2022
Strategic Report
Polar Capital Global Financials Trust plc
Annual Report and Financial Statements for the year ended 30 November 2022
Annual Report and Financial Statements for the year ended 30 November 2022
Contents
Your Company at a Glance | 1 |
Summary of Share Capital Movements | 2 |
Financial Highlights | 3 |
Performance | 4 |
Performance Highlights | 5 |
Chairman's Statement | 6 |
Chair Elect Q & A | 11 |
Board of Directors | 12 |
Investment Managers | 14 |
Manager's Report
Investment Manager's Report | 16 |
Attribution Analysis | 23 |
Top Ten Investments | 24 |
Full Investment Portfolio | 25 |
Portfolio Review | 28 |
Environmental, Social and Governance
Corporate Responsibility | 30 |
Investment Perspective incorporating ESG | 32 |
ESG Dashboard | 34 |
Governance
Strategic Report | 36 |
Section 172 Statement | 44 |
Report of the Directors | 48 |
Report on Corporate Governance | 51 |
Audit Committee Report | 60 |
Directors' Remuneration Report | 67 |
Statement of Directors' Responsibilities | 73 |
Independent Auditors' Report | 74 |
Financial Statements and Notes
Statement of Comprehensive Income | 83 |
Statement of Changes in Equity | 84 |
Balance Sheet | 85 |
Cash Flow Statement | 86 |
Notes to the Financial Statements | 87 |
Shareholder Information
Alternative Performance Measures (APMs) | 115 |
Glossary of Terms | 118 |
Corporate Information - AGM | 120 |
Corporate Information - Other | 122 |
Contact Information | IBC |
Polar Capital Global Financials Trust plc (the Company or Trust) is a UK investment trust launched in July 2013. The Company initially had a fixed seven-year life but in April 2020, with Shareholder approval, moved to five-yearly tender offers with no fixed end of life.
The Company has appointed Polar Capital as its Investment Manager. Since its foundation in 2001, Polar Capital has grown steadily and currently has 14 autonomous investment teams managing specialist, active and capacity constrained portfolios, with a collegiate and meritocratic culture where capacity of investment strategies is managed to enhance and protect performance.
See more at:
polarcapitalglobalfinancialstrust.com
Your Company at a Glance
Investment Objective
The Company's investment objective is to generate for investors a growing dividend income together with capital appreciation.
Investment Policy
The Company seeks to achieve its objective by investing primarily in a global portfolio consisting of listed or quoted securities issued by companies in the financials sector operating in the banking, insurance, property and other subsectors. The portfolio is diversified by factors including geography, industry sub-sector and stock market capitalisation. Full details of the investment policy are set out on page 36 of the Strategic Report.
Management
The Company operates as an investment trust with an independent Board and third-party Investment Manager.
The Company has appointed Polar Capital LLP (the "Manager") as its AIFM and Investment Manager under the terms of an Investment Management Agreement ("IMA"). The IMA provides for a broad range of services including portfolio management. The portfolio has been jointly managed by Mr Nick Brind and Mr John Yakas since launch on 1 July 2013. With effect from 1 December 2020, Mr George Barrow was also appointed as Co-Fund Manager with Mr Brind and Mr Yakas. Details of the fees payable
to the Manager can be found on pages 8, 38 and 93. The Management Fee is charged 80% to capital and 20% to revenue; the Performance Fee, when payable, is charged 100% to capital.
Benchmark
In April 2020, following the reconstruction of the Company, the benchmark was changed to the MSCI ACWI Financials Net Total Return Index in recognition of the Company's level of portfolio exposure to emerging market financials equities and its limited portfolio exposure to real estate equities. Prior to this, the Company was benchmarked against the MSCI World Financials + Real Estate Net Total Return Index. See page 37 for more information.
Life of the Company - Tender Offer/ Reconstruction
The Company was launched in July 2013 with a fixed seven-year life. Shareholders approved changes to the Company's Articles of Association to make a tender offer to all Shareholders and to extend the Company's life indefinitely at the Company's General Meeting held on 7 April 2020 ("the Reconstruction"). The new Articles of Association removed the fixed life and now require the Company to make tender offers at five-yearly intervals, with the first to commence on or before 30 June 2025.
Gearing and use of Derivatives
Under the Articles of Association the Company may utilise an overall maximum leverage (gearing) limit of 20 per cent. of NAV at the time at which the relevant borrowing is taken out or increased.
In July 2022, the Company entered into a new agreement with Royal Bank of Scotland ("RBS"), for a three-year revolving credit facility ("RCF") in the amount of £50m, and two three-year term loans for £15m and USD $18.4m respectively. At the period end, the term loans had been fully drawn down; £25m in sterling and $6m in US dollars had also been drawn down under the RCF. As at 16 February 2023, the Company had drawn down a total of £70.3m across the term loan and RCF, equating to 7.9% net gearing.
Details of how the borrowings may be utilised are given in the Strategic Report on page 36.
Capital Structure
As at 30 November 2022, the Company had 325,394,000 ordinary shares of 5 pence each in issue of which 6,356,000 shares were held in treasury. Since the year end and up to
16 February 2023 (the latest practicable date), the Company has bought back a further 790,000 ordinary shares into treasury.
Annual Report and Financial Statements 2022 • Polar Capital Global Financials Trust plc | 1 |
Summary of Share Capital Movements
Ordinary shares | Treasury shares* | |
As at 1 December 2021 | 272,980,000 | 6,350,000 |
Share capital change during the financial year | ||
Shares issued since 1 December 2021 and up to the | ||
General Meeting held on 1 February 2022: | ||
Reissue out of treasury (1) | 6,350,000 | (6,350,000) |
Issues of new shares out of | 15,150,000 | - |
2021 AGM authority (2) | ||
As at 1 February 2022 | 294,480,000 | - |
Shares issued since 1 February 2022 and up to Annual General | ||
Meeting held 7 April 2022: | ||
Issue of new shares | ||
pursuant to Subsequent | 16,869,893 | - |
Placing 1 in Jan 2022 (3) | ||
Issue of new shares | ||
pursuant to Subsequent | 9,905,427 | - |
Placing 2 in Feb 2022 (3) | ||
Issues of new shares out of | 9,744,680 | - |
2022 GM authority (4) | ||
As at 7 April 2022 | 331,000,000 | - |
Shares issued since 7 April 2022 and up to the year ended | ||
30 November 2022: | ||
Issues of new shares out of | 750,000 | |
2022 AGM authority (5) | ||
Ordinary shares repurchased and held in treasury | ||
Repurchased and held in | (6,356,000) | 6,356,000 |
treasury | ||
As at 30 November 2022 | 325,394,000 | 6,356,000 |
Share capital change subsequent to the financial year end | ||
Ordinary shares repurchased since 1 December 2022 and up to | ||
the date of this Annual Report 16 February 2023: | ||
Repurchased and held in | (790,000)) | 790,000 |
treasury | ||
As at 16 February 2023 | 324,604,000 | 7,146,000 |
The shares above have been issued under the following authorities:
Note 1: General Meeting ("GM") authority granted by Shareholders on 1 February 2021.
Note 2: AGM authority granted by Shareholders on 30 March 2021. This replaced the authority granted on 28 May 2020.
Note 3: Prospectus following the GM authority granted by Shareholders on 16 June 2021. This was in addition to the authority granted under (2).
Note 4: GM authority granted by Shareholders on 1 February 2022. This replaced the authority granted under (1).
Note 5: AGM authority granted by Shareholders on 7 April 2022. This replaced the authority granted under (2).
- Treasury shares are held in the name of the Company and do not attract the right to receive dividends or have any other voting rights. Shares held in treasury may be reissued into the market at a premium to NAV.
2 Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2022
Financial Highlights
Financial Highlights as at and for the year ended 30 November | ||||||||||||||||||
Net asset value (NAV) per ordinary share (total return)* | Ordinary share price (total return)* | |||||||||||||||||
2022 | 79,724,9001.9% | 2022 | -7.6% | 29.7% | ||||||||||||||
2021 | 2021 | |||||||||||||||||
27.9% | 29.7% | |||||||||||||||||
Total net assets^ (+18.4%) | NAV per ordinary share (-0.7%) | |||||||||||||||||
2022 | £541,272,000 | 2022 | 166.3p | |||||||||||||||
2021 | 2021 | |||||||||||||||||
£457,247,000 | 167.5p | |||||||||||||||||
Ordinary share price (-10.1%) | (Discount)/premium per ordinary share* | |||||||||||||||||
2022 | 2022 | |||||||||||||||||
154.6p | -7.0% | |||||||||||||||||
2021 | 2021 | |||||||||||||||||
172.0p | 2.7% | |||||||||||||||||
Net gearing* | Total dividend per ordinary share paid or declared | |||||||||||||||||
for the year | ||||||||||||||||||
2022 | ||||||||||||||||||
6.0% | 2022 | 4.45p | ||||||||||||||||
2021 | 5.2% | 2021 | 4.40p | |||||||||||||||
Dividends~
The Company has paid or declared the following dividends relating to the financial year ended 30 November 2022:
Amount per | Ordinary Shares | ||||
Pay date | Ordinary share | in Issue | Record Date | Ex-Date | Declared Date |
First interim: 31 August 2022 | 2.40p | 330,440,000 | 5 August 2022 | 4 August 2022 | 1 July 2022 |
Second interim: 28 February 2023 | 2.05p | 324,779,000 | 3 February 2023 | 2 February 2023 | 18 January 2023 |
Total (2021: 4.40p) | 4.45p |
- The change in net assets reflects shares reissued from treasury in the year, new shares issued, placing, buybacks, dividend paid and market movements. * Alternative Performance Measure, see pages 115 to 117 for further explanations.
~ Refer to Note 12 on pages 96 to 97 for more details.
Data sourced by HSBC Securities Services Limited, Polar Capital LLP, MSCI and Lipper.
Annual Report and Financial Statements 2022 • Polar Capital Global Financials Trust plc | 3 |
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Polar Capital Global Financials Trust plc published this content on 21 February 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 February 2023 07:39:01 UTC.