophy, using internal and third-party reports, is the most productive course of action we can take. Direct interaction with companies is particularly important when we believe there is a dislocation between our own assessment of a company’s ESG credentials and that of 3rd parties’ reports. Interactions are systematically logged in an internal database as a matter of record. The Managers also have regular interactions with Polar Capital’s Head of Sustainability. James Douglas and Gareth Powell Co-Managers of the Polar Capital Global Healthcare Trust 9 December 2022 Cytokinetics – A Case Study Our continuous monitoring process highlighted Cytokinetics as a company whose Social score had deteriorated, leading to a potential downgrade in its MSCI ESG score from B to CCC. MSCI ﬂagged Human Capital Development and Access to Healthcare as the two key Social issues where the company scored poorly. The team therefore decided to engage with the company to assess whether the MSCI score was a true reﬂection of the company’s underlying ESG progress. The team held a call with the company which revealed that Cytokinetics had started to take the below actions with respect to their Human Capital Development and Access to Healthcare initiatives: 1. Formation of an internal committee with full Board oversight to drive ESG matters; 2. Set out steps to improve diversity and inclusion both at Board level and employee level; 3. Mapped out a strategy to improve access to their products beyond developed markets; 4. Increased interactions with ESG rating agencies; and 5. Creation of a Sustainability and ESG report by 2023, with 3-5 years targets. Following review, engagement and analysis, we concluded that the poor MSCI score was driven by lack of disclosure rather than lack of progress on the ESG front and the team was thus satisﬁed with management’s focus and efforts to progress their ESG initiatives and expand disclosure. Consequently, we have retained Cytokinetics in our investment portfolio. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202228 Environmental, Social and Governance MSCI ESG RATINGS CCC B BB BBB A AA AAA AAA Portfolio Benchmark Weighted Avg ESG Score 6.38 6.70 Adjustment + ESG Trend Positive 49.54% 52.28% - ESG Trend Negative 5.43% 1.99% - ESG Laggards 0.67% 1.43% Adjustment Total 43.44% 48.86% Score Adjustment 2.77 3.27 ESG Quality Score 9.15 9.97 ESG Rating AAA AAA How the MSCI ESG Rating is calculated Top 5 Rated Holdings Security Rating Change Uniphar AA UnitedHealth Group AA AstraZeneca AA Genmab AA Astellas Pharma AA ESG Rating distribution of fund holdings 27% of the fund’s holdings receive an MSCI ESG Rating of AAA or AA (ESG Leaders) and 1% receive an MSCI ESG Rating of B or CCC (ESG Laggards). 0 5 10 15 20 25 30 35 40 45 AAAAAABBBBBBCCCUnrated 27% 41% 25% 5% 1%1% 0%0% Corporate governance The fund’s weighted average percentage of independent board of directors is 82.1%, and its weighted average percentage of women on boards is 30.6%. Vote Cast Statistics Votes For 94.6% Votes Against 4.5% Votes Withheld 0.5% Votes Abstain 0.2% Votes Management say on pay 0.2% * represents a vote that does not fall into the above categorisations. Voting Record Category Number Percentage Number of votable meetings 48 100.00% Number of meetings voted 47 97.92% Number of meetings with at least 1 vote Against, Withhold or Abstain 15 31.25% ESG Dashboard The MSCI ESG Rating for funds is designed to measure the resiliency of portfolios to long-term ESG risks and opportunities. The most highly rated funds consist of issuers with leading or improving management of key ESG risks. The ESG Rating is calculated as a direct mapping of ESG Quality Scores to letter rating categories (e.g. AAA = 8.6-10). The ESG Ratings range from leader (AAA, AA), average (A, BBB, BB) to laggard (B, CCC). All charts provided below are as at 30 September 2022 and have been sourced using MSCI data and ESG metrics and ISS data. Bottom 5 Rated Holdings Security Rating Change Medley B Bio-Rad Laboratories BB Cytokinetics BB Incyte Crop BBB Axonics Modulation Technologie BBB The change in ratings of each holding outlined above represents the year on year movement to 30 September 2022. Weighted average carbon intensity (tCO2e / $m sales) The fund’s holdings have low carbon intensity, based on the weighted average carbon emissions per USD million sales. VERY HIGH HIGH MODERATE LOW VERY LOW 16.5 MSCI ESG metrics and carbon data based off fund holdings as at 30 September 2022, using MSCI’s latest available data. Carbon metrics calculated using issuer EVIC, using Scope 1&2 emissions data (Source: MSCI Climate Change Metrics – reported and estimated data). Governance Governance A system of rules and processes by which the Company is governed Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 29 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202230 Governance Strategic Report The Strategic Report section of this Annual Report comprises the Chair’s Statement, the Investment Manager’s Report, including information on the portfolio, and this Strategic Report. This Report has been prepared to provide information to shareholders on the Company’s strategy and the potential for this strategy to succeed, including a fair review of the Company’s performance during the year ended 30 September 2022, the position of the Company at the year end and a description of the principal risks and uncertainties. Throughout the Strategic Report there are certain forward- looking statements made by the Directors in good faith based on the information available to them at the time of their approval of this Report. Such statements should be treated with caution due to inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. Business Model and Regulatory Arrangements The Company’s business model follows that of an externally managed investment trust providing shareholders with access to a global portfolio of healthcare stocks. The Company is designated an Alternative Investment Fund (‘AIF’) under the Alternative Investment Fund Management Directive (‘AIFMD’) and, as required by the Directive, has contracted with Polar Capital LLP to act as the Alternative Investment Fund Manager (‘AIFM’) and HSBC Bank Plc to act as the Depositary. Both the AIFM and the Depositary have responsibilities under AIFMD for ensuring that the assets of the Company are managed in accordance with the investment policy and are held in safe custody. The Board remains responsible for setting the investment strategy and operational guidelines as well as meeting the requirements of the Financial Conduct Authority (‘FCA’) Listing Rules and the Companies Act 2006. The AIFMD requires certain information to be made available to investors in AIFs before they invest and requires that material changes to this information be disclosed in the Annual Report of each AIF. Investor Disclosure Documents, which set out information on the Company’s investment strategy and policies, gearing, risk, liquidity, administration, management, fees, conﬂicts of interest and other Shareholder information are available on the Company’s website. There have been no material changes to the information requiring disclosure. Any information requiring immediate disclosure pursuant to the AIFMD will be disclosed to the London Stock Exchange. Statements from the Depositary and the AIFM can be found on the Company’s website. Investment Objective and Policy The Company’s Investment Objective is to generate capital growth through investments in a global portfolio of healthcare stocks. The Company will seek to achieve its objective by investing in a diversiﬁed global portfolio consisting primarily of listed equities. The portfolio is diversiﬁed by geography, industry sub-sector and investment size. The portfolio will comprise a single pool of investments, but for operational purposes, the Investment Manager will maintain a Growth portfolio and an Innovation portfolio. Innovation companies are broadly deﬁned by the Investment Manager as small/mid cap innovators that are driving disruptive change, giving rise not only to new drugs and surgical treatments but also to a transformation in the management and delivery of healthcare. The Growth portfolio is expected to comprise a majority of the Company’s assets. For this purpose, once an innovation stock’s market capitalisation has risen above US $5bn, it will ordinarily then be treated as a growth stock. The relative ratio between the two portfolios may vary over the life of the Company due to factors such as asset growth and the Investment Manager’s views as to the risks and opportunities offered by investments in each pool and across the combined portfolio. The original make-up of the combined portfolio was of up to 50 stocks, with growth stocks being primarily US listed. In 2018, the Board authorised an increase to the number of stocks able to be held to 65 and conﬁrmed there is no restriction on geographical exposure. The combined portfolio will therefore be made up of interests in up to 65 companies, with no single investment accounting for more than 10% (or 15% in the case of an investment in another fund managed by the Investment Manager) of the Gross Assets at the time of investment. The innovation portfolio may include stocks which are neither quoted nor listed on any stock exchange but the exposure to such stocks, in aggregate, will not exceed 5% of Gross Assets at the time of investment. In the event that the Investment Manager launches a dedicated healthcare innovation fund, the Company’s exposure to innovation stocks may be achieved in whole or in part by an investment in that fund. In any event, the Company will not, without the prior consent of the Board, acquire more than 15% of any such healthcare innovation fund’s issued share capital. The Board remains positive on the outlook for healthcare and the Company will continue to pursue its Investment Objective in accordance with the stated investment policy and strategy. Future performance is dependent to a signiﬁcant degree on the world’s ﬁnancial markets and their reactions to economic events and other geo-political forces. The Chair’s Statement and the Investment Manager’s Report comment Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 31 Governance on the development and performance of the business during the ﬁnancial year, the outlook and potential risks to the performance of the portfolio. The Board As the day-to-day management of the Company is outsourced to service providers the Board’s focus at each meeting is on investment performance, including the outlook and strategy. The Board also considers the management and provision of services received from third- party service providers and the risks inherent in the various matters reviewed and discussed. Further information on the composition of the Board can be found on page 47. Strategy and Investment Approach The Investment Manager’s investment process is primarily based on bottom-up fundamental analysis. The Investment Manager uses a qualitative ﬁlter consisting of key criteria to build up a watch-list of securities that is monitored on a regular basis. Due diligence is then carried out on the individual securities on the watch-list. Each individual holding is assessed on its own merits in terms of risk: reward including ESG criteria. While the Company expects normally to be fully or substantially invested, the Company may hold cash or money market instruments pending deployment in the portfolio. In addition, it will have the ﬂexibility, when the Investment Manager perceives there to be actual or expected adverse equity market conditions, to maintain cash holdings as it deems appropriate. Service Providers Polar Capital LLP has been appointed to act as the Investment Manager and AIFM as well as to provide or procure company secretarial services, marketing and administrative services, including accounting, portfolio valuation and trade settlement which it has arranged to deliver through HSBC Securities Services (“HSS”). The Company also contracts directly, on terms agreed periodically, with a number of third parties for the provision of specialist services: • Panmure Gordon & Co as Corporate Broker; • Herbert Smith Freehills LLP as Solicitors; • HSBC Securities Services as Custodian and Depositary; • Equiniti Limited as Share Registrars; • RD: IR for Investor Relations and Shareholder Analysis; • Camarco as PR advisors; • PricewaterhouseCoopers LLP as independent Auditors; • Huguenot Limited as website designers and internet hosting services; and • Perivan Limited as designers and printers for shareholder communications. Gearing Following the restructure of the Company in June 2017, the Company maintains long-term structural gearing in the form of a loan from the wholly owned subsidiary PCGH ZDP Plc. No short-term borrowings have been made and there are no arrangements made for any bank loans. The Articles of Association provide that the Company may borrow up to 15% of its Net Asset Value at the time of drawdown, for tactical deployment when the Board believes that gearing will enhance returns to shareholders. Further details of the loan provided by the subsidiary are given on pages 78 and 79. Benchmark The Company will measure the Investment Manager’s performance against the MSCI ACWI Healthcare Index total return, in sterling with dividends reinvested. Although the Company has a benchmark, this is neither a target nor determinant of investment strategy. The portfolio may diverge substantially from the constituents of this index. The purpose of the Benchmark is to set a reasonable measure of performance for shareholders above which the Investment Manager earns a share for any outperformance it has delivered. Investment Management Company and Management of the Portfolio As the Company is an investment vehicle for shareholders, the Directors have sought to ensure that the business of the Company is managed by a leading specialist investment management team and that the investment strategy remains attractive to shareholders. The Directors believe that a strong working relationship with Polar Capital LLP (the Investment Manager) will achieve the optimum return for shareholders. As such, the Board and the Investment Manager operate in a supportive, co-operative and open environment. The Investment Manager is Polar Capital LLP (‘Polar Capital’), which is authorised and regulated by the Financial Conduct Authority, to act as Investment Manager and AIFM of the Company with sole responsibility for the discretionary management of the Company’s assets (including uninvested cash) and sole responsibility to take decisions as to the purchase and sale of individual investments. The Investment Manager also has responsibility for asset allocation within the limits of the investment policy and guidelines established and regularly reviewed by the Board, all subject to the overall control and supervision of the Board. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202232 Governance Under the terms of the IMA, the Investment Manager also provides or procures accountancy services, company secretarial, marketing and day-to-day administrative services, including the monitoring of third-party suppliers, which are directly appointed by the Company. The Investment Manager has, with the consent of the Directors, delegated the provision of certain of these administrative functions to HSBC Securities Services and to Polar Capital Secretarial Services Limited. Polar Capital provides a team of healthcare specialists and the portfolio is co-managed by Dr James Douglas and Mr Gareth Powell. The Investment Manager has other resources which support the investment team and has experience in managing and administering other investment trust companies. Polar Capital provides a team of healthcare specialists and the portfolio is co-managed by Dr James Douglas and Mr Gareth Powell. The Investment Manager has other resources which support the investment team and has experience in managing and administering other investment trust companies. Termination Arrangements The IMA may be terminated by either party giving 12 months’ notice. The IMA may be terminated earlier by the Company with immediate effect on the occurrence of certain events, including: (i) if an order has been made or an effective resolution passed for the liquidation of the Investment Manager; (ii) if the Investment Manager ceases or threatens to cease to carry on its business; (iii) where the Company is required to do so by a relevant regulatory authority; (iv) on the liquidation of the Company; or (v) subject to certain conditions, where the Investment Manager commits a material breach of the IMA. In the event the IMA is terminated before the expiry of the Company’s ﬁxed life then, except in the event of termination by the Company for certain speciﬁed causes, the base fee and the performance fee will be calculated pro rata for the period up to and including the date of termination. Fee Arrangements Management Fee Under the terms of the IMA, the Investment Manager will be entitled to a management fee together with reimbursement of reasonable expenses incurred by it in the performance of its duties. The management fee is payable monthly in arrears and is charged at the rate of 0.75% per annum based on the lower of the market capitalisation and adjusted net asset value. In accordance with the Directors’ policy on the allocation of expenses between income and capital, in each ﬁnancial year 80% of the management fee payable is charged to capital and the remaining 20% to income. Performance Fee The Investment Manager may be entitled to a performance fee. The performance fee was reset at the date of reconstruction of the Company and will be paid in cash at the end of the Company’s expected life (except in the case of an earlier termination of the IMA). The performance fee will be an amount equal to 10% of the excess total return (based on the Adjusted Net Asset Value per ordinary share at that time) over the total return of the benchmark plus 1.5% compounded annually on each anniversary of share admission and adjusted for periods of less than 12 months. In the event of a performance fee becoming payable on the future portfolio realisation date, such fee would be subject to a maximum amount of 3.5% of the terminal NAV. For the purposes of calculating the performance fee, the Company’s Adjusted Net Asset Value will be based on the Net Asset Value adjusted by the amount of any dividends paid by the Company deemed to have been reinvested on the date of payment in ordinary shares at their Net Asset Value (on such date) and the resulting amount added to the Company’s Net Asset Value. If at the end of the Company’s expected life the amount available for distribution to shareholders is less than 215.9p per ordinary share, no performance fee will be payable. If the amount is more than 215.9p per ordinary share but payment of the performance fee in full would reduce it below that level, then the performance fee will be reduced such that shareholders receive exactly 215.9p per share. No performance fee has been paid or accrued since inception and up to 30 September 2022. Strategic Report continued Governance Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 33 Performance and Key Performance Objectives The Board appraises the performance of the Company and the Investment Manager as the key supplier of services to the Company against key performance indicators (‘KPIs’). The objectives of the KPIs comprise both speciﬁc ﬁnancial and Shareholder related measures. These KPI’s have not differed from the prior year. KPI Control Process Outcome The provision of investment returns to shareholders measured by long- term NAV growth and relative performance against the Benchmark. The Board reviews the performance of the portfolio in detail and hears the views of the Investment Manager at each meeting. The Board also considers the value delivered to shareholders through NAV growth and dividends paid. As at 30 September 2022, the total net assets of the Company amounted to £404,833,000 (2021: £385,728,000). The Company’s NAV total return, over the year ended 30 September 2022, was 5.59% while the Benchmark Index over the same period decreased to 6.93%. The Company’s performance is explained further in the Investment Manager’s Report. Since restructuring on 20 June 2017, the total return of the NAV was 60.79% and the benchmark was 64.05%. Investment performance is explained in the Chair’s Statement and the Investment Manager’s Report. The achievement of the dividend policy. Financial forecasts are reviewed to track income and distributions. Two dividends have been paid or are payable in respect of the year ended 30 September 2022 totalling 2.10p per share (2021: two dividends totalling 2.00p per share). The Company’s focus remains on capital growth. While the Company continues to aim to pay two dividends per year these are expected to be a small part of a shareholder total return. Monitoring and reacting to issues created by the discount or premium of the ordinary share price to the NAV per ordinary share with the aim of reduced discount volatility for shareholders. The Board receives regular information on the composition of the share register including trading patterns and discount/premium levels of the Company’s ordinary shares. The Board discusses and authorises the issue or buy back of shares when appropriate. The Board is aware of the vulnerability of a sector specialist investment trust to a change in investor sentiment to that sector. While there is no formal discount policy the Board discusses the market factors giving rise to any discount or premium, the long or short-term nature of those factors and the overall beneﬁt to shareholders of any actions. The market liquidity is also considered when authorising the issue or buy back of shares when appropriate market conditions prevail. A daily NAV per share, calculated in accordance with the AIC guidelines is issued to the London Stock Exchange. The discount of the ordinary share price to the NAV per ordinary share at the year ended 30 September 2022 was 5.6% (2021: 9.5%). During the year ended 30 September 2022, no new shares were issued or bought back. The number of shares in issue, as at the year end was 124,149,256 of which 2,879,256 were held in treasury. The total voting rights of the Company are 121,270,000 shares. To qualify and continue to meet the requirements for sections 1158 and 1159 of the Corporation Tax Act 2010 (‘investment trust status’). The Board receives regular ﬁnancial information which discloses the current and projected ﬁnancial position of the Company against each of the tests set out in sections 1158 and 1159. The Company was granted investment trust status annually up to 1 October 2014 and is deemed to be granted such status for each subsequent year subject to the Company continuing to satisfy the conditions of section 1158 of the Corporation Tax Act 2010 and other associated ongoing requirements. The Directors conﬁrm that the tests have been met in the ﬁnancial year ended 30 September 2022 and believe that they will continue to be met. To ensure the efﬁcient operation of the Company by monitoring the services provided by third party suppliers, including the Investment Manager, and controlling ongoing charges. The Board considers annually the services provided by the Investment Manager, both investment and administrative, and reviews on a cycle the provision of services from third parties including the costs of their services. The annual operating expenses are reviewed and any non-recurring project related expenditure approved by the Board. The Board has received, and considered satisfactory, the internal controls report of the Investment Manager and other key suppliers including the contingency arrangements to facilitate the ongoing operations of the Company in the event of withdrawal or failure of services. The ongoing charges for the year ended 30 September 2022 were 0.84%, compared to 0.83% the previous year. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202234 Governance Strategic Report continued Risk Management The Board is responsible for the management of risks faced by the Company and, through delegation to the Audit Committee, has established procedures to manage risk, oversee the internal control framework and determine the nature and extent of the principal risks the Company is willing to take in order to achieve its long-term strategic objectives. The established risk management process the Company follows identiﬁes and assesses various risks, their likelihood, and possible severity of impact, considering both internal and external controls and factors that could provide mitigation. A post mitigation risk impact score is then determined for each principal risk. The Audit Committee carries out, at least annually, a robust assessment of the principal risks and uncertainties with the assistance of the Investment Manager, continually monitors identiﬁed risks and meets to discuss both long-term and emerging risks outside of the normal cycle of Audit Committee meetings. During the year the Audit Committee, in conjunction with the Board and the Investment Managers undertook a full review of the Company’s Risk Map including the mitigating factors and controls to reduce the impact of the risks. The Committee continues to closely monitor these risks along with any other emerging risks as they develop and implements mitigating actions as necessary. The Committee is mindful of the uncertainty surrounding inﬂation, recession and rising interest rates coupled with the invasion of Ukraine by Russia and the longer term impact this may have on the market and global economy. The impact of this is discussed further in the Chair’s Statement and Investment Manager’s Report. Further information on how the Committee has assessed the Company’s ability to operate as a going concern and the Company’s longer-term viability can be found on pages 55 and 56 of the Report of the Audit Committee. The key risks, which are those classiﬁed as having the highest risk impact score post mitigation, are detailed below with a high- level summary of the management through mitigation and status arrows to indicate any change in assessment over the past year. Risk Cycle Monitoring and Review Identify Risk Analyse Risk Build Risk Strategy Manage Risks Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 35 Governance Portfolio Management Investment Performance Gearing Description Breach of Investment policy, Investment Manager unable to deliver the Investment Objective leading to poor performance against the benchmark or market/industry average. Assessment Unchanged from previous year. Mitigation The Board seeks to mitigate the impact of such risks through the regular reporting and monitoring of the Company’s investment performance against its peer group, benchmark and other agreed indicators of relative performance. A detailed annual review of the investment strategy is undertaken by the Investment Manager with the Board including analysis of investment markets and sector trends. At each meeting the Board discusses developments in healthcare and drug pipelines with the Investment Manager in addition to the composition and diversiﬁcation of the portfolio with sales and purchases of investments and the degree of risk which the Investment Manager incurs to generate investment returns. Individual investments are discussed with the Investment Manager as well as the Investment Manager’s general views on the various investment markets and the healthcare sector in particular. Analytical performance data and attribution analysis is presented by the Investment Manager. The Board is committed to a clear communication program to ensure shareholders understand the investment strategy. This is maintained through the use of monthly factsheets which have a market commentary from the Investment Manager as well as portfolio data, an informative website as well as annual and half year reports. Description Inability to repay ZDP loan and inappropriate use of derivatives. Assessment Unchanged from previous year. Mitigation The Board considered the beneﬁts and drawbacks of the structural debt at the time of restructuring and concluded that the ability to lock-in an effective interest rate of 3% pa for the 7-year life would be beneﬁcial to investment returns, the Board remains of the same belief. The asset cover necessary to repay the ZDP shares is reviewed at each Board meeting. If any ﬂexible gearing is contemplated the Board would agree the overall levels of gearing with the AIFM. The arrangement of bank facilities and drawing of funds under such arrangements are controlled by the Board. Derivatives are considered as being a form of gearing and a policy for their use has been agreed by the Board. The deployment of any borrowed funds is based on the Investment Manager’s assessment of risk and reward. Discount/Premium Trading Description Persistent discount in excess of Board or Shareholder acceptable levels. Assessment Decreased from previous year. Mitigation The Board regularly considers, in comparison to the sector and peers, the level of premium and discount of the share price to the NAV and ways to enhance Shareholder value including share issuance and buy backs. The Board has carefully monitored the discount level and market movements and has discussed performance with the Managers and advisers. The discount of the Company narrowed during the year under review and as at 30 September 2022, the discount of the ordinary share price to the NAV per ordinary share was 5.6% (2021: 9.5%). The Chair also meets regularly with key shareholders to understand any concerns and views as detailed in the Chair’s Statement and within the s172 Report. Further detail on the performance and the impact of market movements on the Company is given in the Investment Manager’s Report. Description Execution of unauthorised trade/dealing error. Error or breach may cause regulatory investigation leading to ﬁnes, reputational damage and risk to investment trust status. Assessment Unchanged from previous year. Mitigation Investment limits and restrictions are encoded into the dealing and operations systems of the Investment Manager and various oversight functions are undertaken to ensure there is early warning of any potential issue of compliance or regulatory matters. Principal Risks and Uncertainties Management of risks through Mitigation & Controls Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202236 Governance Operational Risk Service Failure Cyber Risk Description Failure in services provided by the Investment Manager, Custodian, Depositary or other service providers; Accounting, Financial or Custody Errors resulting in regulatory investigation or ﬁnancial loss, failure of trade settlement, potential loss of Shareholder assets and investment trust status. Assessment Unchanged from previous year. Mitigation The Board carries out an annual review of internal control reports from suppliers which includes cyber protocols and disaster recovery procedures. Due diligence and service reviews are undertaken with third-party service providers including the Custodian and Depositary. A full review of the internal control framework is carried out at least annually. Regular reporting is received by the Investment Manager on behalf of the Board from the Depositary on the safe custody of the Company’s assets. The Board undertakes independent reviews of the Depositary and external Administrator services and additional resources have been put in place by the Investment Manager. Management accounts are produced and reviewed monthly, statutory reporting and daily NAV calculations are produced by the external Administrator and veriﬁed by the Investment Manager. Accounting records are tested, and valuations veriﬁed independently as part of the year-end ﬁnancial reporting process. Description Cyber-attack causing disruption to or failure of operational and accounting systems and processes provided by the Investment Manager creating an unexpected event and/or adverse impact on personnel or the portfolio. Assessment Unchanged from previous year. Mitigation The number, severity and success rate of cyberattacks have increased considerably over recent years. However, controls are in place and the Board proactively seeks to keep abreast of developments through updates with representatives of the Investment Manager who undertakes meetings with relevant service providers. The Audit Committee once again sought assurance via the Investment Manager, from each of the Company’s service providers on the resilience of their business continuity arrangements. These assurances and the subsequent detailed updates that were given to the Committee provided a satisfactory level of assurance that there had not been, and there was no anticipation of any disruption in the ability of each service provider to fulﬁl their duties as would typically be expected. Key Person Shareholder Communications Description Loss of Investment Manager or other key management professionals. Impact on investor conﬁdence leading to widening of the discount and/or poor performance creating a period of uncertainty and potential termination of the Investment Management Agreement. Assessment Unchanged from previous year. Mitigation The strength and depth of investment team provides comfort that there is not over-reliance on one person with alternative portfolio managers available to act if needed. For each key business process roles, responsibilities and reporting lines are clear and unambiguous. Key personnel are incentivised by equity participation in the investment management company. Description Failure to effectively communicate signiﬁcant events to the shareholder and investor base. Assessment Unchanged from previous year. Mitigation Polar Capital Sales Team and the Corporate Broker provide periodic reports to the Board on communications with shareholders and feedback received. The Board is committed to a clear communication programme to ensure shareholders understand the investment strategy. This is maintained through the use of monthly factsheets which have a market commentary from the Investment Manager as well as portfolio data, an informative website as well as annual and half year reports. Contact details and how to contact the Board are provided in regulatory announcements and the Board are present at the AGM to speak to shareholders. Description Non-compliance with statutes, regulations and disclosure requirements, including FCA listed company regime and Companies Act 2006; s1158/1159 of the Corporation Tax Act 2010, the Companies Act 2006 and other UK, European and overseas legislation affecting UK companies including MiFID II and the GDPR. Not complying with accounting standards could result is a suspension of listing or loss of investment trust status, reputational damage and Shareholder activism. Further risks arise from not keeping abreast of changes in legislation and regulations which have in recent years been substantial. Assessment Unchanged from previous year. Mitigation The Board monitors regulatory change with the assistance of the Investment Manager, Company Secretary and external professional suppliers and implements necessary changes should they be required. The Board receives regulatory reports for discussion and, if required, considers the need for any remedial action. In addition, as an investment company, the Company is required to comply with a framework of tax laws, regulation and company law. The Board keeps abreast of third party service provider internal controls processes to ensure requirements are met in accordance with regulatory requirements. Description Financial loss due to unexpected natural disaster or other unpredictable event disrupting the ability to operate or signiﬁcant exposure to the economic cycles of the markets in which the underlying investments conduct their business operations as well as the economic impact on investment markets where such investments are listed. Fluctuations in stock markets and currency exchange rates could be advantageous or disadvantageous to the Company and its performance. Disruption to trading platforms and support services. Assessment Unchanged from previous year. Mitigation The Board regularly discusses global geopolitical issues and general economic conditions and developments. The impact on the portfolio from other geopolitical changes are monitored through existing control systems and discussed regularly by the Board. While it is difﬁcult to quantify the impact of such changes, it is not anticipated that they will fundamentally affect the business of the Company or make healthcare investing any less desirable. The longer term effects of inﬂation, recession and the war in Ukraine will continue to be assessed by the Audit Committee in light of how they will impact the Company’s portfolio and the overall economic and geopolitical environment in which the Company operates. The Company through the Investment Manager, has a disaster recovery plan in place. Regulatory Risk Economic And Market Risk Strategic Report continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 37 Governance The statutory duties of the Directors are listed in s171-177 of the Companies Act 2006. Under s172, Directors have a duty to promote the success of the Company for the beneﬁt of its members (our shareholders) as a whole and in doing so have regard to the consequences of any decision in the long term, as well as having regard to the Company’s stakeholders amongst other considerations. The fulﬁlment of this duty not only helps the Company achieve its Investment Objective but ensures decisions are made in a responsible and sustainable way for shareholders. To ensure that the Directors are aware of, and understand, their duties, they are provided with an induction when they ﬁrst join the Board, including details of all relevant regulatory and legal duties as a Director and continue to receive regular and ongoing updates on relevant legislative and regulatory developments. They also have continued access to the advice and services of the Company Secretary and, when deemed necessary, the Directors can seek independent professional advice. The Schedule of Matters Reserved for the Board, as well as the Terms of Reference of its committees, are reviewed annually and further describe Directors’ responsibilities and obligations and include any statutory and regulatory duties. The Board seeks to understand the needs and priorities of the Company’s stakeholders and these are taken into account during discussions and as part of the decision-making process. As an externally managed investment company, the Company does not have any employees or customers, however the key stakeholders and a summary of the Board’s consideration and actions where possible in relation to each group of stakeholders are described in the table below. Stakeholder Group How we engage with them Shareholders The Directors have considered this duty when making the strategic decisions during the year that affect shareholders, including the continued appointment of the Investment Manager and the recommendation that shareholders vote in favour of the resolutions for the Company to continue and to renew the allotment and buy back authorities at the AGM. The Directors have also engaged with and taken account of shareholders’ interests during the year. The Company’s AGM will be held at 2pm on Thursday 9 February 2023 at the ofﬁces of Polar Capital, 16 Palace Street, London SW1E 5JD. The Board recognises that the AGM is an important event for shareholders and the Company and is keen to ensure that shareholders are able to exercise their right to vote and participate. Any changes to these arrangements will be communicated through the Company’s website and via a Regulatory Information Service announcement. The Board believes that shareholder engagement remains important, especially in the current market conditions and is keen that the AGM be a participative event for all. To enable all shareholders to hear the Managers’ presentation, this year a pre-recorded presentation reviewing the year past and the outlook for 2022-2023 will be uploaded to the Company’s website ahead of the AGM. The AGM in-person meeting will comprise the formal business and questions only. Shareholders are encouraged to send any questions ahead of the AGM to the Board via the Company Secretary at [email protected] stating the subject matter as PCGH-AGM. The investment manager gives a presentation and the Chairs of the Board and of the Committees, along with the Managers, will be in attendance at the AGM and will be available to respond to questions and concerns from shareholders. Should any signiﬁcant votes be cast against a resolution, the Board will engage with shareholders and explain in its announcement of the results of the AGM the actions it intends to take to consult shareholders in order to understand the reasons behind the votes against. Following the consultation, an update will be published no later than six months after the AGM and the Annual Report will detail the impact the Shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed. Relations with shareholders The Board and the Manager consider maintaining good communications and engaging with shareholders through meetings and presentations a key priority. The Board regularly considers the share register of the Company and receives regular reports from the Manager and the Corporate Broker on meetings attended with shareholders and any concerns that are raised in those meetings. The Board also reviews correspondence from shareholders and may attend investor presentations. Shareholders are kept informed by the publication of annual and half year reports, monthly fact sheets, access to commentary from the Investment Manager via the Company’s website and attendance at events at which the Investment Manager presents. Shareholders are able to raise any concerns directly with the Board without using the Manager or Company Secretary as a conduit. The Chair or other Directors are available to shareholders who wish to raise matters either in person or in writing. The Chair and Directors may be contacted through the registered ofﬁce of the Company. The Company, through the sales and marketing efforts of the Investment Manager, encourages retail investment platforms to engage with underlying shareholders in relation to Company communications and enabling those shareholders to cast their votes on Shareholder resolutions. The Company however has no responsibility over such platforms. The Board therefore encourage shareholders invested via the platforms to regularly visit the Company’s website or to make contact with the Company directly to obtain copies of Shareholder communications. Section 172 of the Companies Act 2006 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202238 Governance Section 172 of the Companies Act 2006 continued Stakeholder Group How we engage with them Shareholders Continued The Company has also made arrangements with its registrar for shareholders, who own their shares directly rather than through a nominee or share scheme, to view their account online at www.shareview.co.uk. Other services are also available via this service. Outcomes and strategic decisions during the year AGM To enable more shareholders the opportunity to hear the Investment Manager’s AGM presentation, the Board has opted to pre-record and upload this to the website ahead of the voting deadline and in-person formal business AGM. Investment Manager Through the Board meeting cycle, regular updates and the work of the Management Engagement Committee reviewing the services of the Investment Manager annually, the Board is able to safeguard Shareholder interests by: • Ensuring adherence to the Investment Policy; • Ensuring excessive risk is not undertaken in the pursuit of investment performance; • Ensuring adherence to the Investment Management Policy and reviewing the agreed management and performance fees; and • Reviewing the Investment Manager’s decision making and consistency in investment process. Maintaining a close and constructive working relationship with the Manager is crucial as the Board and the Investment Manager both aim to continue to achieve consistent, long-term returns in line with the Investment Objective. The culture which the Board maintains to ensure this involves encouraging open discussion with the Investment Manager; recognising that the interests of shareholders and the Investment Manager are aligned, providing constructive challenge and making Directors’ experience available to support the Investment Manager. This culture is aligned with the collegiate and meritocratic culture which Polar Capital has developed and maintains. Outcomes and strategic decisions during the year ESG During the year under review, the Board continued to develop its approach to ESG and engages with the Investment manager to better understand how ESG has been further integrated into the investment and decision- making process. The Board also receives information on how ESG affects Polar Capital as a business and the healthcare team in particular. Please see pages 26 to 28 of the ESG Report for further information. The Management Engagement Committee has recommended and the Board has approved the continued appointment of the Investment Manager on the terms set out within the Investment Management Agreement. Investee Companies The Board has instructed the Investment Manager to take into account the published corporate governance policies of the companies in which they invest. The Board has also considered the Investment Manager’s Stewardship Code and Proxy Voting Policy. The Voting Policy is for the Investment Manager to vote at all general meetings of companies in favour of resolutions proposed by the management where it believes that the proposals are in the interests of shareholders. However, in exceptional cases, where the Investment Manager believes that a resolution would be detrimental to the interests of shareholders or the ﬁnancial performance of the Company, appropriate notiﬁcation will be given and abstentions or a vote against will be lodged. The Investment Manager has voted at 47 company meetings over the year ended 30 September 2022, with 5.8% of all votes being against management and 31% of meetings having at least one against or withheld vote. The Investment Manager reports to the Board, when requested, on the application of the Stewardship Code and Voting Policy. The Investment Manager’s Stewardship Code and Voting Policy can be found on the Investment Manager’s website in the Corporate Governance section (www.polarcapital.co.uk). Further information on how the Investment Manager considers ESG in its engagement with investee companies can be found in the Investment Manager’s report on pages 11 to 20. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 39 Governance Stakeholder Group How we engage with them Service Providers The Directors have frequent engagement with the Company’s other service providers through the annual cycle of reporting and due diligence meetings or site visits. This engagement is completed with the aim of having effective oversight of delegated services, seeking to improve the processes for the beneﬁt of the Company and to understand the needs and views of the Company’s service providers, as stakeholders in the Company. Further information on the Board’s engagement with service providers is included in the Corporate Governance Statement and the Report of the Audit Committee. During the year under review, due diligence meetings have been undertaken by the Investment Manager and where possible, service providers have joined meetings to present their reports directly to the Board or the Audit Committee as appropriate. Outcomes and strategic decisions during the year The reviews of the Company’s service providers have been positive and the Directors believe their continued appointment is in the best interests of the Company. The accounting and administration services of HSBC Securities Services (HSS) are contracted through Polar Capital and provided to the Company under the terms of the IMA. The Board continue to monitor service levels and due diligence reviews conducted by the Company Secretary and is satisﬁed that the service received continues to be of a high standard. Proxy Advisors The support of proxy adviser agencies is important to the Directors, as the Company seeks to retain a reputation for high standards of corporate governance, which the Directors believe contributes to the long-term sustainable success of the Company. The Directors consider the recommendations of these various proxy voting agencies when contemplating decisions that will affect shareholders and also when reporting to shareholders through the Half Year and Annual Reports. Recognising the principles of stewardship, as promoted by the UK Stewardship Code, the Board welcomes engagement with all of its investors. The Board recognises that the views, questions from, and recommendations of many institutional investors and proxy adviser agencies provide a valuable feedback mechanism and play a part in highlighting evolving shareholders’ expectations and concerns. Prior to AGMs, the Company engages with these agencies to fact check their advisory reports and clarify any areas or topics that the agency requests. This ensures that whilst the proxy advisory reports provided to shareholders are objective and independent, the Company’s actions and intentions are represented as clearly as possible to assist with shareholders’ decision making when considering the resolutions proposed at the AGM. Outcomes and strategic decisions during the year The Directors are aware of the voting policies of proxy adviser agencies. The Nomination Committee considers the time commitment required of Directors and the Board considers each Director’s independence on an ongoing basis. The Board have conﬁrmed that all Directors remain independent and able to commit sufﬁcient time in fulﬁlling their duties, including those listed on s172 of the Companies Act. Accordingly, all Directors are standing for re-election at the Company’s AGM. Further information has been provided where appropriate in each directors biography on pages 6 and 7. The AIC The Company is a member of the AIC and has also supported lobbying activities such as the consultations on the 2019 AIC Code, the 2021 BEIS Restoring Trust in Audit and Corporate Governance and the FCA’s 2021 consultation on Diversity and Inclusion on Company Boards. The Directors also cast votes in the AIC Board Elections each year and regularly attend AIC events and seminars. Approved by the Board on 9 December 2022 By order of the Board Tracey Lago, FCG Polar Capital Secretarial Services Limited Company Secretary 9 December 2022 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 40 Governance Report of the Directors The Directors, who are listed on pages 6 and 7, present their annual report together with their Report on Corporate Governance, and the Audited Consolidated Financial Statements for the year ended 30 September 2022. In addition, the attention of shareholders is drawn to the Strategic Report Section (Chair’s Statement, the Investment Manager’s Report, Strategic Report, and the ESG and Section 172 Statements) which provides further commentary on the activities and outlook for the Company. Introduction and Status The Company is incorporated in England and Wales as a public limited company and is domiciled in the United Kingdom. It is an investment company as deﬁned in section 833 of the Companies Act 2006 and has a premium listing on the London Stock Exchange. The Company seeks to continue to operate as an investment trust in accordance with sections 1158 and 1159 of the Corporation Tax Act 2010 (as amended by section 42(2) of the Finance Act 2011). As an approved investment trust the close company provisions do not apply. The Directors, under advice, expect the affairs of the Company to continue to satisfy the conditions of an investment trust. As an investment trust the Company’s ordinary shares are excluded from the FCA’s restrictions which apply to nonmainstream investment products. The Company conducts its affairs and intends to do so for the foreseeable future so that the exclusion continues to apply. The Company’s ordinary shares are eligible for inclusion in a stocks and shares ISA. Life of the Company In the absence of any prior proposals, the Articles of Association of the Company require the Directors to put forward at the ﬁrst Annual General Meeting following 1 March 2025 a special resolution to place the Company into voluntary 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 subsidiary, PCGH ZDP Plc, has a ﬁxed life and the Directors of the subsidiary are required to convene a general meeting on or before 19 June 2024 (unless varied by the holders of the Zero Dividend Preference shares) to propose a resolution to wind up the subsidiary. Capital structure • Issued Share Capital The Company’s share capital is divided into ordinary shares of 25p each. At the year end, there were 124,149,256 ordinary shares in issue (2021: 124,149,256 ordinary shares), of which 2,879,256 (2021: 2,879,256) were held in treasury by the Company. During the year to 30 September 2022, no new shares were issued from or bought back into treasury. Further information on transferability and the voting rights attached to these shares can be found in the shareholder information page 102. • Powers to Issue Ordinary Shares and Make Market Purchases of Ordinary Shares The Board was granted authority by shareholders at the AGM in February 2022 to allot equity securities up to a nominal value of £3,031,750, representing approximately 10 per cent. of the Company’s issued share capital, and to issue those shares for cash without offering those shares to shareholders in accordance with their statutory pre-emption rights. New ordinary shares will not be allotted and issued at below the NAV per share after taking into account the costs of issue. Any re-issue of shares from treasury will follow institutional guidelines; it is not anticipated that such shares would be re-issued below NAV. The Board also obtained shareholder authority at the AGM in February 2022 to make market purchases of up to 18,178,373 ordinary shares of the Company for cancellation or holding as treasury shares in accordance with the terms and conditions set out in the shareholder resolution. These authorities will expire at the AGM to be held in February 2023. Renewal of these authorities will be sought at that AGM. Dividends The Company changed its dividend policy following the change in strategy and reconstruction of the portfolio to more closely focus on growth, approved in June 2017. The Company’s policy is an aim to pay two interim dividends in February and August each year. These interim dividends will not necessarily be of equal amounts. Details of the dividends paid and proposed are set out in Note 11 on page 85. Shareholders should recognise that circumstances may arise when it is necessary to reduce the level of dividend payment or equally there may be instances when the level of dividend must be increased in order to comply with sections 1158 and 1159 of the Corporation Tax Act 2010. Where this would result in paying a dividend beyond the Board’s intended policy a ‘special dividend’ will be declared and paid. In accordance with best practice, the Directors will be proposing a resolution to approve the Company’s dividend policy at the AGM to be held in February 2023. Directors In accordance with the Company’s adopted practices detailed on page 48 of the Report on Corporate Governance, all Directors will retire and offer themselves for re-election at the AGM of the Company to be held in February 2023. Having undertaken a Board Evaluation process and discussed the areas of expertise required to run the Company, the Board have Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 41 Governance conﬁrmed their support and rationale for each Directors’ re-election. The Directors believe that they have a balance of experience, expertise and diversity and that they work well together and that each brings multiple qualities to the Board. The Board rationale for re-appointment of each Director is given on pages 6 and 7 and in the letter accompanying the Notice of AGM. Annual General Meeting (‘AGM’) The Company’s AGM will be held at 2pm on Thursday 9 February 2023. Please see page 101 for further information on the resolutions to be proposed. Major Interests in Ordinary Shares As at the year end of 30 September 2022, the Company had received notiﬁcations from the following shareholders in respect of their own and their clients’ interests in the voting rights of the Company: Shareholder Type of Holding Number of Shares % of Voting Rights Rathbone Brothers plc Indirect 14,515,492 11.97 Investec Wealth & Investment Ltd Direct 13,294,180 10.96 1607 Capital Partners Indirect 12,069,633 9.95 Allspring Investments Indirect 6,522,743 5.38 City of London Direct 6,265,289 5.17 Charles Stanley Indirect 6,106,096 5.04 Brewin Dolphin Limited Indirect 6,039,197 4.98 Canaccord Genuity Group Indirect 5,872,733 4.84 Cheviot Asset Management Limited Direct 4,805,275 3.96 Schroders plc Indirect Below 5% Below 5% Since the year end and up to the date of this report, the Company has been notiﬁed of the following: Shareholder Type of Holding Number of Shares % of Voting Rights Investec Wealth & Investment Ltd Direct 12,124,488 10.00 City of London Direct 6,019,216 4.96 * The above percentages are calculated by applying the shareholdings as notiﬁed to the issued share capital at 9 December 2022 of 121,270,000 ordinary shares being all the issued ordinary shares excluding those held in treasury where voting rights are suspended. Listing Rule 9.8.4 Listing Rule 9.8.4 requires the Company to include certain further information in relation to the Group and Company which is not otherwise disclosed. The Directors conﬁrm there are no additional disclosures to be made pursuant to this rule. By order of the Board Tracey Lago, FCG Polar Capital Secretarial Services Limited Company Secretary 9 December 2022 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 42 Governance Corporate Governance Framework The following diagram demonstrates the governance framework within which the Group is managed. The Directors are ultimately accountable to the Company and its shareholders for the Group’s affairs and are therefore responsible for the governance of the Group. The Group and Company has no employees and relies on third parties to administer the Group and Company and to provide investment management services. Report on Corporate Governance Year ended 30 September 2022 Shareholders Board of Directors Chair: Lisa Arnold Audit Committee Management Engagement Committee Nomination Committee Remuneration Committee Third Party Service Providers Investment Manager and AIFM Chair: Neal Ransome Members: all independent NEDs. Chair: Neal Ransome Members: all independent NEDs Functions of the Nomination Committee are carried out by the Board as a whole. Functions of the Remuneration Committee are carried out by the Board as a whole. The Financial Reporting Council (FRC) has endorsed the Association of Investment Companies (‘AIC’) Code of Corporate Governance (the ‘AIC Code’) for AIC Member Companies to report against in relation to their corporate governance provisions. The AIC Code addresses the relevant principles set out in the FRC UK Code as well as additional principles and recommendations on issues that are speciﬁc to investment trust companies. The FRC has conﬁrmed that by following the AIC Code, boards of investment companies (including those structured as investment trusts) will meet their obligations under FCA Listing Rule 9.8.6. As an externally managed investment company many provisions of the FRC UK Code are not relevant, including those relating to the roles of chief executive, executive directors’ remuneration, statement of gas emissions and the requirement to have an internal audit function. In addition, there are provisions within the FRC UK Code which the Board has chosen to depart from in favour of following the AIC Code, such as the Company’s formal Chair Tenure Policy which allows the Chair to continue in role in excess of 9 years. See page 48 for more information. Statement of Compliance and Application of the AIC Code’s Principles The Board has considered the Principles and Provisions of the 2019 AIC Code of Corporate Governance (AIC Code). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of speciﬁc relevance to the Company. The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the FRC provides more relevant information to shareholders. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 43 Governance The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies. The Board believes that the Company’s current practices are consistent in all material respects in applying the principles and complying with the provisions of the AIC Code. The Board will continue to observe the principles and recommendations set out in the AIC Code. The AIC Code’s principles and provisions are structured into ﬁve sections: Board leadership and purpose; division of responsibilities; composition, succession and evaluation; audit, risk and internal control; and remuneration. The Company’s application of the principles and compliance with the provisions of each section is detailed on pages 43 to 50. Purpose The purpose of the Group, comprising the Company and the wholly owned subsidiary PCGH ZDP Plc, is to provide a vehicle for investors in which assets are invested across a diversiﬁed global portfolio of healthcare stocks which aim to deliver long term capital growth to shareholders. The purpose is achieved through the Investment Objective and policy incorporating parameters to ensure excessive risk is not undertaken. The Investment Policy seeks to generate capital growth by investing in a global portfolio of healthcare stocks. The Company will seek to achieve its objective by investing in a diversiﬁed global portfolio consisting primarily of listed equities. The portfolio is diversiﬁed by geography, industry sub-sector and investment size. As an externally managed investment trust, the culture of the Company is a consequence of the Board’s diversity, decisions and behaviours which are aligned with the values and behaviours of the Investment Manager, interaction between the two and engagement with the Company’s stakeholders. The Board monitors this culture, including the policies and practices it implements to maintain it. Board Leadership In promoting the long-term sustainable success of the Company, the performance of the Company’s portfolio is constantly reviewed in pursuit of value generation for shareholders by achievement of the Investment Objective. Investment management fees are reviewed periodically, with the last change occurring with effect from 1 October 2020. The Investment Manager is entitled to a management fee at the rate of 0.75% per annum of the lower of the Group market capitalisation and the Company’s adjusted net asset value. The Company’s performance over the previous ten years can be found on page 3 and how the Board views its duties is considered in the s172 statement on pages 37 to 39. The Board’s engagement with shareholders and stakeholders and how it contributes to strategic decision making is also discussed within the s172 statement. Participation from both groups is encouraged and the Board can be contacted through the Company Secretary. The Company’s service providers are subject to periodic site visits and attend service review and other meetings throughout the year, ensuring effective engagement. Fulﬁlling the Investment Objective and the Company’s performance is the focus of the Board’s discussions. The Board’s effectiveness, including how it promotes the long-term sustainable success of the Company, is reviewed annually. The process and outcomes of the Board evaluation are detailed on page 48. Role, Responsibilities and Committees of the Board The Board has delegated to the Audit Committee and the Management Engagement Committee speciﬁc remits for consideration and recommendation but the ﬁnal responsibility in these areas remains with the Board. The Board determined that due to its size, and the fact that all the Directors are non-executive and independent, the functions of the nomination committee and remuneration committee would be carried out by the full Board. The Board creates ad hoc committees from time to time to enact policies or actions agreed in principle by the whole Board. BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 44 Governance The number of formal meetings of the Board and its Committees held during the year ended 30 September 2022 and the attendance of individual Directors are shown below. Board Audit Committee Management Engagement 2022 AGM Number of Meetings 5 3 1 1 Lisa Arnold 5 3 1 1 Andrew Fleming 5 3 1 1 Neal Ransome 5 3 1 1 Jeremy Whitley 5 3 1 – * Non-attendance due to COVID-19 restrictions. Service Provider Performance Evaluation Process Investment Manager The Board has contractually delegated the management of the portfolio to the Manager. It is the Manager’s sole responsibility to take decisions as to the purchase and sale of individual investments other than unquoted investments where the Board is consulted. The Manager has responsibility for asset allocation and sector selection within the guidelines established and regularly reviewed by the Board. The Manager is responsible for providing or procuring accountancy services, company secretarial and administrative services including the monitoring of third-party suppliers who are directly appointed by the Company. The Manager also ensures that all Directors receive in a timely manner all relevant management, regulatory and ﬁnancial information. Representatives of the Investment Manager attend all Board meetings in a variety of capacities including investment management, compliance, risk and marketing, enabling the Directors to probe further on matters of concern or seek clariﬁcation on certain issues. The whole Board reviews the performance of the Investment Manager in all service disciplines and, at each Board meeting, the Company’s performance against the market and a peer group of funds with a similar Investment Objective is reviewed. The investment team provided by the Investment Manager has long experience of investment in the healthcare sector. In addition, the Investment Manager has other investment resources which support the investment team and have experience in managing and administering other investment trust companies. The Board and Investment Manager work in a collaborative manner and the Chair encourages open discussion and debate. Report of the Management Engagement Committee The Management Engagement Committee comprises all the independent non-executive Directors under the Chairmanship of Neal Ransome, and meets at least once a year and at such other times as may be necessary. The Management Engagement Committee reviews the performance and activities of the Investment Manager and considers the terms of the investment management agreement (“IMA”) and other services and resources supplied by the Investment Manager, prior to making its recommendation to the Board on whether the retention of the Investment Manager is in the interests of shareholders. During the year ended 30 September 2022 the Management Engagement Committee met once to carry out the detailed review of the Investment Manager and consider its continued appointment for the next ﬁnancial year ending 30 September 2023. During the year, the Board reviewed its fee arrangements with the Manager taking into consideration the performance of the Manager in managing the assets of the Company, the performance of the Company in both absolute and relative terms against its benchmark since launch and since reconstruction in June 2017. No change to the fee arrangements were proposed for the year under review or the year ahead. Under the terms of the IMA, the Investment Manager is entitled to a management fee together with reimbursement of reasonable expenses incurred by it in the performance of its duties. The management fee is payable monthly in arrears and is at the rate of 0.75% per annum based on the lower of the market capitalisation and adjusted net asset value. This fee was agreed with effect from 1 October 2020. The review of the Investment Manager also considered the strength of the investment team, depth of other resources provided by the Manager and quality of the services provided or procured by the Manager including shareholder communications, company secretarial, accounting and administration. The Board, through the work of the Management Engagement Committee, has concluded that it is in the best interests of shareholders as a whole that the appointment of Polar Capital LLP as Investment Manager is continued. BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued Report on Corporate Governance continued Year ended 30 September 2022 Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 45 Governance The Company uses a variety of performance measures when monitoring the performance of the portfolio managed by the Investment Manager. These measures are considered to be Alternative Performance Measures under the ESMA guidelines and are described further on pages 97 to 98. Other Suppliers The Board also monitors directly or through the Manager the performance of its other key service providers. • The Board has directly appointed HSBC Bank Plc as Depositary and Panmure Gordon as Corporate Broker. The Depositary reports quarterly and makes an annual presentation to the Board. The Corporate Broker provides reports to each Board meeting and joins the Board on request, and at least every six months, to discuss markets and other issues. • The Registrar, Equiniti Limited, is directly appointed by the Board and the performance of their duties is monitored and reported on by the Company Secretary. • Other suppliers such as printers, website services and PR agents are monitored by the Company Secretary and each supplier reports to the Board as and when deemed necessary. Report of the Audit Committee The Audit Committee comprises all the independent non-executive Directors under the Chairmanship of Neal Ransome. The Committee has formal terms of reference which clearly deﬁne its responsibilities and duties. A separate report of the work of the Audit Committee over the year is set out on pages 51 to 57. A review of the Audit Committee is included separately in the annual board evaluation process. Report of the Remuneration Committee As mentioned above, the role of the Remuneration Committee is undertaken by the full Board. The Directors’ Remuneration Report including the processes undertaken when reviewing remuneration can be found on pages 58 to 62. Chair The Chair is responsible for the leadership of the Board and works with the Company Secretary for setting the Board’s meeting agendas and for balancing the issues presented to each meeting. Open and honest debate is encouraged at each Board meeting and the Chair keeps in touch with both the Company Secretary and other Directors between Board meetings. Lisa Arnold was appointed to the Board in 2018 and appointed as Chair in February 2020. The Chair was independent on appointment and continues to meet the criteria for independence. The Board considers the competence and independence of the Directors on an annual basis. Under the Company’s Chair Tenure Policy, having been appointed following time spent as an NED, the Chair may remain on the Board for up to twelve years. Senior Independent Director Due to the size and structure of the Board it is considered unnecessary to identify a senior independent non-executive director. The Board considers that all Directors have different qualities and areas of expertise on which they may lead where issues arise and to whom concerns may be conveyed. Board Responsibilities The Board currently comprises four non-executive Directors who are all considered to be independent. The Board considers that its overall composition is adequate for the effective governance of the Company. No Director has any former or present connection with the Investment Manager. A formal schedule of matters speciﬁcally reserved for decision by the full Board has been deﬁned and a procedure has been adopted for Directors, in the furtherance of their duties, to take independent professional advice at the expense of the Company. No professional advice has been independently sought during the year. BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7) continued DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 46 Governance Company Secretary The Directors have access to the advice and services of the Company Secretary which is provided in compliance with the IMA through Polar Capital Secretarial Services Limited. An appointed representative, Tracey Lago, is responsible to the Board for ensuring that Board procedures are followed, and that applicable rules and regulations are complied with. The Board and Investment Manager operate in a supportive, co-operative and open environment. The Board acknowledges that PIRC (Pensions and Investment Research Consultants Limited, an independent corporate governance and shareholder advisory consultancy) has recently changed its voting guidelines to recommend voting against the laying of the Annual Report at an AGM where the Investment Manager provides company secretarial services to the Company. However, the Board believes that the beneﬁts gained by utilising the services of a Company Secretary provided by the Investment Manager signiﬁcantly outweigh the potential for a conﬂict of interest perceived by PIRC. The Company Secretary is provided to the Company as an independent service and the appointed representative acts as an ofﬁcer of the Company and not an employee of the Investment Manager when working with the Board and the Company. Meetings The Board has a schedule of regular meetings through the year and meets at additional times as required. During the year, Board and Committee meetings were held to deal with the ongoing stewardship of the Company and other matters including the setting and monitoring of investment strategy and performance, review of the Financial Statements, ESG and considering any shareholder feedback. The level of the ordinary share price discount or premium to the Net Asset Value are kept under review along with matters affecting the industry and the evaluation of third-party service providers. The Board is also responsible for considering, reviewing and implementing appropriate policies in respect of regulatory changes that impact the Company. The full investment strategy was revised during the reconstruction exercise undertaken in early 2017 which re-launched the Company with a revised investment strategy in June 2017. The Board continues to consider the Company’s strategy and its relevance to the market and shareholders as a whole at each Board meeting and at least one Board meeting per year includes an in-depth focus on strategy. Through this process the Board supervises the management of the investment portfolio, the work of the Investment Manager, the risks to which the Company is exposed and their mitigation, and the quality of services received by the Company. As reﬂected in the table on page 44 the Board formally met ﬁve times during the year. In addition to the formal meetings, the Board met on an informal ad-hoc basis as and when deemed necessary to discuss relevant matters and put in place any responses deemed appropriate. Delegated Responsibilities The Board has delegated to each of the Audit and Management Engagement Committees speciﬁc remits for consideration and recommendation, as detailed within the terms of reference which are available on the Company’s website, but the ﬁnal responsibility in these areas remains with the Board. The Chair of the Audit Committee attends the AGM to deal with questions relating to the Annual Report and Financial Statements. Attendance at each of these meetings is disclosed in the table on page 44. Directors’ Professional Development When new Directors are appointed, they are offered an induction course provided by the Investment Manager. Directors are welcome to visit the Manager at any time to receive an update on any aspect of interest or a refresher on the Manager’s operations both generally and those which are speciﬁc to the Company. Directors are also provided on a regular basis with key information on the Company’s policies, regulatory and statutory obligations and internal controls. Changes affecting Directors’ responsibilities are advised to the Board as they arise. Directors may also participate in professional and industry seminars and may use the Manager’s online compliance training resources to ensure they maintain their knowledge. Conﬂicts of Interest Directors have a duty to avoid a situation in which they have a conﬂict of interest or a possible conﬂict with the interests of the Company. The Company’s Articles contain provisions to permit the Board to authorise acceptable conﬂicts or potential conﬂicts. DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) continued Report on Corporate Governance continued Year ended 30 September 2022 Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 47 Governance The Board has in place a policy to govern situations where a potential conﬂict of interest may arise, for example where a Director is also a Director of a company in which the Company invests or may invest. Where a conﬂict situation arises, the conﬂicted Director is excluded from any discussions or decisions relating to the matter of conﬂict. Each Director has provided the Company with a statement of all conﬂicts of interest and potential conﬂicts of interest, which have been approved by the Board and recorded in a register. The Conﬂicts Register is reviewed at every Board meeting and the Directors are reminded of their obligations for disclosure. No Director has declared receipt of any beneﬁts other than their emoluments and associated expenses in their capacity as a Director of the Company. The Board as part of its year-end review has considered the full register of conﬂicts, any conditions imposed on such conﬂicts or potential conﬂicts and the operation of the notiﬁcation and authorisation process. It concluded that the process has operated effectively since its introduction. There were no contracts subsisting during or at the end of the year in which a Director is or was interested and which is or was signiﬁcant in relation to the Company’s business or to the Director. All the Directors were considered independent of the Investment Manager and had no relationship or conﬂicts which were likely to affect their judgement. The Directors’ interests in the ordinary shares of the Company are set out on page 61 of the Directors’ Remuneration Report. Composition and Diversity The Board is responsible to shareholders for the overall management of the Company’s affairs. For the full year under review there were four non-executive Directors. Each Director has different qualities and areas of expertise on which they may lead should issues arise. The Board has a policy to consider diversity and seeks to follow the diversity recommendations of the Hampton-Alexander and Parker Reviews, amongst other factors; consideration is given to all forms of diversity in order to balance both the expertise on, and the structure of, the Board as a whole. The Board notes the requirements of the FCA Diversity and Inclusion Policy published in April 2022, reportable for ﬁnancial years commencing on or after 1 April 2022, and, whilst the Board does not meet the gender requirements (being a minimum of 40% female Board members) or ethnicity requirements (at least one non-white ethnic minority Board member), it does have at least one senior female appointment who is currently Chair of the Board. The Board will have regard to the diversity recommendations of the FCA policy on Diversity and Inclusion, amongst other factors, when making future appointments and will provide full disclosures in next year’s annual report as required under the FCA’s policy. The Board as the Nomination Committee met in October 2022 and considered the near-term recruitment needs of the Board. Having considered a variety of factors, the Committee concluded that at the present time, the Board worked efﬁciently and had the requisite skill sets to lead the Company effectively. Noting the requirement for greater diversity, the Committee concluded that, with a ﬁxed life, the appropriate time for recruitment would be shortly before or after any reconstruction plans. In support of increasing diversity and expanding the pool of potential NED candidates of the future, the Committee and in turn the Board, concluded that they would consider the appointment of a Board Apprentice for the next ﬁnancial year. The Board as the Nomination Committee considered the contribution and performance of each Director as part of the Director and Board performance evaluation. The Board believes that the Directors demonstrate a breadth of experience across the investment and ﬁnancial services industry and exposure to the healthcare sector. Each Director effectively contributes to the operation of the Board and demonstrates independent views on a range of subjects. All the Directors were considered independent of the Investment Manager and had no relationship or conﬂicts which were likely to affect their judgement. DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21) continued COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28) Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 48 Governance Succession The Board has determined that due to the ﬁxed life of the Company there is no need for a formal policy on the length of service for Directors. The reconstruction approved by shareholders in June 2017 extended the life of the Company for a further seven years. Once the reconstruction was completed the Company’s original board was replaced in two phases, a process which completed in December 2019. Following the completion of this process the Board considers that its overall composition is well placed for the effective governance of the Company. No formal succession plans have therefore been developed beyond the ﬁxed life of the Company. It is anticipated that the process of board succession would be reassessed as part of any future reconstruction plans. Evaluation The evaluation of the Board, its Committees and individual Directors is carried out annually. The process involves the use of a written questionnaire to assess the balance of skills, experience, knowledge, independence and effectiveness of the Board, including how the Directors interact as a unit on the Board. The responses to the questionnaire are reviewed and discussed individually with the Chair where appropriate and by the full Board and, should it be deemed necessary, additional reporting measures or operations would be put in place. The review of the Chair’ s performance is conducted by the Board led by the Chair of the Audit Committee. The Chair of the Board did not participate in this discussion. In carrying out these evaluations, each Director is assessed on their relevant experience, their strengths and weaknesses in relation to the overall requirements of the Board and their commitment to the Company in terms of time by regular attendance and participation at Board meetings. The process is constructed to assess the contribution of individual Directors to the overall operation of the Board and its Committees. The Board, through the work of the Nomination Committee, has determined that each Director standing for re-election continues to offer relevant experience, effectively contributes to the operation of the Board and has demonstrated independent views on a range of subjects. The Committee is satisﬁed that the structure, mix of skills and operation of the Board continue to be effective and relevant for the Company. Performance and Re-election In accordance with the Company’s adopted practices, all Directors will retire and offer themselves for re-election at the AGM of the Company to be held in February 2023. Having undertaken a Board Evaluation process and discussed the areas of expertise required to run the Company, the Board have conﬁrmed their support and rationale for each Directors’ re-election. The Directors believe that they have a balance of experience, expertise and sufﬁcient diversity and that they work well together, each director brings multiple qualities and areas of expertise to the Board. The Board rationale for re-appointment of each Director is given on pages 6 and 7 and in the letter accompanying the Notice of AGM. Chair Tenure Policy The Board considers that in the circumstances of an investment company, where corporate knowledge and continuity can add value, there may be merit in appointing one of its members to the Chair. In addition, there may be circumstances where succession plans are disrupted such that an internal candidate with some years’ existing experience is the most appropriate candidate for the Chair. In other circumstances an external candidate may be more appropriate. As per provision 24 of the AIC Code, the Board’s policy is that the maximum Board tenure for its Chair is up to 12 years (where up to 9 years of this could be served as a non-executive Director). The Board believes that due to the staggered nature of the appointment dates of existing Directors, and the expectation that Directors, unless assuming the role of Chair or there being unforeseen circumstances, will retire from the Board after nine years of service, there will be regular refreshment of the Board. COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22- 28) continued Report on Corporate Governance continued Year ended 30 September 2022 Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 49 Governance Internal Controls The Board has overall responsibility for the Group and Company’s system of internal control, for reviewing its effectiveness and ensuring that risk management and control processes are embedded in the Company’s day- to -day operations which are operated or overseen by the Investment Manager. The Investment Manager has an internal control framework to provide reasonable but not absolute assurance on the effectiveness of the internal controls operated on behalf of its clients. The Manager is authorised and regulated by the Financial Conduct Authority and its compliance department monitors the Company’s compliance with the various rules and regulations applicable to it including the FCA’s rules, AIFMD, MiFID II and GDPR, for example. The Board, through the Audit Committee, has established a process for identifying, evaluating, monitoring and managing any principal risks faced by the Company. This is documented through the use of a Risk Map which is subject to regular review by the Audit Committee and accords with the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014 by the Financial Reporting Council. The controls are embedded within the business and aim to ensure that identiﬁed risks are managed and systems are in place to report on such risks. The internal controls seek to ensure the assets of the Group and Company are safeguarded, proper accounting records are maintained, and the ﬁnancial information used by the Group and Company and for publication is reliable. Controls covering the risks identiﬁed, including ﬁnancial, operational, compliance and risk management controls, are monitored by a series of regular reports covering investment performance, attribution analysis, reports from various third parties and from the Investment Manager. As the Company has no employees and its operational functions are carried out by third parties, the Audit Committee does not consider it necessary for the Company to establish its own internal audit function. Contracts with suppliers are entered into after full and proper consideration by the Board of the quality and cost of the services offered, including the control systems in operation in so far as they relate to the affairs of the Company. Operation of Internal Controls The process was active throughout the year and up to the date of approval of this Annual Report. However, such a system is designed to manage rather than eliminate risks of failure to achieve the Company’s business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board, in assessing the effectiveness of the Group and the Company’s internal controls has, through the Audit Committee, received formal reports on the policies and procedures in operation. The reports also include results of tests, with details of any known internal control failures from the Investment Manager for its ﬁnancial year ended 31 March 2022. For the Group and Company’s year under review, no material errors or control failures had been identiﬁed. The Manager has subsequently provided conﬁrmation that there has been no material change to the control environment up to the date of signing these Financial Statements. The Manager has delegated the provision of accounting, portfolio valuation and trade processing to HSBC Securities Services but remains responsible to the Company for these functions and provides the Board with information on these services. Based on the work of the Audit Committee and the reviews of the reports received by the Audit Committee on behalf of the Board, the Board has concluded that there were no material control failures during the year and up to the date of this report. AUDIT, RISK AND INTERNAL CONTROL (PRINCIPLES M-O, PROVISIONS 29-36) Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 50 Governance Due to the fully independent non-executive Board comprising four Directors, the Board has deemed it appropriate for the full Board to fulﬁl the role of the Remuneration Committee. The Board, acting as the Committee, meets at least annually and is responsible for consideration and recommendations in relation to Directors’ remuneration. The remuneration of the Directors is reviewed on an annual basis but will not necessarily lead to a change in remuneration level awarded. Industry guidance, peer investment trust companies’ remuneration, the work undertaken by the Board in the prior year along with plans for the current year and the overall regulatory environment are all considered when reviewing remuneration. Remuneration levels are set to attract candidates of high calibre to the Board. The Company’s remuneration policy will be put to shareholders for approval once again at the AGM in February 2023, the policy is detailed within the Directors’ Remuneration Report on page 59 and explains how the policy is designed to support strategy and promote long-term sustainable success. Tracey Lago, FCG Polar Capital Secretarial Services Limited Company Secretary 9 December 2022 REMUNERATION (PRINCIPLES P-R, PROVISIONS 37-42) Report on Corporate Governance continued Year ended 30 September 2022 Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 51 Governance I am pleased to present my Report to you as Chair of the Audit Committee. The Committee has written terms of reference which are available to view on the Company’s website, www.polarcapitalglobalhealthcaretrust.co.uk The Committee comprises all the Directors and the Board is satisﬁed that the Committee has sufﬁcient recent and relevant ﬁnancial experience and has competence relevant to the sector in which the Company operates to discharge its functions effectively. The experience of the members of the Committee can be assessed from the Directors’ biographies set out on pages 6 and 7. I am a chartered accountant and a former partner and head of the pharmaceutical and healthcare M&A practice of PricewaterhouseCoopers LLP (‘PwC’). I hold the ICAEW’s FCA, BFP and CF qualiﬁcations and am therefore deemed to have appropriate experience and expertise to carry out the role of Chair of the Audit Committee. During the year the Audit Committee met three times, with all members of the Committee attending each meeting. Matters Considered during the Financial Year Ended 30 September 2022: During the year the Audit Committee considered a variety of matters, including: Audit Regulation While the Committee has not had to consider any new material regulations in the year under review, it does regularly review guidance and determine how to apply any relevant best practice to the Company. The Committee continues to review the outcomes of the FRC’s annual Audit Quality Reviews and discusses the ﬁndings with the Auditors. As reported last year, the Committee is aware of the extensive proposals outlined by the Department of Business, Enterprise, Industry and Skills consultation (“BEIS”) which seek to strengthen the UK’s audit and corporate governance framework. The outcomes of the consultation process were published on 31 May 2022 and are expected to progress through primary and secondary legislation from early 2023. The Committee will continue to monitor the detail of and implement any primary legislation arising from the reforms and will consider any suggested guidance from BEIS for good practice. The Committee will report on any changes made in the respective Annual Report following the changes being made. Audit Committee Report Neal Ransome Chair of the Audit Committee Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 52 Governance Audit Committee Report continued Annual External Audit • the scope of the annual audit and agreement with the Auditors of the key areas of focus; • the reports from the Auditors concerning their audit of the annual Financial Statements of the Company; • the performance of the Auditors and the level of fees charged for their services; • the independence and objectivity of the Auditors; • the appointment of the Auditors; • the policy for non-audit services which may be provided by the Auditors in line with the FRC guidance; and • the extent of the non-audit services, the quality of such work and the fees. Internal Audit • the potential need for an internal audit function, which we continue to conclude is unnecessary for an externally managed investment trust. Accounting Policies and related matters • the appropriateness and any changes to the accounting policies of the Company including any judgements required by such policies and the reasonableness of such. During the year the Committee ensured that the accounting policies as set out on pages 77 to 81 were applied consistently throughout the year. During the year there were no changes to currently adopted policies and no new UK-adopted international accounting standards (“UK-adopted IAS”) or amendments to UK-adopted IAS which had any signiﬁcant impact on the Company’s Financial Statements. • the ﬁnancial disclosures contained in the Annual Report and Half Year Report to shareholders. • the going concern statement, longer-term viability statement and the requirement that the Annual Report and Financial Statements, when taken, as a whole are fair, balanced and understandable. • With effect from this ﬁnancial year (ended 30 September 2022), the Company is required to prepare consolidated accounts prepared in accordance with UK-adopted IAS and publish its annual Financial Statements in a common electronic format. The Company’s Subsidiary, PCGH ZDP Plc • the Audit Committee also considers the Financial Statements and audit requirements of the Company’s wholly owned subsidiary, PCGH ZDP Plc. Accounting standard IFRS9 speciﬁes how an entity should classify and measure ﬁnancial assets, liabilities and some contracts. PCGH ZDP Plc has advanced a loan to the Company which falls within the scope of this accounting standard. As required by IFRS9, an impairment review has been conducted to assess the possibility of the Company defaulting on its liability to PCGH ZDP Plc. It has been concluded that the possibility of default is negligible, and that accordingly no adjustment is required to the carrying value of the loan in the Financial Statements of PCGH ZDP Plc. A note on this matter has been included in the Financial Statements of PCGH ZDP Plc. The liability to PCGH ZDP Plc is the equivalent of the redemption value of the ZDP Shares being 122.99p per ZDP Share and becomes payable on 19 June 2024. The Company’s minimum asset cover required to fulﬁl the loan covenant is 1.8x. During the year under review the lowest asset cover available at month end was 10.4x and the highest was 12.5x. Investment Matters • the investment management process, including conﬁrmation of the existence and ownership of investments through the review of quarterly Depositary Reports and meeting with the Depositary in relation to the safeguarding of the Company’s assets. No errors have been reported during the year under review. Internal Controls and Risk • the Risk Map covering the identiﬁcation of new and emerging risks, adjustments to existing risks and the mitigation and controls in place to manage those risks; and • reports from the Investment Manager and the Investment Manager’s external Auditors on the effectiveness of the system of internal ﬁnancial controls including the Risk Map. Dividend Policy • the Committee considered the Company’s Dividend Policy as approved by shareholders at the Annual General Meeting held in February 2022 and recommended to the Board that it continue in force. The Dividend Policy will be proposed for approval by shareholders at the Company’s AGM to be held in February 2023. The Company’s focus remains on capital growth, and while the Company continues to aim to pay two dividends per year these are expected to be a small part of a shareholder total return. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 53 Governance Consideration of the Half Year Report and Financial Statements • prior to publication, the Committee considered and reviewed the Half Year Report and Financial Statements, which were not audited, to ensure that they were prepared on a basis consistent with the accounting policies used in the Annual Report and Financial Statements for the year ended 30 September 2021. Consideration of the Annual Report and Financial Statements • the Committee performed this role through monitoring the integrity of the Financial Statements of the Company and the system of accounting to ensure compliance with the relevant and appropriate accounting standards. The scope of the audit was agreed in advance with a focus on areas of audit risk and the appropriate level of audit materiality. • the Auditors reported to the Committee on the results of the audit work and highlighted any issues which the audit work had discovered, or the Committee had previously identiﬁed as signiﬁcant or material in the context of the Financial Statements. Following a comprehensive review process the Audit Committee presented its conclusions to the Board. Signiﬁcant Matters in Relation to the Financial Statements for the Year Ended 30 September 2022 • in addition to the matters considered by the Committee informing its opinions on going concern and longer-term viability (described below) and in concluding that the Annual Report and Financial Statements, when taken as a whole, are fair, balanced and understandable, the Committee also considered the following matters in relation to the Financial Statements: Signiﬁcant Matter How the Issue was Addressed Valuation, existence and ownership of investments The valuation is carried out in accordance with the accounting policies of the Company as described in note 2(g). The Depositary has reported on its work and safe keeping of the Company’s investments and a report from the Depositary is provided on the Company’s website: www.polarcapitalglobalhealthcaretrust.co.uk Compliance with s1159 and s1159 of the Corporation Tax Act 2010 Consideration of compliance with the requirements of investment trust status is carried out at each Board meeting throughout the year. Stability and ﬁnancial sustainability of the subsidiary in relation to structural gearing provided to the parent company The ZDP shares issued by the subsidiary are traded and maintain a standard listing on the London Stock Exchange. The valuation of the subsidiary is monitored regularly by the Board and the subsidiary is subject to an independent audit by the Auditors. There were no adverse matters brought to the Audit Committee’s attention in respect of the 2022 audit which were material or signiﬁcant, or which should be brought to shareholders’ attention. Conclusions in Respect of the Annual Report and Financial Statements In order to reach the conclusion that the Annual Report and Financial Statements when taken as a whole are fair, balanced and understandable, the Board has requested that the Committee advise on whether it considers these criteria satisﬁed. In so doing the Committee has considered the following: • the ongoing comprehensive control framework around the production of the Annual Report, including the veriﬁcation processes in place to deal with the factual content; • the extensive levels of review undertaken in the production process, by the Investment Manager and the Committee; • the internal control environment as operated by the Investment Manager and other suppliers including any checks and balances within those systems; and • the unqualiﬁed audit report from the Auditors conﬁrming their work based on substantive testing of the Financial Statements. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 54 Governance Audit Committee Report continued As a result of the work performed, the Committee has concluded that the Annual Report and Financial Statements for the year ended 30 September 2022, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s performance, business model and strategy, and it has reported on these ﬁndings and provided such conclusion to the Board. External Auditors Appointment of Auditors, Fees and Tenure The Committee considers by way of meetings and reports, the appointment, remuneration and work of the Auditors. PwC (or the ‘Auditors’) have provided audit services to the Company from its incorporation in 2010 and to the Group since 2017. Following a formal and competitive tender process in 2020, PwC were reappointed as the Company’s auditors. The re-appointment of PwC as Auditors to the Company has been submitted annually for shareholder approval and will be submitted once again at the AGM to be held in February 2023, together with a separate Resolution to authorise the Directors to set the remuneration of the Auditors. In accordance with current legislation, the Company is required to instigate an audit tender process at least every 10 years and will be required to change its auditors after a maximum of 20 years’ engagement. The Auditors are invited to all Committee meetings and receives copies of all relevant papers and meeting minutes. As part of the year end audit, the Committee considered and re-conﬁrmed the level of fees pre-agreed and payable to the Auditor bearing in mind the nature of the audit and the quality of services received. The fees paid to PwC in respect of the audit of the annual Financial Statements of the Company amounted to £41,525 (2021: £38,000). The fees paid to PwC in respect of the audit of the Financial Statements of the Company’s wholly owned subsidiary, PCGH ZDP Plc, were £6,875 (2021: £6,250). The year-on-year increase, whilst unwelcome, is in line with increases experienced across the investment trust sector in the current and recent years. Audit ﬁrms generally have increased the fees that they charge to investment trusts in order to reﬂect the increased level of work that they have been required to perform, and the increased risk that they perceive, in the context of more rigorous and robust levels of audit scrutiny and regulation. Effectiveness of Audit Process The Committee, on behalf of the Board, is responsible for overseeing the relationship with the Auditors including ensuring the quality and effectiveness of the audit. The Audit Committee monitored and evaluated the effectiveness of the Auditors and any changes in the terms of their appointment based on an assessment of their performance, qualiﬁcation, knowledge, expertise and resources. The Auditor’s independence was also considered along with other factors such as audit planning and interpretations of accounting standards. This evaluation has been carried out throughout the year by meetings held with the Auditors, by review of the audit process and by comments from the Investment Manager and others involved in the audit process. Based on its review the Audit Committee concluded that the Auditors remained independent and continued to act in an independent manner. The Auditors are provided with an opportunity to address the Committee without the Investment Manager present to raise any concerns or discuss any matters relating to the audit work and the cooperation of the Investment Manager and others in providing information and the quality of that information including the timeliness in responding to audit requests. Non-audit Work The Audit Committee’s policy for the provision of non-audit services by the Auditors is to ensure that there is a clear separation of audit work and non-audit work and that the cost of any non-audit work is justiﬁed and is not disproportionate to the audit fees, to the extent that the independence of the Auditors would be compromised. The Audit Committee’s policy on the provision of non-audit services by the Auditors is available on the Company’s website. The policy is produced in line with the FRC Ethical Standards (updated in March 2020) and any non-audit services are required to be pre-approved by the Audit Committee. In both the year under review and the prior year, no non-audit services were provided by the Auditors. Overview of Risk and Internal Controls The Board has ultimate responsibility for the management of risk throughout the Company and has asked the Audit Committee to assist in maintaining an effective internal control environment. The Company maintains a Risk Map which seeks to identify, monitor and control principal risks as well as identifying emerging risks. The Committee has continued to review the Risk Map to identify the principal and emerging risks facing the business including those that might threaten its business model, future performance, liquidity and reputation. Alongside this, the Committee considered the likelihood, impact, mitigating factors and controls to reduce the impact of such risks as described on pages 34 and 36. This process was carried out throughout the year and is the means by which the Risk Map is monitored and kept relevant by reﬂecting any changes to the source and level of risks facing the Company. The Committee has met to discuss and assess emerging risks and where appropriate recommends changes to the Risk Map. The Committee will actively continue to monitor the system of internal controls through the regular Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 55 Governance review of the Risk Map and the internal control environment in order to provide assurance that they continue to operate as intended. As part of the year end processes the Audit Committee also undertook a review of the effectiveness of the system of internal controls considering any issues that had arisen during the course of the year. The Committee acknowledges that the Company is reliant on the systems utilised by external suppliers. Representatives of the Investment Manager reported to the Committee on the system of internal controls that is in place for the performance of the Investment Manager’s duties under the IMA. The Committee and the Manager also received presentations and internal control reports from other key suppliers on the quality and effectiveness of the services provided to the Company. In addition, the Manager also conducted a virtual due diligence site visit with HSBC where they received thorough presentations from representatives covering the work of the Operations, Risk Administration and Accounting Teams, in addition to the Custodian and Depositary. No matters of concern with any areas of service were raised at any of the meetings or on reviewing the internal controls reports. The Audit Committee has also discussed with the Investment Manager their policies on whistleblowing, cyber security, antibribery and the Modern Slavery Act and is satisﬁed that the Investment Manager has controls and monitoring processes to implement their policies across the main contractors which supply goods and services to the Investment Manager and to the Company. The Company has adopted an Anti-Corruption policy which incorporates Anti-Bribery, Anti-Slavery and the Corporate Criminal Offence of Tax Evasion. In addition to this the Company has issued a data privacy notice in relation to the General Data Protection Regulation. All such policies can be found on the Company’s website www.polarcapitalglobalhealthcaretrust.co.uk. The Audit Committee also considered the policy and controls used by the Investment Manager surrounding the use of brokerage commissions generated from transactions in the Company’s portfolio and the obtaining of best execution on all transactions. There were no issues of concern arising from the reviews of or within the internal controls environment the Company relied upon during the course of the year ended 30 September 2022 and up to the date of this report. Geopolitical Events This time last year we were reporting on the effect of the COVID-19 pandemic on the portfolio and market disruption in general. Thankfully we now appear to be seeing the last signs of COVID-19 as a pandemic and the ﬁrst signs of it becoming something that we should all continue to be aware of and live with as carefully as we can. Focus has shifted as we now watch the impact of the Ukraine war, escalating energy prices, supply chain shortages, rising interest rates and inﬂation. The consequences of these events can be seen globally and the associated market volatility has had an impact on the Company’s portfolio performance. Further details can be found in the Investment Manger’s Report on pages 11 to 20. The Committee will continue to monitor the impact of these and other events which appear in our assessment of risk and the ability of the Company to achieve its investment objective. The Committee has regularly reviewed the operational resilience of its various service providers in connection with the mitigation of the business risks posed by geopolitical events. Many of the external service providers have continued to utilise the hybrid working model after such a successful business transition to fully remote working during the pandemic. The Committee is pleased to conﬁrm that all service providers have continued to demonstrate their ability to provide services to the expected level, with no breaks in the services provided or signiﬁcant operational failures. Going Concern and Longer-term Viability Going Concern At the request of the Board, the Audit Committee has considered the ability of the Company to adopt the going concern basis for the preparation of the Financial Statements. The Committee has considered the ﬁnancial position of the Company, its cashﬂows and its liquidity position. The Committee has also considered any material uncertainties and events that might cast signiﬁcant doubt upon the Company’s ability to continue as a going concern. The Audit Committee has considered: • the ability of the Company to liquidate its portfolio to meet any liabilities as they fall due; • the level of budgeted expenses and the exposure to currency and credit risk; and • the factors impacting the forthcoming year as set out in the Strategic Report Section and comprising the Chair’s Statement, the Investment Manager’s Report and the Strategic Review. The ﬁnancial position of the Company and its cash ﬂows and liquidity position are described in the Strategic Report and the Financial Statements. Note 26 to the Financial Statements includes the Company’s policies and process for managing its capital, its ﬁnancial risk management objectives, details of ﬁnancial instruments and hedging activities. Exposure to credit risk and liquidity risk are also disclosed. The Committee is mindful of the uncertainty surrounding the Ukraine war, escalating energy prices, supply chain shortages, Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 56 Governance Audit Committee Report continued rising interest rates and inﬂation, and the longer-term impact these factors may have on the market and global economy and will continue to keep this under review. Based on the information provided to the Committee and its assessment of the ﬁnancial position of the Company, the Committee has recommended that a going concern basis should be adopted by the Board for the preparation of the Financial Statements for the year ended 30 September 2022. Longer-term Viability The Board has also asked the Audit Committee to address the requirement that a longer-term viability statement be provided to shareholders. This statement should take account of the Company’s ﬁnancial position, the principal risks as set out on pages 34 to 36 together with the mitigating factors which are assumed to operate appropriately so that the Board may state that they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. The Committee considered the Company’s longer-term viability, with reference to the FRC’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, and concluded that the Board may state its reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment. To provide this assessment, the Audit Committee has considered the Company’s ﬁnancial position as described above including its ability to liquidate its portfolio and meet its expenses as they fall due: • the portfolio comprises investments traded on major international stock exchanges, and there is a spread of investments by market capitalisation of company. Approximately 97% of the portfolio as at 30 September 2022 could be liquidated within seven trading days and there is no expectation that the nature of the investments held within the portfolio will be materially different in future; • the expenses of the Company are predictable and modest in comparison with the assets of the Company and there are no capital commitments foreseen which would alter that position; and • the Company has no employees and consequently has no employment-related liabilities or responsibilities. The Audit Committee has also had regard to the following assumptions in considering the Company’s longer-term viability: • healthcare will continue to be an investable sector of the international stock markets and investors will still wish to have an exposure to such investments; • closed ended investment trusts will continue to be wanted by investors; • regulation will not increase to a level that makes the running of the Company uneconomical in comparison to other competitor products; • should the performance of the Company be less than the Board deems acceptable it has appropriate powers to replace the Investment Manager; and • there will be no material or signiﬁcant changes in the principal risks and uncertainties. Stress Testing In addition to the above, stress testing was undertaken in determining the Company’s longer-term viability and the appropriateness of preparing the Financial Statements on a going concern basis. In conducting the stress tests, the Company’s principal risks were grouped into three buckets according to their post mitigation scores and, where possible, material values were attached to the key risks materialising and evaluated to assess the effect of this on the Company’s ability to continue as a going concern and its viability over a ﬁve-year period. The stress tests also used a variety of falling parameters to demonstrate the impact on the Company’s share price and NAV. Stress testing was also applied to assess the Company’s ability to meet its liability to its subsidiary, PCGH ZDP Plc. This liability is the equivalent of the redemption value of the ZDP Shares being 122.99p per ZDP Share and becomes payable on 19 June 2024. The Company’s minimum asset cover required to fulﬁl the loan covenant is 1.8x. The average asset cover for the period under review was 11.1x and at the Company’s year-end was 11.2x. The results of the stress testing demonstrated the impact on the NAV and reafﬁrmed the Company’s ability to be able to meet its liability to PCGH ZDP Plc as it falls due. The Audit Committee also notes that, in the absence of any prior proposals, the Company’s Articles of Association require the Directors to put forward at the ﬁrst AGM following 1 March 2025 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. Based on these considerations the Audit Committee has recommended to the Board that a statement may be made on the Company’s longer-term viability to continue its operations and meet its expenses and liabilities as they fall due until the liquidation vote at the ﬁrst AGM following 1 March 2025. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 57 Governance Effectiveness of the Audit Committee The services provided to the Board by the Audit Committee are reviewed within the Annual Board Evaluation, including consideration of actions undertaken by the Audit Committee with the Investment Manager and Auditors to ensure an appropriate audit process is undertaken. I am pleased to conﬁrm that the evaluation result was positive and no matters of concern or requirements for change were highlighted. The Committee continually seeks to improve its effectiveness and follow best practice guidance from the FRC and other bodies. Neal Ransome Chair of the Audit Committee 9 December 2022 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 58 Governance Directors’ Remuneration Report Introduction This report is submitted in accordance with the Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) (the ‘Regulations’) and the Listing Rules of the Financial Conduct Authority in respect of the year ended 30 September 2022. It has been audited where indicated. Chair’s Report The Board has determined that due to its size, and the fact that all the Directors are non-executive and independent, the functions normally carried out by a remuneration committee will be performed by the full Board. Shareholders approved the current Directors’ Remuneration Policy by way of an ordinary resolution passed at the AGM held on 26 February 2020. Such policy came into effect on 1 October 2020 and shall remain in force until 30 September 2023: Company’s Policy on Directors’ Remuneration effective until 30 September 2023 How policy supports strategy and promotes long-term sustainable success Operation The Board consists entirely of non-executive Directors, who meet regularly to deal with the Company’s affairs. The intention is that fees payable reﬂect the time spent by them individually and collectively, be of a level appropriate to their responsibilities and be in line with market practice, sufﬁcient to enable candidates of high calibre to be recruited and retained. The Company’s policy in relation to fees is to offer only a ﬁxed basic fee in line with equivalent roles within the sector with additional fees for the roles of Chair of the Company and Chair of the Audit Committee. As the Company is an investment trust and all the Directors are non-executive, it is considered inappropriate to have any long-term incentive schemes or beneﬁts. In accordance with article 98(2) of the Company’s Articles of Association, any Director who performs, or undertakes to perform, services which the Directors consider go beyond the ordinary duties of a Director may be paid such additional remuneration (whether by way of ﬁxed sum, bonus, commission, participation in proﬁts or otherwise) as the Directors may determine. Non-executive Directors have formal letters of appointment which contain the responsibilities and obligations of the Directors in relation to undertaking their role and managing conﬂicts of interest; their remuneration is determined by the Board within the limits set by the Articles of Association. Directors are not entitled to payment for loss of ofﬁce and do not receive any bonus, nor do they participate in any long-term incentive schemes or pension schemes. All fees are paid in cash, monthly in arrears, to the Director concerned. Rates are reviewed annually but the review will not necessarily result in any change to rates. Non-executive Directors are subject to annual re-election by shareholders. There are no performance conditions relating to non-executive Directors fees. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 59 Governance As the current Remuneration Policy will expire on 30 September 2023, the Company is required to seek shareholder approval for a Remuneration Policy that can remain in operation for the next three-year period (unless proposed for change within such period). The Policy being proposed is unchanged from that which was approved in 2020 and if approved by shareholders, the Remuneration Policy will remain in force until 30 September 2026. Company’s Policy on Directors’ Remuneration – to come into force on 1 October 2023 (subject to shareholder approval): How policy supports strategy and promotes long-term sustainable success Operation The Board consists entirely of non-executive Directors, who meet regularly to deal with the Company’s affairs. The intention is that fees payable reﬂect the time spent by them individually and collectively, be of a level appropriate to their responsibilities and be in line with market practice, sufﬁcient to enable candidates of high calibre to be recruited and retained. The Company’s policy in relation to fees is to offer only a ﬁxed basic fee in line with equivalent roles within the sector with additional fees for the roles of Chair of the Company and Chair of the Audit Committee. As the Company is an investment trust and all the Directors are non-executive, it is considered inappropriate to have any long-term incentive schemes or beneﬁts. In accordance with article 98(2) of the Company’s Articles of Association, any Director who performs, or undertakes to perform, services which the Directors consider go beyond the ordinary duties of a Director may be paid such additional remuneration (whether by way of ﬁxed sum, bonus, commission, participation in proﬁts or otherwise) as the Directors may determine. Non-executive Directors have formal letters of appointment which contain the responsibilities and obligations of the Directors in relation to undertaking their role and managing conﬂicts of interest; their remuneration is determined by the Board within the limits set by the Articles of Association. Directors are not entitled to payment for loss of ofﬁce and do not receive any bonus, nor do they participate in any long-term incentive schemes or pension schemes. All fees are paid in cash, monthly in arrears, to the Director concerned. Rates are reviewed annually but the review will not necessarily result in any change to rates. Non-executive Directors are subject to annual re-election by shareholders. There are no performance conditions relating to non-executive Directors fees. As per previous AGM resolutions, shareholders will be asked to consider a non-binding vote for the approval of the following Directors’ Remuneration Implementation Report, which reports on how the Remuneration Policy has operated during the year ended 30 September 2022. The result of the shareholder votes on the Directors’ Remuneration Policy and the latest Implementation Report were as follows: Implementation Report for the Year ended 30 September 2021 Remuneration Policy for the three years ended 30 September 2023 Approved at AGM on 11 February 2022 Approved at AGM on 26 February 2020 Votes for 99.99% 99.99% Votes against 0% 0% Votes abstained 0.01% 0.01% The Board considers this level of support from shareholders a positive endorsement of both its Remuneration Policy and the policy implementation. There has been no communication from shareholders regarding any aspect of the Directors’ remuneration. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 60 Governance Directors’ Remuneration Report continued Implementation Report Directors’ Remuneration Paid for the Year Ended 30 September 2022 Annual Fees Review The review of Directors’ fees is carried out on an annual basis and involves consideration of the time and commitment required of the Directors, including any signiﬁcant increase in requirements due to regulatory or other changes. For comparative purposes the remuneration awarded to directors of similar companies and general market data is also considered. While such a review will not necessarily result in any change to the rates the Committee believes that it is important that these reviews happen annually. The appointment of an external remuneration consultant was considered unnecessary. No Director is involved in deciding their own remuneration and all Directors exercise independent judgement and discretion when considering fees. In October 2022, the Committee carried out a review of Directors’ remuneration which included a selection of peer comparisons and external reports including the Nurole Compensation Report and the Trust Associates 2022 Fee Review. Consideration was also given to movements in the consumer price index (CPI) which had increased by 10.1% since the last change in Directors’ fees in October 2021. The Committee resolved to implement the following increases with effect from 1 October 2022: • The annual fee for the Chair has been increased from £41,000pa to £43,000pa, representing a 4.9% increase. • The annual fee for a non-executive Director has been increased from £29,500pa to £31,000, representing a 5.1% increase. • The additional supplement for the Chair of the Audit Committee has been increased from £5,500 to £5,750, representing a 4.5% increase. In accordance with the shareholder Rights Directive, the Board conﬁrms that there were no variable pay awards made to the Directors and there were no deferral periods or share based pay equivalents. The annual percentage change in remuneration in respect of the ﬁve ﬁnancial years prior to the current year in respect of each Director role is as follows: Financial year to: 30 Sept 2017 30 Sept 2018 30 Sept 2019 30 Sept 2020 30 Sept 2021 30 Sept 2022 Chair 0% 5.7% 0% 5.4% 0% 5.1% Non-executive Director 0% 6% 0% 5.7% 0% 5.4% Chair of the Audit Committee 0% 0% 0% 10.0% 0% 0% Expenses The Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of their duties and attendance at Board and General Meetings. In certain circumstances, under HMRC rules, travel and other out of pocket expenses reimbursed to the Directors may be considered as taxable beneﬁts. The taxable expenses comprise of expenses incurred by the Directors attending Board and other meetings held in London. Such expenses are paid to the Directors grossed up for taxation and shown in the taxable column of the Directors remuneration table. Letters of Appointment In accordance with recommended practice, the Directors do not have service agreements but instead each Director has received a letter setting out the terms of their appointment under which they provide their services to the Company. A Director may resign by giving one month’s notice in writing to the Board at any time. The Directors are not entitled to payment for loss of ofﬁce. New Directors are appointed and elected with the expectation that they will serve for a period of at least three years. In accordance with the Articles of Association any new Director is required to stand for election at the ﬁrst AGM following their appointment, and in accordance with good corporate governance practice all Directors shall stand for re-election every year following their ﬁrst election by shareholders. While it is encouraged, there is no requirement for Directors to hold shares in the Company or Group. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 61 Governance Directors’ and Ofﬁcers’ Liability Insurance Directors’ and Ofﬁcers’ liability insurance cover is held by the Company in respect of the Directors. The Company has, to the extent permitted by law and the Company’s Articles of Association, provided each Director with a Deed of Indemnity which, subject to the provisions of the Articles of Association and s234 of the Companies Act 2006, qualifying third party indemnity provisions, indemniﬁes the Director in respect of costs which they may incur relating to the defence of any proceedings brought against them arising out of their position as Directors (excluding criminal and regulatory penalties). Directors’ legal costs may be funded up-front provided they reimburse the Company if the individual is convicted or, in an action brought by the Company, judgment is given against them. These provisions were in force during the year and remain in force at the date of this report. Remuneration (Audited) In the year under review the Directors’ fees were paid at the following annual rates, the Chair £41,000; other Directors £29,500 with the Chair of the Audit Committee receiving an extra £5,500 supplement for performing that additional role. Year ended 30 September 2022 Year ended 30 September 2021 Director Fixed fee Taxable expenses Total remuneration Fixed fee Taxable expenses Total remuneration Lisa Arnold £41,000 – £41,000 £39,000 – £39,000 (Chair) Neal Ransome £35,000 – £35,000 £33,500 – £33,500 (Chair of the Audit and Management Engagement Committees) Andrew Fleming £29,500 – £29,500 £28,000 – £28,000 Jeremy Whitley £29,500 £795 £30,295 £28,000 – £28,000 TOTAL £135,000 £795 £135,795 £128,500 – £128,500 See note 8 on page 83 No pension or other contributions were paid by the Company during the year to any of the Directors. Consequently, the ﬁgures shown above comprise the single total remuneration ﬁgure for each Director in relation to the Group. Directors’ Share Interests (Audited) The interests of Directors in the ordinary shares of the Company on 30 September 2022 (and 2021): 2022 2021 Lisa Arnold 20,000 20,000 Andrew Fleming 10,000 10,000 Neal Ransome 10,073 10,073 Jeremy Whitley 20,000 20,000 There have been no changes in these interests between the end of the ﬁnancial year and 9 December 2022. None of the Directors hold shares in the subsidiary company PCGH ZDP Plc. Performance The Regulations require a line graph to be included in the Directors’ Remuneration Report showing the total shareholder return for each of the ﬁnancial years in the relevant period. Each annual graph is required to increase by one year until the maximum relevant period of ten years is reached; thereafter the relevant period will continue to be ten years. The Company was incorporated on 12 May 2010 and commenced trading on 15 June 2010, the performance comparison is therefore shown for the period of 10 years from 1 October 2012 to 30 September 2022. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 62 Governance Performance comparison 50 100 150 200 250 300 350 400 Sep 2022 Mar 2022 Sep 2021 Mar 2021 Sep 2020 Mar 2020 Sep 2019 Mar 2019 Sep 2018 Mar 2018 Sep 2017 Mar 2017 Sep 2016 Mar 2016 Sep 2015 Mar 2015 Sep 2014 Mar 2014 Sep 2013 Mar 2013 Sep 2012 MSCI ACWI Health Care Index in sterling with dividends reinvested (TR) (TR: Total Return, rebased to 100 at 30 September 2012) Company reconstruction 20 June 2017 Ordinary Share Price (TR) The MSCI ACWI Healthcare Index (total return in sterling with dividends reinvested) is used as the comparator because, as a market capitalisation weighted index, the Board considers that it is the most appropriate single market index. Relative Importance of Spend on Pay Under the Regulations, the Directors’ Remuneration Report must set out in a graphical or tabular form that shows in respect of the relevant ﬁnancial year and the immediately preceding ﬁnancial year the actual expenditure of the company, and the difference in spend between those years, on remuneration paid to or receivable by all employees of the group; and distributions to shareholders by way of dividend and share buyback; and any other signiﬁcant distributions and payments or other uses of proﬁt or cash-ﬂow deemed by the Directors to assist in understanding the relative importance of spend on pay. The Company has no employees and while the Directors do not consider that the comparison of Directors’ remuneration with distributions to shareholders as a meaningful measure of the Company’s overall performance having regard to the Company’s objective of capital growth, for comparison purposes the table below compares Directors’ fee with the level of dividends paid out, proﬁt after tax and the cost of share buy backs undertaken by the Company. Change 2022 £’000 2021 £’000 £’000 % Directors’ total remuneration 136 129 7 5% Dividends paid or declared in respect of the ﬁnancial year 2,426 2,426 – – Proﬁt on ordinary activities after tax 21,531 63,021 (41,490) (66%) Approved by the Board, and conﬁrmed as a true reﬂection of the major decisions made by the Board acting in the capacity of a remuneration committee, in relation to the remuneration of the Directors including any changes made on 9 December 2022. Lisa Arnold Chair Directors’ Remuneration Report continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 63 Governance The Directors are responsible for preparing the Annual Report and the ﬁnancial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare Financial Statements for each ﬁnancial year. Under that law the Directors have prepared the Group Financial Statements in accordance with UK-adopted IAS and applicable law. Additionally, the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules require the directors to prepare the Financial Statements in accordance with UK-adopted IAS. Under company law the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the state of affairs of the Group and Company and of the proﬁt or loss of the Group and Company for that period. In preparing the ﬁnancial statements, the directors are required to: • select suitable accounting policies and then apply them consistently; • state whether they have been prepared in accordance with UK-adopted IAS, subject to any material departures disclosed and explained in the Financial Statements; • make judgements and accounting estimates that are reasonable and prudent; and • prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufﬁcient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the ﬁnancial position of the Group and enable them to ensure that its Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The Directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions. Directors’ conﬁrmations The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group and company’s position and performance, business model and strategy. Each of the directors, whose names and functions are listed in the Strategic Report conﬁrm that, to the best of their knowledge: • the Company Financial Statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt of the company; • the Group Financial Statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, ﬁnancial position and proﬁt of the group; and • the Strategic Report includes a fair review of the development and performance of the business and the position of the group and company, together with a description of the principal risks and uncertainties that it faces. In the case of each director in ofﬁce at the date the Directors’ Report is approved: • so far as the director is aware, there is no relevant audit information of which the Group and Company’s auditors are unaware; and • they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the group and company’s auditors are aware of that information. Lisa Arnold Chair 9 December 2022 Statement of Directors’ Responsibilities Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 64 Governance Report on the audit of the ﬁnancial statements Opinion In our opinion, Polar Capital Global Healthcare Trust plc’s group ﬁnancial statements and company ﬁnancial statements (the “ﬁnancial statements”): • give a true and fair view of the state of the group’s and of the company’s affairs as at 30 September 2022 and of the group’s and company’s proﬁt and the group’s and company’s cash ﬂows for the year then ended; • have been properly prepared in accordance with UK-adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the ﬁnancial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise: the Group and Company Balance Sheets as at 30 September 2022; the Group Statement of Comprehensive Income, the Group and Company Cash Flow Statements, and the Group and Company Statements of Changes in Equity for the year then ended; and the Notes to the Financial Statements, which include a description of the signiﬁcant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the ﬁnancial statements section of our report. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion. Independence We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the ﬁnancial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulﬁlled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. We have provided no non-audit services to the company or its controlled undertakings in the period under audit. Independent Auditors’ Report to the Members of Polar Capital Global Healthcare Trust plc Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 65 Governance Our audit approach Overview Audit scope • The Group is an Investment Trust Company and engages Polar Capital LLP (the “Manager”) to manage its assets. • We conducted our audit of the ﬁnancial statements using information from HSBC Securities Services (the “Administrator”) to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions. • We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the Company operates. • We obtained an understanding of the control environment in place at both the Manager and the Administrator and adopted a fully substantive testing approach using reports obtained from the Administrator. Key audit matters • Valuation and existence of investments (group and parent) • Income from investments (group and parent) Materiality • Overall group materiality: £4,040,000 (2021: £3,850,000) based on 1% of net assets. • Overall company materiality: £4,040,000 (2021: £3,850,000) based on 1% of net assets. • Performance materiality: £3,030,000 (2021: £2,887,500) (group) and £3,030,000 (2021: £2,887,500) (company). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the ﬁnancial statements. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most signiﬁcance in the audit of the ﬁnancial statements of the current period and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) identiﬁed by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the ﬁnancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identiﬁed by our audit. The key audit matters below are consistent with last year. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 66 Governance Independent Auditors’ Report continued Key audit matter How our audit addressed the key audit matter Valuation and existence of investments (group and parent) Refer to the Accounting Policies and Notes to the Financial Statements. The investment portfolio at the year-end comprised listed equity investments valued at £434.42m. We focused on the valuation and existence of investments because investments represent the principal element of the net asset value as disclosed in the Balance Sheets in the ﬁnancial statements. We also focussed on the accounting policy for the valuation of investments held at fair value through proﬁt or loss as incorrect application could indicate a misstatement in the valuation of investments. We tested the valuation of the listed equity investments by agreeing the prices used in the valuation to independent third party sources. We tested the existence of the investment portfolio by agreeing investment holdings to an independent conﬁrmation obtained from the custodian, HSBC Bank plc. We assessed the accounting policy for investments held at fair value through proﬁt or loss for compliance with accounting standards and performed testing to check that investments are accounted for in accordance with the stated accounting policy. We did not identify any material matters to report. Income from investments (group and parent) Refer to the Accounting Policies and Notes to the Financial Statements. ISAs (UK) presume there is a risk of fraud in income recognition because of the pressure management may feel to achieve a certain objective. In this instance, we consider that ‘income’ refers to all the Company’s income streams, both revenue and capital (including gains and losses on investments). We focused this risk on the accuracy and occurrence of gains/losses on investments and occurrence, accuracy and completeness of dividend income and its presentation in the Income Statement as set out in the requirements of The Association of Investment Companies’ Statement of Recommended Practice (the “AIC SORP”). We assessed the accounting policy for income recognition for compliance with accounting standards and the AIC SORP and perform testing to conﬁrm that the income from investments has been accounted for in accordance with the stated accounting policy and did not identify any issues. We understood and assessed the design and implementation of key controls surrounding income recognition. Capital gains and losses on investments The gains and losses on investments held at fair value comprise of realised and unrealised gains and losses. For unrealised gains and losses, we have tested the valuation of the portfolio at the year-end (see above), together with testing the reconciliation of opening and closing investments, thereby we have assessed the accuracy of the gains and losses recorded. We have also veriﬁed the occurrence of the gains and losses through our testing of the existence of investments, as noted above. For realised gains and losses, we tested a sample of disposal proceeds by agreeing the proceeds to bank statements, in order to verify the occurrence of the gain and loss. We re-performed the calculation of a sample of realised gains and losses in order to assess the accuracy of the gains and losses recorded. No material misstatements were identiﬁed from this testing. Dividend income To test the accuracy of dividend income, we tested a sample of dividend receipts by agreeing the dividend rates from all investments to independent third party sources. To test for completeness, we tested that the appropriate dividends had been received in the year by reference to independent data of dividends declared for all listed investments during the year. We tested the occurrence assertion by testing that all dividends recorded in the year had been declared in the market by investment holdings, and we traced a sample of dividends received to bank statements. We also tested the allocation and presentation of dividend income between the revenue and capital return columns of the Statement of Comprehensive Income in line with the requirements set out in the AIC SORP by determining reasons behind dividend distributions. No material misstatements were identiﬁed from this testing. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 67 Governance How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the ﬁnancial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate. The Group and Company’s accounting is delegated to the Administrator who maintains the Group and Company’s accounting records and who has implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as per of our risk assessment, we understood and assessed the internal controls in place at both the Manager and the Administrator to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations involved obtaining and analysing the relevant control-reports issued by the independent service auditor of the Manager and the Administrator in accordance with generally accepted assurance standards for such work. Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the ﬁnancial statements. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the ﬁnancial statements as a whole, taking into account the structure of the group and company, the accounting processes and controls, and the industry in which the group and company operate. In planning our audit, we made enquiries of the Directors to understand the extent of the potential impact of climate change risk on the Group and Company’s ﬁnancial statements. The Directors concluded that the impact on the measurement and disclosures within the ﬁnancial statements is not material because the Company’s investment portfolio is made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company’s investment activities. We also considered the consistency of the Climate change disclosures included in the Strategic Report with the ﬁnancial statements and our knowledge from our audit. Materiality The scope of our audit was inﬂuenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual ﬁnancial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the ﬁnancial statements as a whole. Based on our professional judgement, we determined materiality for the ﬁnancial statements as a whole as follows: Financial statements – group Financial statements – company Overall materiality £4,040,000 (2021: £3,850,000). £4,040,000 (2021: £3,850,000). How we determined it 1% of net assets 1% of net assets Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark. This benchmark provides an appropriate and consistent year on year basis for our audit. We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark. This benchmark provides an appropriate and consistent year on year basis for our audit. While performing our work, we applied the lower threshold of £3,830,000 being the component materiality level allocated to the Company for the purposes of the audit of the Group ﬁnancial statements. For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £376,000 and £3,830,000. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 68 Governance Independent Auditors’ Report continued We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Speciﬁcally, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £3,030,000 (2021: £2,887,500) for the group ﬁnancial statements and £3,030,000 (2021: £2,887,500) for the company ﬁnancial statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identiﬁed during our audit above £202,000 (group audit) (2021: £192,000) and £202,000 (company audit) (2021: £192,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the directors’ assessment of the group’s and the company’s ability to continue to adopt the going concern basis of accounting included: • evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats, including the ongoing impact of COVID-19, rising inﬂation, Russia’s Invasion of Ukraine, and the subsequent economic uncertainty; • evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the ﬁnancial statements; • reviewing the Directors’ assessment of the Company’s ﬁnancial position in the context of its ability to meet future expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; • assessing the premium/discount at which the Company’s share price trades compared to the net asset value per share; and • assessing the implication of signiﬁcant reductions in net assets as a result of market performance on the ongoing ability of the Company to operate. Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that, individually or collectively, may cast signiﬁcant doubt on the group’s and the company’s ability to continue as a going concern for a period of at least twelve months from when the ﬁnancial statements are authorised for issue. In auditing the ﬁnancial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the ﬁnancial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s and the company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the ﬁnancial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Reporting on other information The other information comprises all of the information in the Annual Report other than the ﬁnancial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the ﬁnancial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 69 Governance In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the ﬁnancial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Report of the Directors In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors for the year ended 30 September 2022 is consistent with the ﬁnancial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Report of the Directors. Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code speciﬁed for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the ﬁnancial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ conﬁrmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the ﬁnancial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identiﬁcation of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least twelve months from the date of approval of the ﬁnancial statements; • The directors’ explanation as to their assessment of the group’s and company’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualiﬁcations or assumptions. Our review of the directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the ﬁnancial statements and our knowledge and understanding of the group and company and their environment obtained in the course of the audit. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 70 Governance Independent Auditors’ Report continued In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the ﬁnancial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group’s and company’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit Committee. We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code speciﬁed under the Listing Rules for review by the auditors. Responsibilities for the ﬁnancial statements and the audit Responsibilities of the directors for the ﬁnancial statements As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the ﬁnancial statements in accordance with the applicable framework and for being satisﬁed that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error. In preparing the ﬁnancial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the ﬁnancial statements Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identiﬁed that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the ﬁnancial statements. We also considered those laws and regulations that have a direct impact on the ﬁnancial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the ﬁnancial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital gains) or to increase net asset value, and management bias in accounting estimates. Audit procedures performed by the engagement team included: • discussions with the Manager and Audit Committee, including consideration of known or suspected instances of non- compliance with laws and regulation and fraud where applicable; • reviewing relevant committee meeting minutes, including those of the Board and Audit Committee; • review of ﬁnancial statement disclosures to underlying supporting documentation; • identifying and testing manual journal entries posted by the Administrator during the preparation of the ﬁnancial statements; and • designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 71 Governance There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non- compliance with laws and regulations that are not closely related to events and transactions reﬂected in the ﬁnancial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the ﬁnancial statements is located on the FRC’s website at: www.frc. org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of directors’ remuneration speciﬁed by law are not made; or • the company ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit Committee, we were appointed by the members on 12 May 2010 to audit the ﬁnancial statements for the year ended 30 September 2011 and subsequent ﬁnancial periods. The period of total uninterrupted engagement is 12 years, covering the years ended 30 September 2011 to 30 September 2022. Other matter As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these ﬁnancial statements form part of the ESEF-prepared annual ﬁnancial report ﬁled on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual ﬁnancial report has been prepared using the single electronic format speciﬁed in the ESEF RTS. Kevin Rollo (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 9 December 2022 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 72 Governance Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 72 Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 73 Statement of Comprehensive Income For the year ended 30 September 2022 Group Group Year ended 30 September 2022 Year ended 30 September 2021 Note Revenue return £’000 Capital return £’000 Total return £’000 Revenue return £’000 Capital return £’000 Total return £’000 Investment income 3 4,427 – 4,427 3,685 – 3,685 Other operating income 4 26 – 26 – – – Gains on investments held at fair value 5 – 22,985 22,985 – 64,165 64,165 Other currency losses 6 – (610) (610) – (144) (144) Total income 4,453 22,375 26,828 3,685 64,021 67,706 Expenses Investment management fee 7 (602) (2,406) (3,008) (518) (2,070) (2,588) Other administrative expenses 8 (599) (59) (658) (553) (59) (612) Total expenses (1,201) (2,465) (3,666) (1,071) (2,129) (3,200) Proﬁt before ﬁnance costs and tax 3,252 19,910 23,162 2,614 61,892 64,506 Finance costs 9 – (1,096) (1,096) – (1,064) (1,064) Proﬁt before tax 3,252 18,814 22,066 2,614 60,828 63,442 Tax 10 (535) – (535) (421) – (421) Net proﬁt for the year and total comprehensive income 2,717 18,814 21,531 2,193 60,828 63,021 Earnings per Ordinary share (pence) 12 2.24 15.51 17.75 1.81 50.16 51.97 The total column of this statement represents Group’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. The Group does not have any other income or expense that is not included in net proﬁt for the year. The net proﬁt for the year disclosed above represents the Group’s total comprehensive income. There are no dilutive securities and therefore the Earnings per Share and the Diluted Earnings per share are the same. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The notes on pages 77 to 96 form part of these Financial Statements. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 74 Statements of Changes in Equity For the year ended 30 September 2022 Group and Company Year ended 30 September 2022 Called up share capital Capital redemp- tion reserve Share premium reserve Special distri- butable reserve Capital reserves Revenue reserve Total Equity Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 Total equity at 1 October 2021 31,037 6,575 80,685 3,672 261,977 1,782 385,728 Total comprehensive income: Proﬁt for the year ended 30 September 2022 – – – – 18,814 2,717 21,531 Transactions with owners, recorded directly to equity: Equity dividends paid 11 – – – – – (2,426) (2,426) Total equity at 30 September 2022 31,037 6,575 80,685 3,672 280,791 2,073 404,833 Group and Company Year ended 30 September 2021 Called up share capital Capital redemp- tion reserve Share premium reserve Special distri- butable reserve Capital reserves Revenue reserve Total Equity Note £’000 £’000 £’000 £’000 £’000 £’000 £’000 Total equity at 1 October 2020 31,037 6,575 80,685 3,672 201,149 2,015 325,133 Total comprehensive income: Proﬁt for the year ended 30 September 2021 – – – – 60,828 2,193 63,021 Transactions with owners, recorded directly to equity: Equity dividends paid 11 – – – – – (2,426) (2,426) Total equity at 30 September 2021 31,037 6,575 80,685 3,672 261,977 1,782 385,728 The notes on pages 77 to 96 form part of these Financial Statements. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 75 Balance Sheets As at 30 September 2022 Notes Group Company 30 September 2022 £’000 30 September 2021 £’000 30 September 2022 £’000 30 September 2021 £’000 Non-current assets Investments held at fair value 13 434,419 408,561 434,419 408,561 Investment in subsidiary 13 – – 50 50 Current assets Receivables 14 233 2,300 233 2,300 Overseas tax recoverable 666 572 666 572 Cash and cash equivalents 24 7,546 13,718 7,496 13,668 8,445 16,590 8,395 16,540 Total assets 442,864 425,151 442,864 425,151 Current liabilities Payables 15 (470) (2,956) (470) (2,956) (470) (2,956) (470) (2,956) Non-current liabilities Zero dividend preference shares 16 (37,561) (36,467) – – Loan from subsidiary – – (37,561) (36,467) Total liabilities (38,031) (39,423) (38,031) (39,423) Net assets 404,833 385,728 404,833 385,728 Equity attributable to equity shareholders Called up share capital 17 31,037 31,037 31,037 31,037 Share premium reserve 19 80,685 80,685 80,685 80,685 Capital Redemption reserve 18 6,575 6,575 6,575 6,575 Special distributable reserve 20 3,672 3,672 3,672 3,672 Capital reserves 21 280,791 261,977 280,791 261,977 Revenue reserve 22 2,073 1,782 2,073 1,782 Total equity 404,833 385,728 404,833 385,728 Net asset value per Ordinary share (pence) 23 333.83 318.07 333.83 318.07 Net asset value per ZDP share (pence) 23 116.91 113.50 – – The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own income statement in the Financial Statements. The parent company’s proﬁt for the year was £21,531,000 (2021: £63,021,000). The Financial Statements on pages 73 to 96 were approved and authorised for issue by the Board of Directors on 9 December 2022 and signed on its behalf by Lisa Arnold Chair The notes on pages 77 to 96 form part of these Financial Statements. Registered number 7251471 Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 76 Cash Flow Statements For the year ended 30 September 2022 Note Group and Company Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Cash ﬂows from operating activities Proﬁt before ﬁnance costs and tax 23,162 64,506 Adjustment for non-cash items: Gains on investments held at fair value through proﬁt or loss (22,985) (64,165) Adjusted proﬁt before tax 177 341 Adjustments for: Purchases of investments, including transaction costs (480,136) (626,164) Sales of investments, including transaction costs 476,716 625,115 Decrease/(increase) in receivables 27 (108) Increase/(decrease) in payables 101 (479) Overseas tax deducted at source (629) (404) Net cash used in operating activities (3,744) (1,699) Cash ﬂows from ﬁnancing activities Interest paid (2) (2) Equity dividends paid 11 (2,426) (2,426) Net cash used in ﬁnancing activities (2,428) (2,428) Net decrease in cash and cash equivalents (6,172) (4,127) Cash and cash equivalents at the beginning of the year 13,718 17,845 Cash and cash equivalents at the end of the year 24 7,546 13,718 The notes on pages 77 to 96 form part of these Financial Statements. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 77 Notes to the Financial Statements For the year ended 30 September 2022 1 GENERAL INFORMATION The consolidated Financial Statements for the year ended 30 September 2022 comprise the Financial Statements of the Company and it’s wholly-owned subsidiary PCGH ZDP plc (together referred to as the ‘Group’). The principal activity of the Group is that of an investment trust company within the meaning of Section 1158/1159 of the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report. The Group and Company’s presentational currency is pounds sterling (rounded to the nearest £’000). Pounds sterling is also the functional currency of the Group and Company because it is the currency which is most relevant to the majority of the Group and Company’s shareholders and creditors and the currency in which the majority of the Group and Company’s operating expenses are paid. 2 ACCOUNTING POLICIES The principal accounting policies which have been applied consistently for all years presented are set out below: (a) BASIS OF PREPARATION The Group and Company’s Financial Statements have been prepared and approved by the Directors in accordance with UK- adopted international accounting standards (“UK-adopted IAS”). 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 through proﬁt or loss. Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by the Association of Investment Companies (AIC) in July 2022 is consistent with the requirements of UK-adopted IAS, the Directors have sought to prepare the Financial Statements on a basis compliant with the recommendations of the SORP. Basis of consolidation - The Group Financial Statements consolidate the Financial Statements of the Company and its wholly owned subsidiary, PCGH ZDP plc, drawn up to the same accounting date. The subsidiary is consolidated from the date of its incorporation. The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 and accordingly has not presented a separate parent company income statement. The ﬁnancial position of the Group and Company as at 30 September 2022 are shown in the balance sheet on page 75. As at 30 September 2022 the Group and Company’s total assets exceeded its total liabilities by a multiple of over 11. The assets of the Group and Company consist mainly of securities that are held in accordance with the Group and Company’s Investment Policy, as set out on page 30 and these securities are readily realisable. The Directors have considered a detailed assessment of the Group and Company’s ability to meets their liabilities as they fall due. The assessment took account of the Group and Company’s current ﬁnancial positions, their cash ﬂows and their liquidity positions. In addition to the assessment, the Group and Company carried out stress testing which used a variety of falling parameters to demonstrate the effects of the Group and Company’s share prices and net asset values. In light of the results of these tests, the Group and Company’s cash balances, and the liquidity positions, the Directors consider that the Group and Company has adequate ﬁnancial resources to enable them to continue in operational existence for at least 12 months. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group and Company’s accounts. (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 a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. The results presented in the revenue return column is the measure the Directors believe appropriate in assessing the Group and Company’s compliance with certain requirements set out in section 1158 of the Corporation Tax Act 2010. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202278 Notes to the Financial Statements continued For the year ended 30 September 2022 2 ACCOUNTING POLICIES continued (c) INCOME Dividends receivable from equity shares are recognised and 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 Group and 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. Bank interest is accounted for on an accruals basis. Interest outstanding at the year end is calculated on a time apportionment basis using market rates of interest. (d) WRITTEN OPTIONS The Group and 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 Group and 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 All expenses, including the management fee, are accounted for on an accruals basis and are recognised when they fall due. 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 Group and 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. The performance fee (when payable) is charged entirely to capital as the fee is based on the out-performance of the Benchmark and is expected to be attributable largely, if not wholly, to capital performance. The research costs relate solely to specialist healthcare research and are accounted for on an accrual basis and, are allocated 20% to revenue and 80% capital. This is in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio. FINANCE COSTS The ZDP shares are designed to provide a pre-determined capital growth from their original issue price of 100p on 20 June 2017 to a ﬁnal capital repayment of 122.99p on 19 June 2024. The initial capital will increase at a compound interest rate of 3% per annum. No dividends are payable on the ZDP shares. The provision for the capital growth entitlement of the ZDP shares is included as a ﬁnance cost and charged 100% to capital within the Statement of Comprehensive Income (AIC SORP paragraph 53 - issued July 2022). Overdraft interest costs are allocated 20% to revenue and 80% to capital in line with the Board’s expected long-term split of revenue and capital return from the Company’s investment portfolio. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 79 SHARE ISSUE COSTS Costs incurred directly in relation to the issue of shares in the subsidiary are borne by the Company and taken 100% to capital. Share issue costs relating to ordinary share issues by the Company are taken 100% to the share premium account. ZERO DIVIDEND PREFERENCE (ZDP) SHARES Shares issued by the subsidiary are treated as a liability of the Group, and are shown in the Balance Sheet at their redemption value at the Balance Sheet date. The appropriations in respect of the ZDP shares necessary to increase the subsidiary’s liabilities to the redemption values are allocated to capital in the Statement of Comprehensive Income. This treatment reﬂects the Board’s long-term expectations that the entitlements of the ZDP shareholders will be satisﬁed out of gains arising on investments held primarily for capital growth. (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 year ended 30 September 2022. 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 Group and 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 Financial Statements 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 Group and Company has designated all of its investments as held at fair value through proﬁt or loss as deﬁned by UK-adopted IAS. 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. 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 (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Having inputs for the asset or liability that are not based on observable market data. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202280 Notes to the Financial Statements continued For the year ended 30 September 2022 2 ACCOUNTING POLICIES continued (g) INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS continued 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. In the event a security held within the portfolio is suspended then judgement is applied in the valuation of that security. (h) RECEIVABLES Receivables are initially recognised at fair value and subsequently measured at amortised cost. Receivables do not carry any interest and are short-term in nature and are accordingly stated at their nominal value (amortised cost) 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, maturity of three months or less, highly liquid investments that are readily convertible to known amounts of cash. (j) DIVIDENDS PAYABLE Dividends payable to shareholders are recognised in the Financial Statements when they are paid or, in the case of ﬁnal dividends, when they are approved by the shareholders. (k) PAYABLES Other payables are not interest-bearing and are initially valued at fair value and subsequently stated at their nominal value (amortised cost). (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 – transfer to subsidiary in relation to ZDP funding requirement – 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. When making a distribution to shareholders, the Directors determining the proﬁts available for distribution by reference to the ‘Guidance on realised and distributable proﬁts under the Companies Act 2006’ issued by the Institute of Chartered Accountants of England & Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those dividends meeting the deﬁnition of qualifying consideration within the guidance and on the available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 81 (n) REPURCHASE OF ORDINARY SHARES (INCLUDING THOSE HELD IN TREASURY) The costs of repurchasing Ordinary shares including related stamp duty and transaction costs are taken directly to equity and reported through the Statement of Changes in Equity as a charge on the special distributable reserve. Share repurchase transactions are accounted for on a trade date basis. The nominal value of Ordinary share capital repurchased and cancelled is transferred out of called up share capital and into the capital redemption reserve. Where shares are repurchased and held in treasury, the transfer to capital redemption reserve is made if and when such shares are subsequently cancelled. (o) SEGMENTAL REPORTING Under IFRS 8, ‘Operating Segments’, operating segments are considered to be the components of an entity about which separate ﬁnancial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The chief operating decision maker has been identiﬁed as the Investment Manager (with oversight from the board). The Directors are of the opinion that the Group and Company has only one operating segment and as such no distinct segmental reporting is required. (p) KEY ESTIMATE AND JUDGEMENTS Estimates and assumptions used in preparing the Financial Statements are reviewed on an ongoing basis and are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The results of these estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. The Group and Company do not consider that there have been any signiﬁcant estimates or assumptions in the current ﬁnancial year. (q) NEW AND REVISED ACCOUNTING STANDARDS There were no new UK-adopted IAS or amendments to UK-adopted IAS applicable to the current year which had any signiﬁcant impact on the Group and Company’s Financial Statements. i) The following new or amended standards became effective for the current annual reporting period and the adoption of the standards and interpretations have not had a material impact on the Financial Statements of the Group and Company. Standards & Interpretations Effective for periods commencing on or after IFRS 9, IAS 39, IFRS 7, IFRS 16 and IFRS 4: Interest Rate Benchmark Reform – phase 2 (amended) IBOR Reform - Phase 2 addresses issues that might affect ﬁnancial reporting during the reform of an interest rate benchmark, including the effects of changes to contractual cash ﬂows or hedging relationships arising from the replacement of an interest rate benchmark with an alternative benchmark rate. The Phase 2 amendments apply only to changes required by the interest rate benchmark reform to ﬁnancial instruments and hedging relationships. 1 January 2021 ii) At the date of authorisation of the Group and Company’s Financial Statements, there were no relevant standards that potentially impact the Group and Company are in issue but are not yet effective and have not been applied in the Financial Statements: The Directors expect that the adoption of the standards listed above will have either no impact or that any impact will not be material on the Financial Statements of the Group and Company in future periods. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202282 Notes to the Financial Statements continued For the year ended 30 September 2022 3 INVESTMENT INCOME Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Revenue: UK Dividend income 472 430 Overseas Dividend income 3,955 3,255 Total investment income allocated to revenue 4,427 3,685 4 OTHER OPERATING INCOME Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Bank interest 26 – Total other operating income 26 – 5 GAINS ON INVESTMENTS HELD AT FAIR VALUE Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Net gains on disposal of investments at historic cost 18,524 56,156 Less fair value adjustments in earlier years (11,626) (10,661) Gains based on carrying value at previous balance sheet date 6,898 45,495 Valuation gains on investments held during the year 16,087 18,670 22,985 64,165 6 OTHER CURRENCY LOSSES Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Exchange losses on currency balances (610) (144) 7 INVESTMENT MANAGEMENT FEE Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Management fee – charged to revenue 602 518 – charged to capital 2,406 2,070 Investment management fee payable to Polar Capital LLP. 3,008 2,588 Management fees are allocated 20% to revenue and 80% to capital. Details of the fee arrangements are given in the Strategic Report in page 32. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 83 8 OTHER ADMINISTRATIVE EXPENSES (INCLUDING VAT WHERE APPROPRIATE) Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Directors' fees 1 136 129 Directors' NIC 14 12 Auditors’ remuneration 2 : For audit of the Group and Company Financial Statements 48 44 Depositary fee 23 24 Registrar fee 30 30 Custody and other bank charges 37 35 UKLA and LSE listing fees 3 3 50 Legal & professional fees 4 6 (7) AIC fees 21 19 Directors' and ofﬁcers’ liability insurance 16 12 Corporate broker’s fee 25 25 Marketing expenses 5 43 18 Research costs - allocated to revenue 6 15 15 Shareholder communications 22 14 HSBC administration fee 158 131 Other expenses 2 2 Total other administrative expenses allocated to revenue 599 553 Research cost - allocated to capital 6 59 59 Total other administrative expenses 658 612 1 Full disclosure is given in the Directors’ Remuneration Report on page 61. 2 2022 includes £6,875 (2021: £6,250) paid to the Auditor for the audit of PCGH ZDP Plc. 3 Reﬂects write off of PCCH ZDP FCA fee accrual which no longer applies. 4 2021 includes the reversal of unused prior year accruals. 5 Includes marketing expenses payable to Polar Capital LLP of £22,500 (2021: £12,600). 6 Research costs (which applied from 3 January 2018) payable by the Company relate solely to specialist healthcare research and are capped at US $81,772 (£74,000) (2021: US $147,721 (£110,000)) with the cost of general non-specialist research and any amounts exceeding the agreed cap being absorbed by Polar Capital. Any adjustments to the prior year’s budget versus actual spend is included in the current period. These costs are allocated 20% to revenue and 80% to capital and are included in the ongoing charges calculation. Ongoing charges represents the total expenses of the fund, excluding ﬁnance costs and tax, expressed as a percentage of the average daily net asset value, in accordance with AIC guidance issued in May 2012. The ongoing charges ratio for the year ended 30 September 2022 was 0.84% (2021: 0.83%). See Alternative Performance Measures on pages 97 and 98. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202284 Notes to the Financial Statements continued For the year ended 30 September 2022 9 FINANCE COSTS Year ended 30 September 2022 Year ended 30 September 2021 Revenue return £’000 Capital return £’000 Total return £’000 Revenue return £’000 Capital return £’000 Total return £’000 Interest on overdrafts – 2 2 – 2 2 Appropriation to ZDP shares – 1,094 1,094 – 1,062 1,062 Total ﬁnance costs – 1,096 1,096 – 1,064 1,064 10 TAXATION Year ended 30 September 2022 Year ended 30 September 2021 Revenue return £’000 Capital return £’000 Total return £’000 Revenue return £’000 Capital return £’000 Total return £’000 a) Analysis of tax charge for the year: Overseas tax 535 – 535 421 – 421 Total tax for the year (see note 10b) 535 – 535 421 – 421 b) Factors affecting tax charge for the year: The charge for the year can be reconciled to the proﬁt per the Statement of Comprehensive Income as follows: Proﬁt before tax 3,252 18,814 22,066 2,614 60,828 63,442 Tax at the UK corporation tax rate of 19% (2021: 19%) 617 3,575 4,192 496 11,557 12,053 Tax effect of non-taxable dividends (841) – (841) (700) – (700) Gains on investments that are not taxable – (4,251) (4,251) – (12,164) (12,164) Unrelieved current period expenses and deﬁcits 224 468 692 204 405 609 Overseas tax suffered 535 – 535 421 – 421 Expenses not allowable – 208 208 – 202 202 Total tax for the year (see note 10a) 535 – 535 421 – 421 c) Factors that may affect future tax charges: The Company has an unrecognised deferred tax asset of £6,334,000 (2021: £5,423,000). The deferred tax asset is based on a prospective corporation tax rate of 25% (2021: 25%). The Finance Act 2021 received Royal Assent on 10 June 2021 and the rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset. 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 recognised. 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. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 85 11 AMOUNTS RECOGNISED AS DISTRIBUTIONS TO ORDINARY SHAREHOLDERS IN THE YEAR Dividends paid in the year ended 30 September 2022 Payment date No of shares Pence per share Year ended 30 September 2022 £’000 28 February 2022 121,270,000 1.00p 1,213 31 August 2022 121,270,000 1.00p 1,213 2,426 The revenue available for distribution by way of dividend for the year is £2,717,000 (2021: £2,193,000). The total dividends payable in respect of the ﬁnancial year ended 30 September 2022 which is the basis on which the requirements of Section 1158 Corporation Tax Act 2010 are considered, is set out below: Payment date No of shares Pence per share Year ended 30 September 2022 £’000 31 August 2022 121,270,000 1.00p 1,213 28 February 2023 121,270,000 1.10p 1,334 2,547 Dividends paid in the year ended 30 September 2021 Payment date No of shares Pence per share Year ended 30 September 2021 £’000 26 February 2021 121,270,000 1.00p 1,213 31 August 2021 121,270,000 1.00p 1,213 2,426 The total dividends payable in respect of the ﬁnancial year ended 30 September 2021, which is the basis on which the requirements of Section 1158 Corporation Tax Act 2010 are considered, is set out below: Payment date No of shares Pence per share Year ended 30 September 2021 £’000 31 August 2021 121,270,000 1.00p 1,213 28 February 2022 121,270,000 1.00p 1,213 2,426 All dividends are paid as interim dividends, and all have been charged to revenue, where necessary utilising the revenue reserves. The dividends paid in February each year relate to a dividend declared in respect of the previous ﬁnancial year but paid in the current accounting year. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202286 Notes to the Financial Statements continued For the year ended 30 September 2022 12 EARNINGS PER ORDINARY SHARE Year ended 30 September 2022 Year ended 30 September 2021 Revenue return Capital return Total return Revenue return Capital return Total return The calculation of basic earnings per share is based on the following data: Net proﬁt for the year (£’000) 2,717 18,814 21,531 2,193 60,828 63,021 Weighted average Ordinary shares in issue during the year 121,270,000 121,270,000 121,270,000 121,270,000 121,270,000 121,270,000 Basic - Ordinary shares (pence) 2.24 15.51 17.75 1.81 50.16 51.97 As at 30 September 2022 there were no potentially dilutive shares in issue. 13 INVESTMENTS HELD AT FAIR VALUE (a) Investments held at fair value through proﬁt or loss 30 September 2022 £’000 30 September 2021 £’000 Opening book cost 380,123 321,976 Opening investment holding gains 28,438 20,428 Opening fair value 408,561 342,404 Analysis of transactions made during the year Purchases at cost 477,549 626,217 Sales proceeds received (474,676) (624,225) Gains on investments held at fair value 22,985 64,165 Closing fair value 434,419 408,561 Closing book cost 401,521 380,123 Closing investment holding gains 32,898 28,438 Closing fair value 434,419 408,561 The Company received £474,676,000 (2021: £624,225,000) from disposal of investments in the year. The book cost of these investments when they were purchased were £456,152,000 (2021: £568,069,000). These investments have been revalued over time and until they were sold, any unrealised gains/losses were included in the fair value of the investments. The following transaction costs, including stamp duty and broker commissions were incurred during the year: 30 September 2022 £’000 30 September 2021 £’000 On acquisition 310 442 On disposal 224 256 534 698 (b) Fair value hierarchy 30 September 2022 £’000 30 September 2021 £’000 Level 1 assets 434,419 408,561 Valuation at the end of the year 434,419 408,561 All Level 1 assets are traded on a recognised Stock Exchange. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 87 (c) Subsidiary undertaking Company and business Country of registration, incorporation and operation Number and class of shares held by the Company Holding PCGH ZDP Plc England and Wales 50,000 Ordinary shares of £1 100% The Company is a public limited company with the sole purpose of issuing Zero Dividend Preference (ZDP) shares. The registered ofﬁce is at Polar Capital, 16 Palace Street, London, SW1E 5JD. The investment is stated in the Company’s Financial Statements at cost, which is considered by the Directors to equate to fair value. The subsidiary is non-trading and the value of the net assets have not changed since the acquisition of the Ordinary share capital by the Company. The cost is therefore considered to equate to the fair value of the shares held. 14 RECEIVABLES 30 September 2022 £’000 30 September 2021 £’000 Sales for future settlement – 2,040 Accrued income 205 252 VAT recoverable 8 – Prepayments 20 8 233 2,300 15 PAYABLES 30 September 2022 £’000 30 September 2021 £’000 Purchases for future settlement – 2,587 Accruals 470 369 470 2,956 16 ZERO DIVIDEND PREFERENCE SHARES (‘ZDP SHARES’) 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 36,467 35,405 Capital growth of ZDP shares 1,094 1,062 At 30 September 2022 37,561 36,467 Further details on the ZDP shares are set out in the Additional Information on page 102. 17 CALLED UP SHARE CAPITAL (i) Ordinary shares - Allotted, Called up and Fully paid: 30 September 2022 £’000 30 September 2021 £’000 Ordinary shares of nominal value 25p each: Opening balance of 121,270,000 (2021: 121,270,000) 30,317 30,317 Allotted, Called up and Fully paid: 121,270,000 (2021: 121,270,000) Ordinary shares of 25p 30,317 30,317 2,879,256 (2021: 2,879,256) Ordinary shares, held in treasury 720 720 At 30 September 2022 31,037 31,037 No Ordinary shares were repurchased or issued during the year (2021: nil). The Ordinary shares held in treasury have no voting rights and are not entitled to dividends. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202288 Notes to the Financial Statements continued For the year ended 30 September 2022 17 CALLED UP SHARE CAPITAL continued (ii) Subsidiary company (for information purposes) 30 September 2022 £’000 30 September 2021 £’000 ZDP shares - Allotted, Called up and Fully paid: ZDP shares of nominal value 1p each: Opening balance of 32,128,437 ZDP shares (2021: 32,128,437) 32,128 32,128 Allotted, Called up and Fully paid: 32,128,437 (2021: 32,128,437) ZDP shares of 1p 32,128 32,128 At 30 September 2022 32,128 32,128 18 CAPITAL REDEMPTION RESERVE 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 6,575 6,575 At 30 September 2022 6,575 6,575 The Capital Redemption reserve was created following the Company’s reconstruction tender offer shares, where shares were repurchased and cancelled in 2017. This reserve is not distributable. 19 SHARE PREMIUM RESERVE 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 80,685 80,685 At 30 September 2022 80,685 80,685 This reserve is not distributable 20 SPECIAL DISTRIBUTABLE RESERVE 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 3,672 3,672 At 30 September 2022 3,672 3,672 The special distributable reserve was created following approval from the Court, received on 18 August 2010, to cancel that share premium account from the initial share offering. Surpluses to the credit of the special distributable reserve can be used to purchase the Group and Company’s own shares. In addition the Group and Company may use this reserve for the payment of dividends. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 89 21 CAPITAL RESERVES 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 261,977 201,149 Net gains on disposal of investments 6,898 45,495 Valuation gains on investments held during the year 16,087 18,670 Exchange losses on currency balances (610) (144) Overdraft interest allocated to capital (2) (2) Research costs allocated to capital (59) (59) Investment management fee allocated to capital (2,406) (2,070) Capital contribution to ZDP entitlement (201) (191) ZDP appropriation (893) (871) At 30 September 2022 280,791 261,977 The balance on the capital reserve represents a proﬁt of £32,898,000 (2021: £28,438,000) on investments held and a proﬁt of £247,893,000 (2021: £233,539,000) on investments sold. The balance on investments held comprises holding gains on investments (which may be deemed to be realised and other amounts, which are unrealised. An analysis has not been made between the amounts that are realised (and may be distributed or used to repurchase the Group and Company’s shares) and those that are unrealised. The balance on investments sold are realised distributable capital reserves which may be used to repurchase the Group and Company’s shares or be distributed as dividends subject to meeting the deﬁnition of qualifying consideration as noted in Note 2(m). 22 REVENUE RESERVE 30 September 2022 £’000 30 September 2021 £’000 At 1 October 2021 1,782 2,015 Revenue proﬁt 2,717 2,193 Interim dividends paid (2,426) (2,426) At 30 September 2022 2,073 1,782 The revenue reserve may be distributed or used to repurchase the Group and Company’s shares (subject to being a positive balance). 23 NET ASSET VALUE PER SHARE (i) Ordinary shares 30 September 2022 30 September 2021 Net assets attributable to Ordinary shareholders (£'000) 404,833 385,728 Ordinary shares in issue at end of year 121,270,000 121,270,000 Net asset value per Ordinary share (pence) 333.83 318.07 Total issued Ordinary shares 124,149,256 124,149,256 Ordinary shares held in treasury 2,879,256 2,879,256 Ordinary shares in issue 121,270,000 121,270,000 As at 30 September 2022 there were no potentially dilutive shares in issue. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202290 Notes to the Financial Statements continued For the year ended 30 September 2022 23 NET ASSET VALUE PER SHARE continued (ii) Subsidiary company (for information purposes) ZDP shares 30 September 2022 30 September 2021 Calculated entitlement of ZDP shareholders (£) £37,560,975 £36,466,967 ZDP shares in issue at the end of the year 32,128,437 32,128,437 Net asset value per ZDP share (pence) 116.91 113.50 24 CASH AND CASH EQUIVALENTS 30 September 2022 £’000 30 September 2021 £’000 Cash at bank 7,496 13,668 Company cash and cash equivalents 7,496 13,668 Cash held at subsidiary 50 50 Group cash and cash equivalents 7,546 13,718 25 TRANSACTIONS WITH THE INVESTMENT MANAGER AND RELATED PARTY TRANSACTIONS (a) TRANSACTIONS WITH THE MANAGER Under the terms of an agreement dated 26 May 2010 the Group has appointed Polar Capital LLP (“Polar Capital”) to provide investment management, accounting, secretarial and administrative services. Details of the fee arrangement for these services are given in the Strategic Report. The total fees, paid under this agreement to Polar Capital in respect of the year ended 30 September 2022 were £3,008,000 (2021: £2,588,000) of which £259,000 (2021: £239,000) was outstanding at the year-end. In addition, the total research cost in respect of the year ended 30 September 2022 was £74,000 (2021: £114,000). As at the year end, £54,800 (2021: £18,700) was outstanding. Refer to note 8 on page 83 for more details. (b) RELATED PARTY TRANSACTIONS The Group and Company has no employees and therefore no key management personnel other than the Directors. The Group and Company paid £136,000 (2021: £129,000) to the Directors and the Remuneration Report including Directors’ shareholdings and movements within the year is set out on page 61. 26 FINANCIAL INSTRUMENTS RISK MANAGEMENT POLICIES AND PROCEDURES FOR THE GROUP AND COMPANY The Group and Company invests in equities and other ﬁnancial instruments for the long term to further the investment objective set out on page 30. This exposes the Group and Company to a range of ﬁnancial risks that could impact on the assets or performance of the Group and Company. The main risks arising from the Group and Company’s pursuit of its investment objective are market risk, liquidity risk and credit risk and the Directors’ approach to the management of them is set out below. The Group and Company’s exposure to ﬁnancial instruments can comprise: – Equity and non-equity shares and ﬁxed interest securities which may be held in the investment portfolio in accordance with the Investment Objective. – Bank overdrafts, the main purpose of which is to raise ﬁnance for the Group and Company’s operations. – Cash, liquid resources and short-term receivables and payables that arise directly from the Group and Company’s operations. – Derivative transactions which the Group and Company enters into may include equity or index options, index futures contracts, and forward foreign exchange contracts. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 91 The purpose of these is to manage the market price risks and foreign exchange risks arising from the Group and Company’s investment activities. The overall management of the risks is determined by the Board and its approach to each risk identiﬁed is set out below. The Board and the Investment Manager co-ordinate the risk management and the Investment Manager assesses the exposure to market risk when making each investment decision. (a) Market Risk Market risk comprises three types of risk: market price risk (see note 26(a)(i)), currency risk (see note 26(a)(ii)), and interest rate risk (see note 26(a)(iii)). (i) Market Price Risk The Group and Company is an investment company and as such its performance is dependent on its valuation of its investments. Consequently, market price risk is the most signiﬁcant risk that the Group and Company faces. Market price risk arises mainly from uncertainty about future prices of ﬁnancial instruments used in the Group and Company’s operations. It represents the potential loss the Group and Company might suffer through holding market positions in the face of price movements. A detailed breakdown of the investment portfolio is given on page 22. Investments are valued in accordance with the accounting policies as stated in Note 2(g). At the year end, the Group and Company did not hold any derivative instruments (2021: nil). Management of the risk In order to manage this risk it is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce both the statistical risk and the risk arising from factors speciﬁc to a particular healthcare sub sector. The allocation of assets to international markets, together with stock selection covering small, medium and large companies, and the use of index options, are other factors which act to reduce price risk. The Investment Manager actively monitors market prices throughout the year and reports to the Board which meets regularly in order to consider investment strategy. Market price risks exposure The Group and Company’s exposure to changes in market prices at 30 September on its investments was as follows: 30 September 2022 £’000 30 September 2021 £’000 Non-current asset investments at fair value through proﬁt or loss 434,419 408,561 434,419 408,561 Market price risk sensitivity The following table illustrates the sensitivity of the return after taxation for the year and the value of shareholders’ funds to an increase or decrease of 15% (2021: 15%) in the fair values of the Group and Company’s investments. This level of change is considered to be reasonably possible based on observation of current market conditions and historic trends. The sensitivity analysis is based on the Group and Company’s investments at each balance sheet date, with all other variables held constant. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202292 Notes to the Financial Statements continued For the year ended 30 September 2022 26 FINANCIAL INSTRUMENTS continued (a) Market Risk continued Market price risk sensitivity continued 30 September 2022 30 September 2021 Increase in fair value £’000 Decrease in fair value £’000 Increase in fair value £’000 Decrease in fair value £’000 Statement of Comprehensive Income - proﬁt after tax Revenue return (97) 97 (103) 103 Capital return 64,772 (64,772) 60,867 (60,867) Change to the proﬁt after tax for the year 64,675 (64,675) 60,764 (60,764) Change to equity attributable to shareholders 64,675 (64,675) 60,764 (60,764) (ii) Currency Risk The Group and Company’s total return and net assets can be signiﬁcantly affected by currency translation movements as the majority of the Group and Company’s assets and revenue are denominated in currencies other than sterling. Management of the risk The Investment Manager mitigates risks through an international spread of investments. Settlement risk on investment trades is managed through short term hedging. Foreign currency exposure The table below shows, by currency, the split of the Group and Company’s monetary assets, liabilities and investments that are priced in currencies other than sterling. Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Monetary Assets: Cash and short term receivables Swiss francs 460 394 Euros 241 214 Japanese yen 172 – US dollars 129 4,240 Danish krone 101 98 Australian dollar – 66 Monetary Liabilities: Other payables US dollars – (2,587) Foreign currency exposure on net monetary items 1,103 2,425 Non-Monetary Items: Investments at fair value through proﬁt or loss that are equities US dollars 295,559 273,938 Euros 32,964 68,537 Japanese yen 27,564 7,286 Swiss francs 26,130 7,678 Danish krone 17,635 17,509 Swedish krona 11,758 – Australian dollar – 9,158 Total net foreign currency exposure 412,713 386,531 Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 93 During the ﬁnancial year, movements against sterling in the ﬁve major currencies noted above were: • US dollar appreciated by 17.2% (2021: depreciated by 4.3%), • Euro appreciated by 2.1% (2021: depreciated by 5.5%), • Japanese yen depreciated by 7.4% (2021: depreciated by 10.3%). • Swiss franc appreciated by 12.7% (2021: depreciated by 5.9%), • Danish krone appreciated by 2.0% (2021: depreciated by 5.4%). Foreign currency sensitivity The following table illustrates the sensitivity of the proﬁt after tax for the year and the value of equity attributable to shareholders in regard to the ﬁnancial assets and ﬁnancial liabilities and the exchange rates for the £/US dollar, £/Euros, £/Japanese yen, £/Danish krone, £/Swiss francs and £/Australian dollar. Based on the year end position, if sterling had depreciated by a further 20% (2021: 15%) against the currencies shown, this would have the following effect: Year ended 30 September 2022 £’000 US dollars Euro Japanese yen Swiss francs Danish krone Statement of Comprehensive Income - proﬁt after tax Revenue return 32 60 43 115 25 Capital return 73,890 8,241 6,891 6,533 4,409 Change to the proﬁt after tax for the year and to equity attributable to shareholders 73,922 8,301 6,934 6,648 4,434 Year ended 30 September 2021 £’000 US dollars Euro Danish krone Australian dollar Swiss francs Statement of Comprehensive Income - proﬁt after tax Revenue return 47 38 17 12 70 Capital return 48,586 12,095 3,090 1,616 1,355 Change to the proﬁt after tax for the year and to equity attributable to shareholders 48,633 12,133 3,107 1,628 1,425 Based on the year end position, if sterling had appreciated by a further 20% (2021: 15%) against the currencies shown, this would have the following effect: Year ended 30 September 2022 £’000 US dollars Euro Japanese yen Swiss francs Danish krone Statement of Comprehensive Income - proﬁt after tax Revenue return (22) (40) (29) (77) (17) Capital return (49,260) (5,494) (4,594) (4,355) (2,939) Change to the proﬁt after tax for the year and to equity attributable to shareholders (49,282) (5,534) (4,623) (4,432) (2,956) Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202294 Notes to the Financial Statements continued For the year ended 30 September 2022 26 FINANCIAL INSTRUMENTS continued (a) Market Risk continued Foreign currency sensitivity continued Year ended 30 September 2021 £’000 US dollars Euro Danish krone Australian dollar Swiss francs Statement of Comprehensive Income - proﬁt after tax Revenue return (35) (28) (13) (9) (51) Capital return (35,911) (8,940) (2,284) (1,195) (1,001) Change to the proﬁt after tax for the year and to equity attributable to shareholders (35,946) (8,968) (2,297) (1,204) (1,052) In the opinion of the Directors, while these are regarded as reasonable estimates, neither of the above sensitivity analyses are representative of the year as a whole since the level of exposure changes frequently as part of the currency risk management process used to meet the Group’s objectives. (iii) Interest Rate Risk Although the majority of the Group and Company’s ﬁnancial assets are equity shares which pay dividends, not interest, the Group and Company will be affected by interest rate changes as interest is earned on any cash balances and paid on any overdrawn balances. Given the interest rate risk exposure noted below, the impact of any interest rate change is not considered to be signiﬁcant and as such, no sensitivity analysis has been provided. Interest rate changes will also have an impact on the valuation of equities, although this forms part of price risk, which has already been considered separately above. Management of the risk The possible effects on fair value and cash ﬂows that could arise as a result of changes in interest rates are taken into account when making investment decisions. Derivative contracts are not used to hedge against the exposure to interest rate risk. Interest rate exposure At the year-end, ﬁnancial assets and liabilities exposed to ﬂoating interest rates were as follows: Year ended 30 September 2022 £’000 Year ended 30 September 2021 £’000 Cash at bank 7,496 13,668 Cash held at subsidiary 50 50 7,546 13,718 The above year-end amounts may not be representative of the exposure to interest rates in the year ahead since the level of cash held during the year will be affected by the strategy being followed in response to the Board’s and Manager’s perception of market prospects and the investment opportunities available at any particular time. (b) Liquidity Risk Liquidity risk is the possibility of failure of the Group and Company to realise sufﬁcient assets to meet its ﬁnancial liabilities. Management of the risk The Group and Company’s assets mainly comprise readily realisable securities which may be sold to meet funding requirements as necessary. Financial Statements Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 95 Liquidity risk exposure At 30 September the ﬁnancial liabilities comprised: 30 September 2022 £’000 30 September 2021 £’000 Due within 1 month: Other creditors and accruals 470 2,956 Due in more than 1 year: ZDP's entitlement 37,561 36,467 38,031 39,423 The ZDP shares have a planned repayment date of 19 June 2024 in the amount of £39,514,000. (c) Credit Risk Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of investments or to repay deposits. Management of the risk The Group and Company manages credit risk by using brokers from a database of approved brokers and by dealing through Polar Capital. All cash balances are held with approved counterparties. HSBC Bank plc is the custodian of the Group and Company’s assets. The Group and Company’s assets are segregated from HSBC’s own trading assets and are therefore protected in the event that HSBC were to cease trading. These arrangements were in place throughout the current and prior year. Credit risk exposure The maximum exposure to credit risk at 30 September 2022 was £7,751,000 (2021: £13,970,000) comprising: 30 September 2022 £’000 30 September 2021 £’000 Accrued Income 205 252 Cash at bank 7,546 13,718 7,751 13,970 All of the above ﬁnancial assets are current, their fair values are considered to be the same as the values shown and the likelihood of a material credit default is considered low. None of the Group and Company’s assets are past due or impaired. All deposits were placed with banks that had a rating of A or higher. Financial Statements Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 202296 Notes to the Financial Statements continued For the year ended 30 September 2022 26 FINANCIAL INSTRUMENTS continued (d) Capital Management Policies and Procedures The Group and Company’s capital, or equity, is represented by its net assets which amounted to £404,833,000 as at 30 September 2022 (2021: £385,728,000), which are managed to achieve the Group’s and Company’s investment objective set out on page 30. The Board monitors and reviews the broad structure of the Group’s and Company’s capital on an ongoing basis. This review includes: (i) the need to issue or buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (i.e. the level of share price discount or premium); and (ii) the determination of dividend payments. The Group and Company is subject to externally imposed capital requirements through the Companies Act with respect to its status as a public company. In addition, in order to pay dividends out of proﬁts available for distribution by way of dividend, the Group and Company has to be able to meet one of two capital restriction tests imposed on investments by company law. These requirements are unchanged since the previous year end and the Group and Company has complied with them and no breaches have taken place during the year under review. 27 POST BALANCE SHEET EVENTS There are no signiﬁcant events that have occurred after the end of the reporting period to the date of this report which require disclosure. Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 97 Shareholder Information In assessing the performance of the Company, the Investment Manager and the Directors use the following APMs which are not deﬁned in accounting standards or law but are considered to be known industry metrics: Net Asset Value (NAV) and NAV per share The NAV is the value attributed to the underlying assets of the Company less the liabilities, presented either on a per share or total basis. The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. See Note 23 on page 89 for detailed calculations. The NAV per Ordinary share is published daily. NAV Total Return (APM) The NAV total return shows how the net asset value has performed over a period of time taking into account both capital returns and dividends paid to shareholders. NAV total return is calculated as the change in NAV from the start of the period, assuming that dividends paid to shareholders are reinvested on the payment date in Ordinary shares at their net asset value. Year ended 30 September 2022 Year ended 30 September 2021 Opening NAV per share a 318.07p 268.11p Closing NAV per share b 333.83p 318.07p Dividend reinvestment factor c 1.00609 1.006997 Adjusted closing NAV per share d = bc 335.86p 320.30p NAV total return for the year (d / a)-1 5.59% 19.46% NAV Total Return Since Restructuring (APM) NAV total return since restructuring is calculated as the change in NAV from the date of reconstruction on 20 June 2017, assuming that dividends paid to shareholders are reinvested on the payment date in Ordinary shares at their net asset value. Year ended 30 September 2022 Year ended 30 September 2021 NAV per share at reconstruction a 215.85p 215.85p Closing NAV per share b 333.83p 318.07p Dividend reinvestment factor c 1.039646 1.033409 Adjusted closing NAV per share d = bc 347.07p 328.70p NAV total return since reconstruction (d / a)-1 60.79% 52.28% Share Price Total Return (APM) Share price total return shows how the share price has performed over a period of time. It assumes that dividends paid to shareholders are reinvested in the shares at the time the shares are quoted ex-dividend. Year ended 30 September 2022 Year ended 30 September 2021 Opening share price a 288.00p 233.00p Closing share price b 315.00p 288.00p Dividend reinvestment factor c 1.006720 1.007605 Adjusted closing share price d = bc 317.12p 290.19p Share price total return for the year (d / a)-1 10.11% 24.55% Alternative Performance Measures (APMs) Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022 98 Shareholder Information (Discount)/Premium (APM) A description of the difference between the share price and the net asset value per share usually expressed as a percentage (%) of the net asset value per share. If the share price is higher than the NAV per share the result is a premium. If the share price is lower than the NAV per share, the shares are trading at a discount. 30 September 2022 30 September 2021 Closing share price a 315.00p 288.00p Closing NAV per share b 333.83p 318.07p Discount per Ordinary share (a / b)-1 5.64% 9.45% Ongoing Charges (APM) Ongoing charges are calculated in accordance with AIC guidance by taking the Company’s annual ongoing charges, excluding performance fees and exceptional items, if any, and expressing them as a percentage of the average daily net asset value of the Company over the year. Ongoing charges include all regular operating expenses of the Company. Transaction costs, interest payments, tax and nonrecurring expenses are excluded from the calculation as are the costs incurred in relation to share issues and share buybacks. Where a performance fee is paid or is payable, a second ongoing charge is provided, calculated on the same basis as the above but incorporating the amount of performance fee due or paid. Year ended 30 September 2022 Year ended 30 September 2021 Investment Management (Note 7) £3,008,000 £2,588,000 Other Administrative Expenses (Note 8) £658,000 £612,000 a £3,666,000 £3,200,000 Average daily net asset value b £433,884,000 £384,905,000 Ongoing Charges a / b x 100 0.84% 0.83% Performance fee c – – d = a+c £3,666,000 £3,200,000 Ongoing charges including performance fee d / b x 100 0.84% 0.83% Net Gearing (APM) Gearing is calculated in line with AIC guidelines and represents net gearing, i.e. total assets less cash and cash equivalents divided by net assets. The total assets are calculated by adding back the structural gearing which is the ZDP value. Cash and cash equivalents are cash and purchases and sales for future settlement outstanding at the year end. 30 September 2022 30 September 2021 Net assets a £404,833,000 £385,728,000 ZDP loan value (Note 16) b £37,561,000 £36,467,000 Total assets c = (a+b) £442,394,000 £422,195,000 Cash and cash equivalents (including amounts awaiting settlement) d £7,546,000 £13,171,000 Net gearing ((c-d)/a) -1 7.41% 6.04% Alternative Performance Measures (APMs) continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 99 Shareholder Information AAF Report A report prepared in accordance with the Audit and Assurance Faculty guidance issued by the Institute of Chartered Accountants in England and Wales. Utilised within the review of internal controls. AGM The Annual General Meeting of the Company, to be held at 2.00 pm on Thursday, 9 February 2023 at the ofﬁce of the manager, Polar Capital, 16 Palace Street, London SW1E 5JD. AIC Association of Investment Companies, the industry body for closed ended investment companies. AIFM Alternative Investment Fund Manager – Polar Capital LLP. AIFMD Alternative Investment Fund Managers Directive. Issued by the European Parliament in 2012 and 2013, the Directive requires that, while the Board of Directors of an Investment Trust remains fully responsible for all aspects of the Company’s strategy, operations and compliance with regulations, all alternative investment Funds (‘AIFs’) in the European Union, must appoint a Depositary and an Alternative Investment Fund Manager (‘AIFM’). The Company’s AIFM is Polar Capital LLP. Benchmark The Benchmark is the MSCI ACWI/Healthcare Index (total return in sterling with dividends reinvested). Closed-ended Investment Company An Investment Company with a ﬁxed issued ordinary share capital, the shares of which are traded on an exchange at a price not necessarily related to the net asset value of the company and which can only be issued or bought back by the company in certain circumstances. Custodian The Custodian is HSBC Bank plc, a ﬁnancial institution responsible for safeguarding, worldwide, the listed securities and certain cash assets of the Group and Company, as well as the income arising therefrom, through provision of custodial, settlement and associated services. Depositary The Depositary is also HSBC Bank plc. Under AIFMD rules the Company must appoint a Depositary whose duties in respect of investments, cash and similar assets include: safekeeping; veriﬁcation of ownership and valuation; and cash monitoring. Under the AIFMD rules, the Depositary has strict liability for the loss of the Group and Company’s ﬁnancial assets in respect of which it has safe-keeping duties. The Depositary’s oversight duties will include but are not limited to share buybacks, dividend payments and adherence to investment limits. Derivative A contract between two or more parties, the value of which ﬂuctuates in accordance with the value of an underlying security. Examples of derivatives are Put and Call Options, Swap contracts, Futures and Contracts for Difference. A derivative can be an asset or a liability and is a form of gearing because it can increase the economic exposure to shareholders. ESEF European Single Electronic Format is the requirement whereby reports are prepared and ﬁled in XHTML format. The requirement applied with effect from 1 January 2021 to all issuers in UK (or EU) regulated markets. In addition, for issuers preparing consolidated annual accounts in accordance with IFRS, the XHTML ﬁle requires tagging under the IFRS taxonomy. ESMA The European Securities and Markets Authority is an independent EU authority whose purpose is to improve investor protection and promote stable, orderly ﬁnancial markets. IFRS International Financial Reporting Standards; comprised of standards and interpretations approved by the International Accounting Standards Board (IASB) and the International Financial Reporting Committee (IFRC), including interpretations issued by the IFRS Interpretations Committee. Investment Company Section 833 of the Companies Act 2006. An Investment Company is deﬁned as a company which invests its funds in shares, land or other assets with the aim of spreading investment risk. Glossary of Terms Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022100 Shareholder Information Investment Manager / Manager Polar Capital LLP is the Investment Manager. Mr Gareth Powell and Dr James Douglas together have delegated responsibility for the creation of the portfolio of investments subject to various parameters set by the Board of Directors. The responsibilities of the Investment Manager and the fees payable are set out in the Strategic Report and the Directors’ Report. Investment Trust taxation status Section 1158 of the Corporation Tax Act 2010. UK Corporation Tax law allows an Investment Company (referred to in Tax law as an Investment Trust) to be exempted from tax on its proﬁts realised on investment transactions, provided it complies with certain rules. These are similar to Section 833 above but further require that the Company must be listed on a regulated stock exchange and that it cannot retain more than 15% of income received. The Directors’ Report contains conﬁrmation of the Company’s compliance with this law and its consequent exemption from taxation on capital gains. MiFID II Markets in Financial Instruments Directive, applicable from 3 January 2018. Non-executive Director The Group and Company are managed by a Board of Directors who are appointed by letter rather than a contract of employment. Neither the Group nor Company has any executive Directors. Remuneration of the non-executive Directors is set out in the Directors’ Remuneration Report while the duties of the Board and the various Committees are set out in the Corporate Governance Statement. An example of the letter of appointment is available on the Company’s website. PRIIPS The Packaged Retail and Insurance-based Investment Products regulations which came into force on 1 January 2018 in the UK and EU. The regulations require generic pre-sale disclosure of investment ‘product’ costs, risks and certain other matters. PwC The Group and Company’s Auditors are PricewaterhouseCoopers LLP, represented by Kevin Rollo, Partner. SORP The Statement of Recommended Practice. The Financial Statements of the Group and Company are drawn up in accordance with the Investment Trust SORP issued by the AIC. ZDP Zero Dividend Preference shares are preference shares which carry no entitlement to dividends, but which carry the right, on a ﬁxed date, to the repayment of capital and a ﬁxed rate of return in priority to any capital payment to the holders of ordinary shares. Glossary of Terms continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 101 Shareholder Information 2023 Annual General Meeting (“AGM”) The Company’s AGM will be held at 2pm on Thursday 9 February 2023 at 16 Palace Street, London, SW1E 5JD. Further information including the full text of the resolutions to be proposed at the AGM and an explanation of each resolution is contained in the Notice of AGM which has been posted to shareholders and is available on the Company’s website. Shareholders will have the option to ask questions at the meeting but are also encouraged to send any questions ahead of the AGM to the Board via the Company Secretary at [email protected] stating the subject matter as PCGH- AGM. We will endeavour to answer relevant questions at the meeting or on the Company’s website as appropriate. For ease of reference and understanding a brief explanation of the resolutions and the structure of the AGM is given below. Resolution 1 relates to the statutory requirement of every company to lay before shareholders the Annual Report and Financial Statements, i.e. this document. The Annual Report has been prepared and approved by the Board of Directors and audited by the externally appointed auditors. The document will be ﬁled at Companies House once published to shareholders. The Annual Report sets out the Company’s business strategy, governance structure and procedures as well as the ﬁnancial accounts for the ﬁnancial year under review. Resolutions 2 and 3, in compliance with the Large and Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulation 2013 (the ‘Regulations’), The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 and the Listing Rules of the Financial Conduct Authority, the Company is required on a three-yearly basis to provide shareholders with the opportunity to vote on the Company’s Directors’ Remuneration Policy. Resolution 2 seeks shareholder approval to renew the forward-looking Remuneration Policy which lasts for up to three years. The current Policy was approved by shareholders at the 2020 AGM and will expire on 30 September 2023 unless renewed. The Policy being presented for renewal is unchanged from the current Policy and will expire on 30 September 2026 or upon the reconstruction of the Company. In addition to this, on an annual basis, shareholders are presented with the Directors’ Remuneration Implementation Report which looks back at the year under review and advises how the Remuneration Policy was applied. Resolution 3 therefore, is the annual advisory vote of shareholders on the Remuneration Implementation Report. The Directors’ Remuneration Report is presented on pages 60 to 62. Resolutions 4 to 7 relate to the annual re-election of directors. In line with good corporate governance the tenure policy of directors is nine years, with the exception of the Board’s Chair tenure policy which allows the Chair to remain in role for up to twelve years in certain circumstances. It is recommended that directors stand for re-election on an annual basis in order to give shareholders the opportunity to vote on each Director. Having undergone a Board Evaluation process, as described on page 48, the Directors have provided a rationale for their support for the reappointment of each director on pages 6 and 7 and within the Notice of AGM. Resolutions 8 and 9 relate to the statutory appointment or reappointment of the Company’s external auditors and the Directors’ authority to determine their remuneration. Further information is provided in the Audit Committee Report on page 54. Resolution 10 relates to the Company’s dividend policy. Following the Company’s reconstruction in 2017, which included a change to the Company’s strategy from income and growth to growth alone, the adopted dividend policy has been and remains that dividends will be paid bi-annually in February and August. Resolutions 11 to 13 relate to potential changes in the share capital. Resolution 11 authorises the Directors to allot (i.e. sell) ordinary shares, whether these be newly created shares or shares held in the Company’s treasury account which have been previously bought back in the market. Once allotted the shares are listed on the London Stock Exchange and have the same rights as any other ordinary shares of the Company. Resolution 12 is proposed in connection with 11 and allows the Directors to allot the shares without pre-emption rights. Under the Companies Act, all shareholders have the right of pre-emption which means that the Company must offer existing shareholders an opportunity to buy the company’s shares before they are offered to third parties; being a listed company with many shareholders, the Directors ask to disapply the pre-emption rights which means they are able to offer and allot the shares to speciﬁc shareholders or in speciﬁc ways to the market, noting that such allotments would be at a premium to the net asset value (NAV) per share and therefore accretive (i.e. positive) to overall shareholder value. While all shareholders can trade the ordinary shares of the Company on the open market there are times when a shareholder would like to acquire greater amounts of shares than are available in the market and might approach the Company through the corporate broker to obtain shares. In a similar but opposite scenario, resolution 13 provides the Directors’ the ability to buy back (i.e. purchase) shares of the Company in the market. Depending on the market environment, and various other factors, the shares of the Company may trade at a discount to NAV. When this is the case the Company may step in and buy back shares in an effort to reduce the discount. Each of these authorities require shareholder approval and are regular resolutions proposed to each AGM. Each authority remains in place for 12 months or until the limits have been reached. Corporate Information - AGM Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022102 Shareholder Information Share Capital, Voting Rights and Transferability The Company’s share capital is divided into ordinary shares of 25p each. At the year end, there were 124,149,256 ordinary shares in issue (2021: 124,149,256 ordinary shares), of which 2,879,256 (2021: 2,879,256) were held in treasury by the Company. During the year to 30 September 2022, no new shares were issued from or bought back into treasury. Ordinary shares carry voting rights which are exercised on a show of hands at a meeting, where each shareholder has one vote, or on a poll, where each share has one vote. Ordinary shares held in treasury carry no voting rights. Arrangements for the casting of proxy votes are provided when a notice of meeting is issued. Any shares in the Company may be held in uncertiﬁcated form and, subject to the Articles, title to uncertiﬁcated shares may be transferred by means of a relevant system. Further information can be found in the Articles of Association available on the Company’s website www.polarcapitalglobalhealthcaretrust.co.uk. The Company is not aware of arrangements to restrict the votes or transferability of its shares. History and Structure The Company was incorporated as Polar Capital Global Healthcare Growth and Income Trust plc on 12 May 2010. On 15 June 2010 the Company issued 89,000,000 ordinary shares of 25p each and 17,800,000 subscription shares of 1p each 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). The subscription share rights expired on 31 January 2014, following the issue of 17,800,000 ordinary shares. The subscription shares were subsequently cancelled. On 20 June 2017 the Company was reconstructed and the name was changed to Polar Capital Global Healthcare Trust plc. As part of the reconstruction, a 100% tender offer was made to shareholders of which 21.8% was accepted resulting in 26,299,042 ordinary shares being bought back by the Company; the Company also offered new ordinary shares in the form of an issue and placing which resulted in 27,798,298 new ordinary shares being created. As part of the reconstruction and change of investment strategy, the Company created a wholly owned subsidiary, PCGH ZDP Plc (the ‘subsidiary’) (together with the Company, the ‘Group’) which was created to provide structural gearing to the Company through the placing of Zero Dividend Preference shares (‘ZDP shares’). The subsidiary was incorporated on 30 March 2017 and issued 50,000 ordinary shares of £1 each which were subscribed by the Company and fully paid up. On 19 June 2017 the subsidiary issued 32,128,437 ZDP shares at 100p each. These ZDP shares have a standard listing on the London Stock Exchange. Each ZDP share is entitled to 122.99p on 19 June 2024 on the winding up of the subsidiary. The proceeds of the ZDP Share issue were advanced to the Company under the terms of a loan agreement for investment by the Company in accordance with its Investment Policy. Following the reconstruction and in the absence of any prior proposals, the Articles of Association require the Directors to put forward at the ﬁrst Annual General Meeting to be held after 1 March 2025, a resolution for the voluntary winding up of the Company and the appointment of a liquidator. Members voting in favour, whether in person or by proxy, shall collectively have sufﬁcient votes, irrespective of number, to pass the resolution. Company Website http://www.polarcapitalglobalhealthcaretrust.co.uk The Investment Manager maintains a website on behalf of the Company 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. Information on the Company can also be obtained from various other sources including: • www.theaic.co.uk • www.ft.com/markets • www.londonstockexchange.co.uk Capital Gains Tax Information on Capital Gains Tax (‘CGT’) is available on the HM Revenue & Customs website www.hmrc.gov.uk/cgt/index. When shares are disposed of a capital gain may result if the disposal proceeds exceed the sum of the base cost of the shares sold and any other allowable deductions such as share dealing costs. The exercise of subscription shares into ordinary shares should not have given rise to a capital gain, however a capital gain may arise on the eventual disposal of those shares. The calculations required to compute capital gains may be complex and depend on personal circumstances. Shareholders are advised to consult their personal ﬁnancial advisor for further information regarding a possible tax liability in respect of their shareholdings. Corporate Information - Other Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 103 Shareholder Information Further information on the subscription shares is provided in the subscription share section below. The Company was launched on 15 June 2010 with the issue of ordinary shares at £1 per share with subscription shares attached (on a one for ﬁve basis). Subscription Shares Tax Implications The base ‘cost’ for UK tax purposes of the subscription shares is a proportion of the issue price paid for the ordinary shares to which the subscription shares were attached. The apportionment is made by reference to the respective market values of the ordinary shares and subscription shares at the close of business on 15 June 2010, the day the ordinary and subscription shares were admitted to trading. The market value for UK tax purposes of the Company’s ordinary shares and subscription shares on such date were as follows: Ordinary Shares 101.0p Subscription Shares 14.875p If you have exercised the subscription rights attaching to your subscription shares, the resulting ordinary shares are treated for UK tax purposes as the ‘same’ asset as the subscription shares in respect of which the subscription rights are exercised. The base ‘cost’ for UK tax purposes of the resulting ordinary shares will be the base cost attributed to the exercised subscription shares, increased by the amount of subscription monies paid. Statement by the Depositary The statement of the Depositary’s responsibilities in respect of the Company and its report to shareholders for the year ended 30 September 2022 is available on the Company’s website. The Depositary, having carried out such procedures as it considered necessary, was satisﬁed that in all material respects the Company was managed in accordance with the applicable FCA rules and AIFMD. Statement By The AIFM The statement by the AIFM in respect of matters to be disclosed to investors for the year ended 30 September 2022 is available on the Company’s website. Share Price and Net Asset Value The Company’s Net Asset Value (NAV) is normally released daily, on the next working day, following the calculation date, to the London Stock Exchange. The mid-market price of the ordinary shares is published daily in the Financial Times in the Companies and Markets section under the heading ‘Investment Companies’. Share price information is also available from The London Stock Exchange website: www.londonstockexchange.co.uk Electronic Communications If you hold your shares in your own name you can choose to receive communications from the Company in electronic format. This method reduces cost, is environmentally friendly and, for many, is convenient. If you would like to take advantage of Electronic Communications, please visit our registrar’s website at www.shareview.co.uk. You will need your Shareholder Reference Number. If you agree to the terms and conditions, in future, on the day that documents are sent to shareholders by post you will receive an e-mail providing the website address where the documents can be viewed and downloaded. Paper copies will still be available on request. Nominee shareholders Where notiﬁcation has been provided in advance the Company will arrange for copies of shareholder communications to be provided to the operators of nominee accounts. Nominee service providers are encouraged to advise investors that they may attend general meetings when invited by the Chair. Disability Act Copies of this Annual Report and Financial Statements or other documents issued by the Company are available from the Company Secretary. If needed, copies can be made available in a variety of formats, either Braille or on audio tape or larger type as appropriate. You can contact our Registrars, Equiniti Limited, who have installed textphones to allow speech and hearing-impaired people who have their own textphone to contact them directly by ringing 0870 600 3950 without the need for an intermediate operator. Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you prefer to go through a ‘typetalk’ operator (provided by the Royal National Institute for the Deaf), you should dial 18001 followed by the number you wish to dial. Investing The ordinary shares of the Company are listed and traded on the London Stock Exchange. Investors may purchase shares through their stockbroker, bank or other ﬁnancial intermediary. There are a variety of ways to invest in the Company. However, this will largely depend upon whether you would like ﬁnancial advice or are happy to make your own investment decisions. Investing Risks Investors should be aware of the following risks when considering investing in the shares of Polar Capital Global Healthcare Trust plc: Past performance is not a guide to future performance. Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022104 Shareholder Information Please remember that any investment in the shares of Polar Capital Global Healthcare Trust plc either directly or through a savings scheme or ISA carries the risk that the value of your investment and any income from them may go down as well as up due to the ﬂuctuations of the share price, the market and interest rates. This risk may result in an investor not getting back their original amount invested. As the shares in an investment trust are traded on a stock market, the share price will ﬂuctuate in accordance with supply and demand and may not reﬂect the underlying net asset value of the shares. Where the share price is less than the underlying value of the assets, the difference is known as the ‘discount’. For these reasons, investors may not get back the original amount invested. Although the Company’s Financial Statements are denominated in sterling, it may invest in stocks and shares that are denominated in currencies other than sterling. To the extent that it does so, asset values may be affected by movements in exchange rates. As a result, the value of your investment may rise or fall with movements in exchange rates. Polar Capital Global Healthcare Trust plc is allowed to borrow against its assets and this may increase losses triggered by a falling market. The Company may increase or decrease its borrowing levels to suit market conditions. If you are in any doubt as to the suitability of a plan or any investment available within a plan, please take professional advice. Polar Capital Global Healthcare Trust plc is an investment trust and as such its ordinary shares are excluded from the FCA’s restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. If you are investing through a savings plan, ISA or other investment arrangement it is important that you read the key features documents and understand the risks associated with investing in the shares of the Company. If you are in any doubt as to the suitability of a plan or any investment available within a plan, please take professional advice. Tax rates and reliefs change from time to time and may affect the value of your investment. For those investors who would like advice: Private Client Stockbrokers – Investors with a large lump sum to invest may want to contact a private client stockbroker. They will manage a portfolio of shares on behalf of a private investor and will offer a personalised service to meet an individual’s particular needs. A list of private client stockbrokers is available from The Personal Investment Management & Financial Advice Association (PIMFA) at www.pimfa.co.uk Financial Advisers – Financial Advisers who wish to purchase shares for their clients can also do so via a growing number of platforms that offer investment trusts including AJ Bell, Interactive Investor, Ascentric, Embark, Nucleus, Raymond James, Seven IM and Transact. For investors looking to ﬁnd a ﬁnancial adviser, please visit www.unbiased.co.uk For those investors who are happy to make their own investment decisions: Online Stockbroking Services – There are a number of real time execution only stockbroker services which allow private investors to trade online for themselves, manage a portfolio and buy UK listed shares. Online stockbroking services include AJ Bell, Barclays Stockbrokers, Charles Stanley, Fidelity, Halifax Share Dealing, interactive investor and Hargreaves Lansdown. As an investor holding shares through one of these platforms, you are entitled to attend and vote at company general meetings. For example, interactive investor allow you to vote your shares at no extra cost through your account and new customers are automatically signed up to the voting and information service, which enables you to receive shareholder materials and vote on decisions directly affecting your UK- registered shareholdings. Please visit the AIC’s pages below for further information: https://www.theaic.co.uk/how-to-attend-an-AGM https://www.theaic.co.uk/availability-on-platforms/how-to- vote-your-shares Share Dealing Services The Company has also made arrangements with its share registrars, Equiniti Limited, for investors to buy and sell shares through the Shareview.co.uk service. For telephone sales call 0345 603 7037 (or +44 121 415 7560) between 8.30am and 4.30pm for dealing and up to 6.00pm for enquiries, Monday to Friday. For Internet sales log on to www.shareview.co.uk/dealing Forward-Looking Statements Certain statements included in this Annual Report and Financial Statements 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. Corporate Information - Other continued Annual Report and Financial Statements 2022 • Polar Capital Global Healthcare Trust plc 105 Shareholder Information 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, you should have regard to the principal risks and uncertainties included in the Strategic Report within this Annual Report. No part of this Annual Report constitutes, or shall be taken to constitute, an invitation or inducement to invest in Polar Capital Global Healthcare Trust plc or any other entity and must not be relied upon in any way in connection with any investment decision. The Company undertakes no obligation to update any forward-looking statements. Boiler Room Scams Shareholders of Polar Capital Global Healthcare Trust plc may receive unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders, offering to sell them what often turn out to be worthless or high risk shares in U.S. or UK investments or offering to act on the shareholder’s behalf on the payment of a retainer or similar in a spurious corporate event. These operations are commonly known as ‘boiler rooms’. These ‘brokers’ can be very persistent and extremely persuasive. It is not just the novice investor that has been duped in this way; many of the victims had been successfully investing for several years. Shareholders are advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. If you have been contacted by an unauthorised ﬁrm regarding your shares the FCA would like to hear from you. You can report an unauthorised ﬁrm using the FCA helpline on 0845 606 1234 or 0800 111 6768 or by visiting their website, which also has other useful information, at www.fca.org.uk If you receive any unsolicited investment advice: • Make sure you get the correct name of the person and organisation • If the calls persist, hang up If you deal with an unauthorised ﬁrm, you will not be eligible to receive payment under the Financial Services Compensation Scheme. More detailed information on this or similar activity can be found on the FCA website. How to avoid investment and pension scams  Y contacting our Consumer Helpline on 0800 111 6768 or using our reporting form using the link below. If you’ve lost money in a scam, contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk  Scammers usually cold call, but contact can also come by email, post, word of mouth  investment out of the blue, chances are it’s a high risk investment or a scam. Check the FCA Warning List Use the FCA Warning List to check the risks of a potential investment – you can also search  our authorisation.  Get impartial advice before investing – don’t use  Be ScamSmart and visit  1 2 3 Polar Capital Global Healthcare Trust plc • Annual Report and Financial Statements 2022106 Shareholder Information Company Registration Number 7251471 (Registered in England) The Company is an investment company as deﬁned under Section 833 of the Companies Act 2006. Directors Lisa Arnold (Chair) Neal Ransome (Audit Committee Chair) Andrew Fleming Jeremy Whitley Registered Ofﬁce and Contact Address for Directors 16 Palace Street London SW1E 5JD Investment Manager and AIFM Polar Capital LLP 16 Palace Street London SW1E 5JD Authorised and regulated by the Financial Conduct Authority. Telephone: 020 7227 2700 Website: www.polarcapital.co.uk Portfolio Co-Managers Dr. James Douglas Mr. Gareth Powell Company Secretary Polar Capital Secretarial Services Limited Represented by Tracey Lago, FCG Depositary, Bankers and Custodian HSBC Bank Plc 8 Canada Square London E14 5HQ Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT Solicitors Herbert Smith Freehills LLP Exchange House Primrose Street London EC2A 2HS Stockbrokers Panmure Gordon & Co One New Change London EC4M 9AF Identiﬁcation Codes Ordinary shares SEDOL: B6832P1 ISIN: GB00B6832P16 TICKER: PCGH GIIN: ID3ME4.99999.SL.826 LEI: 549300YV7J2TWLE7PV84 Registrar Shareholders who have their shares registered in their own name, not through a share savings scheme or ISA, can contact the registrars with any queries on their holding. Post, telephone and Internet contact details are given below. In correspondence you should refer to Polar Capital Global Healthcare Trust plc, stating clearly the registered name and address and, if available, the full account number. Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA Shareholder helpline: 0800 313 4922 (or +44 121 415 7047 from overseas) Contact Information Contents Overview Your Business at a Glance 1 Highlights 2 Performance 3 Chair’s Statement 4 Board of Directors 6 Investment Team 8 Manager’s Report Investment Manager’s Report 11 Ten Largest Investments 21 Full Investment Portfolio 22 Environmental, Social and Governance Corporate Responsibility for ESG 24 Investment Perspective 26 ESG Dashboard 28 Governance Strategic Report 30 Section 172 of the Companies Act 2006 37 Report of the Directors 40 Report on Corporate Governance 42 Audit Committee Report 51 Directors’ Remuneration Report 58 Statement of Directors’ Responsibilities 63 Independent Auditors’ Report 64 Financial Statements and Notes Statement of Comprehensive Income 73 Statements of Changes in Equity 74 Balance Sheets 75 Cash Flow Statements 76 Notes to the Financial Statements 77 Shareholder Information Alternative Performance Measures (APMs) 97 Glossary of Terms 99 Corporate Information – AGM 101 Corporate Information – Other 102 Contact Information 106 Purpose The purpose of the Group, comprising the Company and the wholly owned subsidiary PCGH ZDP Plc, is to provide a vehicle for investors in which assets are invested across a diversiﬁed global portfolio of healthcare stocks which aim to deliver long term capital growth to Shareholders. The purpose is achieved through implementation of the Investment Objective and investment policies incorporating parameters to ensure excessive risk is not undertaken. Investment Objective The generation of capital growth through investments in a global portfolio of healthcare stocks. See more at: polarcapitalhealthcaretrust.co.uk We were delighted to be awarded winner of the Biotech and Healthcare specialist sector at the Investment Week - Investment Company of the Year Awards in November 2022. Designed and printed by Perivan 264615 This document is printed on Galerie Satin, a paper sourced from well managed, responsible, FSC® certiﬁed forests and other controlled sources. The pulp used in this product is bleached using an elemental chlorine free (ECF) process. Annual Report and Financial Statements for the year ended 30 September 2022 Polar Capital Global Healthcare Trust plc 2022 Annual Report and Financial Statements for the year ended 30 September 2022

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