Strategic Report
Annual Report and Financial Statements for the year ended 30 November 2023
Polar Capital Global Financials Trust plc
2023 Annual Report and Financial Statements for the year ended 30 November 2023
Contents
Your Company at a Glance 1
Financial Highlights 2
Performance 3
Performance Highlights 4
Chair’s Statement 5
Board of Directors 8
Investment Managers 10
Manager’s Report
Investment Manager’s Report 12
Attribution Analysis 20
Top Ten Investments 21
Full Investment Portfolio 22
Portfolio Review 25
Environmental, Social and Governance (“ESG”)
Corporate Responsibility for ESG 27
Investment Perspective 29
ESG Dashboard 31
Governance
Strategic Report 34
Section 172 Statement 42
Report of the Directors 46
Report on Corporate Governance 48
Audit Committee Report 55
Directors’ Remuneration Report 61
Report of the Management Engagement Committee 66
Statement of Directors’ Responsibilities 68
Independent Auditors’ Report 69
Financial Statements and Notes
Statement of Comprehensive Income 78
Statement of Changes in Equity 79
Balance Sheet 80
Cash Flow Statement 81
Notes to the Financial Statements 82
Shareholder Information
Alternative Performance Measures (APMs) 109
Glossary of Terms 112
Corporate Information – AGM 115
Corporate Information – Other 117
Contact Information 122
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 LLP (“Polar Capital” or
the “Manager”) 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.
S
ee more at:
polarcapitalglobalfinancialstrust.com
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 1
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 34 of the Strategic Report.
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 35 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.
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 is jointly managed by
Mr Nick Brind and Mr George Barrow. Details of the fees
payable to the Manager can be found on pages 36 and 88.
The Management Fee is charged 80% to capital and 20%
to revenue; the Performance Fee, when payable, is charged
100% to capital.
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; £30m in sterling and $12m in US dollars had
also been drawn down under the RCF. As at 13 February
2024, the Company had drawn down a total of £69.1m
across the term loan and RCF, equating to 6.8% net gearing.
Details of how the borrowings may be utilised are given in
the Strategic Report on page 34.
Capital Structure
As at 30 November 2023, the Company had 331,750,000
ordinary shares of 5 pence each in issue of which 22,888,313
shares were held in treasury. Since the year end and up to
13 February 2024 (the latest practicable date), the Company
has bought back a further 2,311,282 ordinary shares into
treasury.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 2
Financial Highlights
Financial Highlights as at and for the year ended 30 November
Net gearing*
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Ordinary share price (-10.2%)
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Discount per ordinary share*
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Total net assets (-9.8%)
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
NAV per ordinary share (-4.9%)
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Ordinary share price (total return)*
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Total dividend per ordinary share paid or declared
for the year (+2.25%)
Total net assets NAV per ordinary share
2022
2023
2022
2023
158.1p
166.3p
-12.2%
-7.0%
2022
2023
138.8p
154.6p
£541,272,000
£488,198,000
Ordinary share price (total return)*
Discount per ordinary share*Ordinary share price
2022
2023
2022
2022
2023
6.5%
-2.8%
6.0%
Net gearing*
2022
2023
2023
2022
2023
4.55p
4.45p
net asset value per ordinary share (total return)* Total dividend per ordinary share paid or declared for the year
29.7%
1.9%
-7.6%
-7.5%
Net asset value (NAV) per ordinary share (total return)*
-2.8%
1.9%
* Alternative Performance Measure, see pages 109 to 111for further explanations.
~ Refer to Note 12 on pages 91 to 92 for more details.
Data sourced by HSBC Securities Services Limited and Polar Capital LLP.
Dividends
~
The Company has paid or declared the following dividends relating to the financial year ended 30 November 2023:
Pay date
Amount per
Ordinary share
Ordinary Shares
in Issue Record Date Ex-Date Declared Date
First interim: 31 August 2023 2.45p 315,955,329 4 August 2023 3 August 2023 11 July 2023
Second interim: 29 February 2024 2.10p 307,160,405 2 February 2024 1 February 2024 18 January 2024
Total (2022: 4.45p) 4.55p
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 3
Performance since Inception
Rebased to 100 at 1 July 2013
Discrete Performance (%)
For the year ended 30 November
2013~ 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NAV per share (TR)* 3.7 9.8 5.3 22.2 16.4 -1.5 10.4 -6.5 27.9 1.9 -2.8
Ordinary share price (TR)* 5.8 -2.2 6.2 21.4 16.7 -1.7 12.4 -1.6 29.7 -7.6 -7.5
Benchmark* 6.4 11.0 0.9 24.5 14.2 -0.1 9.9 -6.4 27.0 6.8 0.3
MSCI ACWI Financials (TR)^ 7.6 9.8 -2.4 25.9 15.8 -0.4 8.0 -8.2 27.0 6.8 0.3
* See page 4 note 1 and note 2 for NAV and share price total return (TR) calculation respectively and note 4 for a definition of the benchmark
~ Performance total return (TR) for the period was from inception date of 1 July 2013 to 30 November 2013.
^ The performance of the MSCI ACWI Financials Net Total Return Index (£) excluding Real Estate prior to August 2016 is shown for illustrative purposes only.
Source: Polar Capital
Performance
PCFT NAV per share (TR)* Benchmark* Ordinary share price (TR)* MSCI ACWI Financials (TR)^
50
100
150
200
250
Nov
2013
Nov
2014
Nov
2015
Nov
2016
Nov
2017
Nov
2018
Nov
2019
Nov
2020
Nov
2021
Nov
2022
Nov
2023
Jul
2013
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 4
Performance (Sterling total return) Note
For the year ended
30 November 2023
%
Since
Inception
%
NAV per ordinary share
*
1 -2.8 119.7
Ordinary share price
*
2 -7.5 87.9
Ordinary share price including subscription share value
*
3 - 91.8
Benchmark (Sterling total return) 4
For the year ended
30 November 2023
%
Since
Inception
%
MSCI ACWI Financials 0.3 124.0
Chain-linked benchmark 0.3 135.6
Other Indices and peer group (Sterling total return)
MSCI World Index 6.9 204.2
FTSE All Share Index 1.8 76.5
Lipper Financial Sector 5 -2.2 103.5
Performance since Reconstruction on 22 April 2020
(Sterling total return)
Since
Reconstruction
%
NAV per ordinary share
*
6 68.8
Benchmark 4 67.7
Earnings per Ordinary share 7
For the year ended
30 November 2023
For the year ended
30 November 2022
Revenue Return 4.97p 4.45p
Capital Return (9.84p) (2.75p)
Total (4.87p) 1.70p
Expenses
*
For the year ended
30 November 2023
For the year ended
30 November 2022
Ongoing charges 0.86% 0.87%
Ongoing charges including performance fee 8 0.86% 0.65%
Note 1 The total return NAV performance for the period is calculated by reinvesting the dividends in the assets of the Company from the relevant ex-dividend
date. Performance since inception has been calculated using the initial NAV of 98p and the NAV on 30 November 2023. Dividends are deemed to be reinvested on the
ex-dividend date as this is the protocol used by the Company’s benchmark and other indices.
Note 2 The total return share price performance is calculated by reinvesting the dividends in the shares of the Company from the relevant ex-dividend date.
Performance since inception has been calculated using the launch price of 100p to the closing price on 30 November 2023.
Note 3 The total return share price performance since inception includes the value of the subscription shares issued free of payment at launch based on one for
every five Ordinary shares and assumes such were held throughout the period from launch to the final conversion date of 31 July 2017. Performance is calculated by
reinvesting the dividends in the shares of the Company from the relevant ex-dividend date and uses the launch price of 100p per Ordinary share and the closing price
per Ordinary share on 30 November 2023.
Note 4 Chain linked benchmark is a combination of 3 benchmarks which have been in operation over the period. From inception until 31 August 2016 the
Company’s benchmark was the MSCI World Financials Index, which included Real Estate as a constituent until its removal that year. From 1 September 2016 to 23 April
2020 the benchmark was the MSCI World Financials + Real Estate Net Total Return Index. From 23 April 2020, the benchmark changed to MSCI ACWI Financials Net
Total Return Index (in Sterling) due to the Company’s exposure to emerging market equities and its limited exposure to real estate equities.
Note 5 Dynamic average of open-ended funds in the Lipper Financial Sector Universe which comprised 55 open ended funds in the year under review.
Note 6 The total return NAV performance since the Reconstruction is calculated by reinvesting the dividends in the assets of the Company from the relevant
ex-dividend date. The new performance fee period runs from the date of the Reconstruction. The opening NAV for the performance fee of 102.8p is the closing NAV
the day before the tender offer was completed.
Note 7 Refer to Note 11 on page 91 for more details.
Note 8 The prior year decrease in ongoing charges including performance fee reflects the write back of the performance fee accrual for the year ended
30 November 2022.
* Alternative Performance Measure, see pages 109to 111 for further explanations.
Data sourced by HSBC Securities Services Limited and Polar Capital LLP.
Performance Highlights
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 5
Chair’s
Statement
Simon Cordery
Chair
Dear Shareholder
I wrote my first statement to you as Chair of the Company
within the half-year report in July 2023, reflecting a challenging
period for investors and the financials sector which has
continued for most of the year under review.
2023 proved to be a most frustrating year for investors
in the global financials sector. While we saw broad stock
market improvements over the period, predominantly led by
technology, the financials sector underperformed, following
a few years of relative out-performance. Sentiment has not
been favourable towards the sector despite a backdrop of
historically low valuations and improving profitability at banks
in particular. It seems that rising interest rates, high inflation
and the fear of a slowdown in economic growth weighed
more heavily on investors’ minds.
Several US bank failures and the controversial events
surrounding the distressed Credit Suisse sale to UBS also played
their part in denting confidence in the sector. Although high
interest rates are generally favourable to the performance of
banks, investors are focusing instead on the potential for loan
losses which these might cause. However, as interest rate hikes
moderate and succeed in reducing inflation to target levels,
central banks may start the process of lowering rates once
more and this should act as a catalyst to investment in the
financials sector.
The highest interest rates in more than a decade have
offered investors an almost risk free safe haven in the form of
government bonds and even cash, with an appealing headline
return (before the effects of inflation). This has provided a
credible alternative to equities and corporate bonds; investors
currently seem happy to wait for a better time to invest their
cash.
Geopolitical risk remains high. The ongoing war in Ukraine
and the consequences of COVID continue to impact economic
activity. Energy prices remain volatile and supply chain issues
persist. The opening up of China, post the ending of zero-COVID
polices, has not provided the fillip to the investment markets
expected this time last year. The troubles of the Chinese property
market and their impact on the local banking sector seem yet to
be fully realised. These factors have dampened investment and
broader economic activity. The more recent conflict within the
Gaza Strip has stoked geopolitical risk issues and raised tensions
across the Middle East. None of this is helpful in moving investor
sentiment to increase risk. A speedy resolution in the Middle East
and any sign of improvement with regards to Ukraine would be
positives for investors but it is difficult to see either development
currently.
Investment Performance
The Investment Manager’s Report, on pages 12 to 19, has
more detail on how the portfolio evolved over the year and
the bank subsector issues are discussed in detail. The MSCI
ACWI Financials Index underperformed more broadly based
indices over the reporting period and the Company’s portfolio
underperformed the Benchmark. Despite having respectable
returns in the first half, the Company’s overweight position in
US mid sized banks meant the second half was disappointing.
We avoided the big failures (Credit Suisse, First Republic and
Signature) but took a small loss on Silicon Valley Bank; being
overweight banks generally held the portfolio back. The portfolio
was modestly geared over the period under review which acted
as an additional drag on performance.
The Net Asset Value Total Return (NAV TR) for the year fell by
2.8% versus the MSCI ACWI Financials Index which rose 0.3%.
Share price performance was further impacted by the widening
of the discount to NAV to 12% in common with the investment
companies’ sector in general. Investment companies with large
holdings of illiquid assets such as real estate, infrastructure and
private equity saw the biggest widening in discounts, but many
investment companies with highly liquid underlying assets were
also impacted. The year-end discount to NAV was 12.2% (2022:
7.0%), slightly below the widest discount of 13.6% seen earlier
in the year; consequently the Share Price Total Return for the
period under review fell by 7.5%.
Since launch in 2013, the NAV TR has been 119.7% against
135.6% for the benchmark. From the point of the Company’s
reconstruction in April 2020, the portfolio has returned 68.8%
and the Benchmark 67.7%.
NAV Discount management
The Company continued to pursue a substantial share buyback
policy during the year which was accretive to NAV and helped
support liquidity in the shares. The Company bought back a
total of 16,532,313 ordinary shares, equivalent to 5.1% of the
shares in issue at the start of the financial year, at an average
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 6
discount of 10.5%. These buybacks had an accretive effect
on the NAV of 0.76p per share. Following the period end,
a further 2,311,282 ordinary shares were repurchased into
treasury.
The Board issues a delegated authority to the Manager and
our Corporate Broker to buy shares under defined parameters.
These are designed to ensure that the Company does not
displace any market demand for shares but provides liquidity,
if required, once market demand has been satisfied.
The Board has reconfirmed its authority to the Manager to
continue the policy of share repurchases under appropriate
parameters in order to reduce the discount at which the
Company’s shares trade.
Dividends
The Company’s current dividend policy and aim with respect to
the Ordinary Shares is to pay two interim dividends each year, in
February and August. These interim dividends will not necessarily
be of equal amounts. The Board monitors, with the help of the
Manager, the prospects for dividends from its equity holdings
and interest income from cash and fixed income securities.
In August 2023 the Company paid an interim dividend of
2.45p per ordinary share. Despite a challenging year for markets,
the portfolio has generated good dividends and in particular
collected coupons from its increased fixed interest holdings.
As a result the Company’s revenue account has recovered to
pre-COVID levels. The Board has declared a further interim
dividend of 2.10p per ordinary share payable to shareholders
on the register as at 2 February 2024. This will bring the total
dividend paid for the financial year under review to 4.55p per
ordinary share, a modest increase on the previous financial year.
Share Capital
While there were no share issues during the year, share
buybacks totalling 16,532,313 resulted in a reduction in shares
issued in the market and an increase in shares in treasury.
As at 30 November 2023, the Company had 331,750,000
ordinary shares of 5 pence each in issue (2022: 331,750,000
shares), of which 22,888,313 shares (2022: 6,356,000) were
held in treasury. Following the period end, a further 2,311,282
ordinary shares were repurchased into treasury. Following
these share repurchases, as at 13 February 2024, the total
number of ordinary shares in issue was 331,750,000 of which
25,199,595 shares were held in treasury.
The Board
The Board is aware of the FCA’s Diversity and Inclusion
Policy and notes that its current composition meets two of
the three ‘comply or explain’ targets with three of the four
members being female and one of the two senior positions
being occupied by a female. Whilst the Board does not meet
the recommended ethnicity requirements, it has put in place
a succession plan based on the recommended nine-year
tenure of Directors. A key objective for the Board is having
an appropriate blend of skills and diversity of experience and
thought around the table. When the Board next embarks upon
a director search it will set criteria, as it did in the most recent
round of hiring, that ensures candidates are sourced from a
broad pool such that the Board can consider candidates with
minority ethnic backgrounds. Further information on this can
be found in the Corporate Governance Report on page 52.
As I mentioned in my Interim Statement, Katrina Hart and
Robert Kyprianou retired from the Board following nine years
continuous service and we welcomed Susie Arnott and Angela
Henderson to the Board. There have been no other changes
to the membership of the Board during the year under
review. The Directors’ biographical details are available on the
Company’s website and are provided on pages 8 and 9.
Environmental, Social and Governance
(ESG)
The Company’s investment mandate is not an ESG mandate,
however the Manager incorporates ESG considerations into
its investment process and the Board has close engagement
with the Manager to monitor its progress. ESG is now formally
incorporated into the Terms of Reference of the Management
Engagement Committee. This Committee, chaired by Susie
Arnott, undertook a detailed analysis of the ESG methodology
and engagement process by the investment team, and was
pleased to note year on year progress in this regard.
Beyond the investment portfolio, the Board considered the
ESG aspects of the Company. As all business operations
are outsourced, the Board has limited control over ESG
deliverables, however the Manager obtains certain ESG
confirmations and attestations from suppliers annually. The
Board, via the Company Secretary and Manager, works with
the Company’s key service providers to gain clear insight into
their ESG strategies and believes that adopting good ESG
practices leads to better outcomes for the Company.
Management Team
The Company’s portfolio is currently managed by Nick Brind
and George Barrow. As announced in early 2023, John Yakas
retired on 30 June 2023 but remains available to the team
in an advisory capacity. On 1 December 2023, the team
was joined by senior fund manager, Tom Dorner, a highly
experienced financials investor.
Annual General Meeting
The Company’s Annual General Meeting (“AGM”) will be held
at 16 Palace Street at 2:00pm on Thursday, 18 April 2024.
The notice of AGM has been provided to Shareholders and
is available on the Company’s website. Detailed explanations
Chair’s Statement continued
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 7
of the formal business and the resolutions to be proposed at
the AGM are contained within the Shareholder Information
section on pages 115 and 116 and in the Notice of AGM.
As we have done in previous years, we will once again
upload a copy of the Manager’s Investment Presentation
to the Company’s website ahead of the AGM and will
hold only the formal business of the meeting in person.
We have provided a zoom link in the Notice of AGM
which will enable anyone interested to view the formal
business and ask questions via the on-line chat function.
The Managers will be available to answer questions and
meet shareholders present. All formal business resolutions
will be voted on by a poll and we therefore encourage
shareholders to submit their votes ahead of the meeting by
proxy card which is provided with the Notice of Meeting.
We are conscious of the importance of shareholder
engagement and would like to encourage shareholders to
engage with the Board and the Investment Manager. As such,
the Board invites shareholders to submit questions in writing to
which we will respond, as far as possible, ahead of the AGM
date. Please send your questions to cosec@polarcapital.co.uk
with the subject heading PCFT AGM.
Outlook
Looking to the year ahead, we remain constructive on
the outlook for the Financials sector despite an uncertain
backdrop. Clearly there remain significant geopolitical issues
further complicated by elections in the US and UK, which may
well weigh on the markets. However there are several signs
for optimism. Evidence suggests inflation is at last reducing,
economic growth seems to be returning to key markets
and the fears of a deep recession appear to be abating. The
earnings outlook in the financial sector has improved and
valuations offer attractive entry levels for investors who are,
generally speaking, significantly underweight financial sector
exposure. As and when these positive influences take root,
a recovery in investor sentiment should follow. I encourage
you to read the detailed Investment Managers report and
the Outlook section where they set out their thoughts on the
various subsectors.
Simon Cordery
Chair
15 February 2024
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 8
Board of Directors
Biography & Other Appointments Biography & Other Appointments Biography & Other Appointments
Independent Non-executive Chair Independent Non-executive Director Independent Non-executive Director
Appointed to the Board on 1 July 2019 and as
Chair on 30 March 2023.
Appointed to the Board on 1 November 2021. Appointed to the Board on 1 December 2022.
Skills and Experience Skills and Experience Skills and Experience
Simon has over 40 years’ experience working
within financial services of which nearly 30 years
have been focused on the wealth management
industry. Most recently he was Head of
Investor Relations and Sales at BMO Global
Asset Management, where he spent almost
25 years in senior roles, and previously he held
roles with Invesco Fund Managers, Jefferies &
Co, Kleinwort Benson Securities and Rea Bros
Merchant Bank. Simon has considerable and
detailed knowledge of the investment trust
industry and remains actively involved with
the AIC.
Cecilia is an experienced non-executive director
with almost 30 years’ investment and financial
services experience. Her executive career
included senior investing roles with Royal Bank
of Scotland, Barclays Capital and Centaurus
Capital and encompassed a broad range of
asset classes including public and private debt
and equity. Her non-executive roles are Senior
Independent Director at Northern 2 VCT PLC, a
listed investment trust investing private equity
in early stage companies, NED and Chair of the
Valuation Committee of RIT Capital Partners
plc, an investment trust with a global mandate
to invest across a range of asset classes, both
quoted and unquoted, and an INED to Eurobank
Cyprus Limited. She qualified as a chartered
accountant with KPMG.
Susie started her career in fund management
over 20 years ago and was primarily focused on
the financial sector; including periods focused
on emerging markets investments and global
financials portfolios. She also spent a number
of years working in impact investing, combining
her experience and passion for social investment
and impact measurement. In her current
roles, Susie continues to focus on investment
with a global impact incorporating ESG as a
mainstream consideration.
Committee Memberships Committee Memberships Committee Memberships
Chair of the Board, Nomination and
Remuneration Committees. Member of
the Audit and Management Engagement
Committees.
Chair of the Audit Committee. Member of the
Nomination, Remuneration and Management
Engagement Committee.
Chair of the Management Engagement
Committee and member of the Audit,
Nomination and Remuneration Committees.
Other Appointments Other Appointments Other Appointments
No other current appointments. Cecilia is a non-executive director of Northern 2
Venture Capital Trust plc, RIT Capital Partners plc
and Eurobank Cyprus Limited.
Susie is a director of Sableknight Limited and
Lockfold Communications.
Board Rationale for supporting re-election Board Rationale for supporting re-election Rationale for appointment
Simon has extensive wealth management and
marketing experience and detailed knowledge of
the investment trust market having previously held
the position of Head of Investor Relations & Sales
for BMO Global’s Investment Trust business. Since
assuming the role of the Chair, Simon has actively
sought to engage with shareholders to understand
any concerns and leads the Board with an inclusive
and engaging manner. Simon’s re-election as a
Chair and non-executive Director is supported by
the Board and the Manager.
Cecilia brings to the Board her extensive
experience of investing strategies. This is
complemented by her current and previous
NED roles, including chairing roles in Audit and
Valuation Committees. As an NED of two other
listed investment trusts, she is knowledgeable
of the governance aspects of these vehicles
and highly attuned to the need to act in the
interest of investors. This experience and her
qualification as a Chartered Accountant is
viewed as highly relevant. Cecilia’s re-election
as a non-executive Director is supported by the
Board and the Manager.
Susie was appointed to the Board in December
2022 and brings to the Board a wealth of
investment management and ESG experience.
Susie is currently Chair of the Management
Engagement Committee and as part of this role
has ensured that the Board is kept abreast of
the latest ESG developments. Susie has been an
advocate for clearer ESG reporting to both the
Board and stakeholders ensuring that the quality
of reporting remains at a high standard. Susie’s
re-election as a non-executive Director is supported
by the Board and the Manager.
PCFT Share Interests 41,358 (0.01%
of ISC)
PCFT Share Interests 40,000 (0.01% of
ISC)
PCFT Share Interests 20,000 (0.01% of
ISC)
Annual Remuneration £41,000 Annual Remuneration £35,000 Annual Remuneration £29,500
Simon Cordery FCSI
Non-Executive Chair
Cecilia McAnulty
Non-Executive Audit Committee Chair
Susie Arnott
Non-Executive Director
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 9
Biography & Other Appointments
Independent Non-executive Director
Appointed to the Board on 1 December 2022.
Skills and Experience
Angela is an experienced non-executive director,
committee chair and solicitor who had an
executive career in financial services . She has
held non-executive board seats at operating and
investment companies in various sectors including
financial services.
Committee Memberships
Member of the Audit, Nomination,
Remuneration and Management Engagement
Committees.
Other Appointments
Angela is currently a NED for Macquarie Capital
(Europe) Limited, Hargreave Hale AIM VCT plc
and Wells Fargo Securities International Limited
and has various other private interests.
Rationale for appointment
Angela was appointed to the Board on
1 December 2022 and is an experienced
non-executive director with legal experience
spanning over 20 years. Since joining the Board,
Angela has been a keen participant in meetings
bringing a new perspective to discussions.
Angela’s re-election as a non-executive Director
is supported by the Board and the Manager.
PCFT Share Interests –
Annual Remuneration £29,500
Angela Henderson
Non-Executive Director
Robert Kyprianou was appointed to the Board
on 7 June 2013 and stepped down from the
Board at the AGM on 30 March 2023 following
nine years continuous service.
Robert Kyprianou
Non-Executive Chair (Retired)
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 10
Investment Managers
Date appointed
Nick joined Polar Capital following the acquisition of HIM Capital in September 2010.
Skills and Experience
Nick has 29 years’ investment experience across a wide range of asset classes and for the last 20 years
has focused on the financials sector. His previous experience includes portfolio manager roles at
New Star Asset Management where he managed the New Star Financial Opportunities Fund which
concentrated on the equity and fixed-income securities of European financial companies. Previously
he worked at Exeter Asset Management and Capel-Cure Myers. Nick has co-managed the Company’s
investments since launch in 2013.
He is also the manager of the Polar Capital Financial Credit Fund.
Nick has a Masters in Finance from London Business School.
Nick Brind Co-Fund Manager
Date appointed
George joined Polar Capital following the acquisition of HIM Capital in September 2010.
Skills and Experience
George has over 10 years’ experience analysing financial companies in Europe, Asia and emerging
markets. Prior to joining Polar Capital, he was an analyst at HIM Capital from 2008 where he completed
his Investment Management Certificate.
George was appointed co-manager of the Company with Nick in December 2020. He also co-manages
the Polar Capital Financial Opportunities Fund and the Polar Capital Global Financials Trust with Nick
Brind.
George Barrow Co-Fund Manager
Polar Capital provides a team of financial specialists and the portfolio is jointly managed by Nick Brind and George Barrow, supported
by other financials specialists within the team.
The Manager has other investment resources which support the investment team and has experience in administering and managing
other investment companies.
Manager’s Report
Manager’s
Report
11
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 12
Manager’s Report
George Barrow
Co-Fund Manager
Nick Brind
Co-Fund Manager
Investment Manager’s
Report
around 0.5%. The Lipper open-ended peer group of financial
sector equity funds fell by -2.2%. Financial bonds performed
well, returning 4.4% as per the ICE BofA Global Financials index.
Performance in the first half of the year was largely
satisfactory but the second half was disappointing. While
we had no holdings in Credit Suisse, First Republic Bank
or Signature Bank and only a very small holding in Silicon
Valley Bank (SVB) an overweight position in US banks was a
headwind to performance. Overall stock selection during the
period and the negative impact of gearing were the main
drivers of underperformance.
More specifically, our bias to higher quality companies hurt
performance as they lagged peers and our overweight
position in defensive names towards the end of the year led
to some underperformance on a sharp rotation and market
rally. We realised a loss on a holding in CAB Payments, a
cross-border payments company which listed in the UK in
July. In our view, the company has a significant opportunity
to disrupt the existing correspondent banking model for
cross-border transfers. However, shortly after listing, the
company issued a profits warning following unexpected
central bank action in a number of its key markets. The share
price fell sharply as a result. We expect it will take some time
for management to rebuild credibility given the earnings
downgrade so soon after the IPO and consequently the
holding was sold after the period end.
Sector review
Banks
In 2023, negative sentiment around the outlook for growth
weighed on banks’ share prices due to concerns about the
impact on their profitability from an economic downturn.
Shares initially performed well in the period as earnings
expectations continued to rise benefitting from higher
Investment review
Performance
Having outperformed for two consecutive years, it was
disappointing but perhaps not surprising that financials
underperformed the broader equity markets in the year to
November 2023. While equity markets did deliver good
returns, this was largely due to the strong performance of
technology shares, specifically the so-called ‘Magnificent
Seven’, (the US mega-cap technology firms of Amazon,
Apple, Alphabet, NVIDIA, Meta, Microsoft and Tesla).
The financials sector was particularly impacted by the collapse
of a number of US regional banks and, in Europe, the forced
sale of Credit Suisse to UBS Group which led to a sharp
selloff in banking shares and bonds in March. Consequently,
US financials, which comprise approximately 45% of the
portfolio, were weak over the year. Conversely, Japanese
and European financials, notwithstanding the turmoil around
Credit Suisse, stood out for their positive performance.
Asian financials were weaker than expected, following the
reopening of China from its zero-Covid policy which provided
less support to economic data than had been expected.
Government bond markets suffered further falls during the
second half of the year around concerns that central banks
would pursue interest rate increases aggressively to reduce
inflation. These falls then reversed sharply in November on
the back of much-improved inflation data, led by lower
energy and goods prices, but also concerns that the outlook
for growth was weakening.
Against this background, the Trust’s net asset value fell 2.8%
while the benchmark index, the MSCI All Country World
Financials Index, rose 0.3% and the MSCI All Country World
Index rose 6%. The MSCI All Country Index excluding the
performance of the Magnificent Seven would have fallen by
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 13
Manager’s Report
interest rates which fed through to higher net interest
income – the income they generate from the assets they hold
(i.e. loans and securities), relative to what they pay out to
depositors and other sources of funding.
However, higher interest rates resulted in significant
unrealised mark to market losses in the securities portfolios
held by banks. Despite negligible risk of these losses being
realised if held to maturity, these losses in some cases
were substantial relative to banks capital. Therefore, the
announcement by SVB on 8 March 2023, that it would be
selling a portfolio of its securities at a loss, while at the same
time aiming to raise capital to strengthen its balance sheet
unnerved both investors and depositors. Despite support for
the capital raise, the loss of $42bn in deposits on that day led
to it being pulled and ultimately the bank’s collapse.
Signature Bank was foreclosed two days later as it also
suffered significant deposit outflows. While the bank was
better known as a New York commercial real estate lender,
its exposure to crypto assets via its Signet payments platform
unsettled depositors as it followed shortly after the failure
of Silvergate Bank, a much smaller bank with much larger
exposure to the crypto industry whose demise received very
little coverage.
First Republic was the last of the four US banks to go into
foreclosure, being bought from the Federal Deposit Insurance
Corporation by JP Morgan. In this case, a business model
focused on lending to high net worth and aspirational
clients which had seen phenomenal growth on the back
of its customer service unravelled, despite the efforts of a
JP Morgan bank-led consortium to help by injecting $30bn of
deposits into the bank.
In Europe, Credit Suisse, which had seen large outflows
of deposits in the final few months of 2022, saw further
outflows following the collapse of SVB. Its 2022 Annual
Report alluded to “material weakness” in its internal controls
and a poorly timed or misunderstood statement from their
largest shareholder that they would “absolutely not” put
more capital into Credit Suisse knocked sentiment further.
Despite support from the Swiss National Bank and its
regulator stating the bank was solvent, it was forced into a
sale to UBS Group.
The decision by Swiss regulators to write down Credit Suisse’s
AT1 bondholders to zero while equity investors were not was
at odds with the established creditor hierarchy and resulted in
sharp falls in similar bonds issued by other banks. However,
given the importance of the AT1 bond market, regulators
in Europe, UK, Hong Kong, Singapore and Canada were
quick to announce they would honour the creditor hierarchy
leading to a recovery in AT1 bond prices.
Not surprisingly, these events led to a sharp selloff in bank
shares, particularly in other smaller US regional banks that
were seen as vulnerable due to weaker capital. Initially
actions by US authorities appeared to have little impact due
to concerns around regional banks’ commercial real estate
exposure which exacerbated share price falls, but deposit
flows stabilised within a few weeks. Asian, European and
other bank shares stabilised quickly, as the issues were not
seen as systemic.
In comparison, the second half of the financial year was
relatively muted. Although US banks rallied sharply in June
and July, proposals from US regulators to increase capital
requirements – the so-called Basel 3 Endgame – as well as
concerns about the impact of rising government bond yields
saw US banks fall back to their May lows. Only when US
Government bond yields started to fall on softer inflation data
did banks start to perform again.
European and Japanese banks performed extremely well over
the remainder of the year, the former on the back of positive
earnings revisions, as analysts factored in the impact of higher
interest rates on their earnings, while the latter performed
on the expectation that the Bank of Japan would increase
interest rates from the current -0.1%, bringing an end to its
negative interest rate policy in place since 2016.
Banks’ 12-month performance (2022-23)
Banks performance
Japanese banks 38.7%
European banks 30.3%
UK banks 12.1%
Emerging market banks -1.4%
Indian banks -4.0%
Australian banks -5.0%
Chinese banks -10.0%
Canadian banks -10.9%
US banks -12.4%
US regional banks -26.1%
Source: Bloomberg, 30 November 2023
Note: The figures are in sterling total return terms
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 14
Manager’s Report
Investment Manager’s Report continued
Insurance
With the events in the banking sector, news flow elsewhere came a distant second. Unsurprisingly given its defensive
characteristics, the insurance subsector outperformed. It also benefitted from the higher interest rate tailwinds and therefore
higher investment income as well as improving underwriting returns, i.e. higher profitability.
There was concern over the subsectors’ exposure to US regional banks and Credit Suisse, which led to some volatility. Some life
assurance companies also have high exposure to commercial real estate which came under scrutiny, but for most of the sector,
exposure was negligible or non-existent.
The implementation of IFRS 17, a new accounting standard, had a significant impact on the European insurance sector during
the latter half of the year. While this standard has not changed the products, free cashflow yields or dividend prospects for the
sector, it has significantly altered the reporting of results, adding yet more complexity and for many lowered reported earnings.
The reinsurance sector benefited from the withdrawal of capital by some underwriters in 2022, reflecting the poor level of
profitability over the preceding few years. In particular, the increased cost of claims from so-called ‘secondary perils’ – floods
and hailstorms – as well as higher catastrophe losses from larger events such as Hurricane Ian – which hit Florida in September
2022, generating estimated insurance losses of around $60bn (the second costliest hurricane on record) – impacted profitability.
Consequently, with the drop in supply of capital underpinning the reinsurance sector but with demand unchanged at best,
reinsurance rates rose sharply in January. This was estimated by the insurance broker Howden to be +37% on average.
Furthermore, the attachment points, i.e. the amount of loss borne by an insurer before a reinsurer covers the cost, also
increased. The impact is that either insurance companies would not be able to pass on losses for less costly events or the
amount they would be able to recover would be lower.
As a result, reinsurers’ share prices performed well, reflecting the much better reward from the risks they were underwriting.
Nevertheless, the subsector did succumb to profit-taking towards the end of the period as lower than expected inflation data
led to a rotation into more cyclical stocks that would benefit from a softer economic landing.
Global reinsurance capital ($bn)
Diversified financials
The performance of the diversified financials sector was subdued and a headwind to performance. This sector consists of a
very wide group of companies, including trust banks, investment banks, stock exchanges, asset managers, information services
companies, payment companies and consumer finance companies. Despite some of the constituents of the subsector being very
defensive, it is sensitive to activity in financial markets.
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 15
Manager’s Report
Asset managers saw a wide dispersion of returns. Alternative
asset managers have performed extremely well in recent
years, although some have come under pressure over the past
year due to concerns around fundraising, valuations of their
portfolio companies and the impact on performance fees
from lower returns. Overall, they outperformed, with those
with higher exposure to private credit strategies performing
particularly well on the expectation that demand for private
credit will be more resilient.
Consumer finance companies held up better than expected
reflecting the strong jobs market and household savings.
Information services companies such as S&P Global and
Moody’s performed well, both benefiting from a resurgence
in bond issuance which benefited their credit rating
businesses. Berkshire Hathaway performed reasonably well,
reflecting its defensive positioning with exposure to the likes
of Apple and large insurance businesses offsetting its more
economically sensitive businesses.
FinTech companies saw a mixed performance. Visa and
Mastercard both performed well, reflecting their defensive
characteristics and benefiting from resilience of consumer
spending, but payment companies such as PayPal and Adyen
performed poorly over concern around margin pressure
from increased competition. At the end of May 2023,
MSCI designated that payment companies should move
from the technology sector back to the financial sector and
those companies consequently now represent 10.8% of
the Benchmark.
Investment activity
At the beginning of the period, we retained a constructive
view of the outlook and despite concerns around a potential
recession, took the view that the sector would weather it
well given resilient earnings. Nevertheless, we reduced risk
and increased our exposure to fixed income securities, while
keeping gearing at a moderate level.
Our exposure to Asia continues to focus on the faster
growing economies of India and Indonesia. While we have
no exposure to Chinese state banks, in the first few months
of 2023 we increased our exposure to the region to benefit
from the reopening of China by adding to holdings in Hong
Kong Clearing & Exchanges, BOC Hong Kong, AIA Group and
Prudential. However, as economic data coming out of Asia
disappointed over the course of the year, we subsequently
reduced exposure in AIA Group and Prudential and sold
our holdings in Hong Kong Clearing & Exchanges and BOC
Hong Kong.
At the start of the period, we had a mid single-digit
percentage exposure to small and mid-sized US regional
banks, including Cullen/Frost Bankers, Enterprise Financial
Services and East West Bancorp. This had fallen from around
a low double-digit exposure in the middle of 2022. We had
been reducing our positions due to concerns on capital, the
impact of higher deposit costs on profitability and also their
higher exposure to commercial real estate, making them
more sensitive to a US recession.
We added to holdings in European banks including AIB
Group and Nordea Bank while starting new positions in BNP
Paribas and Intesa Sanpaolo as we saw them continuing to
benefit from higher interest rates. New holdings were also
bought in Intermediate Capital Group and Ares Management,
both alternative asset managers that have significant
private credit strategies. We continue to believe they will be
beneficiaries of the much more attractive environment for
credit strategies.
Following the collapse of SVB, we made more material
changes to the portfolio, selling our remaining holdings
in small and mid-sized regional banks on the basis that
the headwinds facing US regional banks in the shorter
term would cap any rally in their shares. This was done by
increasing our exposure to larger US banks, albeit leaving
the portfolio overall underweight in US banks relative to the
benchmark.
However, as valuations for US banks dropped to levels not
seen since 2016 and 2020, we started to add again to
specific holdings. Barclays, in a research note, highlighted that
US banks had seen the worst relative performance in 2023
versus the broader US stock market since 1937, marginally
worse than their peak-to-trough underperformance during
the global financial crisis (GFC), and their fourth worst year
in absolute terms. For some quality names this seemed
nonsensical.
We purchased call options on a US regional bank ETF
to participate in a recovery in US regional bank shares.
In addition we added to our holdings in Bank of America and
US Bancorp. Despite concerns over the unrealised losses in
their securities portfolio, we see both banks as conservative
lenders and valuations were attractive. We also purchased a
holding in East West Bancorp, taking our exposure back to
overweight.
During the year, we started a holding in ICICI bank, a very
well regarded Indian private sector bank, offset by reducing
our exposure to HDFC Bank, a larger but equally well run
peer. We also purchased holdings in American Express and
Intercontinental Exchange (ICE), which owns the New York
Stock Exchange among other businesses. ICE’s shares had
been lacklustre following the announcement of its acquisition
of Black Knight, a mortgage software and data business
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 16
Manager’s Report
Investment Manager’s Report continued
where revenues were under pressure due to high interest
rates, but we anticipate a reversal when the interest rate
cycle turns.
We added to our reinsurance exposure by starting holdings in
RenaissanceRe Holdings and Everest Group, two Bermudan
reinsurance companies, partly offset by reducing our holding
in Berkshire Hathaway. We also started a holding in Munich
Re which we switched into following a sale of our holding
in Hannover Rueck as we saw it better positioned than its
German peer in the current environment. We also added to
our holding in Beazley following a fall in its share price due to
confusion around how the new IFRS 17 accounting standard
had impacted its results.
Following the write down of Credit Suisse’s AT1 bonds,
we added to our fixed income exposure by either adding to
or starting new holdings in AT1 bonds issued by AIB Group,
BNP Paribas, CaixaBank and Banco Santander. Gearing, which
started the year at 6.0%, fluctuated between 2.6% and
8.2% finishing the year at 6.5%.
Outlook
Bank failures
Why did so many banks fail in quick succession when the
banking sector is so much better capitalised, with significantly
greater levels of liquidity and no signs of stress? Ultimately,
the catalyst was a sharp move in interest rates which led to
significant unrealised losses in banks’ securities portfolios.
This spooked the markets and led to a sharp outflow of
deposits. While this deposit outflow is similar to what was
seen during the GFC, this time around it has not been about
toxic assets on weak bank balance sheets as it was then.
The banks that failed stood out as having a high exposure
to uninsured depositors so were vulnerable to any loss of
confidence. For example, the three US banks with the largest
concentration of uninsured deposits as a percentage of total
deposits were First Republic, Signature Bank and SVB, all of
which failed, with the first at 67% and the other two at close
to 90%. This compares to a median for the US banking sector
of approximately 40%. First Republic was in the strongest
position of the three but that was not sufficient to prevent a
bank run.
This is not GFC II
We did not see this as another global financial crisis as
the profitability of the banking sector is vastly improved
with the rise in interest rates supporting earnings, greater
capital cushions and the somewhat anaemic growth in loan
origination in recent years. Critically, outside the US, large
banks are required to hedge their interest rate risk and are
penalised with higher capital requirements if they do not do so.
The report by the Federal Reserve into SVB’s failure stated:
“Silicon Valley Bank failed because of a textbook case of
mismanagement by the bank. Its senior leadership failed
to manage basic interest rate and liquidity risk and Federal
Reserve supervisors failed to take forceful enough action”.
The Federal Reserve went on to argue contentiously that rules
around the regulation of banks which were relaxed under the
Trump administration, had played their part in SVB’s failure.
Basel 3 Endgame
While larger US banks were beneficiaries of the outflow
of deposits from smaller US regional banks in March, due
to their perceived safety, they were hit much harder by
proposals dubbed “Basel 3 Endgame” which will increase
their capital requirements if implemented. While ultimately
these proposals are the final piece in the jigsaw for the
post-GFC regulatory framework, they have come under
criticism not only from politicians but also regulators.
JP Morgan, one of the few banks not to report a loss in 2008
and extremely well regarded for its risk management, is one
of the hardest affected and estimates its capital requirements
will rise by around 25%. Jamie Dimon, its Chairman and
Chief Executive, has stated non-bank competitors will be
“dancing in the streets” as a consequence. We believe a
more resilient and safer banking system is a positive for
bank shareholders, but the latest proposals appear to have
not been well thought through. While banks will be able to
meet the new targets with little difficulty, any easing of the
proposals would be positive.
Commercial real estate
A significant percentage of most banks’ balance sheets are
secured against property, whether that be residential or
commercial. Since the GFC, banks have materially tightened
their underwriting of property loans in part as a response
to new regulations. Nevertheless, in the past year investors
have been understandably concerned about their exposure
to offices. As a result of the pandemic and changing work
patterns, along with the rise in bond yields, valuations for
office property have fallen sharply.
Consequently, banks in recent quarters have been increasing
their provisions but as most banks’ exposure to office
property is limited to a low single-digit percentage of their
loan books, this should be a very manageable issue. However,
it is likely to remain a headwind for some banks’ share prices
until there is greater clarity on the outlook for real estate
markets, as illustrated by the sharp fall in the share price of
New York Community Bank, even though it is seen as an
outlier, due to it being forced by regulators to raise the level
of provisions it had set aside for potential defaults.
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 17
Manager’s Report
US banks commercial real estate (CRE)
exposure
0
10
20
30
40
large
1
Office CRE % LoansCRE % Loans
medium
2
small
3
%
12
2 2
4
18
36
Source: Company reports 1Q23
Positioning
The Trust’s largest positions include holdings in JP Morgan,
Mastercard and Visa. The following gives more detail on
some of the sector where we see attractive opportunities.
Insurance
We remain positive on the outlook for the reinsurance
sector where our largest holdings are Arch Capital and
RenaissanceRe Holdings. The reinsurance market is cyclical
and high returns will inevitably lead to the sector attracting
new capital which will drive down returns. However, we have
yet to see it happen in any meaningful way. Following what
is known as January renewals, where a significant number of
reinsurance contracts are agreed, results would suggest that
underwriting returns, all things being equal, should continue
to be attractive.
Many industry participants believe it is the best underwriting
market in over a decade. The biggest risk in the shorter term
is an environment where investors turn much more positive
on the outlook for growth globally. Cyclical sectors such
as banks and therefore insurance stocks would lag such a
rally. However, with valuations for the sector undemanding,
arguably discounting a much worse outcome for profitability
and growth, we still see good value.
UK mid-cap financials
We added to our UK mid-cap financials during the year given
attractive valuations. While it is more understandable for those
that are domestically focused to trade on lower valuations
as international investors perceive greater risks in the UK
economy than we believe is warranted, it is very evident where
companies have similarly listed peers on higher valuations.
Either these companies start delivering better returns to
shareholders or are vulnerable to being taken private.
Consequently, among others we added to holdings in
Intermediate Capital Group, as highlighted above, and
started new holdings in IG Group Holdings, an online
trading company, Hiscox, the property and casualty insurance
business, and repurchased a holding in OSB Group, a UK
bank focused on the buy-to-let market. OSB Group had seen
its shares fall sharply in 2022 on the back of a profit-warning
exacerbated by poor communication from management
which we felt more than discounted the downside risks.
FTSE 350 Index P/E ratio relative to the MSCI
World Index P/E ratio
0.5
0.6
0.7
0.8
0.9
1.0
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Jan-20
Jan-21
Jan-22
Jan-23
Jan-24
Source: Bloomberg, January 2024
1. ‘Large’ refers to JP Morgan, Bank of America, Citigroup, Wells Fargo.
2. ‘Mid-sized’ refers to PNC Financial Services, US Bancorp, Trust Financial Corp, Fifth
Third Bancorp, M&T Bank, Regions Financial Corp, KeyCorp, Citizen Financial Group.
3. ‘Small’ refers to East West Bancorp, Western Alliance Bancorp, Comerica, Webster
Financial Corp, Zions Bancorp. These have reported 1Q23 results and we feel are
representative of smallcap banks.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 18
Manager’s Report
Alternative asset managers
We continue to see longer-term opportunities in alternative
asset managers, so-called as they invest in assets such as
private equity, private credit, infrastructure and real estate.
They have seen strong inflows in recent years and with little
or no pressure on fees, this has led to strong growth in
profits. This contrasts with traditional long only equity and
bond asset managers who have been losing market share to
cheaper, passive funds and see fee compression.
The added attraction of alternative asset managers is that capital
is locked up for several years, giving more certainty about future
profitability. Returns for the better performing managers have
been very good. While fundraising has been weaker in the past
year, we expect them to benefit from the improving outlook
for interest rates and growth which will allow activity in private
equity markets to pick up and with that performance and flows.
Holdings we own include Ares Management, EQT and Antin
Infrastructure Partners.
Indian and Indonesian banks
We continue to see strong tailwinds for banks in certain
emerging markets where penetration of financial services and
household debt-to-GDP ratios are low. The added attraction
of many banks in the region is the strength of their deposit
franchises, capital levels and profitability. However, valuations
reflect the stronger tailwinds and this is why we do not have
larger holdings.
Emerging markets have materially underperformed developed
markets over the past five years. A weaker US dollar and
lower bond yields historically have been a positive for
emerging markets. India and Indonesia represent our key
overweight positions there, reflecting their excellent long-
term growth prospects and the opportunity to invest in highly
profitable, well-run banks operating in a stable regulatory
framework. We have holdings in HDFC Bank, ICICI Bank,
IndusInd Bank, Bank Rakyat Indonesia and Bank Central Asia
among others.
European banks
Our largest European bank holdings include BNP Paribas,
AIB Group and Nordea Bank. European banks have
been pilloried for most of the past decade for their poor
performance, albeit the European Central Bank’s (ECB)
monetary policy which squeezed net interest margins and
their profits was a significant contributor. When taking into
account the lower risk loan books of European banks, they
have seen a significant increase in capital ratios over the past
decade, with many carrying excess capital well over levels
required by regulators.
They have benefited from the rise in interest rates but share
price returns have lagged earnings growth as investors
expect the ECB to lower interest rates at some point leading
to declining net interest income. Equally, they have come
under pressure over concerns around windfall taxes and
the interest they earn on excess reserves held at the central
bank. Valuations remain extremely low on almost all metrics,
especially relative to wider equity markets.
Subordinated financial bonds
The events surrounding the Credit Suisse takeover and the
regulator’s decision to allow the complete write off of the
bank’s AT1 debt investors while equity investors received
compensation resulted in significant volatility in the AT1 bond
market. Following assurance from other regulators to respect
the established creditor hierarchy the event was seen as
idiosyncratic and the ATI bond market rallied.
With rising interest rates globally over the past two years, the
high single-digit yields on offer across the subordinated bonds
of banks and insurance companies continue to look attractive
in both absolute and relative (to history) terms, especially when
taking into account the greater resilience of the sector.
US dollar financial bond yields (%)
Source: ICE BofA 27 November 2023
Summary
Ultimately it is the outlook for growth and interest rates
that will decide returns over any short or medium term time
period. A weaker economic outlook, all things being equal,
will lead to lower share prices and vice versa. Financials are a
play on a soft landing, as illustrated by the sharp jump in US
bank shares on the more dovish language used by Federal
Reserve Chair Jerome Powell in December when he left
interest rates on hold and indicated the era of rises was over.
Many investors had assumed central banks would err on
keeping interest rates higher for longer for fear of repeating
the errors of the 1970s when the Federal Reserve cut
aggressively only to have to raise interest rates again as
inflation took hold. However, if actions follows words, a
more accommodative policy will reduce the tail risk of a
Investment Manager’s Report continued
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 19
Manager’s Report
We would draw
Shareholders attention to
www.polarcapitalglobalfinancials
trust.com
for monthly factsheets, regular
investment commentary and
portfolio updates.
sharper downturn in the shorter term. Consequently, we
are constructive on the outlook for the sector as the policy
reduces many of the concerns around the US banking system
with regard to the unrealised losses on securities portfolios
and the potential for increased loan losses.
As importantly, it should help to underpin sentiment and
uncertainty around the impact of higher interest rates on
financial markets directly or indirectly. The sector suffers
swings in sentiment and at the moment is assuming a more
subdued and weaker outlook than earnings and valuations
suggest. Underlying operating performance is good and will
be underpinned at much higher levels unless interest rates
return to the levels seen two plus years ago. Consequently,
we remain very constructive on the outlook for returns from
the sector over the coming year.
Nick Brind & George Barrow
Co-Managers
Polar Capital Global Financials Team
15 February 2024
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 20
Manager’s Report
Attribution Analysis
The top ten relative contributors to, and
the bottom ten relative detractors from
performance versus the benchmark
For the year ended 30 November 2023
Since Inception to 30 November 2023
Active positions – top ten and bottom ten
active positions
For the year ended 30 November 2023
HDFC Bank
Wells Fargo
Bank of America
Beazley
UniCredit SpA
U.S. Bancorp
UBS Group
PNC Financial Services
Citizens Financial Group
CAB Payments
Sumitomo Mitsui Financial
AIB Group
Arch Capital
HSBC Holdings
Ares Management
First Republic Bank
Gresham House
Truist Financial
Goldman Sachs
Mastercard
-1.5 -1.0 -0.5 0.0 0.5 1.0
0.64
0.53
0.48
0.41
0.29
0.27
0.24
0.23
0.22
0.20
-0.24
-0.25
-0.25
-0.26
-0.27
-0.31
-0.31
-0.33
-0.34
-1.35
%
Blackstone
Aon
CME Group
Zurich Insurance Group
Berkshire Hathaway
Progressive Corporation
Citigroup
BlackRock
Goldman Sachs
Commonwealth Bank of Australia
HDFC Bank
CHUBB
Mastercard
AIB Group
Arch Capital
Nordea Bank
Sumitomo Mitsui Financial
Beazley
JP Morgan Chase
Visa
-2.5 -1.5 -0.5 0.5 1.5 2.5 3.5 4.5
3.27
2.83
2.04
1.91
1.87
1.60
1.56
1.56
1.54
1.51
-0.71
-0.72
-0.75
-0.78
-0.80
-0.88
-0.97
-1.04
-1.23
-1.24
%
Allocation Effect
Selection Effect (Incl. Interaction) Currency Effect Total Attribution Effect
30-Nov-13 30-Nov-14 30-Nov-15 30-Nov-16 30-Nov-17 30-Nov-18 30-Nov-19 30-Nov-20 30-Nov-21 30-Nov-22 30-Nov-23
Since
Inception
-20
-15
-10
-5
0
5
10
15
20
25
30
Note: This represents the gross return of the Company’s portfolio minus the benchmark return. This reflects the attribution effect where the Company’s gross return is compared to the
benchmark return. Total Attribution Effect is derived from the Relative Attribution Analysis, which decomposes the Excess Return (Gross) into the Allocation Effect and stock Selection Effect
(Inc. Interaction). Allocation Effect refers to the portion of the Company’s overall performance attributable to the Manager’s decision on taking different asset categories weights. Stock
Selection Effect refers to the portion of the Company’s overall performance attributable to the Manager’s decision on selecting individual securities.
Note: The Attribution Analysis of the relative and active positions represents the gross return of the Company’s portfolio minus the benchmark return.
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 21
Top Ten Investments
As at 30 November
Ranking Market Value £'000 % of total net assets
2023 2022 Stock Sector Country 2023 2022 2023 2022
1 (1) Banks North America 31,432 30,627 6.4% 5.7%
JP Morgan Chase is the largest bank in the US, with a market capitalisation of US$451bn, and a presence in over 100 markets. It is the result of a combination of
several banks including JP Morgan, Chase Manhattan, Bank One, Chemical Bank and Manufacturers Hanover. During the financial crisis the company also acquired
Bear Stearns, one of the largest investment banks in the US and Washington Mutual, which at the time was the largest savings and loans bank in the US.
2 (18) Financial Services North America 27,136 9,805 5.6% 1.8%
Mastercard is the 2nd largest payments company in the world with a market capitalisation of US$388bn. Its principal business is to process payments between the
banks of merchants and individuals or corporations who use the Mastercard branded debit, credit and prepaid cards to make purchases. It was founded in 1966 by
a number of Californian banks as a competitor to what is today Visa.
3 (13) Financial Services North America 21,140 11,108 4.3% 2.1%
Visa is the largest payments company in the world with a market capitalisation of US$529bn. Visa was founded by Bank of America in 1958 when it launched
BankAmericard, the first card with a revolving credit feature before licensing it to other institutions in 1966. It was renamed Visa in 1976.
4 (3) Insurance Europe 19,891 22,493 4.1% 4.2%
CHUBB, incorporated in Switzerland, has a market capitalisation of US$94bn and is the largest commercial insurer in the United States and the world’s largest
publicly traded property and casualty insurer. It operates in 54 countries as a global provider of insurance products which also include accident and health,
reinsurance and life insurance. It was formed from the acquisition of CHUBB by ACE in 2016 which then adopted the CHUBB name.
The Chubb Logo is a registered trademark of Chubb Limited.
5 (4) Berkshire Hathaway Financial Services North America 16,764 21,302 3.4% 3.9%
Berkshire Hathaway, is the largest financial company globally with a market capitalisation of US$783bn. It owns US auto insurer GEICO and General Re, a reinsurance
company and has operations in a diverse range of industries from railroads to confectionary. It also has large investments in American Express, Bank of America, the
Coca-Cola company and Apple. It has been managed by Warren Buffett since 1964.
6 (6) Banks North America 13,003 20,754 2.7% 3.8%
Wells Fargo is the 3rd largest bank in the US with a market capitalisation of US$162bn, and branches across the whole country. It was founded in 1852 by Henry
Wells and William G Fargo, two of the founders of American Express, to provide banking and express services to California by stagecoach. Wells Fargo acquired
Wachovia in 2008, which at the time was the fourth largest bank in the US based on total assets.
7 (2) Bank of America Banks North America 13,002 25,887 2.7% 4.8%
Bank of America is the 2nd largest bank in the US with a market capitalisation of US$241bn. The bank’s history dates to 1904 when it was founded as the Bank of
Italy to service Italian immigrants in California. It was acquired by Nations Bank in 1998 and its name changed to Bank of America. During the financial crisis the bank
acquired Merrill Lynch, one of the largest investment banks in the US.
8 (15) Marsh & McLennan Insurance North America 12,308 10,041 2.5% 1.8%
Marsh is a global leader in insurance broking and risk management. Working with clients of all sizes to provide solutions to quantify and manage risk. Offering
risk management, risk consulting, insurance broking, alternative risk financing, and insurance program management services to businesses, government entities,
organizations, and individuals around the world. It has a market capitalisation of $98bn.
9 (14) Insurance North America 11,356 10,533 2.3% 1.9%
Arch Capital Group operations began in 2001. Through organic growth and strategic acquisitions, Arch has evolved into a leading diversified specialty insurer and
reinsurer writing insurance, reinsurance and mortgage insurance on a worldwide basis. Headquartered in Bermuda the company has a market capitalisation of
US$31bn.
10 (-) Insurance North America 11,237 - 2.3% -
RenaissanceRe is a global provider of property, casualty and specialty reinsurance and insurance solutions. Founded in 1993 it is headquartered in Bermuda and has
a market capitalisation of US$11bn.
Total - 10 Largest Investments 177,269 36.3%
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 21
Manager’s Report
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 22
Manager’s Report
Full Investment Portfolio
As at 30 November 2023
Ranking
Market Value
£’000
% of total net
assets
2023 2022 Stock Sector Country 2023 2022 2023 2022
1 (1) JP Morgan Chase Banks North America 31,432 30,627 6.4% 5.7%
2 (18) Mastercard Financial Services North America 27,136 9,805 5.6% 1.8%
3 (13) Visa Financial Services North America 21,140 11,108 4.3% 2.1%
4 (3) CHUBB Insurance Europe 19,891 22,493 4.1% 4.2%
5 (4) Berkshire Hathaway Financial Services North America 16,764 21,302 3.4% 3.9%
6 (6) Wells Fargo Banks North America 13,003 20,754 2.7% 3.8%
7 (2) Bank of America Banks North America 13,002 25,887 2.7% 4.8%
8 (15) Marsh & McLennan Insurance North America 12,308 10,041 2.5% 1.8%
9 (14) Arch Capital Insurance North America 11,356 10,533 2.3% 1.9%
10 (-) RenaissanceRe Insurance North America 11,237 - 2.3% -
Top 10 investments 177,269 36.3%
11 (47) S&P Global Financial Services North America 10,214 4,923 2.1% 0.9%
12 (21) AIB Group Banks Europe 9,511 8,949 1.9% 1.7%
13 (20) U.S. Bancorp Banks North America 8,845 8,972 1.8% 1.7%
14 (7) HSBC Holdings Banks United Kingdom 8,627 14,656 1.8% 2.7%
15 (19) Bank Rakyat Banks Asia (ex-Japan) 8,431 9,183 1.7% 1.7%
16 (-) BNP Paribas Banks Europe 8,238 - 1.7% -
17 (8) AIA Group Insurance Asia (ex-Japan) 8,177 13,874 1.7% 2.6%
18 (40) Nordea Bank Banks Europe 8,133 5,502 1.7% 1.0%
19 (-) American Express Financial Services North America 7,987 - 1.6% -
20 (34) Royal Bank of Canada Banks North America 7,820 5,858 1.6% 1.1%
Top 20 investments 263,252 53.9%
21 (-) Intesa Banks Europe 7,694 - 1.6% -
22 (5) HDFC Bank Banks Asia (ex-Japan) 7,607 21,022 1.6% 3.9%
23 (22) Beazley Insurance United Kingdom 7,422 8,909 1.5% 1.6%
24 (-) Muenchener Ruecker Insurance Europe 7,326 - 1.5% -
25 (-) Intercontinental Exchange Financial Services North America 7,271 - 1.5% -
26 (-) Grupo Financiero Banorte Banks Latin America 7,100 - 1.4% -
27 (28) Indusind Bank Banks Asia (ex-Japan) 7,055 6,898 1.4% 1.3%
28 (56) Axis Bank Banks Asia (ex-Japan) 6,876 3,789 1.4% 0.7%
29 (-) London Stock Exchange Financial Services United Kingdom 6,821 - 1.4% -
30 (-) Intermediate Capital Financial Services United Kingdom 6,676 - 1.4% -
Top 30 investments 335,100 68.6%
31 (-) BlackRock Financial Services North America 6,242 - 1.3% -
32 (54) Ares Management Financial Services North America 5,932 4,236 1.2% 0.8%
33 (27) Morgan Stanley Financial Services North America 5,565 7,558 1.1% 1.4%
34 (38) East West Bancorp Banks North America 5,496 5,660 1.1% 1.0%
35 (35) Tisco Financial Banks Asia (ex-Japan) 5,174 5,805 1.1% 1.1%
36 (46) Lancashire Insurance United Kingdom 5,007 5,024 1.0% 0.9%
37 (17) Bank Central Asia Indonesia Banks Asia (ex-Japan) 4,946 9,890 1.0% 1.8%
38 (45) Allianz Insurance Europe 4,943 5,078 1.0% 0.9%
39 (29) Intact Financial Corporation Insurance North America 4,871 6,836 1.0% 1.3%
40 (-) Bank of Cyprus Banks Europe 4,674 - 1.0% -
Top 40 investments 387,950 79.4%
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 23
Manager’s Report
Ranking
Market Value
£’000
% of total net
assets
2023 2022 Stock Sector Country 2023 2022 2023 2022
41 (11) Toronto-Dominion Bank Banks North America 4,580 12,439 0.9% 2.3%
42 (-) OSB Group Financial Services United Kingdom 4,572 - 0.9% -
43 (-) ICICI Bank Banks Asia (ex-Japan) 4,363 - 0.9% -
44 (12) Sumitomo Mitsui Financial Banks Japan 4,329 11,789 0.9% 2.2%
45 (9) DBS Group Banks Asia (ex-Japan) 4,254 13,200 0.9% 2.4%
46 (-) ING Groep Banks Europe 4,225 - 0.9% -
47 (31) The Travelers Companies Insurance North America 4,216 6,484 0.9% 1.2%
48 (52) Macquarie Financial Services Asia (ex-Japan) 4,125 4,644 0.8% 0.9%
49 (66) Moneybox (unquoted) Financial Services United Kingdom 3,773 2,310 0.8% 0.4%
50 (10) PNC Financial Services Banks North America 3,740 13,112 0.8% 2.4%
Top 50 investments 430,127 88.1%
51 (30) Standard Chartered Banks United Kingdom 3,717 6,552 0.8% 1.2%
52 (41) MSCI Financial Services North America 3,707 5,497 0.8% 1.0%
53 (39) Mitsubishi UFJ Financial Group Banks Japan 3,691 5,629 0.8% 1.0%
54 (-) Everest Group Insurance North America 3,560 - 0.7% -
55 (-) Hiscox Insurance United Kingdom 3,403 - 0.7% -
56 (60)
International Personal Finance 9.75% 2025
Bond
Fixed Income Fixed Income 3,089 2,563 0.6% 0.5%
57 (57) Ares Capital Financial Services North America 3,067 3,393 0.6% 0.6%
58 (32) Prudential Insurance Asia (ex-Japan) 3,000 6,402 0.6% 1.2%
59 (-) IG Group Financial Services United Kingdom 2,940 - 0.6% -
60 (65) Lancashire 5.625% 2041 Bond Fixed Income Fixed Income 2,820 2,348 0.6% 0.4%
Top 60 investments 463,121 94.9%
61 (67) IG Group 3.125% 2028 Bond Fixed Income Fixed Income 2,488 2,284 0.5% 0.4%
62 (61) Rothesay Life 4.875% Perp Bond Fixed Income Fixed Income 2,487 2,548 0.5% 0.5%
63 (59) Pension Insurance 7.375% Perp Bond Fixed Income Fixed Income 2,480 2,576 0.5% 0.5%
64 (-) Antin Infrastructure Partners Financial Services Europe 2,479 - 0.5% -
65 (62) Legal General Group 5.625% Perp Bond Fixed Income Fixed Income 2,477 2,542 0.5% 0.5%
66 (63) Golub Capital Financial Services North America 2,465 2,465 0.5% 0.5%
67 (23) Citizens Financial Group Banks North America 2,385 8,570 0.5% 1.6%
68 (69) AIB Group 6.25% Perp Bond Fixed Income Fixed Income 2,347 2,056 0.5% 0.4%
69 (73) Societe Generale 5.375% Perp Bond Fixed Income Fixed Income 2,104 1,978 0.4% 0.4%
70 (64) VPC Specialty Lending Investments Fixed Income Fixed Income 2,014 2,428 0.4% 0.4%
Top 70 investments 486,847 99.7%
71 (70) Aviva 6.875% Perp Bond Fixed Income Fixed Income 2,008 2,030 0.4% 0.4%
72 (71) Riverstone Credit Opportunities Fixed Income Fixed Income 1,939 2,026 0.4% 0.4%
73 (75) BNP Paribas 7% Perp Bond Fixed Income Fixed Income 1,762 1,867 0.4% 0.3%
74 (-) CaixaBank 8.25% Perp Bond Fixed Income Fixed Income 1,747 - 0.4% -
75 (78) Rothesay Life 6.875% Perp Bond Fixed Income Fixed Income 1,672 1,675 0.3% 0.3%
76 (72) Barclays 8.875% Perp Bond Fixed Income Fixed Income 1,562 1,978 0.3% 0.4%
77 (81) Provident Financial 8.875% 2032 Bond Fixed Income Fixed Income 1,535 1,593 0.3% 0.3%
78 (-) VEF Financial Services Europe 1,526 - 0.3% -
79 (-) Investec Fixed Income Fixed Income 1,391 - 0.3% -
80 (85) Rothesay Life 5% Perp Bond Fixed Income Fixed Income 1,386 206 0.3% 0.0%
Top 80 investments 503,375 103.1%
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 24
Manager’s Report
Ranking
Market Value
£’000
% of total net
assets
2023 2022 Stock Sector Country 2023 2022 2023 2022
81 (-) Cab Payments Financial Services United Kingdom 1,378 - 0.3% -
82 (68) Atom Bank (unquoted) Banks United Kingdom 1,281 2,241 0.3% 0.4%
83 (76)
Nationwide Building Society 5.75% Perp
Bond
Fixed Income Fixed Income 1,258 1,785 0.3% 0.3%
84 (83) Shawbrook Group 9% 2030 Bond Fixed Income Fixed Income 1,246 480 0.3% 0.1%
85 (-) CaixaBank 5.25% Perp Bond Fixed Income Fixed Income 1,240 - 0.3% -
86 (-) Quilter 8.625% 2033 Bond Fixed Income Fixed Income 1,211 - 0.2% -
87 (-) Shawbrook Group 12.25% 2034 Bond Fixed Income Fixed Income 1,194 - 0.2% -
88 (-) Hellenic Bank 10.25% 2033 Bond Fixed Income Fixed Income 1,065 - 0.2% -
89 (82) Chesnara 4.75% 2032 Bond Fixed Income Fixed Income 1,049 1,275 0.2% 0.2%
90 (-) Litigation Capital Management Financial Services Asia (ex-Japan) 1,049 - 0.2% -
Top 90 investments 515,346 105.6%
91 (-)
Banco Bilbao Vizcaya Argentaria 8.375%
Perp Bond
Fixed Income Fixed Income 891 - 0.2% -
92 (-) Personal Group Insurance United Kingdom 566 - 0.1% -
93 (84) Jupiter 8.875% 2030 Bond Fixed Income Fixed Income 448 456 0.1% 0.1%
94 (-) Admiral Group 8.5% 2034 Bond Fixed Income Fixed Income 368 - 0.1% -
95 (-)
RL Finance Bonds NO 6 10.125% Perp
Bond
Fixed Income Fixed Income 310 - 0.0% -
96 (-) Permanent TSB Group 13.25% Perp Bond Fixed Income Fixed Income 195 - 0.0% -
Total investments 518,124 106.1%
Other net liabilities (29,926) (6.1%)
Total net assets 488,198 100.0%
Note: Figures in brackets denote comparative rankings as at 30 November 2022.
Full Investment Portfolio continued
As at 30 November 2023
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 25
Manager’s Report
Portfolio Review
As at 30 November 2023
Geographical Exposure*
Benchmark weighting
as at 30 November
2023**
30 November
2023
30 November
2022
North America 55.3% 52.2% 50.1%
Europe 15.3% 16.2% 15.5%
Asia (ex-Japan) 15.7% 13.3% 19.8%
United Kingdom 4.1% 11.6% 9.4%
Fixed Income - 9.7% 7.8%
Japan 4.3% 1.7% 3.2%
Latin America 1.6% 1.4% -
Other net liabilities - (6.1%) (5.8%)
Total 100.0% 100.0%
Sector Exposure*
Benchmark weighting
as at 30 November
2023**
30 November
2023
30 November
2022
Banks 41.8% 43.3% 60.1%
Financial services 38.1% 31.2% 17.2%
Insurance 20.1% 21.9% 20.7%
Fixed Income - 9.7% 7.8%
Other net liabilities - (6.1%) (5.8%)
Total 100.0% 100.0%
Market Capitalisation*
Benchmark weighting
as at 30 November
2023**
30 November
2023
30 November
2022
Large (>US$5bn) 99.0% 95.5% 98.7%
Medium (US$0.5bn - US$5bn) 1.0% 8.7% 5.9%
Small (<US$0.5bn) - 1.9% 1.2%
Other net liabilities - (6.1%) (5.8%)
Total 100.0% 100.0%
* Based on the net assets as at 30 November 2023 of £488.2m (2022: £541.3m)
** The classifications are derived from the Benchmark as far as possible. Not all geographical areas or sectors of the Benchmark are shown, only those in which the Company had an investment
at the year end.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 26
Environmental, Social and Governance
Environmental,
Social and
Governance
26
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 27
Environmental, Social and Governance
Corporate Responsibility for ESG
As an investment trust with a wholly non-executive,
independent Board of Directors the operations of
the Company are delegated to third parties, primarily
the Manager. However, the ultimate responsibility to
Shareholders remains with the Board. The Board recognises
that this includes ESG factors and over recent years ESG has
become ever more important from an impact, risk and cost
perspective across all aspects of the Company.
Despite investment trusts currently having relatively few
regulatory reporting requirements, ESG is important to the
Board and the Manager reports to the Board its detailed
assessment of the portfolio in ESG terms and the associated
operations of Polar Capital. Whilst the Portfolio Managers
integrate ESG considerations into their investment process,
they are not required to have consideration of ESG factors
when reviewing new, continuing or exiting investments, they
are not required to take an investment decision solely on the
basis of ESG factors.
Over recent months the ESG dialogue with the Manager
has accelerated, with increasingly detailed assessment and
measurement of key areas along with how it is integrated
and how it impacts all elements of the Company. The Board
recognises that ESG is an evolving area, and intends to adopt
emerging best practice in its analysis and reporting in line
with regulatory requirements. ESG is separated into those
areas on which the Board can have a direct influence, and
those areas where it is reliant on others.
ESG and Third-Party Service Providers
The Manager 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. Considering
the growing requirements surrounding ESG, third party
service providers have been engaged in providing copies of
their ESG, Diversity and Inclusion and other related policies
to the Company. The Board, via the Company Secretary and
Manager will continue to monitor the practices of service
providers and seek to assure Shareholders where appropriate
that suitable policies and procedures are in place.
Corporate Responsibility
The Company’s core investment and administrative activities
are undertaken by the Manager which seeks to limit the
use of non-renewable resources and reduce waste where
possible. The 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. The Manager utilises a number of third-party
data sources and reference points to build an ESG rating of
each stock. It is recognised however that these ratings may
deviate from the ratings determined by the investment team
because of direct market intelligence and contact with the
companies involved.
The Board monitors the Manager’s approach to ESG
and considers 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 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 the Manager is working to develop appropriate
disclosures about its portfolio. The Board will continue to
work alongside its 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.
Sustainability Disclosure Requirements
(SDR)
On 28 November 2023, the UK Financial Conduct Authority
published the Policy Statement, setting out its final rules on
the UK Sustainability Disclosure Requirements (SDR) and
sustainability related investment labels.
The Company and Manager are scoping the implications
of this regulation and ensure that it is in compliance with
relevant requirements.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 28
Environmental, Social and Governance
Diversity Policy and Gender Reporting
The Company has no employees and the Board is comprised
of one male and three female independent non-executive
Directors.
The Board is cognisant of the requirements of the FCA
Diversity and Inclusion Policy published in April 2022 and,
while the Board meets the gender requirements, being a
minimum of 40% female Board members and having at least
one senior female appointment, the current composition does
not satisfy the ethnicity requirements. The Board has put in
place a succession plan based on the recommended nine-year
tenure of Directors with allowance for an extended period of
up to 12 years for the role of the Chair (in line with the Chair
Tenure Policy).
The Board will continue to consider the benefits of diversity
throughout any recruitment process, especially when
compiling a shortlist of candidates and selecting individuals
for interview in order to ensure a wide group of candidates.
The Board has taken care to take account of this when
developing job specifications and in the use of head-hunters
who demonstrate an ability to widen the pool of candidates.
We are acutely aware that not doing so could mean we do
not attract candidates who support the Board as a whole
to function as best it can. The Board’s Diversity Policy is
discussed further in the Report on Corporate Governance
on page 52.
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
fall 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 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 38 to 41;
additionally how the directors have undertaken their duties in
compliance with s172 of the Companies Act 2006 is provided
on pages 42 to 45.
Simon Cordery
Chair
15 February 2024
Corporate Responsibility for ESG continued
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 29
Environmental, Social and Governance
Scoring Factors include:
Governance
Independent Directors
Director Meeting Attendance
Women on Management Board
Board Age Range
Governance Disclosure Score
Director Remuneration % Net Income
Shareholder Alignment
Tax Gap
Polar Score
Total Governance Score
Third-party assessment
Environmental
GHG/Revenue (capped at 4x) (Scope 1 & 2)
GHG absolute
Net Zero Target Year (i.e. years vs 2022)
Environment Disclosure Score
MSCI Environmental Score
Qualitative Factor - accounting for loan book breakdown
Total Environmental Score
Social
% Women in Workforce
Employee Reviews (Glassdoor)
Human Capital Development
Social Disclosure Score
Data Privacy
Business Ethics / Sales Practices
Total Social Score
MSCI Social Score
Total Score
Governance
Environmental
Social
Total
Norms Based Factors including:
United Nations Global Compact Principles
United Nations Guiding Principles on Human Rights
International Labour Organisation Fundamental Principles
MSCI Controversies Flag
Investment Perspective
Process
During the year, the Portfolio Manager further developed its
ESG process which leverages the team’s industry experience
and incorporates both quantitative and qualitative factors to
create a framework for ongoing analysis.
The ESG approach involves:
• Screening
• Integration (internal ESG rating)
• Ongoing monitoring and engagement
Exclusionary Screening
The team first applies a norms-based exclusion screen to the
Trust’s investment universe to ensure that potential holdings
that are involved in controversial practices from an ESG
perspective are excluded.
This involves screening the portfolio for alignment with the
UN’s Global Compact, The UN’s Guiding Principles on Business
and Human Rights, the International Labour Organisation’s
conventions and the Organisation for Economic Co-Operation
and Development’s (OECD) Guidelines for Multinational
Enterprises. Further to this, we exclude companies which
derive more than 5% of their revenues from the production of
tobacco, thermal coal or adult entertainment.
Proprietary ESG Scoring Process
Through the use of a proprietary ESG scoring process, current
and prospective companies are assessed against a variety
of ESG factors examples of which are provided in the table.
The team incorporates data from company disclosures,
management meetings, regulatory reports and third-party
ESG providers. In addition, the analysis includes a qualitative
ESG overlay for each company which focuses on specific
governance (risk management, engagement, litigation,
strategy) and environmental factors (exposure to fossil fuels,
communication, and engagement).
Any company which receives a proprietary ESG rating of
‘CCC’ (the lowest of seven rating categories) is excluded from
the investment universe. Furthermore, the team excludes
companies rated ‘CCC’ for governance. A rating of ‘B’ acts as
an automatic threshold for advanced due diligence with the
team engaging with the company directly to assess whether
the shortfall is being addressed.
Ongoing Engagement
Ongoing monitoring and engagement of companies is central
to the team’s approach. This is often particularly important in
the case of smaller companies where ESG disclosure can be
limited (leading to low ratings by third-party ESG providers)
and does not give a fair reflection of their approach to ESG
issues. All company interactions by the team on ESG related
issues are logged and graded (green, orange or red flags).
A red flag would result in any holdings in that company being
automatically sold.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 30
VEF – Case Study
Example of ESG scoring system in action
VEF, an investment company focused on private fintech companies operating in emerging markets, has been assessed as AA
rated by our proprietary ESG scoring system and is unrated by MSCI. One challenge in conducting an ESG assessment across all
current and prospective holdings, particularly for smaller companies, can be the availability of third party data. In such instances,
the team’s scoring approach places greater weight on the qualitative assessment which focuses on specific governance and
environmental factors.
Our qualitative analysis on VEF based on company data and several interactions with senior management highlighted the
following:
• Strong risk management framework based on comprehensive due diligence prior to an investment. Sustainability is core to
investment decision making and focused on governance and business ethics, responsible finance and financial inclusion.
• An ESG due diligence is conducted pre-investment while VEF conducts post-investment analysis which includes active
engagement with companies and periodic sustainability analysis. VEF assesses both pre and post investment whether
their investments comply with the sustainability principles outlined in the UN Global Compact and OECD Guidelines for
Multinational Enterprises.
• VEF has released an annual dedicated sustainability report since 2020 which is prepared in accordance with Global Reporting
Initiative (“GRI”) standards and includes a materiality assessment. This is ahead of EU Corporate Sustainability Reporting
Directive (“CSRD”) requirements (by 2026).
• VEF’s investments have no exposure to companies operating in the fossil fuel sector. VEF measures Scope 1-3 emissions and
the environmental impact of VEF’s business is limited.
• Management actively engage with investors and have been responsive to our requests for information and meetings.
Future engagements with the company will continue to inform our ESG scoring.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 30
Environmental, Social and Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 31
Environmental, Social and Governance
Corporate governance
The weighted average percentage of independent board of directors
in the portfolio’s investee companies is 83.2%, and the weighted
average percentage of women on boards is 35.0%.
Weighted Average percentage
of women on boards
Weighted Average
Board Independence
83.2%
88.0%
35.0% 34.7%
30-Nov-2023
30-Nov-2022
ESG Dashboard
Top Five Rated Holdings
2023
Polar
Rating
MSCI
Rating
Everest Re AAA BBB
Ares Management AAA BB
MSCI AAA NA
Riverstone Credit Opportunities AAA NA
EQT AB AAA AA
MSCI ESG Rating
2023 Portfolio Benchmark
Weighted Average ESG Score /
Quality Score
6.56 6.62
Letter Rating A A
Bottom Five Rated Holdings
2023
Polar
Rating
MSCI
Rating
Bank Rakyat Indonesia Persero BB A
ICICI Bank Ltd BB A
VPC Speciality Lending Investments BB NA
Berkshire Hathaway BB BB
Axis Bank BB A
Bottom Five Rated Holdings
2022
Polar
Rating
MSCI
Rating
VPC Specialty Lending Investments BB NA
Axis Bank BB A
Cullen Frost Bankers BB B
Bank Rakyat BB A
Shawbrook BB NA
Top Five Rated Holdings
2022
Polar
Rating
MSCI
Rating
Sampo AAA AA
Riverstone Credit Opportunities AAA NA
DnB Bank AAA AAA
MSCI AAA NA
Hannover Re Rueck SE AAA A
MSCI
ESG Fund Rating
for PCFT
CCC B BB BBB A AA AAA
A
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). The dashboard allows the Board to review the ratings of
investee companies within the portfolio and informs discussions
between the Board and Manager at Board meetings. All charts
provided below are in respect of the portfolio as at 30 November
2023 / 30 November 2022.
2022 Portfolio Benchmark
Weighted Average ESG Score /
Quality Score
6.80 6.74
Letter Rating A A
In last year’s report the Portfolio and Benchmark were shown as being rated AA by MSCI. In March 2023, the MSCI ESG Ratings
methodology was changed to remove adjustments made to the Weighted Average ESG Score used to calculate the ESG Rating. As
such, in this report the 2022 figures are provided on the new MSCI ESG Ratings methodology to be consistent with the 2023 figures.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 32
Environmental, Social and Governance
2023 Voting Statistics
Category Percentage
Number of votes FOR 90.7%
Number of votes AGAINST 7.0%
Number of votes ABSTAIN 0.3%
Number of votes WITHHOLD 0.4%
Number of votes on Management say on pay 1.7%
Source:
2022 Voting Statistics
Category Percentage
Number of votes FOR 87.9%
Number of votes AGAINST 6.0%
Number of votes ABSTAIN 0.1%
Number of votes WITHHOLD 0.5%
Number of votes on Management say on pay 5.5%
Source:
2023 Meeting Overview
Category Number Percentage
Number of votable meetings 77
Number of meetings voted 75 97.4
Number of meetings with at least 1 vote
Against, Withhold or Abstain
27 35.1
Source:
2022 Meeting Overview
Category Number Percentage
Number of votable meetings 74
Number of meetings voted 73 98.7
Number of meetings with at least 1 vote
Against, Withhold or Abstain
26 35.1
Source:
Weighted Average Carbon Intensity (tCO2e / Sales)
The Trust’s holdings have very low carbon intensity (scope 1 and 2 emissions), based on the weighted average carbon emissions per USD
million sales.
2023
13.0
2022
15.5
VERY HIGH HIGH MODERATE LOW VERY LOW VERY HIGH HIGH MODERATE LOW VERY LOW
Portfolio Letter Rating Distribution
40.1% of the Trust’s holdings receive an MSCI ESG Rating of AAA or AA (ESG Leaders) while 0% receive an MSCI ESG Rating of B or CCC
(ESG Laggards).
Polar
MSCI
3.7%
7.3%
34.5%
36.4%
30.5%
34.2%
9.8%
15.5%
8.9%
8.5%
0.0%
10.7%
0.0%0% 0.0%0%
AAA
AA
ABBBBBBCCCUnrated
0
10
20
30
40
ESG Dashboard continued
Governance
Governance
A system of rules,
processes and practices by
which the Company
is governed.
33
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 34
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 November
2023, the position of the Company at the year end and a
description of the principal risks and 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 portfolio of mostly listed or quoted securities issued by
companies in the financials sector. Its shares are listed on the
main market of the London Stock Exchange.
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 for
investors a growing dividend income together with capital
appreciation. The Company seeks to achieve its objective by
investing in a global portfolio primarily consisting of listed
or quoted securities issued by companies in the financials
sector operating in banking, insurance, property and other
subsectors. The portfolio is diversified by geography, industry
subsectors and stock market capitalisation.
The Company may have a small exposure to unlisted and
unquoted companies, but in aggregate, this is not expected
to exceed 10% of total assets at the time of investment.
The Company will not invest more than 10% of total assets,
at the time of investment, in other listed closed-ended
investment companies and no single investment will normally
account for more than 10% of the portfolio at the time of
investment.
The Company may employ levels of borrowing from time
to time with the aim of enhancing returns. This is currently
subject to an overall maximum of 20% (increased from 15%
at the time of the reconstruction in April 2020) of net assets
at the time the relevant borrowing is taken out. Actual levels
of borrowing may change from time to time based on the
Manager’s assessment of risk and reward. The Company
may invest through equities, index-linked and other debt
securities, cash deposits, money market instruments, foreign
currency exchange transactions, forward transactions, index
options and other instruments including derivatives. Forward
transactions, derivatives (including put and call options on
individual positions or indices) and participation notes may
be used to gain exposure to the securities of companies
falling within the Company’s investment policy or to seek
to generate income from the Company’s position in such
securities, as well as for efficient portfolio management. Any
use of derivatives for investment purposes is made based on
the same principles of risk spreading and diversification that
apply to the Company’s direct investments. The Company
may hedge exposure to foreign currencies if considered
appropriate for efficient portfolio management.
Strategy and Investment Approach
The Manager’s investment process is a six-stage process
primarily driven by a bottom-up fundamental analysis of
individual companies, with macroeconomic inputs. The
Manager uses both quantitative and qualitative screens
to rank companies on a risk-adjusted basis. The approach
involves undertaking a detailed income statement and
balance sheet analysis and values a company based on the
Capital Asset Pricing Model that compares a company’s
return on equity to its cost of capital (the latter taking
account of both stock and country risk) to provide a fair price/
book valuation. This valuation (coupled with other more
standard valuation systems) is then ranked across the global
universe and added to scores focused on other variables
such as profitability, risk, ESG and growth metrics to provide
a model portfolio and a focus for additional stock-specific
research. The Portfolio Managers undertake trips to the US,
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 35
Europe and Asia to meet companies as well as regularly
meeting companies at various conferences and at the Polar
offices.
There are no limits on the exposure of the investment
portfolio to either small or mid-cap companies but the
majority of the portfolio is invested in companies with a
market capitalisation greater than US$5bn. The Manager
has discretion to invest up to 10% of the portfolio in debt
securities.
The investment portfolio is primarily invested in companies
that not only offer capital appreciation but pay dividends,
which are expected to rise over time, so as to meet the
necessary income required to facilitate the payment of a
rising level of dividends to Shareholders. The Board, together
with the Manager will continue to assess the likely income
capability of the portfolio to determine the appropriate
longer-term distribution level.
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, marketing and administrative services, including
accounting and portfolio valuation which it has arranged to
deliver through HSBC Securities Services (“HSS”).
The Company also contracts directly, on terms agreed
periodically, with several third parties for the provision of
specialist services:
• HSBC Securities Services as Custodian and Depositary;
• Stifel Nicolaus Europe Limited as Corporate Broker;
• Equiniti Limited as Share Registrars;
• PricewaterhouseCoopers LLP as Independent Auditors;
• RD:IR for Investor Relations and Shareholder Analysis;
• Marten & Co as third-party research providers;
• Camarco as PR advisors;
• Perivan as Designers and Printers for shareholder
communications; and
• Huguenot Limited as Website Designers and internet
hosting services.
Benchmark
The Company measures the Manager’s performance against
the MSCI ACWI Financials Net Total Return Index (‘the
Benchmark’). This has been used to measure the performance
of the Company since 23 April 2020. The Manager does not
seek to replicate the index in constructing the Company’s
portfolio. The portfolio may, therefore, diverge substantially
from the constituents of the Benchmark.
Although the Company evaluates its performance against
the Benchmark, this is neither a target nor a determinant of
investment strategy. The purpose of the Benchmark is to set
out a reasonable measure of performance for Shareholders
and an appropriate base which, together with an additional
hurdle, forms the level above which the Manager earns a
performance fee.
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 is attractive
to Shareholders. The Directors believe that a strong working
relationship with the Manager will achieve the optimum return
for Shareholders. As such, the Board and 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 for decisions as to the purchase
and sale of individual investments. The 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.
Information is provided to the Directors on a timely basis,
covering all aspects of relevant management, regulatory and
financial information. The Board receives a report from the
Manager at each Board meeting and may ask representatives
of the Manager to attend Board meetings enabling Directors
to probe further on matters of concern or seek clarification
as appropriate. While the Board reviews the performance of
the Manager at each Board meeting, and the Company’s
performance against the Benchmark and a peer group of
funds with similar objectives, the Management Engagement
Committee formally carries out an annual review of the
Manager and other suppliers’ performance during the year.
Polar Capital provides a team of financial specialists and the
portfolio is jointly managed by Mr Nick Brind and Mr George
Barrow, supported by other financials specialists within the team.
The Manager has other investment resources which support
the investment team and has experience in administering and
managing other investment companies.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 36
Strategic Report continued
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 Manager; (ii) if the 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 Manager commits a material breach of
the IMA. In the event the IMA is terminated by the Company,
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 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, with effect
from 7 April 2020, is charged at a rate of 0.70% per annum of
the Company’s NAV. 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 revenue.
Performance Fee
The Manager may be entitled to a performance fee equal to
10% of the excess of the performance fee hurdle and payable
at the end of each five-year period, the first period being from
23 April 2020 to 30 June 2025 and at five yearly intervals
thereafter.
For the purposes of calculating the performance fee, the
Company’s NAV (adjusted to reflect dividends paid, and
any performance impact caused by the issue or buyback of
ordinary shares) at 30 June 2025, being the end of the relevant
Performance Period, will be used. No performance fee has been
paid or accrued as at 30 November 2023. Where a performance
fee becomes payable it will be charged 100% to capital.
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 37
Performance and Key Performance Objectives
The Board appraises the performance of the Company and the 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 KPIs have not differed from the prior year.
KPI Control Process Outcome
The provision of
investment returns to
Shareholders measured
by long-term NAV
total return relative to
the Benchmark and a
comparator group.
The Board reviews at each meeting the performance
of the portfolio and considers the views of the
Manager and the value delivered to Shareholders
through NAV growth and dividends paid.
The Company’s NAV total return, over the year ended 30 November
2023, was -2.8%*while the Benchmark delivered 0.3% over the
same period. Since inception the NAV total return was 119.7%*
compared to 135.6% for the Benchmark and 103.5% for a
comparator group.
The Board also receives monthly reports on
performance against both the Benchmark and a
comparator group of open-ended investment funds.
The Company ranks 13 out of a comparator group of 31 open
ended funds within the Lipper Financial Sector universe since
inception and 5 out of 7 within a smaller comparable group of
funds regularly considered by the Board as at 30 November 2023.
The achievement of a
progressive dividend
policy.
Financial forecasts are reviewed to track income and
distributions.
A total of two interim dividends amounting to 4.55p (2022: 4.45p)
per ordinary share have been paid or declared in respect of the
financial year ended 30 November 2023. While the aim to achieve
dividend growth remains there is no guarantee that this can be
achieved.
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
reducing 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 discount of the ordinary share price to the NAV per ordinary
share at the year-end was 12.2%* compared with a discount of
7.0% at the year ended 30 November 2022. The discount for the
investment trust sector at 30 November 2023 was 15.7%.
The Board is aware of the vulnerability of a sector
specialist investment trust to a change in investor
sentiment towards that sector. While there is no
formal 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 mitigating 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.
During the year under review, the Company bought back
16,532,313 ordinary shares at an average discount of 10.5%. After
the year end and up to 13 February 2024, the Company bought
back a further 2,311,282 shares. All shares bought back have been
placed into treasury for reissue to the market under the appropriate
conditions.
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 has been granted investment trust status annually since
its launch on 1 July 2013 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 believe that the tests have been met in the financial year
ended 30 November 2023 and will continue to be met.
Efficient operation
of the Company with
appropriate investment
management resources
and services from third
party suppliers within
a stable and risk-
controlled environment.
Annually the Board considers the services provided
by the Manager, both investment and administrative,
and reviews the provision of services from third
parties including the costs of their services.
The Board, through the Audit Committee has received and
considered satisfactory the internal controls report of the Manager
and other key suppliers including contingency arrangements to
facilitate the ongoing operations of the Company in the event of
withdrawal or failure of services.
The annual operating expenses are reviewed and any
non-recurring project related expenditure approved
by the Board.
The ongoing charges for the year ended 30 November 2023
excluding the performance fee were 0.86% of net assets (2022:
0.87%)*. The ongoing charges including the performance fee
payable were 0.86% (2022: 0.65%)*. The decrease in ongoing
charges including performance fee in the prior year reflects the write
back of the performance fee accrual during FY22.
*See Alternative Performance Measures
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 38
Principal Risks and Uncertainties
The Board is responsible for the management of risks
faced by the Company. Through delegation to the Audit
Committee, it 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 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 Manager, it monitors identified risks and
meets to discuss both long-term and emerging risks.
During the year the Audit Committee, in conjunction with
the Board and the Manager, 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 continued impact of
geopolitical events as well as the effects of inflation and
rising interest rates. While there are signs of inflation slowing
and energy prices reducing, the continuation of the Russian
war on Ukraine, and also the Middle East crisis has created
further market volatility. This continues to impact supply
chains, while high interest rates continue to affect consumers.
Geopolitical events such as these can have a significant
impact on global financial markets, and the global economy.
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 59
and 60 of the Report of the Audit Committee.
The principal risks are detailed on the following pages along
with a high-level summary of their management through
mitigation over the past financial year.
Risk Cycle
Monitor
and Review
Identify Risk
Analyse Risk
Build Risk
Strategy
Manage
Risks
Strategic Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 39
Investment Manager Performance
Principal Business Risks and Uncertainties Management of Risks through Mitigation & Controls
Failure to achieve investment objective, investment
performance below agreed benchmark objective or
market/ industry average.
The Board seeks to manage the impact of such risks through
regular reporting and monitoring of investment performance
against a comparator group of open-ended funds, the
Benchmark and other agreed indicators of relative performance.
In months when the Board is not scheduled to meet, it receives a
monthly report containing financial information on the Company
including gearing and cash balances.
Performance and strategy are reviewed throughout the year
at regular Board meetings where the Board can challenge the
Manager. The Board also receives a monthly commentary from
the Manager in the form of factsheets for all the specialist
financial sector funds managed by Polar Capital.
The Board is committed to a clear communication programme
to ensure Shareholders understand the investment strategy. This
is maintained using monthly factsheets which have a market
commentary from the Manager as well as portfolio data, an
informative website as well as annual and half year reports. The
Management Engagement Committee considers the suitability
of the Manager based on performance and other services
provided.
Loss of portfolio manager or other key staff. 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.
Gearing, either through bank debt or the use of derivatives
may be utilised from time to time. Whilst the use of gearing
is intended to enhance the NAV total return, it will have
the opposite effect when the return on the Company’s
investment portfolio is negative.
The arrangement of any new banking facilities and gearing
limits under such arrangements are controlled by the Board.
Derivatives are considered as a form of gearing and their use
has been agreed by the Board. The deployment of borrowed
funds (if any) is based on the Manager’s assessment of risk and
reward. At 30 November 2023 the Company was 6.5% geared
(2022: 6.0%).
The ability to continue the dividend policy may be
compromised due to lower income because of changes in
underlying companies’ policies or changes in the portfolio
construction, regulatory intervention, local taxes because of
the currency exposure underlying the portfolio. This could
result in a lower level of dividend being paid than intended or
previously paid.
The Board monitors income and currency exposure through
monthly management accounts and discussion. In the event
of there being insufficient income during the financial year the
Company has built up revenue reserves on which to draw to pay
dividends. Equally, in the event of the revenue reserves being
fully utilised the Company may use other distributable reserves.
See notes 22 to 24 on pages 98 and 99.
The Board and the Manager will continue to assess the income
capability of the portfolio and determine the appropriate longer-
term dividend level based on how economies and businesses
perform.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 40
Principal Risks and Uncertainties continued
Market, Economic and Political Risk
Principal Business Risks and Uncertainties Management of Risks through Mitigation & Controls
While the portfolio is diversified across several stock markets
worldwide, the investment mandate is focused on financials
and thus the portfolio is more sensitive to investor sentiment
and the commercial acceptance of the sector than a general
investment portfolio.
The Company’s portfolio is exposed to risks such as market
price, credit, liquidity, foreign currency and interest rates.
The portfolio is actively managed. The Manager’s style
focuses primarily on the investment opportunity of individual
stocks and, accordingly, may not follow the makeup of the
Benchmark. This may result in returns which are not in line
with the Benchmark.
The degree of risk which the Manager incurs to generate the
investment returns and the effect of gearing on the portfolio
by borrowed funds can magnify the portfolio returns per
share positively or negatively.
The Board has set appropriate investment limits against which it
monitors the position of the portfolio. They include guidelines on
exposures to certain investment markets and sectors. The Board
discusses with the Manager at each Board meeting its views on
the sector.
At each Board meeting the composition and diversification of
the portfolio by geographies, sectors and capitalisations are
considered along with sales and purchases of investments.
Individual investments are discussed with the Manager as well as
the Manager’s general views on the various investment markets
and the financials sector.
Analytical performance data and attribution analysis is presented
by the Manager.
The policies for managing the risks posed by exposure to market
prices, interest rates, foreign currency exchange rates, credit
and liquidity are set out in Note 27 to the financial statements.
Shareholders have sight of the entire portfolio and geographic
exposure of investments.
There is 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.
The fluctuations of exchange rates can also have a material
impact on Shareholder returns.
The Board regularly discusses global geopolitical issues and
general economic conditions and developments.
The impact on the portfolio from other geopolitical changes
is monitored through existing control systems and discussed
regularly by the Board. The longer-term effects of geopolitical
events 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.
Note 27 describes the risks posed by changes in foreign
exchange rates. The Manager can hedge foreign currency if it is
thought appropriate at the time.
Strategic Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 41
Operational and Regulatory Risk
Principal Business Risks and Uncertainties Management of Risks through Mitigation & Controls
There are risks from the failure of, or disruption to,
operational and accounting systems and processes provided
by the Manager including any subcontractors to which the
Manager has delegated a task as well as directly appointed
suppliers.
The mis-valuation of investments or the loss of assets from
the custodian or sub custodians could affect the NAV per
share or lead to a loss of Shareholder value.
There is taxation risk that the Company may fail to
continue as an investment trust and suffer capital gains tax
or fail to recover as fully as possible withholding taxes on
overseas investments.
The legal and regulatory risks include failure to comply
with the FCA’s Prospectus Rules, Listing Rules and
Disclosure Guidance and Transparency Rules; not meeting
the provisions of the Companies Act 2006 and other UK
and overseas legislation affecting UK companies and not
complying with accounting standards. Further risks arise
from not keeping abreast of changes in legislation and
regulations which have in recent years been substantial.
At each Board meeting the Board receives an administration
report that provides details on general corporate matters
including legislative and regulatory developments and changes.
The Board conducts an annual review of suppliers and their
internal control reports, which includes the disaster recovery
procedures of the Manager.
Regular reporting from the Depositary on the safe custody of the
Company’s assets and the operation of control systems related
to the portfolio reconciliation is monitored. Specialist advice
is sought on taxation issues as and when required. The Audit
Committee has oversight of such work.
Information and guidance on legal and regulatory risks is
managed by using the Manager or professional advisers where
necessary and the submission of reports to the Board for
discussion and, if required, any remedial action or changes
considered necessary. The Board monitors new developments
and changes in the regulatory environment and seeks to ensure
that their impact on the Company is understood and complied
with.
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.
The number, severity and success rate of cyber-attacks have
increased considerably over recent years. Detailed 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.
Investor Relations and Stewardship
Principal Business Risks and Uncertainties Management of risks through Mitigation & Controls
Persistent excessive share price premium/discount to NAV. In consultation with its advisors, including the corporate broker,
the Board regularly considers the level of the share price
premium/discount to the NAV and the Board reviews ways to
enhance Shareholder value including share issuance and buy
backs.
Failure to communicate effectively and timeously with
investors or the issuance of erroneous or misleading
information.
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 using 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.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 42
Governance
Section 172 Statement
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 (its 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
wider 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.
Shareholder 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 2:00pm on Thursday 18 April 2024 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 can 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. Shareholders will have the
opportunity to hear a pre-recorded presentation from the Manager, reviewing the Company’s
performance in the year and the outlook for 2023-2024, in advance of the AGM. The presentation
will be uploaded to the Company’s website ahead of the AGM. In addition, Shareholders will be
able to watch the proceedings of the AGM live via Zoom Conference. Details of how to access
the online link are provided in the Notice of 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 cosec@polarcapital.co.uk stating the subject matter as
PCFT-AGM. The Chair of the Board and of the Committees, along with the Managers, will attend 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 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.
Strategic Report continued
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 43
Governance
Shareholder Group How we engage with them
Shareholders
continued
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 reviews any correspondence from Shareholders and members of the Board attend Manager
presentations to investors.
Shareholders are kept informed by the publication of annual and half year reports, monthly fact sheets,
access to commentary from the Manager via the Company’s website and attendance at events at which
the Manager presents.
Shareholders can raise any concerns directly with the Chair or the Board without intervention of the
Manager or Company Secretary. They may do this either in person at the AGM or at other events,
or in writing either via the registered office of the Company or to the Chair’s specific email address
Chair.PCFT@polarcapital.co.uk.
The Company, through the sales and marketing efforts of the Manager, encourages retail investment
platforms to engage with underlying Shareholders in relation to Company communications and enable
those Shareholders to cast their votes on Shareholder resolutions; the Company however has no
responsibility over such platforms. The Board therefore encourages Shareholders invested via platforms
to regularly visit the Company’s website or to contact the Company directly to obtain copies of
Shareholder communications.
The Company has 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 available via this website.
Outcomes and strategic decisions during the year
Buybacks
Further to shareholder authority being granted, the Company has the facility to conduct share buy backs
when, in normal market conditions, it is in the best interests of shareholders to do so. The Company bought
back a total of 16,532,313 shares during the year under review. After the year end and up to 13 February
2024, the Company bought back a further 2,311,282 shares.
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. In addition, shareholders can watch the proceedings of the AGM live via Zoom
Conference. Details of how to access the online link are provided in the Notice of AGM.
Manager
Through the Board meeting cycle, regular updates and the work of the Management Engagement Committee
in reviewing the services of the 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 Agreement and reviewing the agreed management
and performance fees;
• Ensuring compliance with statutory legal requirements, regulations and other advisory guidance such as
consumer duty and aspects of operational resilience; and
• Reviewing the Manager’s decision making and consistency of its investment process.
Maintaining a close and constructive working relationship with the Manager is crucial as the Board and the
Manager both aim to continue to deliver consistent, long-term returns in line with the Investment Objective.
The culture which the Board maintains to achieve this involves encouraging open discussion with the Manager,
ensuring that the interests of Shareholders and the Manager are aligned, providing constructive challenge and
making Directors’ experience available to support the Manager. This culture is aligned with the collegiate and
meritocratic culture which Polar Capital has developed and maintains.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 44
Section 172 Statement continued
Strategic Report continued
Shareholder Group How we engage with them
Manager
continued
Outcomes and strategic decisions during the year
ESG
The Board continued to engage with the Investment Manager to oversee how ESG has been integrated into
the overall house methodology as well as the bespoke financials team investment approach, engagement and
decision making. The Board also receives information on how ESG affects Polar Capital as a business and the
financials team.
Consumer Duty
The Board has worked with the Investment Manager to ensure the obligations of the new Consumer
Duty regulations are appropriately applied to the Company. In light of the obligations, all communications
including the website, fact sheets and other published documentation, have been reviewed to ensure they are
appropriate for all end users. A ‘value for money’ assessment has also been undertaken and is made available
to distributors on request for their due diligence processes.
Management
On the recommendation of the Management Engagement Committee the Board has resolved to continue the
appointment of the Manager on the terms agreed within the Investment Management Agreement.
Investee
Companies
The Board has instructed the Manager to consider 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 Manager voted at 75 company meetings over the year ended 30 November 2023, with 7% of all
votes being against management and 35% of meetings having at least one vote against, withheld or
abstained. The Manager reports to the Board, when requested, on the application of the Stewardship
Code and Voting Policy. The Manager’s Stewardship Code and Voting Policy can be found on the
Manager’s website in the Corporate Governance section (www.polarcapital.co.uk). Further information
on how the Manager considers ESG in its engagement with investee companies can be found in the ESG
Report on pages 27 and 32.
Outcomes and strategic decisions during the year
The Board receives information on the ratings of investee companies and can use this as a tool to inform
discussions with the Manager during Board meetings.
Service
Providers
The Directors oversee the Company’s service providers through the annual cycle of reporting and due
diligence meetings or site visits undertaken by the Manager. This engagement is undertaken 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 Shareholders. 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. However, the Board continues to conduct due diligence service
reviews in conjunction with the Company Secretary and is satisfied that the services received continue to
be of a satisfactory standard.
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 45
Shareholder Group How we engage with them
Proxy
Advisors
The support of the major institutional investors and 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 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 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.
Outcomes and strategic decisions during the year
Where possible the Chair and other representatives of the Company have engaged with the stewardship
teams of some larger investors to understand and address their expectations in terms of board governance,
recruitment and diversity. Prior to AGMs, the Company engages with these agencies to fact check their
advisory reports and clarify any areas or topics contained within the report. 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.
The AIC
The Company is a member of the AIC and has supported various lobbying activities. Representatives
of the Manager sit on a variety of forums run by the AIC which aids development and understanding
of new policies and procedures. The Directors may cast votes in the AIC Board Elections each year and
regularly attend AIC events.
Approved by the Board on 15 February 2024
By order of the Board
Jumoke Kupoluyi, ACG
Polar Capital Secretarial Services Limited
Company Secretary
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 46
Report of the Directors
Report of the Directors
The Directors, who are listed on pages 8 and 9, present
their annual report, together with their Report on Corporate
Governance and the Audited Financial Statements for the
year ended 30 November 2023. In addition, the attention
of Shareholders is drawn to the Strategic Report Section
(Chair’s Statement, the Investment Manager’s Report,
Strategic Report, ESG and Section 172 Statements) which
provide 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, operating 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. Its ordinary shares are
listed and traded on the main market of the London Stock
Exchange.
As an investment trust the Company’s ordinary shares
are excluded from the FCA’s restrictions which apply to
non-mainstream 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
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 a General Meeting held on 7 April 2020
(the ‘Reconstruction’). The new Articles of Association
removed the fixed life and instead require the Company to
make tender offers at five-yearly intervals, with the first to
commence on or before 30 June 2025.
Dividends
The Company has an income and growth mandate, and
the Board is aware of the importance of income to some
Shareholders as part of their total return. The Board will
be careful to balance its objective of growing dividends
for Shareholders with sustainable earnings prospects and
the availability of distributable reserves to support dividend
payments. Shareholders should be aware 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 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 policy,
a ‘special dividend’ may be declared and paid.
The Company’s dividend policy is to, where possible, pay
two interim dividends each year, in February and August.
These interim dividends will not necessarily be of equal
amounts. The Directors do not recommend, and the
Company does not pay, a final dividend. Details of the
dividends paid and declared are set out on pages 2 and 37
and in Note 12 on page 92. 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 on 18 April
2024.
Annual General Meeting
The Company’s AGM will be held at 2:00pm on
Thursday 18 April 2024. Please see pages 115 and 116 for
further information on the resolutions to be proposed.
Powers to issue shares and make market
purchases of ordinary shares
At the AGM held in 2023, the Board was granted by
Shareholders the power to allot equity securities for cash
without first offering those shares to Shareholders in
accordance with their statutory pre-emption rights, up to
a nominal value of £1,623,020, equivalent to 10% of the
Company’s issued ordinary share capital. The Board was
also granted authority by Shareholders to make market
purchases of up to 48,658,139 ordinary shares of the
Company, equivalent to 14.99% of the issued share capital
in accordance with the terms and conditions set out in
the Shareholder resolution. In the financial year under
review, a total of 16,532,313 shares were repurchased into
Treasury. After the year-end up to 13 February 2024, the
latest practicable date, no new shares have been issued
and a further 2,311,282 shares have been repurchased.
These authorities will expire at the 2024 AGM and renewal
of these authorities will be sought at that AGM. Details of
the resolutions and the Directors’ policies for the issue and
purchase of shares will be set out in the separate Notice
of Annual General Meeting which will be distributed to
Shareholders in February 2024. New ordinary shares will only
be allotted and issued at or above the prevailing net asset
value per share after considering the costs of issue.
Further information on transferability and the voting rights
attached to these shares can be found in the shareholder
information section on page 117.
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 47
Major Interests in Ordinary Shares
As at the year end of 30 November 2023, 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*
Rathbones Investment Management Limited~ Indirect 62,039,287 18.7
1607 Capital Partners LLC Direct 31,730,064 9.7
City of London Investment Management Direct 30,885,298 9.3
RBC Brewin Dolphin Ltd Indirect 21,781,666 6.6
Charles Stanley Indirect 16,408,045 5.0
Quilter Cheviot Investment Management Indirect 16,128,869 4.9
JM Finn & Company Ltd Direct 15,899,293 4.8
Canaccord Genuity Indirect 10,091,107 3.0
~ position following the all-share combination of Rathbones Group Plc with Investec Wealth & Investment Limited.
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*
Rathbones Investment Management Limited Indirect 58,294,346 18.9
1607 Capital Partners LLC Direct 34,749,710 11.3
* The above percentages are calculated by applying the shareholdings as notified to the issued share capital at 13 February 2024 of 306,550,405 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 Company which is not
otherwise disclosed. The only disclosure to be made is regarding the amount of interest capitalised and can be found in Note 9
on page 90.
By order of the Board
Jumoke Kupoluyi, ACG
Polar Capital Secretarial Services Limited
15 February 2024
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 48
Corporate Governance Framework
The Directors are ultimately accountable to the Company and its Shareholders for the Company’s affairs and are therefore
responsible for the governance of the Company. The Company has no employees and relies on third parties to administer the
Company. The following diagram demonstrates the governance framework within which the Company is managed.
Shareholders
Board of Directors
Chair: Simon Cordery
Audit
Committee
Management
Engagement Committee
Nomination
Committee
Remuneration
Committee
Third Party
Service Providers
Investment Manager
and AIFM
Chair: Cecilia McAnulty
Members: all independent
NEDs.
Chair: Susie Arnott
Members: all independent
NEDs.
Functions carried
out by the
Board as a whole.
Functions carried
out by the
Board as a whole.
As an externally managed investment trust, some provisions of the FRC UK Code of Corporate Governance (the 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, therefore the Board has considered the Principles and
Provisions of the Association of Investment Companies Code of Corporate Governance 2019 (the AIC Code) and considers that
reporting against the Principles and Provisions of the AIC Code provides more relevant information to Shareholders. The FRC has
recently released amendments to the UK Code which will be taken into account by the AIC and Company and reported against
where appropriate.
The AIC Code addresses the relevant principles set out in the Financial Report Council (‘FRC’) UK Code as well as additional
principles and recommendations on issues that are specific to investment trust companies. The FRC has endorsed the AIC Code
and 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.
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.
Statement of Compliance and Application of the AIC Code’s Principles
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 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 the following pages.
Report on Corporate Governance
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 49
BOARD LEADERSHIP AND PURPOSE (Principles A-E, Provisions 1-7)
Board Leadership and Purpose
The Company’s purpose is to provide a vehicle for investment in which assets are invested across a global portfolio of listed or
quoted securities issued by companies in the financials sector operating in the banking, insurance, property and other subsectors
which generate for investors a growing dividend income together with capital appreciation. The purpose is achieved through
the Investment Objective and Policy incorporating parameters to ensure excessive risk is not taken.
The portfolio is diversified by factors including geography, industry subsector and stock market capitalisation. As an externally
managed investment trust, the culture of the Company is a consequence of the Board’s composition, decisions and behaviours
which are aligned with the values and behaviours of the 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.
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 in April 2020 following the reconstruction of the Company and
the introduction of the current fee structure. The Investment Manager is entitled to a management fee at the rate of 0.70%
(previously 0.85%) per annum based on the Company’s net asset value. The Company’s performance since launch in July 2013
can be found on page 3, how the Board views its engagement with stakeholders and Shareholders and how this contributes to
strategic decision making is set out in the s172 statement on pages 42 to 45. Participation from all stakeholders 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 reviews and other meetings throughout the year, ensuring effective engagement. Fulfilling the
Investment Objective and monitoring the Company’s performance is the primary 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 53.
Role, Responsibilities and Committees of the Board
The Board has delegated to the Audit and Management Engagement Committees specific remits for consideration and
recommendation but the final responsibility in these areas remains with the Board. The Board has 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 are 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.
Separate reports of the work of the Audit Committee and Management Engagement Committee over the year are set out
on pages 55 to 60 and page 66 respectively. The Directors’ Remuneration Report, including the processes undertaken when
reviewing remuneration, can be found on pages 61 to 65.
The number of formal meetings of the Board and its Committees held during the year ended 30 November 2023 and the
attendance of individual Directors are shown below:
Board
Audit
Committee
Management
Engagement
Committee
2023
Annual General
Meeting
Number of Formal Meetings
7 3 3 1
Simon Cordery 7 3 3 1
Cecilia McAnulty 7 3 3 1
Susie Arnott 7 3 3 1
Angela Henderson^ 6 2 2 1
Robert Kyprianou* 3 2 2 1
Katrina Hart~ 1 1 1 –
^ Unable to attend meeting due to bereavement. Papers for all meetings were reviewed and an opportunity to raise any issues was provided during an alternative session.
* Retired from the Board on 30 March 2023.
~ Retired from the Board on 1 December 2022.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 50
Report on Corporate Governance continued
Service Provider Performance Evaluation Process
Investment Manager (the 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 subject to the Investment Management Agreement. The
Manager has responsibility for asset allocation and stock selection within the limits established and regularly reviewed by the Board.
The Manager is responsible for providing or procuring accountancy services, company secretarial, marketing 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
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 any issues.
The whole Board reviews the performance of the Manager and, at each Board meeting, the Company’s investment performance
against the market and a peer group of funds with similar investment objectives is reviewed. The investment team provided by the
Manager has long experience of investment in the financial sector. In addition, the Manager has other investment resources that
support the investment team and have experience in managing and administering other investment companies.
The Board and Manager work in a collaborative manner and the Chair encourages open discussion and debate.
DIVISION OF RESPONSIBILITIES (PRINCIPLES F-I, PROVISIONS 8-21)
Chair
The Chair is responsible for the leadership of the Board and works with the Company Secretary to set the Board’s meeting agendas
and balance 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. Simon Cordery was appointed to
the Board in 2019 and appointed as Chair in March 2023. 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.
The Board considers that in the specific 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 situations 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 tenure for its Chair is up to twelve years where up
to nine years have been served as a non-executive Director.
Senior Independent Director
Due to the size and structure of the Board it is considered unnecessary to appoint 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. As and when required, the Chair of the Audit Committee leads on specific matters
such as the annual evaluation of the Chair.
Board Responsibilities
The Board currently comprises four non-executive Directors who are all considered to be independent in character and judgement.
No Director has any former or current connection with the 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 such advice has been sought during the year.
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, Jumoke Kupoluyi, ACG, is responsible to the
Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Board
and Manager operate in a supportive, cooperative and open environment. The Board acknowledges that PIRC (Pensions and
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 51
Investment Research Consultants Limited, an independent corporate governance and Shareholder advisory consultancy) has
recently confirmed its voting guidelines to recommend voting against the laying of the Annual Report at an AGM where the
Manager provides company secretarial services to the Company. The Board believes that the benefits gained by utilising the
services of a Company Secretary provided by the 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 Manager when working with the Board and the Company.
Meetings
The Board has a schedule of regular meetings throughout 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 share buyback and issuance programme, the setting and monitoring of investment strategy and performance, review of
financial statements, ESG and Shareholder issues including investor relations. The level of share price discount or premium to the
net asset value together with policies for issuance or repurchase of ordinary shares 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 Company’s investment strategy was reviewed during the reconstruction undertaken in early 2020. The Board continues
to consider the Company’s strategy and its relevance to the market and Shareholders at each Board meeting. Through this
process the Board supervises the management of the investment portfolio, the risks to which the Company is exposed and their
mitigation, and the quality of services received by the Company.
Directors’ Professional Development
When new Directors are appointed, they are offered an induction programme provided by the Manager. Directors are also
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 of 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
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. The Company’s Articles contain provisions
to permit the Board to authorise acceptable conflicts or potential conflicts. Where a conflict situation arises, the conflicted
Director may be excluded from any discussions, decisions or votes 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 from the Company
other than their emoluments in their capacity as a Director of the Company.
The Board as part of its year-end review has considered the 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 the Director.
The Directors’ interests in the ordinary shares of the Company are set out on page 64 of the Directors’ Remuneration Report.
Capacity and Overboarding
Prior to appointment, current and planned commitments of board candidates are considered and it is determined before
interview stage whether the Board feels that the candidate has the capacity to dedicate to the Company. Once appointed, all
Directors are required to seek permission and approval from the Board prior to accepting any new appointments, including a
change of role. Following notification, the Board will consider the type of role, expected time commitments and the impact
on the Director’s ability to discharge their duties to the Company. Directors are also required to provide a list of their existing
significant external commitments and estimated time commitments for each for the Board to assess any risk of insufficient
capacity or over boarding.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 52
The Board continues to be satisfied that the external commitments of all non-executive Directors serve to enhance their skills
and experience and do not affect their ability to commit sufficient time to their roles as Directors of the Company, as evidenced
by their attendance records and contributions in meetings.
COMPOSITION, SUCCESSION AND EVALUATION (Principles J-L, Provisions 22-28)
Board Composition, Diversity and Recruitment
The Board is responsible to Shareholders for the overall management of the Company’s affairs. During the year under review,
there were six non-executive Directors, reducing to four following the retirement of Katrina Hart on 1 December 2022 and
Robert Kyprianou on 30 March 2023. With effect from 1 December 2022, Susie Arnott and Angela Henderson were appointed
to the Board as non-executive Directors.
Each Director has different qualities and areas of expertise on which they may lead when 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 to balance both the expertise on, and the structure of, the Board as
a whole.
The Board notes the reporting requirements of the FCA Diversity and Inclusion Policy and has chosen to align its diversity
reporting reference date with the Company’s financial year end, 30 November 2023. The Board’s current composition meets
two of the three ‘comply or explain’ targets with three of the four members being female and one of the two senior positions
being occupied by a female. The Board is conscious that following its recent recruitment process and refreshment of the
Board, it still does not meet the FCA’s ethnicity recommendations; however it believes it has followed a stringent process
and appointed the appropriate candidates with the requisite skillsets required of the wider Board. The Board will continue to
consider diversity at all stages of recruitment to the Board and will work hard to ensure the broadest range of candidates are
found when recruiting new directors.
As required under LR 9.8.6R(10), further detail in respect of the diversity targets as at 30 November 2023 are provided in the
tables below. As an externally managed investment trust, the Company has no executive directors or employees therefore
columns relating to executive roles/management have been omitted from the tables. As per the AIC’s Guidance, the Company
considers the roles of Board Chair and Chair of the Audit Committee as senior board positions and the disclosures are made on
this basis.
Number of
board members
Percentage of
the board
Number of senior
positions on the board
(Chair and Audit Chair)
Men 1 25% 1
Women 3 75% 1
Number of
board members
Percentage of
the board
Number of senior
positions on the board
(Chair and Audit Chair)
White British or other (including minority-white groups) 4 100% 2
Minority Ethnic – – –
The Board as the Nomination Committee met in November 2023 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. The Board via the Nomination Committee also considered the
contribution and performance of each Director as part of the annual Director and Board performance evaluation. The Board
believes that the Directors demonstrate a breadth of experience across the investment and financial services industry. 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 Manager and had no relationship or conflicts which were likely to affect their
judgement.
Report on Corporate Governance continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 53
Succession
The Board believes that retaining Directors with sufficient experience of the Company, investment industry and financial
markets is of benefit to Shareholders while recognising that regular refreshment of approach is equally of benefit and
importance. Following the reconstruction of the Company, the Board formulated a succession plan which gave due regard
to the recommended maximum of nine years’ tenure for a non-executive director and a formal tenure policy, allowing for
a reasonable extension to the nine years for the role of Chair where the Chair has been appointed from the role of the
non-executive director. The refreshment of the Board was undertaken in two phases which completed in March 2023. Following
the completion of this process the Board considers that its overall composition is well placed for the effective governance of the
Company.
Performance and Re-Election
The Board formally reviews the performance of the Directors each year as part of the annual evaluation process. Directors are
required to stand for election by Shareholders at the first AGM following their appointment to the Board and, in line with
recommended practice, each Director stands for re-election annually. The rationale for re-election of each Director is included
in the Board of Directors information on pages 8 and 9 and the Chair’s letter which accompanies the Notice of Annual General
Meeting at which the re-election resolutions are being put to Shareholders.
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
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
does 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.
AUDIT, RISK AND INTERNAL CONTROL (Principles M-O, Provisions 29-36)
Internal Controls
The Board has overall responsibility for the 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.
The Manager has an internal control framework to provide 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 major risks faced by the Company. This is documented using 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 Company are safeguarded, proper accounting records are maintained, and the financial information used by the
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 Manager.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 54
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 internal controls process was active throughout the year under review and up to the date of approval of this Annual Report.
However, such an internal controls system is designed to manage rather than eliminate risks of failure to achieve the Company’s
objective and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board will
continue to monitor the system of internal controls to provide assurance that they operate as intended.
The Board, in assessing the effectiveness of the Company’s internal controls has, through the Audit Committee, received formal
reports on the policies and procedures in operation. These reports from the Manager include results of tests on the policies
and procedures in operation during the year under review, with details of any known internal control failures. 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 Board considers ad hoc reports from the Manager and third-party suppliers and information is supplied to the Board as
required. In addition to the regular internal controls reports provided by the Manager and various third-party suppliers, when
required, the Board receives assurances on the status of the business and operational functions.
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.
The principal risks and uncertainties to which the Company is subject are detailed in the Strategic Report. 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 under review and up to the date of this report.
REMUNERATION (Principles P-R, Provisions 37-42)
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 was
approved by shareholders at the AGM in March 2023, is detailed within the Directors’ Remuneration Report on page 61 and
explains how the policy is designed to support strategy and promote long-term sustainable success.
Jumoke Kupoluyi, ACG
Polar Capital Secretarial Services Limited
Company Secretary
15 February 2024
Report on Corporate Governance continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 55
I am pleased to present to you my report as Chair of the Audit Committee
(the ‘Committee’).
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 for the Committee
to discharge its functions effectively. The experience of
the members of the Committee can be assessed from the
Directors’ biographies on pages 8 and 9 and I myself, am a
Chartered Accountant. The Committee has written terms
of reference which are available to view on the Company’s
website www.polarcapitalglobalfinancialstrust.com
During the year ending 30 November 2023, the Audit
Committee met three times, with a quorum of members of the
Committee attending each meeting.
Matters Considered in Connection with the
Financial Year Ended 30 November 2023:
During the year the Committee considered the following:
Audit Regulation
• Since my last report to you, the Committee has not had
to consider any new material regulations. The Committee
continues to follow developments in the relevant
regulatory environment to consider any new and ongoing
requirements 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 for
Business and Trade (“DBT”) which seek to strengthen the
UK’s audit and corporate governance framework. The
Committee will continue to monitor the detail of this,
implement any legislation arising from the reforms and
consider any suggested guidance from the DBT for good
practice. The Committee will report on any changes made
in future Annual Reports following the introduction of any
revised legislation.
Annual External Audit, including:
• The appointment of the Auditors;
• 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 financial disclosures in the annual and interim reports
to Shareholders;
• The policy and extent of any non-audit services (including
fees paid) in line with the FRC guidance;
• The going concern statement, longer-term viability
statement, including the impact of the future tender
offers to be made to Shareholders at five-yearly
intervals; and
• The requirement to confirm that the Annual Report and
Financial Statements when taken as a whole are fair,
balanced and understandable.
Internal Audit
As the Company is an externally managed investment trust
we continue to conclude that the need for an internal audit
function is unnecessary but will keep this under review.
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 82 to 107 were
consistent with previous years and applied throughout
the year. The Committee confirmed there have been
no changes to currently adopted policies and no
new UK-adopted international accounting standards
(“UK-adopted IAS”) or amendments to UK-adopted
Audit Committee
Report
Cecilia McAnulty
Audit Committee Chair
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 56
Audit Committee Report continued
IAS which had any significant impact on the Company’s
Financial Statements; and
• The financial disclosures contained in the Annual Report
and Half Year Report to shareholders.
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; and
• The valuation of unquoted investments and the provision
of associated recommendations to the Board.
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 Manager and its 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 AGM held
in March 2023 and recommended to the Board that it
should continue. Shareholders should be reminded that
the dividend policy is an objective and not an absolute
guarantee. The Dividend Policy will be proposed for
approval by Shareholders at the AGM to be held in April
2024. The Board seeks to balance its objective of growing
dividends for Shareholders with future earnings prospects
and the availability of revenue reserves.
Consideration of the Half-Year Report and
Financial Statements
• Prior to publication, the Committee considered, reviewed
and confirmed the half year report and financial
statements, which are not audited or reviewed by the
Auditors, to ensure they were prepared on a basis
consistent with the accounting policies used in the Annual
Report and Financial Statements for the year ended
30 November 2022.
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
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 on the results of the audit work to
the Committee 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 Committee presented its conclusions to the
Board.
Tax matters
• The Committee is responsible for reviewing the
outstanding tax reclaims and where necessary the
payment or receipt of overseas tax. In the year under
review, £74,000 was received by the Company from
overseas tax reclaims and there remained £1,487,000
(2022: £1,184,000) of outstanding reclaims at the
year end. This increase in the tax receivable balance
reflects new reclaims since the last year end and delays
experienced in processing tax reclaims due to the
pandemic when some markets suspended the processing
of reclaims. In addition, some tax offices are in the course
of changing their reclaim processes from paper to digital
which has resulted in a hiatus in recovery of claims. As
at the year ended 30 November 2023, the outstanding
tax reclaims were aged between 0.5 to 5.6 years and
have been filed with the relevant tax authorities. The
outstanding reclaims at the year-end are within the
statute of limitations and we anticipate these will be
received in the near future. In addition, the Committee
reviewed the provision for the Indian capital gains tax.
The Indian capital gains tax provision represents an
estimate of the amount of tax payable by the Company.
This additional tax only becomes payable at the point at
which the underlying investments are sold and any profit
crystallised. Further details of the Indian capital gains tax
can be found on pages 83 to 84 and 90.
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 57
Conclusions in Respect of the Annual Report
and Financial Statements
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 over
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 Manager and the Committee;
• The internal control environment as operated by the
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 on the Financial
Statements.
As a result of the work performed, the Committee has
concluded that the Annual Report for the year ended
30 November 2023, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company’s position, performance,
business model and strategy, and it has reported on these
findings to the Board.
External Audit – Year Ended 30 November
2023
Appointment of Auditors, Tenure and Fees
The Committee considers by way of meetings and reports,
the appointment, remuneration and work of the Auditors.
PricewaterhouseCoopers LLP (PwC or the ‘Auditors’) have
provided audit services to the Company from its incorporation
in 2013 to date and the audit partner who led our statutory
audit for the year under review was Kevin Rollo. There are no
contractual obligations restricting the choice of external auditor.
In accordance with current legislation, the Company is
required to instigate an audit tender process at least every
10 years and will have to change its auditor after a maximum
of 20 years’ engagement. The Company’s last audit tender
was completed in December 2021 ahead of PwC’s ten-year
anniversary as Auditors of the Company. Following the tender
process which included an assessment of several providers on
a range of criteria including independence, proposed audit
approach, sector experience, fee level, depth and quality
of team, and the result of any FRC quality control reviews,
the incumbent auditors PwC were re-appointed as the
Company’s Auditors. PwC have confirmed their continued
independence and have expressed their willingness to be
appointed, in accordance with s487 of the Companies
Act 2006. A resolution proposing their re-appointment and to
authorise the Directors to determine their remuneration will
therefore be proposed at the AGM.
As part of the year end process, the Committee considered
the level of fees paid to the auditors, bearing in mind the
nature of the audit and the quality of services previously
received. The fees paid to PwC in respect of the audit of the
Significant Matters in Relation to the Financial Statements for the Year Ended 30 November
2023
In addition to the matters considered by the Committee in forming its opinions on the Going Concern and longer-term viability
statements described below, and in concluding that the Annual Report is 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, ownership of investments and the
income received from such
The valuation is carried out in accordance with the accounting
policy described in note 2(g). The Depositary has reported
on its work and safe keeping of the Company’s investments.
Such report is provided on the Company’s website.
Compliance with S1158 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.
There were no adverse matters brought to the Committee’s attention in respect of the 2023 audit which were material or
significant or which should be brought to shareholders’ attention.
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Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 58
annual Financial Statements amounted to £49,980 (2022:
£44,000). The fee represents a further increase on the prior
year to reflect the additional work required by the auditors
because of new auditing standards, specifically IAS 315,
inflation and the level of audit work required to perform a
robust quality audit.
The year-on-year increase in audit fees continues to be 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
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. The Audit Committee continues
to keep fee levels under close review and insists that all fee
increases are justified.
Effectiveness of Audit
The Committee, on behalf of the Board, is responsible for
overseeing the relationship with the external Auditors including
ensuring the quality and effectiveness of the audit. The
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 Auditors’
independence was also considered, along with other factors
such as audit planning and interpretations of accounting
standards. This evaluation was carried out throughout the
year by meetings held with the Auditors, by review of the
audit process and by comments from the 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 Manager present, to raise any concerns or discuss
any matters relating to the audit work and the co-operation
of the Manager and others in providing any information, and
the quality of that information including the timeliness in
responding to audit requests.
Non-Audit Work
The Committee’s policy on 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 Company’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 the event of non-audit services being proposed, the
Committee undertakes a review of the services to satisfy itself
that these are proposed within the terms of the policy and in
an efficient and cost-effective way. In the year under review,
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 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 frequently reviews the risk map
to identify the principal and emerging risks facing the business
including those that might threaten the Company's 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 38 to 41. This process was carried
out throughout the year and is how the risk map is monitored
and kept relevant by reflecting any changes to the source and
level of risks facing the Company. The Committee actively
monitors the system of internal controls through the regular
review of the risk map and the internal control environment to
provide assurance that they continue to operate as intended.
As part of the year end processes the Committee undertook a
review of the effectiveness of the system of internal controls
considering any issues that had arisen during the year. The
Committee acknowledges that the Company is reliant on
the systems utilised by external suppliers. Representatives of
the Manager reported to the Committee on the system of
internal controls that is in place for the performance of the
Manager’s duties under the IMA. The Committee and the
Manager 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 due diligence site visit with HSBC where
they received thorough presentations from representatives
covering the work of the Operations, Risk Administration and
Accounting Teams, and 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 Committee has discussed with the Investment Manager
policies on whistleblowing, cyber security, anti-bribery and
the Modern Slavery Act and is satisfied that the Manager has
controls and monitoring processes to implement its policies
across the main contractors which supply goods and services
to the 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
Audit Committee Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 59
data privacy notice in relation to the General Data Protection
Regulation. All such policies can be found on the Company’s
website.
The Committee further considered the policy and controls used
by the 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 year ended 30 November 2023 and up to the date of this
report.
Other Significant Issues Considered by
the Audit Committee During the Year
Geopolitical Events
This time last year we were reporting on the impact of the
Russian war on Ukraine as well as the effects of inflation and
rising interest rates. Whilst we are seeing signs of inflation
slowing and energy prices reducing, the continuation of the
Russian war on Ukraine, the impact on supply chains and high
interest rates continue to be felt by consumers. The Middle East
crisis has created further market volatility. Geopolitical events
such as these can have a significant impact on global financial
markets, and hence on the Company’s portfolio performance.
Further details can be found in the Investment Manager’s
Report on pages 12 to 19. The Committee continues to
monitor the impact of these and other events which appear
in our assessment of risk and of the ability of the Company to
achieve its investment objective.
The Committee regularly reviews 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 a
successful hybrid working model following a period of 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 or significant operational
failures occurring.
Going Concern and Longer-term Viability
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 replaced it with the requirement for the
Company to make tender offers at five-yearly intervals, the
first of which will be made in mid-2025.
Going Concern
At the request of the Board the 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 performance of the Company,
its financial position, cash flows and liquidity in addition any
material uncertainties and events that might cast significant
doubt upon the Company’s ability to continue as a going
concern including:
• The Company’s ability to liquidate its portfolio and meet
its expenses as they fall due, together with its exposure to
currency and credit risk; and
• The Company’s net current liabilities position in
connection with the bank loans being due for repayment
in July 2025; and
• The factors impacting the forthcoming year as set out
in the Strategic Report section, 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 27 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 uncertainties detailed above
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 November 2023. The Financial Statements have
been prepared on the going concern basis, as explained in
Note 2(a) to the Financial Statements.
Longer-Term Viability
The Board has also asked the Committee to address the
requirement that a longer-term viability statement be
provided to Shareholders. This statement should take account
of the Company’s current position and principal risks as set
out on pages 38 to 41 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 Board has selected five years from the year end
30 November 2023 as an appropriate period of assessment.
The assessment period is selected as the period post the
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 60
Company’s reconstruction in 2020 through and post the
first of the tender offers to be made to Shareholders in
accordance with the Articles of Association, such tender offer
will commence on or before 30 June 2025.
To provide this assessment the Committee has considered the
Company’s financial position as described above to liquidate
its portfolio and meet its expenses as they fall due:
• The portfolio comprises investments traded on major
international stock exchanges. There is a spread of
investments by size of company. In current market
conditions 97.3% of the portfolio 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
Company has two unquoted investments, Atom Bank and
Moneybox, which at the year-end equated to 1.1% of
total net assets;
• 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 four non-executive Directors and no
employees and consequently does not have redundancy
or other employment related liabilities or responsibilities.
The Committee has also had regard to the following
assumptions in considering the Company’s longer-term viability:
• Financials will continue to be an investable sector of the
international stock markets and that investors will still
wish to have an exposure to such investments;
• Closed end investment trusts will continue to be attractive
to investors;
• Regulation will not increase to a level that makes the
running of the Company uneconomical in comparison
with other competitive products;
• There will be no material or significant changes in the
principal risks and uncertainties; and
• Should the performance of the Company be less than
the Board deems acceptable it has appropriate powers to
replace the Investment Manager.
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. The results of the testing demonstrated the impact on
the NAV and confirmed the Company’s ability to meet its
liabilities as they fall due.
In light of these considerations, the Committee has
recommended to the Board that a positive statement may be
made on the Company’s longer-term prospects to continue
its operations and meet its expenses and liabilities as they
fall due. In support of such recommendation the Committee
considered the financial position, the cash flow forecast
including expenses and the portfolio liquidity position
covering the period of five years and beyond.
Effectiveness of the Audit Committee
The services provided to the Board by the Committee are
reviewed within the Annual Board Evaluation, including
consideration of actions undertaken by the Committee with
the 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 seeks to improve its effectiveness
and follow best practice guidance from the FRC and other
bodies.
Cecilia McAnulty
Chair of the Audit Committee
15 February 2024
Audit Committee Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 61
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 November 2023. 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 on
30 March 2023. Such policy came into effect on 1 December 2023 and shall remain in force until 30 November 2026.
Company’s Policy on Directors’ Remuneration effective 1 December 2023
How policy supports strategy and promotes
long-term sustainable success Operation
The Board consists entirely of independent non-executive
Directors, who meet regularly to deal with the Company’s
affairs.
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.
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.
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 or a nominated
third party.
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.
Rates are reviewed and benchmarked annually but the
review will not necessarily result in any change to rates.
Non-executive Directors are subject to annual re-election by
Shareholders.
In accordance with 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.
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 current Remuneration Policy has operated during
the year ended 30 November 2023.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 62
Directors’ Remuneration Report continued
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 November 2022
Remuneration
Policy for the
three years ended
30 November 2023
Approved at AGM on 30 March 2023
Votes for 99.98% 99.98%
Votes against 0.02% 0.02%
Votes abstained 0.00% 0.00%
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.
Implementation Report
Directors’ Remuneration for the Year Ended 30 November 2023
Fees and Expenses – Annual 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 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.
Directors’ fees were last increased with effect from 1 December 2021, when an inflationary increase was awarded. The Board
undertook the annual review of fees paid to the Directors in October 2023 which included a selection of peer comparisons
and external reports including the Nurole Compensation Report and the Trust Associates 2023 Fee Review. Consideration was
also given to the rise in inflation and the retail price index since the last change in Directors’ fees. As a result, the Committee
resolved to implement the following annual fee increases with effect from 1 December 2023:
• Chair £41,000pa to £43,000pa (4.9% increase);
• Non-executive Director £29,500pa to £31,000pa (5.1% increase); and
• Supplement for performing the role of Chair of the Audit Committee £5,500pa to £5,750pa (4.5% increase).
Article 105, of the Company’s Articles of Association stipulates the aggregate amount available for Directors’ Remuneration as
£250,000; at the rates agreed the Board falls within the aggregate limit with remaining allowance to accommodate overlapping
transition periods for new directors.
In accordance with the Shareholder Rights Directive, the Board confirms that no variable pay awards were made to the Directors
and there were no deferral periods or share based pay equivalents. The 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 November
2018
30 November
2019
30 November
2020
30 November
2021
30 November
2022
30 November
2023
Year to
30 November
2024
Chair +5.7% – – – +10.8% – 4.9%
Non-Executive Director +6.0% – – – +11.3% – 5.1%
Chair of the Audit Committee +5.0% – – – +10.0% – 4.5%
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 63
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. Where expenses are classified as taxable
under HMRC guidance, they are paid gross and shown in the taxable column of the Directors’ remuneration table. There were
no such expenses claimed by the Directors in the year under review (2022: nil). The policy for claiming such expenses was not
changed during the year.
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 stand for re-election every year
following their first election by Shareholders.
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 Directors 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 fixed annual rates: the Chair £41,000; other Directors
£29,500 with the Chair of the Audit Committee receiving an extra £5,500 for performing that additional role.
The fees payable in respect of each of the Directors were as follows:
Date of Appointment
Year ended
30 November
2023
£
Year ended
30 November
2022
£
Simon Cordery (Chair) 1 July 2019 37,211 29,500
Cecilia McAnulty (Chair of the Audit Committee) 1 November 2021 35,000 33,096
Susie Arnott 1 December 2022 29,500 –
Angela Henderson 1 December 2022 29,500 –
Robert Kyprianou (retired as Chair on 30 March 2023) 7 June 2013 13,509 41,000
Katrina Hart (retired on 1 December 2022) 7 June 2013 82 29,500
Joanne Elliott (retired on 7 April 2022) 7 June 2013 – 11,046
Total 144,802 144,142
* Joanne Elliott was Chair of the Audit Committee until her retirement from the Board on 7 April 2022; Joanne Elliott was concurrently CFO of the property team at Thames River Capital LLP
and payment in respect her services as a director was made to Thames River Capital LLP.
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.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 64
Directors’ Share Interests (Audited)
The interests of Directors in the ordinary shares of the Company on 30 November 2023 and 30 November 2022 were as follows:
30 November
2023
30 November
2022
Simon Cordery 41,358 40,124
Cecilia McAnulty 40,000 40,000
Susie Arnott 20,000 –
Angela Henderson – –
Katrina Hart
*
– 51,595
Robert Kyprianou
~
– 113,538
Total 101,358 245,257
*retired on 1 December 2022
~ retired on 30 March 2023
All holdings are beneficially held. There have been no other changes to Directors’ Share Interests.
While it is no longer a requirement, Directors are actively encouraged to maintain a holding of ordinary shares in the Company.
Performance
The Regulations require a performance comparison 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. As the Company was incorporated on
17 May 2013 and commenced trading on 1 July 2013, the performance comparison is shown for the period from 1 July 2013.
Each subsequent 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.
Total return per ordinary share
80
100
120
140
160
180
200
220
240
Ordinary share price (TR)
Rebased to 100
* For information purposes.
NAV per share (TR)* Benchmark
Jul
2013
Nov
2013
Nov
2014
Nov
2015
Nov
2016
Nov
2017
Nov
2018
Nov
2019
Nov
2020
Nov
2021
Nov
2022
Nov
2023
The chart above, in accordance with legislation, shows the total return per ordinary share, and does not consider the value
ordinary Shareholders would have received from the subscription shares they were given at launch and were able to sell or
exercise on the single conversion date of 31 July 2017.
Directors’ Remuneration Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 65
The Company’s Benchmark for the period to 31 August 2016 was the MSCI World Financials Index. On 1 September 2016 the
constituents of the MSCI World Financials Index changed to exclude real estate. MSCI therefore provided a revised index, the
MSCI World Financials + Real Estate Net Total Return Index which was adopted for all periods from 1 September 2016 until the
General Meeting of the Company held on 7 April 2020 at which time a new index was adopted following the reconstruction of
the Company on 23 April 2020, being the MSCI ACWI Financials Net Total Return Index.
Relative Importance of Spend on Pay
Under the Regulations (Schedule 8, Part 3 (20)), the Directors’ Remuneration Report must show a comparison of all
remuneration paid to employees* to all distributions (including dividends and share buy backs) paid to Shareholders for the
current year, preceding year and the difference between those years. This is to assist the Directors in understanding the relative
importance of spend on pay.
*The Company does not have any employees therefore for the purposes of comparison the remuneration paid to the non-executive
Directors is included.
Change
2023
£’000
2022
£’000 £’000 %
Directors’ total remuneration 145 144 1 1%
Dividends paid or declared in respect of the financial year*
14,191
14,588
(397) (3%)
(Loss)/profit on ordinary activities after tax (15,525) 5,450 (20,975) (385%)
Ordinary shares repurchased into treasury 23,139 9,175 13,964 152%
Issue of ordinary shares out of treasury – 10,960 (10,960) (100%)
Issue of new ordinary shares – 45,047 (45,047) (100%)
Issue of new ordinary shares pursuant to placing – 45,308 (45,308) (100%)
*The total dividends paid or declared is based on the number of shares in issue on the ex-dividend date. The first interim dividend of 2023, was paid on 31 August 2023 on 315,955,329 shares
(2022: 330,440,000 shares), the second interim dividend of 2022 will be paid on 29 February 2024 on 307,160,405 shares (2022: 324,779,000 shares). No payments were made in the period
to any past Directors (2022: £nil).
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 on 13 February 2024.
Simon Cordery
Chair
15 February 2024
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 66
Report of the Management
Engagement Committee
The Management Engagement Committee (“the Committee”)
comprises all of the directors, all of whom are independent
and non-executive. It is chaired by Susie Arnott, and meets
at least twice a year and at such other times as may be
necessary. The Committee has written terms of reference,
which are available to view on the Company’s website,
www.polarcapitalglobalfinancialstrust.com. The terms of
reference define the Committee’s responsibilities and duties.
The Committee is responsible for reviewing the performance
of the Investment Manager along with the Company’s
other service providers, keeping under review the terms
of the Investment Management Agreement (‘IMA’) and
the Manager’s appointment as AIFM, prior to making its
recommendation to the Board on whether the retention of
the Investment Manager is in the interests of shareholders.
The Committee’s terms of reference were updated during
the financial year under review to integrate ESG oversight
into the scope of the Committee’s responsibilities. As
part of this role, the Committee provides oversight of the
Manager’s investment process, ensuring ESG is integrated by
Polar Capital to ensure the Manager and the Company are
effective in meeting their social and regulatory requirements.
Performance Evaluation Process
Investment Manager
During the year, the Management Engagement Committee
carried out the detailed review of the Investment Manager’s
services and consider its continued appointment for the next
financial year ending 30 November 2024.
In addition, the Committee reviewed the current fee
arrangements with the Manager taking into consideration
the performance of the Manager in managing the assets of
the Company, the provision of operational and administrative
services and the performance of the Company in both
absolute and relative terms against the Benchmark and
peers since launch and post the reconstruction in April 2020.
No change to the fee arrangements was proposed
for the year under review or the year ahead.
The Committee has reviewed in detail the performance of
the Investment Manager in managing the portfolio over
the longer-term. Despite challenging market conditions and
disappointing short term performance, the Board supports
the strong fundamental approach taken by the team and
welcomed the recent recruitment of an experienced senior
fund manager, which should broaden and enhance the skills
of the investment team.
The Committee also considered the quality of support from
the marketing and administrative functions of the Manager,
including the quality of shareholder communications.
Following the review, the Committee concluded that it is in
the best interests of shareholders that the appointment of
Polar Capital LLP as Investment Manager is continued.
ESG
The Board and Committee regularly monitor the Investment
Manager’s approach to ESG including its methodology and
integration into the investment process. On a quarterly basis,
the Board reviews the Company’s ESG Dashboard which
includes both metrics regarding the Company’s MSCI ESG
fund score as well as bespoke ratings derived from detailed
in-house analysis. Engagement and specific action have
become increasingly meaningful areas and the Managers’
methodology incorporates these interactions with investee
companies into the process, through engagement reports and
trade exclusions.
As noted earlier in the Annual Report, the Managers are
required to have consideration of ESG factors when reviewing
new, continuing or exiting investments but are not required
to take an investment decision solely on the basis of ESG
factors.
During the year under review, the Committee considered
the developments in ESG as well as the format and content
of reports provided to the Board to ensure the quality of
information provided to the Board is of the highest standard.
Further information on how the Investment Manager
considers ESG in its engagement with investee companies
can be found in the ESG report on pages 27 to 32.
Susie Arnott
Chair of the Management Engagement Committee
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 67
Other Suppliers
The Board monitors directly or through the Investment
Manager the performance of its other key service providers
and whether they continue to provide both appropriate
services and value for money.
• The Board has directly appointed HSBC Bank Plc as
Administrator, Custodian and Depositary and Stifel
Nicolaus as Corporate Broker. The Depositary reports
quarterly and makes an annual presentation to the Board.
The Corporate Broker provides reports to the Board
periodically and joins the Board on request to discuss
markets and other issues.
• The Registrar, Equiniti Limited, is directly appointed by
the Board and the performance of its duties is monitored
by the Company Secretary.
• Other suppliers such as printers, website designers and
PR agents are monitored by the Company Secretary
and each supplier reports to the Board as and when
deemed necessary.
Committee Evaluation
The activities of the Management Engagement Committee
were considered as part of the annual Board evaluation
process. This year, an internal evaluation was completed
and the findings of the evaluation processes were
satisfactory with no matters of concern or requirements for
change needed.
Susie Arnott
Chair of the Management Engagement Committee
15 February 2024
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 68
Statement of Directors’ Responsibilities
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 Financial Statements in accordance with the
UK-adopted International Accounting Standards (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 Company and of
the profit or loss of the 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
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 Company
and enable them to ensure that the Financial Statements
and the Directors’ Remuneration Report comply with
the Companies Act 2006. They are responsible for such
internal controls 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 Company 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 comply 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 financial
statements taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the 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’s Financial Statements, which have been
prepared in accordance with applicable accounting
standards give a true and fair view of the assets, liabilities,
financial position and profit/loss of the Company; and
• the Strategic Report includes a fair review of the
development and performance of the business and the
position of the 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 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
Company’s auditors are aware of that information.
Simon Cordery
Chair
15 February 2024
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 69
Report on the audit of the financial statements
Opinion
In our opinion, Polar Capital Global Financials Trust plc’s financial statements:
• give a true and fair view of the state of the company’s affairs as at 30 November 2023 and of its returns and 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 Balance Sheet as at 30 November 2023; the Statement of Comprehensive Income, the Statement of
Changes in Equity, and the Cash Flow Statement 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 company 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 in the period under audit.
Independent Auditors’ Report
to the members of Polar Capital
Global Financials Trust plc
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 70
Independent Auditors’ Report continued
Our audit approach
Overview
Audit scope
• The Company is an Investment Trust Company and engages Polar Capital LLP (the“Manager”) to manage its assets. The
Company also engages Polar Capital LLP (the “Manager”) to manage its day to day operations.
• 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
• Income from and losses on investments
Materiality
• Overall materiality: £4,881,000 (2022: £5,412,000) based on approximately 1% of net assets.
• Performance materiality: £3,660,000 (2022: £4,059,000).
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.
Key audit matter How our audit addressed the key audit matter
Valuation and existence of investments
Refer to Note 2 Accounting Policies (g) Investments Held at
Fair Value Through Profit or Loss and Note 13 Investments
Held at Fair Value Through Profit or Loss.
The investment portfolio at the year-end comprised of listed
investments valued at £512.78 million and two unlisted
investments valued collectively at £5.05 million.
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 Sheet.
We tested the valuation of the listed equity investments by
agreeing the prices used in the valuation to independent third
party sources.
For unlisted investments, we assessed the appropriateness
of the valuation methodology applied by reference to the
International Private Equity and Venture Capital Valuation
guidelines (IPEV), and tested the techniques used in
determining the fair value of unlisted investments.
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 71
Key audit matter How our audit addressed the key audit matter
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.
For each unlisted investment we performed procedures to
assess whether significant estimates and judgements made
were supportable. Where applicable per investment we:
• Compared the valuation to the price of recent
transactions;
• Sought publicly available third party information that
would support or challenge management’s valuation;
• Validated the accuracy of publicly available inputs to the
model and challenged management to provide supporting
evidence for non-publicly available inputs; and
• Checked mathematical accuracy of the valuation.
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 and losses on investments
Refer to the Note 2 Accounting Policies (c) Income, (g)
Investments Held at Fair Value Through Profit or Loss, Note 3
Investment Income and Note 5 Losses on Investments Held at
Fair Value.
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 that income from investments has been accounted for in
accordance with the stated accounting policy.
We tested the accuracy of dividend receipts by agreeing the
dividend rates from investments to independent third-party
data.
We tested occurrence by testing that 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.
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 dividends during
the year.
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.
The gains and losses on investments held at fair value
comprise realised and unrealised gains and losses.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 72
Key audit matter How our audit addressed the key audit matter
For unrealised gains and losses, we tested the valuation
of the portfolio at the year-end,together with testing the
reconciliation of opening and closing investments.
For realised gains and losses, we tested a sample of disposals
by agreeing the proceeds to bank statements and we
reperformed the calculation of a sample of realised gains and
losses.
We did not identify any material misstatements as a result of
our testing.
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 company, the accounting processes and controls, and the
industry in which it operates.
The Company’s accounting is delegated to the Administrator who maintains the Company’s accounting records and who has
implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as part
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.
The impact of climate risk on our audit
In conducting our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the
potential impact of climate change risk on the company’s financial statements. The Directors and Investment Manager
concluded that the impact on the measurement and disclosures within the financial statements is not material because the
company’s investment portfolio is mainly 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:
Overall company materiality £4,881,000 (2022: £5,412,000).
How we determined it approximately 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 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% (2022: 75%) of overall materiality, amounting to £3,660,000
(2022: £4,059,000) for the company financial statements.
Independent Auditors’ Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 73
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 £244,000
(2022: £270,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of 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;
• 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 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 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.
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.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 74
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 November 2023 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 company and its 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 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 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 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 company and its
environment obtained in the course of the audit.
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 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.
Independent Auditors’ Report continued
Governance
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 75
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 in respect of the Financial Statements, 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 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 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 company 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 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;
• assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
• identifying and testing manual journal entries posted by the Administrator during the preparation of the financial
statements; and to incorporate unpredictability around the nature, timing or extent of our testing.
• challenging assumptions in the significant accounting estimates, in relation to the valuation of unlisted investments (see
related key audit matter above);
• incorporating unpredictability around the nature, timing or extent of our testing.
Governance
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 76
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 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 17 May 2013 to audit the
financial statements for the year ended 30 November 2013 and subsequent financial periods. The period of total uninterrupted
engagement is 11 years, covering the years ended 30 November 2013 to 30 November 2023.
Kevin Rollo (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
15 February 2024
Independent Auditors’ Report continued
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 77
Financial
Statements
and Notes
77
Financial Statements and Notes
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 78
Statement of Comprehensive Income
For the year ended 30 November 2023
Year ended 30 November 2023 Year ended 30 November 2022
Notes
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Investment income 3 19,143 – 19,143 17,473 – 17,473
Other operating income 4 916 – 916 146 – 146
Losses on investments held at fair value 5 – (25,777) (25,777) – (5,540) (5,540)
Losses on derivatives – (442) (442) – (103) (103)
Other currency losses 6 – (152) (152) – (819) (819)
Total income/(expense) 20,059 (26,371) (6,312) 17,619 (6,462) 11,157
Expenses
Investment management fee 7 (704) (2,815) (3,519) (727) (2,907) (3,634)
Performance fee 7 – – – – 1,164 1,164
Other administrative expenses 8 (774) (20) (794) (870) (19) (889)
Total expenses (1,478) (2,835) (4,313) (1,597) (1,762) (3,359)
Profit/(loss) before finance costs and tax 18,581 (29,206) (10,625) 16,022 (8,224) 7,798
Finance costs 9 (722) (2,887) (3,609) (249) (996) (1,245)
Profit/(loss) before tax 17,859 (32,093) (14,234) 15,773 (9,220) 6,553
Tax 10 (1,986) 695 (1,291) (1,484) 381 (1,103)
Net profit/(loss) for the year and total
comprehensive income/(expense) 15,873 (31,398) (15,525) 14,289 (8,839) 5,450
Earnings/(losses) per ordinary share (pence) 11 4.97 (9.84) (4.87) 4.45 (2.75) 1.70
The total column of this statement represents the Company’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 amounts dealt with in the Statement of Comprehensive Income are all derived from continuing activities.
The notes on pages 82 to 107 form part of these Financial Statements.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 79
Statement of Changes in Equity
For the year ended 30 November 2023
Year ended 30 November 2023
Notes
Called up
share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
reserve
£’000
Special
distributable
reserve
£’000
Capital
reserves
£’000
Revenue
reserve
£’000
Total
Equity
£’000
Total equity at
1 December 2022 16,588 251 311,380 128,256 74,905 9,892 541,272
Total comprehensive
(expense)/income:
(Loss)/profit for the year ended
30 November 2023 – – – – (31,398) 15,873 (15,525)
Transactions with owners,
recorded directly to equity:
Issue costs relating to prior year
share placings 21 – – (11) – – – (11)
Shares bought back and held in
treasury 22 – – – (23,139) – – (23,139)
Equity dividends paid 12
– – – – – (14,399) (14,399)
Total equity at
30 November 2023 16,588 251 311,369 105,117 43,507 11,366 488,198
Year ended 30 November 2022
Notes
Called up
share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
reserve
£’000
Special
distributable
reserve
£’000
Capital
reserves
£’000
Revenue
reserve
£’000
Total
Equity
£’000
Total equity at
1 December 2021 13,967 251 219,163 131,947 83,744 8,175 457,247
Total comprehensive
(expense)/income:
(Loss)/profit for the year ended
30 November 2022 – – – – (8,839) 14,289 5,450
Transactions with owners,
recorded directly to equity:
Issue of shares out of treasury 21, 22
– – 4,483 6,477 – – 10,960
Issue of new ordinary shares
(including costs) 19, 21 1,282 – 43,765 – – – 45,047
Issue of new ordinary shares
pursuant to placings
(including costs) 19, 21 1,339 – 43,969 – – – 45,308
Shares bought back and held in
treasury 22 – – – (9,175) – – (9,175)
Equity dividends paid 12,22 – – – (993) – (12,572) (13,565)
Total equity at
30 November 2022 16,588 251 311,380 128,256 74,905 9,892 541,272
The notes on pages 82 to 107 form part of these Financial Statements.
Financial Statements and Notes
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 80
Notes
30 November 2023
£’000
30 November 2022
£’000
Non current assets
Investments held at fair value through profit or loss
13
518,124 572,748
Current assets
Cash and cash equivalents
15
37,262 29,793
Fair value of open derivative contracts
13
506 6
Receivables*
14
8,419 3,161
46,187 32,960
Total assets 564,311 605,708
Current liabilities
Bank overdraft
15
(1) –
Fair value of open derivative contracts
13
(316) –
Payables
16
(6,502) (3,778)
(6,819) (3,778)
Non-current liabilities
Bank loan
17, 18
(69,031) (60,507)
Indian capital gains tax provision
18
(263) (151)
(69,294) (60,658)
Net assets 488,198 541,272
Equity attributable to equity shareholders
Called up share capital
19
16,588 16,588
Capital redemption reserve
20
251 251
Share premium reserve
21
311,369 311,380
Special distributable reserve
22
105,117 128,256
Capital reserves
23
43,507 74,905
Revenue reserve
24
11,366 9,892
Total equity 488,198 541,272
Net asset value per ordinary share (pence)
25
158.06 166.34
* In the prior years overseas tax recoverable was disclosed separately on the face of the balance sheet. The total receivable has been re-presented to include overseas tax recoverable. Full
disclosure of the overseas tax recoverable is available in Note 14.
The Financial Statements on pages 78 to 107, including the associated notes, were approved and authorised for issue by the
Board of Directors on 15 February 2024 and signed on its behalf by:
Simon Cordery
Chair
The notes on pages 82 to 107 form part of these Financial Statements.
Registered number: 8534332
Balance Sheet
As at 30 November 2023
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 81
Notes
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Cash flows from operating activities
(Loss)/profit before tax (14,234) 6,553
Adjustment for non-cash items:
Losses on investments held at fair value through profit or loss 25,777 5,540
Losses on derivative investments* 442 103
Scrip dividends received – (11)
Amortisation on fixed interest securities (186) (3)
Adjusted profit before tax 11,799 12,182
Adjustments for:
Purchases of investments, including transaction costs (284,542) (508,484)
Sales of investments, including transaction costs 311,263 414,210
Purchases of derivative financial instruments* (1,794) (109)
Proceeds on disposal of derivative financial instruments* 1,168 –
Increase in receivables (549) (832)
Increase/(decrease) in payables 479 (510)
Indian capital gains tax 114 (18)
Greek sales tax – (6)
Overseas tax deducted at source (1,596) (2,071)
Net cash generated from/(used in) operating activities 36,342 (85,638)
Cash flows from financing activities
Net proceeds from issue of shares out of treasury – 11,301
Net proceeds from issue of new ordinary shares – 45,140
Net proceeds from share placings – 45,308
Shares repurchased into treasury (22,988) (9,137)
Issue cost paid (11) (93)
Loan repaid
17
– (1,647)
Loan drawn
17
9,891 10,094
Exchange (gains)/losses on the loan facility* (1,367) 1,642
Equity dividends paid
12
(14,399) (13,565)
Net cash (used in)/generated from financing activities (28,874) 89,043
Net increase in cash and cash equivalents 7,468 3,405
Cash and cash equivalents at the beginning of the year 29,793 26,388
Cash and cash equivalents at the end of the year
15
37,261 29,793
* The prior year has been updated for presentational purposes only. There is no impact to the movement in the total cash flows and the year end cash position.
The notes on pages 82 to 107 form part of these financial statements.
Cash Flow Statement
For the year ended 30 November 2023
Financial Statements and Notes
Notes to the Financial Statements
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 82
1. General Information
Polar Capital Global Financial Trust plc is a public limited company registered in England and Wales whose shares are traded on
the London Stock Exchange.
The principal activity of the Company 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 Board has determined that Sterling is the Company’s functional currency and the presentational currency of the financial
statements because it is the currency which is most relevant to the majority of the Company’s shareholders and creditors and
is the currency in which the majority of the Company’s operating expenses are paid. All figures are rounded to the nearest
thousand pounds (£’000) except as otherwise stated.
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 Company’s Financial Statements have been prepared and approved by the Directors in accordance with UK-adopted international
accounting standards (“UK-adopted IAS”) and with the requirements of the Companies Act 2006.
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.
The financial position of the Company as at 30 November 2023 is shown in the balance sheet on page 80. As at 30 November 2023
the Company’s total assets exceeded its total liabilities by a multiple of over 7.4. The assets of the Company consist mainly of securities
that are held in accordance with the Company’s Investment Policy, as set out on page 34 and these securities are readily realisable.
The Directors have considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due. The assessment
took account of the Company’s current financial position, its cash flows and its liquidity position. In addition to the assessment the
Company carried out stress testing, which used a variety of falling parameters to demonstrate the effects on the Company’s share
price and net asset value. In light of the results of these tests, the Company’s cash balances, and the liquidity position, the Directors
consider that the Company has adequate financial resources to enable it 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 Company’s
financial statements.
(b) Presentation of the Statement of Comprehensive Income
In order to better reflect the activities of an investment trust company and in accordance with the guidance set out by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital
nature has been presented alongside the Statement of Comprehensive Income. The result presented in the revenue return
column is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set
out in Section 1158 of the Corporation Tax Act 2010.
(c) Income
Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive Income on
an ex-dividend basis.
Special dividends are recognised on an ex-dividend basis and may be considered to be either revenue or capital items. The facts
and circumstances are considered on a case-by-case basis before a conclusion on appropriate allocation is reached.
Where the Company has received dividends in the form of additional shares rather than in cash, the amount of the cash
dividend foregone is recognised in the revenue return column of the Statement of Comprehensive Income. Any excess in value
of shares received over the amount of cash dividend foregone is recognised in the capital return column of the Statement of
Comprehensive Income.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 83
The fixed returns on debt securities and non-equity shares are recognised under the effective interest rate method.
Bank interest is accounted for on an accrual basis. Interest outstanding at the year end is calculated on a time apportionment
basis using market rates of interest.
(d) Written Options
The Company may write exchange-traded options with a view to generating income. This involves writing short-dated covered
call options and put options. The use of financial derivatives is governed by the Company’s policies, as approved by the Board.
These options are recorded initially at fair value, based on the premium income received, and are then measured at subsequent
reporting dates at fair value. Changes in the fair value of the options are recognised in the capital return for the year.
The option premiums are recognised evenly over the life of the option and shown in the revenue return, with an appropriate
amount shown in the capital return to ensure the total return reflects the overall change in the fair value of the options.
Where an option is exercised, any balance of the premium is recognised immediately in the revenue return with a corresponding
adjustment in the capital return based on the amount of the loss arising on exercise of the option.
(e) Expenses and Finance Costs
All expenses, including the management fee, are accounted for on an accrual basis.
Expenses are allocated wholly to the revenue column of the Statement of Comprehensive Income except as follows:
Expenses are charged to the capital column of the Statement of Comprehensive Income where a connection with the
maintenance or enhancement of the value of investments can be demonstrated. In this respect the investment management
fees have been charged to the Statement of Comprehensive Income in line with the Board’s expected long-term split of returns,
in the form of capital gains and income from the Company’s portfolio. As a result, 20% of the investment management fees are
charged to the revenue account and 80% charged to the capital account of the Statement of Comprehensive Income.
Finance costs are calculated using the effective interest rate method and are accounted for on an accruals basis and, in line with
the management fee expense, are charged 20% to the revenue account and 80% to the capital account of the Statement of
Comprehensive Income.
Any performance fee accrued is charged entirely to capital as the fee is based on the outperformance of the Benchmark and is
expected to be attributable largely, if not wholly, to capital performance. A provision will be recognised when outperformance
has been achieved in accordance with the calculations detailed on page 36.
The research costs relate solely to specialist financial research and are accounted for on an accrual basis. They are allocated
20% to revenue and 80% to capital in line with the expected long-term split of revenue and capital return from the Company’s
investment portfolio.
(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 November 2023. Taxable profit differs from net
profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current
tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.
In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against
capital returns in the supplementary information in the Statement of Comprehensive Income is the “marginal basis”. Under this
basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Statement
of Comprehensive Income, then no tax relief is transferred to the capital return column.
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 84
2. Accounting Policies continued
(f) Taxation continued
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 Tax Act 2010 are not liable for taxation
on UK capital gains.
The company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961. The Indian capital
gains tax provision represents an estimate of the amount of tax payable by the Company. Tax amounts payable may differ
from this provision depending on when the Company disposes of its investments. The current provision for Indian capital
gains tax is calculated based on the long term (securities held more than one year) or short term (securities held less than one
year) nature of the investments and the applicable tax rate at the year end. Currently, the short-term tax rate is 15% and the
long-term tax rate is 10%. The estimated tax charge is subject to regular review including a consideration of the likely period of
ownership, tax rates and market valuation movements. The provision at the year end is recognised in the Balance Sheet and the
year-on-year movement in the provision is recognised in the Statement of Comprehensive Income.
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 when the asset
is realised based on tax rates that have been enacted or substantively enacted at the balance sheet date.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity.
(g) Investments Held at Fair Value Through Profit or Loss
When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant
market, the investments concerned are recognised or derecognised on the trade date and are initially measured at fair value.
On initial recognition the Company has designated all of its investments as held at fair value through profit or loss as defined by
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.
Written and purchased options are valued at fair value using quoted bid prices.
Index futures are valued at the difference between exchange settlement prices and inception prices.
All investments, classified as fair value through profit or loss, are further categorised into the fair value hierarchy detailed on
page 94.
Changes in fair value of all investments and derivatives held at fair value are recognised in the capital return column of the
Statement of Comprehensive Income. Gains or losses on derivative financial instruments are treated as capital or revenue
depending on the motive and circumstances of the transaction. Where positions are undertaken to protect or enhance capital,
the returns are capital and where they are generating or protecting revenue, the returns are revenue.
In respect of unquoted investments, or where the market for a financial instrument is not active, fair value is established by
using various valuation techniques, in accordance with the International Private Equity and Venture Capital (“IPEVC”) Valuation
Guidelines – Edition December 2022. These may include using reference to recent arm’s length market transactions between
knowledgeable, willing parties, if available, reference to recent rounds of re-financing undertaken by investee companies
involving knowledgeable parties, reference to the current fair value of another instrument that is substantially the same or a
relevant comparable.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 85
(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
Interim dividends payable to Shareholders are recognised in the financial statements in the period in which they are paid.
(k) Payables
Payables are not interest-bearing and are initially valued at fair value and subsequently stated at their nominal value (amortised cost).
(l) Bank Loans
Interest-bearing bank loans are initially recognised at cost, being the proceeds received net of direct issue costs, and
subsequently at amortised cost. The amounts falling due for repayment within one year are included under current liabilities and
more than one year under non-current liabilities in the Balance Sheet.
(m) 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.
(n) Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are
shown in equity, as a deduction, net of tax, from the proceeds.
(o) Capital Reserves
Capital reserve arising on investments sold includes:
– gains/losses on disposal of investments;
– exchange differences on currency balances; and
– 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 determine 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
in England and 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 and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 86
2. Accounting Policies continued
(p) Repurchase of Ordinary Shares (including those held in treasury)
Where applicable, 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.
Where the shares held in treasury are reissued, the amount of the sales proceed up to the repurchased cost of those shares is
transferred back into special distributable reserve, the excess of the sales proceeds over the repurchased cost is transferred to
share premium.
(q) Share Issue Costs
Where applicable, costs incurred directly in relation to the issue of new shares together with additional share listing costs have
been deducted from the share premium reserve.
(r) 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 Company has only one operating segment and as such no distinct segmental reporting
is required.
(s) Key Estimates and Judgements
The preparation of financial statements in conformity with UK-adopted IAS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. 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 key judgements and sources of estimation uncertainty that have a significant risk of causing material adjustment to the
carrying amounts of assets and liabilities and expenses in future periods are as follows:
Valuation of Level 3 Investments
Investments valued using valuation techniques include unlisted financial investments, which by their nature, do not have an
externally quoted price based on regular trades.
The valuation techniques used may include the techniques described in note 2(g). When determining the inputs into the
valuation techniques used, priority is given to publicly available prices from independent sources when available, but overall the
source of pricing is chosen with the objective of arriving at a fair value measurement that reflects the price at which an orderly
transaction would take place between market participants at the balance sheet date.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 87
(t) 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 Company’s financial statements.
i) There were no relevant standards effective for the current annual reporting period that potentially impact the Company in
issue.
ii) At the date of authorisation of the Company’s financial statements, the following relevant standards that potentially impact
the Company are in issue but are not yet effective and have not been applied in the financial statements:
Standards &
Interpretations
Effective for periods
commencing on or after
Disclosure of Accounting
Policies (Amendments to
IAS 1 and IFRS Practice
Statement 2)
Requirement amended to disclose material accounting policies instead
of significant accounting policies and provided guidance in making
materiality judgements to accounting policy disclosure.
1 January 2023
Definition of Accounting
Estimates (amendments
to IAS 8)
The amendment introduced the definition of accounting estimates
and included other amendments to IAS 8 to help entities distinguish
changes in accounting estimates from changes in accounting policy.
1 January 2023
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 Company in future periods.
3. Investment Income
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Revenue:
UK dividends 2,391 2,660
Overseas dividends 13,313 13,812
Scrip dividends - 11
Interest on debt securities 3,439 990
Total Investment Income 19,143 17,473
Included within income from investments is £623,000 (2022: £748,000) of special dividends classified as revenue in nature in
accordance with note 2 (c). No special dividends have been recognised in capital (2022: nil).
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 88
4. Other Operating Income
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Bank interest 916 146
Total other operating income 916 146
5. Losses on Investments Held at Fair Value
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Net losses on disposal of investments at historic cost (1,274) (11,901)
Less fair value adjustments in earlier years (26,371) (32,737)
Losses based on carrying value at previous balance sheet date (27,645) (44,638)
Valuation gains on investments held during the year 1,868 39,098
(25,777) (5,540)
6. Other Currency Losses
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Exchange (losses)/gains on currency balances (1,519) 823
Exchange gains/(losses) on the loan facility 1,367 (1,642)
(152) (819)
7. Investment Management and Performance Fee
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Management fee
– charged to revenue 704 727
– charged to capital 2,815 2,907
Investment management fee payable to Polar Capital LLP 3,519 3,634
Performance fee payable to Polar Capital (charged wholly to capital)* - (1,164)
* In 2022, the company underperformed and the prior year provisions have been written back resulting in a credit to the Statement of Comprehensive Income.
Management fees are allocated 20% to revenue and 80% to capital. Details of the investment management and performance
fees are set out in the Strategic Report on page 36.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 89
8. Other Administrative Expenses (including VAT where appropriate)
Year ended
30 November 2023
£’000
Year ended
30 November 2022
£’000
Directors' fees
1
145 144
Directors' NIC 15 13
Auditors' remuneration - for audit of the Financial Statements
2
50 50
Depositary fee
3
34 35
HSBC administration fee
3
205 171
Registrar fee 39 31
Custody and other bank charges
4
87 114
UKLA and LSE listing fees 49 36
Legal & professional fees
5
(3) 36
AIC fees 21 19
Directors' and officers' liability insurance 19 16
Corporate broker's fee
6
16 43
Marketing expenses
7
72 88
Research costs - allocated to revenue
8
5 5
Shareholder communications 17 24
Other expenses
9
3 45
Total other administrative expenses allocated to revenue 774 870
Research costs - allocated to capital
8
20 19
Total other administrative expenses 794 889
1 Full disclosure is given in the Directors’ Remuneration Report on page 63.
2 The base audit fee for the statutory audit in the current year was £49,980. The base audit fee for the statutory audit in the prior year was £44,000. Overrun fee of £6,000 incurred in the
completion of the 2021 audit due to the change in performance fee methodology.
3 Fees are determined on the pre-approved rate card with HSBC.
4 Fee is based on the value of the assets and geographical activity and determined on the pre-approved rate card with HSBC.
5 Includes VAT recovered which is greater than the total fees paid during the current year.
6 Corporate Broker fee is reduced by the commission received on the share buybacks during the year.
7 Includes bespoke marketing budget of £50,000 (2022: £50,000).
8 Research costs (which applied from 3 January 2018) payable by the Company relate solely to specialist financial research.
9 Includes non-executive Director search costs in the prior year only.
Ongoing charges represents the total expenses of the Company, 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 November 2023 was 0.86% (2022: 0.87%). The ongoing charges ratio
including the performance fee was 0.86% (2022: 0.65%). See Alternative Performance Measures on pages 109 and 111.
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 90
9. Finance Costs
Year ended 30 November 2023 Year ended 30 November 2022
Revenue
£’000
Capital
£’000
Total
£’000
Revenue
£’000
Capital
£’000
Total
£’000
Interest on loans and overdrafts 699 2,795 3,494 201 804 1,005
Loan arrangement fees 23 92 115 48 192 240
722 2,887 3,609 249 996 1,245
Finance costs are allocated 20% to revenue and 80% to capital.
10. Taxation
a) Analysis of tax charge/(credit) for the year:
Year ended 30 November 2023 Year ended 30 November 2022
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Overseas tax 1,438 – 1,438 1,465 – 1,465
Tax relief in capital 693 (693) – 19 (19) –
Withholding tax recovered (145) – (145) – – –
Indian capital gains tax – (2) (2) – (368) (368)
Greek sales tax – – – – 6 6
Total tax charge/(credit) for the year (see note 10b) 1,986 (695) 1,291 1,484 (381) 1,103
b) Factors affecting tax charge/(credit) for the year:
The charge/(credit) for the year can be reconciled to the profit/(loss) per the Statement of Comprehensive Income as follows:
Year ended 30 November 2023 Year ended 30 November 2022
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Profit/(loss) before tax 17,859 (32,093) (14,234) 15,773 (9,220) 6,553
Tax at the UK corporation effective tax rate of 23%
(2022: 19%)
4,108 (7,381) (3,273) 2,997 (1,751) 1,246
Tax effect of non-taxable dividends (3,382) – (3,382) (2,940) – (2,940)
Losses on investments that are not taxable – 6,065 6,065 – 1,228 1,228
Overseas tax suffered 1,438 – 1,438 1,465 – 1,465
Indian capital gains tax – (2) (2) – (368) (368)
Greek sales tax – – – – 6 6
Unrelieved current period expenses and deficits – 623 623 – 504 504
Withholding tax recovered (145) – (145) – – –
Tax relief on overseas tax suffered (33) – (33) (38) – (38)
Total tax charge/(credit) for the year (see note 10a) 1,986 (695) 1,291 1,484 (381) 1,103
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 91
c) Factors that may affect future tax charges:
The Company has an unrecognised deferred tax asset of £2,618,000 (2022: £1,968,000). The deferred tax asset is based on the
current corporation tax rate of 25% (2022: 25%).
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 UK tax on any capital gains arising on the
revaluation or disposal of investments held by the Company.
The Company is liable to Indian capital gains tax under Section 115 AD of the Indian Income Tax Act 1961. A tax provision on
Indian capital gains is calculated based on the long term (securities held more than one year) or short term (securities held less
than one year) nature of the investments and the applicable tax rate at the year end. The current rates of short-term tax rates
are 15% and the long term tax rates are 10% respectively. At the year ended 30 November 2023, the Company has a deferred
tax liability of £263,000 (2022: £151,000) on capital gains which may arise if Indian investments are sold.
11. Earnings/(Losses) Per Ordinary Share
Year ended 30 November 2023 Year ended 30 November 2022
Revenue
return
Capital
return
Total
return
Revenue
return
Capital
return
Total
return
The calculation of basic earnings/(losses) per share is
based on the following data:
Net profit/(loss) for the year (£’000) 15,873 (31,398) (15,525) 14,289 (8,839) 5,450
Weighted average ordinary
shares in issue during the year 319,065,538 319,065,538 319,065,538 320,762,691 320,762,691 320,762,691
From continuing operations
Basic - ordinary shares (pence) 4.97 (9.84) (4.87) 4.45 (2.75) 1.70
As at 30 November 2023 there were no potentially dilutive shares in issue (2022: nil).
12. Amounts Recognised as Distributions to Ordinary Shareholders in the Year
Dividends paid in the year ended 30 November 2023
Payment date
No. of shares Amount per share
Year ended
30 November 2023
£’000
28 February 2023
324,779,000 2.05p 6,658
31 August 2023
315,955,329 2.45p 7,741
14,399
The revenue available for distribution by way of dividend for the year is £15,873,000 (2022: £14,289,000).
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 92
12. Amounts Recognised as Distributions to Ordinary Shareholders in the Year continued
The total dividends payable in respect of the financial year ended 30 November 2023, which is the basis on which the
requirements of section 1158 Corporation Tax Act 2010 are considered, are set out below:
Payment date
No. of shares Amount per share
Year ended
30 November 2023
£’000
31 August 2023
315,955,329 2.45p 7,741
29 February 2024
307,160,405 2.10p 6,450
14,191
The total dividends payable in respect of the financial year ended 30 November 2022, which is the basis on which the
requirements of section 1158 Corporation Tax Act 2010 are considered, are set out below:
Payment date
No. of shares Amount per share
Year ended
30 November 2022
£’000
31 August 2022
330,440,000 2.40p 7,930
28 February 2023
324,779,000 2.05p 6,658
14,588
All dividends are paid as interim dividends, and all have been charged to revenue, where necessary utilising the revenue reserve
and in exceptional circumstances utilising the special distributable reserve. £162,000 for the dividend paid on 31 August 2022
was partially paid from the special distributable reserve.
13. Investments Held at Fair Value Through Profit or Loss
(a) Investments held at fair value through profit or loss
30 November 2023
£’000
30 November 2022
£’000
Opening book cost 506,766 422,479
Opening investment holding gains 65,982 59,621
Opening fair value 572,748 482,100
Analysis of transactions made during the year
Purchases at cost 286,636 510,922
Sales proceeds received (315,669) (414,737)
Losses on investments held at fair value (25,777) (5,540)
Amortisation on fixed interest securities 186 3
Closing fair value 518,124 572,748
Closing book cost 476,645 506,766
Closing investment holding gains 41,479 65,982
Closing fair value 518,124 572,748
The Company received £315,669,000 (2022: £414,737,000) from disposal of investments in the year. The book cost of these
investments when they were purchased were £316,943,000 (2022: £426,638,000). 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.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 93
The following transactions costs, including stamp duty and broker commissions were incurred during the year:
30 November 2023
£’000
30 November 2022
£’000
On acquisitions 473 565
On disposals 246 327
719 892
(b) Changes in Derivative Financial Instruments
(i) Futures
30 November 2023
£’000
30 November 2022
£’000
Valuation at 1 December 6 –
Additions at cost 683 109
Proceeds of disposal (386) –
Losses on disposal (297) (109)
Valuation (losses)/gains (294) 6
Valuation at 30 November (288) 6
The Company invested in currency and index futures during the year for the purposes of efficient portfolio management. As at
30 November 2023, the Company held a long position of 80 CME Japanese Yen December 2023 contracts, a short position of
250 CME British Pound December 2023 contracts and a short position of 20 CME British Pound/Japanese Yen December 2023
contracts with a market value loss of £288,000. (2022: 15 ICF Long Gilt March 2023 with a market value gain of £6,000).
(ii) Options
30 November 2023
£’000
30 November 2022
£’000
Valuation at 1 December – –
Additions at cost 1,111 –
Proceeds of disposal (782) –
Gains on disposal 293 –
Valuation losses (144) –
Valuation at 30 November 478 –
The Company invested in purchased call and put options during the year for the purposes of efficient portfolio management.
As at 30 November 2023, the company held SPDR S&P Regional Banking ETF call options and the market value of this open call
option position was £478,000 (2022: £nil).
(c) Fair Value of Open Derivative Contracts
30 November 2023
£’000
30 November 2022
£’000
CME Japanese Yen December 2023 Futures 28 –
ICF Long Gilt March 2023 Futures – 6
SPDR S&P Regional Banking ETF Call Options 478 –
506 6
CME British Pound December 2023 Futures (231) –
CME British Pound/Japanese Yen December 2023 Futures (85) –
(316) –
Total 190 6
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 94
13. Investments Held at Fair Value Through Profit or Loss continued
(d) Fair value hierarchy
The Company’s financial instruments within the scope of IFRS 7 that are held at fair value comprise its investment portfolio and
derivative financial instruments.
They are categorised into a hierarchy consisting of the following three levels:
Level 1 – valued using quoted prices in active markets for identical assets or liabilities.
Level 2 – valued by reference to valuation techniques using observable inputs other than quoted market prices included within Level 1.
Level 3 – valued by reference to valuation techniques using inputs that are not based on observable market data.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to ‘the fair
value measurement of the relevant asset’.
Details of the valuation techniques used by the Company are given in note 2(g) on page 84.
The following tables set out the fair value measurements using the IFRS 7 hierarchy at 30 November 2023 and 2022:
As at 30 November 2023
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity Investments and derivative financial
instruments 464,999 478 5,054 470,531
Interest bearing securities 47,783 – – 47,783
Total 512,782 478 5,054 518,314
The Level 2 investment relates to the SPDR S&P Regional Banking ETF Call Options.
The Level 3 investment relates to the shares in Atom Bank and Moneybox.
As at 30 November 2022
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Equity Investments and derivative financial
instruments
526,173 – 4,551 530,724
Interest bearing securities 42,030 – – 42,030
Total 568,203 – 4,551 572,754
The Level 3 investment relates to the shares in Atom Bank and Moneybox.
There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is
set out below.
Level 3 investments at fair value through profit or loss
30 November 2023
£’000
30 November 2022
£’000
Opening balance 4,551 1,921
Additions at cost – 3,000
Total gains/(losses) included in the Statement of Comprehensive
Income - on assets held at the year end 503 (370)
Closing balance 5,054 4,551
Level 3 Investments are recognised at fair value through profit or loss on a recurring basis.
Level 3 investments are valued in accordance with the accounting policy in Note 2(g) on page 84.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 95
A +/- 10% change in the price used to value the investment in the level 3 investments at the year end would result in
a +/- £505,000 (2022: £455,000) impact on the gains or losses on investments held at fair value in the Statement of
Comprehensive Income.
(e) Unquoted Investments
The value of the unquoted investments as at 30 November 2023 was £5,054,000 (2022: £4.551,000) and the portfolio
comprised the following holdings:
30 November 2023
£’000
30 November 2022
£’000
Atom Bank 1,281 2,241
Moneybox 3,773 2,310
5,054 4,551
Atom Bank is a UK digital bank founded in 2014 and based in Durham. It currently offers fixed rate and instant access savings
products, business banking loans and retail mortgages.
At 31 March 2023 (Atom Bank’s financial year end), Atom Bank announced that it had made pre-tax losses of £10,097,000
(2022: £11,927,000) and had net assets attributable to shareholders of £283,134,000 (2022: £251,094,000).
The valuation of Atom Bank was reviewed by the Investment Manager and the Board during both the half year and full year
financial results process. In November 2023, the investment of Atom Bank was decreased to the price at which the bank raised
£100m of capital. See Note 13(d) on page 94 for further details.
Moneybox is an on-line UK savings and wealth platform and provides mobile applications which enable customers to make
regular savings into tax efficient products, such as ISAs, or a personal pension, as well as various savings accounts.
At 31 May 2023 (Moneybox’s financial year end), Moneybox announced that it had made pre-tax profit of £4,141,000 (2022:
pre-tax loss of £10,198,000) and had net assets attributable to shareholders of £62,569,000 (2022: £31,917,000).
The valuation of Moneybox was reviewed by the Investment Manager and the Board during both the half year and full year
financial results process. During the year, the valuation of Moneybox was increased based on the strong performance of the
company. The valuation was calculated by calculating the average enterprise value to sales ratio of a peer group of listed
companies and then applying a discount to reflect the smaller size and narrower focus of Moneybox. This was cross checked
using a discounted cash flow analysis. An increase/decrease in the discount used of 5% would decrease/increase the fair value
by £290,000 and an increase/decrease of the multiple of sales of the peer group used of 0.5x would increase/decrease the fair
value by £295,000. See Note 13(d) on page 94 for further details.
14. Receivables
30 November 2023
£’000
30 November 2022
£’000
Securities sold awaiting settlement 4,933 527
Dividends and interest receivable 1,930 1,395
VAT recoverable 36 25
Overseas tax recoverable* 1,487 1,184
Prepayments 33 30
8,419 3,161
* The prior year figure, previously disclosed on the face of the balance sheet has been re-presented to be included as part of the total receivables figure.
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 96
15. Cash and Cash Equivalents
30 November 2023
£’000
30 November 2022
£’000
Cash at bank 36,406 29,652
Cash held at derivative clearing houses 856 141
Cash and Cash Equivalents 37,262 29,793
Bank overdraft (1) –
37,261 29,793
16. Payables
30 November 2023
£’000
30 November 2022
£’000
Securities purchased awaiting settlement 4,521 2,427
Repurchase of treasury shares awaiting settlement 189 38
Accruals 1,792 1,313
6,502 3,778
17. Bank Loans
i) Bank loans
30 November 2023
£’000
30 November 2022
£’000
The Company has the following unsecured term loans:
£15m at 3.921% repayable 8 July 2025 15,000 15,000
US$18.4m at 4.208% repayable 8 July 2025 14,551 15,469
29,551 30,469
The Company made the following drawdowns from the RBS revolving credit facility of
£50m as at year ended 30 November 2023 (30 November 2022: RBS revolving credit facility
of £50m):
£20m repayable 8 July 2025 20,000 20,000
£5m repayable 8 July 2025 5,000 5,000
US$6m repayable 8 July 2025 4,740 5,038
US$6m repayable 8 July 2025 4,740 –
£5m repayable 8 July 2025 5,000 –
69,031 60,507
During the year, the Company had further draw downs of US$6m and £5m from the three-year £50m revolving credit facility,
all expiring on 8 July 2025. As at 30 November 2023, the Company had drawn down £30m and US$12m (£9.5m) respectively
from the revolving credit facility, with £10m remaining available.
The term loans of £15m and USD $18.4m (£14.6m) held at the year end are due for settlement within 2 years and are stated at
their fair value, which equates to amortised cost.
Both the term loan and credit facility are unsecured but subject to certain covenants and restrictions, all of which have been
complied with during the year. The main covenants relating to the term loan and credit facility are:
(i) Consolidated Gross Borrowing not to exceed 30% of the Adjusted Portfolio Value at any time.
(ii) The number of Eligible Investments shall not be less than 50 at any time.
(iii) The Adjusted Portfolio Value shall at all times be equal to or more than £240,000,000.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 97
ii) Reconciliation of bank loans
30 November 2023
£’000
30 November 2022
£’000
Bank loans held as at 1 December 2022 60,507 50,418
Term loan of £20m and RCF of £15m & US$20.4m under RBS facility expired in July 2022 – (52,000)
Term loans of £15m & US$18.4m and RCF of £20m under RBS facility due to expire in
July 2025
– 50,353
RCF drawn under RBS facility due to expire in July 2025 9,891 10,094
Exchange losses on settlement of RCF balances – 2,254
Effect of changes in foreign exchange rates on Term loan and RCF (1,367) (612)
Bank loans held as at 30 November 2023 69,031 60,507
The movement in the liability arising from the bank loans due to changes in foreign exchange rates is a non-cash movement and
is included in the Statement of Comprehensive Income within ‘Other currency losses’.
18. Non-current Liabilities
30 November 2023
£’000
30 November 2022
£’000
Indian capital gains tax provision 263 151
Bank loan 69,031 60,507
69,294 60,658
19. Called Up Share Capital
30 November 2023
£’000
30 November 2022
£’000
Allotted, Called up and Fully paid:
Ordinary shares of 5p each:
Opening balance of 325,394,000* (2022: 272,980,000) 16,270 13,649
Issue of nil (2022: 25,644,680) new ordinary shares - 1,282
Issue of nil (2022: 26,775,320) new ordinary shares pursuant to placings - 1,339
Issue of nil (2022: 6,350,000) ordinary shares out of treasury - 318
Repurchase of 16,532,313 (2022: 6,356,000) ordinary shares into treasury (827) (318)
Allotted, Called up and Fully paid: 308,861,687 (2022: 325,394,000 ) ordinary shares
of 5p
15,443 16,270
22,888,313 (2022: 6,356,000) ordinary shares held in treasury 1,145 318
At 30 November 2023 16,588 16,588
* Excluding shares held in Treasury.
During the year, there were 16,532,313 ordinary shares repurchased into treasury for a total consideration £23,139,000
(2022: £9,175,000). There were no (2022: 6,350,000) ordinary shares issued out of treasury (a total net consideration of
2022: £10,960,000).
There were no new ordinary shares issues in the current year. In the prior year the Company issued 25,644,680 new ordinary
shares from the blocklisting facility for a total consideration of £45,140,000 less expenses of £93,000. In addition, the Company
also undertook a share placing programme, the first placing at the end of January 2022 and second placing at the end of
February 2022 under the Prospectus issued on 12 May 2021. This resulted in a total allotment of 26,775,320 new ordinary
shares for a total consideration of £46,022,000 less expenses of £714,000.
Subsequent to the year end to 13 February 2024, the Company has purchased a further 2,311,282 shares out of treasury for a
total consideration of £3,592,473 into treasury.
The ordinary shares held in treasury have no voting rights and are not entitled to dividends.
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 98
20. Capital Redemption Reserve
30 November 2023
£’000
30 November 2022
£’000
At 1 December 2022 251 251
At 30 November 2023 251 251
The capital redemption reserve represents the nominal value of shares repurchased and cancelled.
This reserve is not distributable.
21. Share Premium Reserve
30 November 2023
£’000
30 November 2022
£’000
At 1 December 2022 311,380 219,163
Issue of nil (2022: 25,644,680) new ordinary shares – 43,858
Issue of nil (2022: 26,775,320) new ordinary shares pursuant to placings – 43,969
Issue of nil (2022: 6,350,000) ordinary shares out of treasury – 4,483
Issue cost (11) (93)
At 30 November 2023 311,369 311,380
The cost to the block listing application of £nil (2022: £93,000) has been accounted as an issue cost as defined under IAS 32. The
current year cost of £11,000 relates to a VAT adjustment in relation to the prior year issue costs following the submission of the
Company’s VAT return.
The share premium arises from excess of consideration received on the issue of the shares over the nominal value.
This reserve is not distributable.
22. Special Distributable Reserve
30 November 2023
£’000
30 November 2022
£’000
At 1 December 2022 128,256 131,947
Issue of nil (2022: 6,350,000) ordinary shares out of treasury – 6,477
Repurchase of 16,532,313 (2022: 6,356,000) ordinary shares into treasury (23,139) (9,175)
Interim dividends paid * – (993)
At 30 November 2023 105,117 128,256
* In the prior year, the second interim dividend of 2.00p per share for the year ended 30 November 2021 was paid on 28 February 2022. Part of this dividend, amounting to £831,000 was
paid out of the special distributable reserve. In addition, the first interim dividend of 2.40p per share for the year ended 30 November 2022 was paid on 31 August 2022. Part of this dividend
amounting to £162,000 was paid out of the special distributable reserve.
The special distributable reserve was created following approval from the Court, received on 4 September 2013, to cancel the
share premium account from initial share offering.
Surpluses to the credit of the special distributable reserve can be used to purchase the Company’s own shares. In addition, the
Company may use this reserve for the payment of dividends.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 99
23. Capital Reserves
30 November 2023
£’000
30 November 2022
£’000
At 1 December 2022 74,905 83,744
Net losses on disposal of investments (27,645) (44,638)
Valuation gains on investments held during the year 1,868 39,098
Net losses on derivative contracts (442) (103)
Exchange (losses)/gains on currency balances (1,519) 823
Exchange gains/(losses) on the loan facility 1,367 (1,642)
Investment management fee charged to capital (2,815) (2,907)
Performance fee credited to capital – 1,164
Research costs charged to capital (20) (19)
Finance costs charged to capital (2,887) (996)
Indian capital gains tax 2 368
Greek sales tax – (6)
Tax relief due from revenue 693 19
At 30 November 2023 43,507 74,905
The balance on the capital reserve represents a profit of £42,095,000 (2022: profit of £65,778,000) on investments held and a
gain of £1,412,000 (2022: gain of £9,127,000 ) on investments sold.
The balance on investments held comprises holding gains on investments (which may become 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 Company’s shares) and those that are unrealised.
The balance on investments sold are realised distributable capital reserves which may be used to repurchase Company’s shares
or be distributed as dividends subject to meeting the definition of qualifying consideration as noted in Note 2(o).
24. Revenue Reserve
30 November 2023
£’000
30 November 2022
£’000
At 1 December 2022 9,892 8,175
Revenue profit 15,873 14,289
Interim dividends paid* (14,399) (12,572)
At 30 November 2023 11,366 9,892
* Part of the dividends for the prior year ending November 2022 were paid from the special distribution reserve as noted in Note 22.
The revenue reserve may be distributed or used to repurchase the Company’s shares (subject to being a positive balance).
25. Net Asset Value Per Ordinary Share
30 November 2023 30 November 2022
Net assets attributable to ordinary shareholders (£'000) 488,198 541,272
Ordinary shares in issue at end of year (excluding shares held in treasury) 308,861,687 325,394,000
Net asset value per ordinary share (pence) 158.06 166.34
As at 30 November 2023, there were no potentially dilutive shares in issue. (2022: nil).
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 100
26. Transactions with the Investment Manager and Related Party Transactions
(a) Transactions with the manager
Under the terms of an agreement dated 11 June 2013 the Company 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 November
2023 were £3,519,000 (2022: £3,634,000) of which £278,000 (2022: £305,000) was outstanding at the year end.
A performance fee based on cumulative relative performance since 23 April 2020, amounting to £nil (2022: £nil) has been
accrued at the year end. Any accrued performance fee is payable at the end of each five-year tender period, the next being in
2025. See Strategic Report on page 36 for more details.
In addition, the total research costs in respect of the period from 1 December 2022 to the year ended 30 November 2023 were
£25,000 (2022: £24,000) of which £8,000 (2022: £11,000) was outstanding at the year end.
(b) Related party transactions
The Company has no employees and therefore no key management personnel other than the Directors. The Company
paid £145,000 (2022: £144,000) to the Directors of which £23,000 (2022: £47,000) was outstanding at the year end. The
Remuneration Report is set out on pages 61 to 65. When dividends are paid by the Company these are received by the Directors
who own shares at the same rates and terms as by all other Shareholders.
27. Derivatives and Other Financial Instruments
Risk management policies and procedures for the Company
The Company invests in equities, debt securities and other financial instruments for the long-term to further the investment
objective set out on page 34.
This exposes the Company to a range of financial risks that could impact on the assets or performance of the Company.
The main risks arising from the 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 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.
– Borrowings, the main purpose of which is to enhance returns.
– Cash, liquid resources and short-term debtors and creditors that arise directly from the Company’s operations.
– Derivative transactions which the Company enters into may include equity or index options, contracts for difference, index
futures contracts and forward foreign exchange contracts. The purpose of these is to manage the market price risks and
foreign exchange risks arising from the 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 Manager co-ordinate the risk management and the Manager assesses the exposure to market risk when making
each investment decision.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 101
(a) Market Risk
Market risk comprises three types of risk: market price risk (see note 27(a)(i)), currency risk (see note 27(a)(ii)), and interest rate
risk (see note 27(a)(iii)). Further details are included in the Strategic Report on page 40.
(i) Market Price Risk
The 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 Company faces.
Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s operations.
It represents the potential loss the Company might suffer through holding market positions in the face of price movements.
A detailed breakdown of the investment portfolio is given on pages 22 to 24. Investments are valued in accordance with the
accounting policies as stated in note 2(g).
At the year end, the Company’s portfolio included index futures contracts to the value of (£288,000) (2022: £6,000) and
purchased call options to the value of £478,000 (2022: £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 financial sub-sector. The allocation of
assets to international markets, together with stock selection covering small, medium and large companies, and the use of
options, are additional factors which act to reduce price risk. The Investment Manager actively monitors market prices and
reports to the Board, which meets regularly in order to consider investment strategy.
Market price risks exposure
The Company’s exposure to changes in market prices at 30 November on its investments was as follows:
30 November 2023
£’000
30 November 2022
£’000
Investments held at fair value through profit or loss 518,124 572,748
Derivative financial instruments held at fair value through profit or loss 190 6
518,314 572,754
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% (2022: 15%) in the fair values of the 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 Company’s investments at each balance sheet date, adjusting for a change in management fee, with all other variables held
constant.
30 November 2023 30 November 2022
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 (109) 109 (120) 120
Capital return 77,312 (77,312) 85,432 (85,432)
Change to the profit after tax for the
year 77,203 (77,203) 85,312 (85,312)
Change to equity attributable to
shareholders 77,203 (77,203) 85,312 (85,312)
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 102
27. Derivatives and Other Financial Instruments continued
(a) Market Risk continued
(ii) Currency Risk
The Company’s total return and net assets can be significantly affected by currency translation movements as the majority of the
Company’s assets and revenue are denominated in currencies other than Sterling.
Management of the risk
The Manager mitigates risks through an international spread of investments.
Derivative contracts may be used to hedge against the exposure to currency risk at the Manager’s discretion.
Foreign currency exposure
The table below (as continued) with non-monetary items on page 103, shows, by currency, the split of the Company’s monetary
assets, liabilities and investments that are priced in currencies other than Sterling.
30 November 2023
£’000
30 November 2022
£’000
Monetary Assets:
Cash and short term receivables
US dollars 15,217 6,934
Australian dollars 7,471 10,373
Canadian dollars 6,622 7,654
Japanese yen 4,551 4,267
Euros 2,412 1,104
Vietnam dong 507 530
Indian rupee 152 470
Taiwan dollars 104 112
Swiss francs 93 90
Norwegian krona 28 103
Hong Kong dollars – 1,064
Monetary Liabilities:
Other payables
US dollar (20,671) (21,314)
Japanese yen (4,875) –
Indian rupee (3,122) (1,154)
Euros (705) (360)
Hong Kong dollars (1) (1,064)
Foreign currency exposure on net monetary items 7,783 8,809
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 103
30 November 2023
£’000
30 November 2022
£’000
Non-Monetary Items:
Investments held at fair value through profit or loss that are equities
US dollars 269,074 279,038
Euros 54,991 43,925
Indian rupee 25,900 34,915
Canadian dollars 17,271 25,133
Indonesian rupiah 13,376 19,073
Swedish krona 9,660 5,502
Hong Kong dollars 8,177 24,254
Japanese yen 8,021 17,418
Mexican peso 7,100 –
Thai baht 5,174 5,805
Singapore dollars 4,254 13,200
Australian dollars 4,125 4,644
Norwegian krona – 9,896
Swiss francs – 8,488
Malaysian ringgit – 4,775
Total net foreign currency exposure
434,906 504,875
Foreign currency sensitivity
The following tables illustrate the sensitivity of net profit for the year and net assets with regard to the Company’s monetary
financial assets and liabilities and exchange rates. The sensitivity analysis is based on the Company’s monetary currency financial
instruments held at the balance sheet date and assumes a 20% (2022: 20%) appreciation or depreciation in Sterling against
the currencies to which the Company is exposed, which is considered to be a reasonable illustration based on the volatility of
exchange rates during the year.
If Sterling had weakened by 20% (2022: 20%) this would have had the following effect:
30 November 2023
£’000
30 November 2022
£’000
Statement of Comprehensive Income - profit after tax
Revenue return 3,015 2,616
Capital return (470) (692)
Change to the profit after tax for the year 2,545 1,924
Change to equity attributable to shareholders 2,545 1,924
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 104
27. Derivatives and Other Financial Instruments continued
(a) Market Risk continued
(ii) Currency Risk continued
Foreign currency sensitivity continued
Conversely if Sterling had strengthened by 20% (2022: 20%) this would have had the following effect:
30 November 2023
£’000
30 November 2022
£’000
Statement of Comprehensive Income - profit after tax
Revenue return (3,015) (2,616)
Capital return 470 692
Change to the profit after tax for the year (2,545) (1,924)
Change to equity attributable to shareholders (2,545) (1,924)
In the opinion of the Directors, while these are regarded as reasonable estimates, neither of the above sensitivity analysis 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 Company’s objectives.
(iii) Interest Rate Risk
The Company will be affected by interest rate changes as it holds interest-bearing financial assets. Interest rate changes will also
have an impact on the valuation of investments, although this forms part of price risk, which is 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 may be used to hedge against the exposure to currency risk at the Manager’s discretion.
Interest rate exposure
The exposure, at 30 November 2023, of financial assets and liabilities to interest rate risk is shown by reference to:
– Floating interest rates (i.e. giving cash flow interest rate risk) - when the rate is due to be re-set; and
– Fixed interest rates (i.e. giving fair value interest rate risk) - when the financial instrument is due for repayment.
30 November 2023
Within one year
£’000
More than one year
£’000
Total
£’000
Exposure to floating interest rates:
Cash and cash equivalents 37,262 – 37,262
Bank overdraft (1) – (1)
Bank loans – (39,480) (39,480)
Non-current asset investments held at fair value through profit or
loss
– 40,788 40,788
Exposure to fixed interest rates:
Non-current asset investments held at fair value through
profit or loss
– 6,995 6,995
Bank loans – (29,551) (29,551)
Total exposure to interest rates 37,261 (21,248) 16,013
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 105
30 November 2022
Within one year
£’000
More than one year
£’000
Total
£’000
Exposure to floating interest rates:
Cash and cash equivalents 29,793 – 29,793
Bank loans – (30,038) (30,038)
Non-current asset investments held at fair value through
profit or loss
– 33,989 33,989
Exposure to fixed interest rates:
Non-current asset investments held at fair value through
profit or loss
– 8,041 8,041
Bank loans – (30,469) (30,469)
Total exposure to interest rates 29,793 (18,477) 11,316
The weighted average interest rate for the fixed rate financial assets was 10.4% (2022: 12.1%) and the effective period for
which the rate was fixed was 4.5 years (2022: 6.2years).
During the year, the Company maintained its £15m and USD$18.4m term loans with The Royal Bank of Scotland International
Ltd, on which interest is payable at fixed rates of 3.921% and 4.208% respectively. The loans will expire on 8 July 2025. Details
of the amounts drawn on the term loan are given in Note 17.
The Company also maintained its three-year revolving credit facility for the amount of £50 million with The Royal Bank of
Scotland International Ltd. Interest is payable at the Compounded Reference Rate based on the secured overnight financing rate
(SOFR) as quoted in the market for the relevant currency and period, plus a margin of 1.30%, plus mandatory costs, which are
the lender’s costs of complying with certain regulatory requirements of the Bank of England. At the year end, the Company had
drawn down £30m and US$12m (£9.5m) respectively from the revolving credit facility.
The above amounts are not necessarily representative of the exposure to interest rates in the year ahead, as the level of cash
and investment in fixed interest securities varies during the year according to the performance of the stock market, events
within the wider economy and the Manager’s decisions on the best use of cash or borrowings over the year.
Interest rate sensitivity
The following table illustrates the sensitivity of the return after taxation for the year and net assets to an increase or decrease of
150 basis points (2022: 100 basis points) in interest rates regarding the Company’s monetary financial assets, which are subject to
interest rate risk. This level of change is reasonably possible based on observation of current market conditions.
The sensitivity analysis is based on the Company’s monetary financial instruments held at each balance sheet date, with all other
variables held constant.
30 November 2023 30 November 2022
Increase
in rate
£’000
Decrease
in rate
£’000
Increase
in rate
£’000
Decrease
in rate
£’000
Effect on revenue return 440 (440) 238 (238)
Effect on capital return (474) 474 (240) 240
Effect on net profit and on equity
attributable to shareholders (34) 34 (2) 2
In the opinion of the Directors, the above sensitivity analysis may not be representative of the year as a whole, since the level of
exposure may change.
Financial Statements and Notes
Notes to the Financial Statements continued
For the year ended 30 November 2023
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 106
27. Derivatives and Other Financial Instruments continued
(b) Liquidity Risk
Liquidity risk is the possibility of failure of the Company to realise sufficient assets to meet its financial liabilities.
Management of the risk
The Company’s assets mainly comprise readily realisable securities which may be sold to meet funding requirements as necessary.
Liquidity risk exposure
At 30 November the financial liabilities comprised of:
30 November 2023
£’000
30 November 2022
£’000
3 months or less:
Balances due to brokers 4,710 2,465
Accruals 1,792 1,313
Bank overdraft 1 –
Fair value of open derivative contracts 316 –
More than 12 months:
Indian capital gains tax provision 263 151
Bank loan 69,031 60,507
76,113 64,436
(c) Credit Risk
Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposal of
investments or to repay deposits.
Management of the risk
The 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 Company’s assets. The 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 November 2023 was £44,631,000 (2022: £31,721,000) comprising:
30 November 2023
£’000
30 November 2022
£’000
Balances due from brokers 4,933 527
Fair value of open derivative contracts 506 6
Accrued Income 1,930 1,395
Cash and cash equivalents 37,262 29,793
44,631 31,721
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 Company’s financial assets are past due or impaired.
All deposits were placed with banks that had ratings of A or higher.
Financial Statements and Notes
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 107
(d) Gearing Risk
The Company’s policy is to increase its exposure to markets through the judicious use of borrowings. When borrowings are invested,
the impact is to magnify the impact on Shareholder’s funds of changes, both positive and negative, in the value of the portfolio.
Management of the risk
The Company uses short-term loans to manage gearing risk, details of which can be found in Note 17.
Gearing risk exposure
The loans are valued at amortised cost, using the effective interest rate method in the Financial Statements.
(e) Capital Management Policies and Procedures
The Company’s capital, or equity, is represented by its net assets which amounted to £488,198,000 as at 30 November 2023
(2022: £541,272,000), which are managed to achieve the Company’s investment objective set out on page 34.
The Board monitors and reviews the broad structure of the 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);
(ii) the determination of dividend payments; and
(iii) the planned level of gearing through the Company’s fixed and variable rate revolving credit facility.
The 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 Company
has to be able to meet one of the two capital restriction tests imposed on investment companies by company law.
28. Capital Commitments, Contingent Assets and Liabilities
Capital Commitments
The Company has no commitments to further investment in any investee companies (2022: £nil).
29. Post Balance Sheet Events
After the year end and to 13 February 2024, a further 2,311,282 ordinary shares were bought back and held in treasury.
Following these buy backs, the total number of ordinary shares in issue was 306,550,405 and the shares held in treasury was
25,199,595.
There are no other significant events that have occurred after the end of the reporting period to the date of this report which
require disclosure.
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 108
Shareholder
Information
108
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 109
Alternative Performance Measures
(APMs)
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:
NAV Total Return
The NAV total return shows how the net asset value per share has performed over a period of time taking into account both
capital returns and dividends paid to shareholders. The NAV total return performance for the period is calculated by reinvesting
the dividends in the assets of the Company from the relevant ex-dividend date.
Year ended
30 November 2023
Year ended
30 November 2022
Opening NAV per share
a
166.3p 167.5p
Closing NAV per share
b
158.1p 166.3p
Dividend reinvestment factor
c
1.022930 1.026183
Adjusted closing NAV per share
d = b*c
161.7p 170.7p
NAV total return for the year
(d / a)-1
-2.8% 1.9%
NAV Total Return Since Inception
NAV total return since inception is calculated as the change in NAV from the initial NAV of 98p, assuming that dividends paid to
Shareholders are reinvested on the ex-dividend date in ordinary shares at their net asset value.
Year ended
30 November 2023
Year ended
30 November 2022
NAV per share at inception
a
98.0p 98.0p
Closing NAV per share
b
158.1p 166.3p
Dividend reinvestment factor
c
1.361991 1.331251
Adjusted closing NAV per share
d = b*c
215.3p 221.4p
NAV total return since inception
(d / a)-1
119.7% 125.9%
NAV Total Return Since Reconstruction
NAV total return since reconstruction is calculated as the change in NAV from the NAV of 102.8p, which was the closing
NAV the day before the tender offer on 22 April 2020, assuming that dividends paid to Shareholders are reinvested on the
ex-dividend date in ordinary shares at their net asset value.
Year ended
30 November 2023
Year ended
30 November 2022
Rebased NAV per share at reconstruction
a
102.8p 102.8p
Closing NAV per share
b
158.1p 166.3p
Dividend reinvestment factor
c
1.097861 1.073252
Adjusted closing NAV per share
d = b*c
173.6p 178.5p
NAV total return since reconstruction
(d / a)-1
68.8% 73.6%
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 110
Share Price Total Return
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 November 2023
Year ended
30 November 2022
Opening share price
a
154.6p 172.0p
Closing share price
b
138.8p 154.6p
Dividend reinvestment factor
c
1.030408 1.028037
Adjusted closing share price
d = b*c
143.0p 158.9p
Share price total return for the year
(d / a)-1
-7.5% -7.6%
Share Price Total Return Since Inception
Share price total return since inception is calculated as the change in share price from the launch price of 100p, assuming that
dividends paid to Shareholders are reinvested on the ex-dividend date.
Year ended
30 November 2023
Year ended
30 November 2022
Share price at inception
a
100.0p 100.0p
Closing share price
b
138.8p 154.6p
Dividend reinvestment factor
c
1.353458 1.311772
Adjusted closing share price
d = b*c
187.9p 202.8p
Share price total return since inception
(d / a)-1
87.9% 102.8%
Share Price Total Return Including Subscription Share Value
The share price total return including subscription share value performance since inception includes the value of the subscription
shares issued free of payment at launch on the basis of one-for-five ordinary shares and assumes such were held throughout the
period from launch to the conversion date of 31 July 2017. Performance is calculated by reinvesting the dividends in the shares
of the Company from the relevant ex-dividend date and uses the launch price of 100p per ordinary share.
Year ended
30 November 2023
Year ended
30 November 2022
Share price at inception
a
100.0p 100.0p
Closing share price
b
138.8p 154.6p
Dividend reinvestment factor
c
1.381556 1.340750
Adjusted closing share price
d = b*c
191.8p 207.3p
Share price total return including subscription
share value since inception
(d / a)-1
91.8% 107.3%
Alternative Performance Measures (APMs) continued
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 111
(Discount)/Premium
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 November 2023 30 November 2022
Closing share price
a
138.8p 154.6p
Closing NAV per share
b
158.1p 166.3p
Discount per ordinary share
(a / b)-1
-12.2% -7.0%
Ongoing Charges
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
non-recurring 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 movement in the performance fee provision.
Year ended
30 November 2023
Year ended
30 November 2022
Investment Management Fee (Note 7 on page 88) £3,519,000 £3,634,000
Other Administrative Expenses (Note 8 on page 89) £794,000 £889,000
a
£4,313,000 £4,523,000
Average daily net assets value
b
£502,339,000 £519,515,000
Ongoing Charges excluding performance fee
a / b
0.86% 0.87%
Performance fee (Note 7 on page 88)
c
- (£1,164,000)
d = a+c
£4,313,000 £3,359,000
Ongoing charges including performance fee
d / b
0.86% 0.65%
Net Gearing
Gearing is calculated in line with AIC guidelines and represents net gearing. This is defined as total assets less cash and cash
equivalents divided by net assets. The total assets are calculated by adding back the bank loan. Cash and cash equivalents are
cash and purchases and sales for future settlement outstanding at the year end.
30 November 2023 30 November 2022
Net assets
a
£488,198,000 £541,272,000
Bank loan
b
£69,031,000 £60,507,000
Total assets
c = (a+b)
£557,229,000 £601,779,000
Cash and cash equivalents (including amounts awaiting settlement)
d
£37,484,000 £27,855,000
Net gearing
(c-d)/a-1
6.5% 6.0%
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 112
Glossary of Terms
AAF Report A report prepared in accordance with Audit and Assurance Faculty guidance issued by the Institute of
Chartered Accountants in England and Wales. Utilised within the review of internal controls.
Administrator The Company’s Administrator is HSBC Securities Services (HSS) who is contracted through Polar Capital
LLP to provide accounting and administrative services under the terms of the Investment Management
Agreement (“IMA”).
AGM Annual General Meeting – a meeting required to be held in accordance with the Companies Act 2006,
within six months of the Company’s financial year end. The Annual General Meeting, to be held at
2:00pm on Thursday 18 April 2024 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.
AIF Alternative Investment Fund – the Company is an investment trust which is a collective investment
undertaking which raises capital from a number of investors (in the case of the Company, by selling
shares in the open market on the London Stock Exchange) with a view to investing the capital in
accordance with the investment policy (see page 34).
AIFM Alternative Investment Fund Manager, a body appointed in accordance with the AIFMD (see below).
Polar Capital LLP is the appointed AIFM to the Company.
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 UK and European Union, must appoint a Depositary and an Alternative
Investment Fund Manager (‘AIFM’).
Benchmark The Benchmark is the MSCI ACWI Financials Net Total Return Index (in Sterling with dividends
reinvested).
Closed-ended
Investment
Company
An Investment Company whose shares are traded in the open market, e.g., on the London Stock
Exchange.
Custodian HSBC Bank plc is the Custodian of the Company’s assets. The Custodian is a financial institution
responsible for safeguarding, worldwide, the listed securities and certain cash assets of the Company,
as well as the income arising therefrom, through provision of custodial, settlement and associated
services.
Depositary The Company’s Depositary is HSBC Bank plc. Under AIFMD (see above) 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 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 for shareholders.
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 113
Discount/premium See Alternative Performance Measure (APM) on page 111.
Earnings per Share
(“EPS”)
A company’s profitability expressed on a per share basis and calculated by dividing the company’s annual
earnings after tax by the weighted average number of shares in issue.
ESEF European Single Electronic Format (ESEF) 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.
FCA The Financial Conduct Authority regulates the financial services industry in the UK. Its role includes
protecting consumers, keeping the industry stable, and promoting healthy competition between
financial service providers.
IFRS International Financial Reporting Standards (IFRS) are accounting standards which are developed by the
International Accounting Standards Board (IASB) and the International Sustainability Standards Board (ISSB).
The IASB sets IFRS Accounting Standards and the ISSB sets IFRS Sustainability Disclosure Standards.
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.
Investment
Manager/Manager
Polar Capital LLP is the Investment which has 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 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.
Market
capitalisation
Also sometimes referred to as ‘market cap’, this is a measure which describes the size of a Company
or an Investment Trust. It is calculated by multiplying the number of shares in issue by the price of the
shares.
Net Asset Value
(NAV)
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 value of the Company’s assets, principally investments made in
other companies and cash being held, minus any liabilities. The NAV is also described as ‘Shareholders
funds’. 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. The NAV per ordinary share is
published daily.
Non-executive
Director or NED
The Company is managed by a Board of Directors who are often referred to as independent
non-executive Directors. The Company does not have 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.
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 114
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 Company’s Auditors are PricewaterhouseCoopers LLP, represented by Kevin Rollo, Partner.
SORP The Statement of Recommended Practice (SORP) for investment trusts is issued by the AIC and it
provides recommendations on financial reporting that supplement official accounting standards. (See
Note 2(a) on page 82).
Treasury shares Treasury shares are the Company’s own shares that have been bought back from shareholders and
not cancelled but held in Treasury. Such shares may be reissued into the market at a premium to NAV.
Treasury shares do not attract the right to receive dividends or have any other voting rights.
UK-adopted IAS The international accounting standards adopted by the UK Endorsement Board after delegation
of adoption powers. These include International Accounting Standards (IAS), IFRS and related
interpretations, subsequent amendments to those standards and related interpretations, issued or
adopted by the IASB.
Glossary of Terms continued
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 115
Corporate Information – AGM
2024 Annual General Meeting (“AGM”)
The Company’s AGM will be held at 2:00pm on Thursday 18 April 2024 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 opportunity 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 cosec@polarcapital.co.uk stating the subject matter as PCFT-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 is provided 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.
Resolution 2, 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.
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. Shareholders last voted on the
Remuneration Policy at the AGM in 2023 and the policy came into effect from 1 December 2023, the current policy will remain
in force until 30 November 2026 unless amended during any earlier proposed reconstruction following the end of the fixed life.
Resolution 2 therefore, is the annual advisory vote of shareholders on the Remuneration Implementation Report. The Directors’
Remuneration Report is presented on pages 61 to 65.
Resolutions 3 to 6 relate to the annual election and re-election of directors. In line with good corporate governance the
tenure policy of directors is nine years, except for 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 to give
shareholders the opportunity to vote on each Director. Having undergone a Board Evaluation process, as described on page 53,
the Directors have provided a rationale for their support for the reappointment of each director on pages 8 and 9 and within the
Notice of AGM.
Resolutions 7 and 8 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 57.
Resolution 9 relates to the Company’s dividend policy. The Company will aim to pay two interim dividends in respect of each
full financial year. It continues to be the aim of the Company to maintain an income and growth mandate and the Board will
utilise reserves to support the dividend where necessary. The interim dividends will not necessarily be of equal amounts because
the dividends from the Company’s underlying investments are expected to arrive irregularly throughout the financial year.
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 116
Resolutions 10 to 12 relate to potential changes in the share capital. Resolution 10 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 11 is proposed in connection with 10 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 12 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 (see Glossary on page 113). When this
is the case the Company may step in and buy back shares in an effort to reduce the discount and remove excess liquidity in
the market. 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 continued
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 117
History and Structure
The Company was incorporated on 17 May 2013. On 1 July 2013, it issued 153,000,000 ordinary shares plus one subscription
share for every five ordinary shares which were admitted to trading on the Main Market of the London Stock Exchange. In
accordance with the Company’s original prospectus, on 31 July 2017, the subscription Shareholders had the opportunity to
exercise their rights to subscribe for one ordinary share per subscription share at a price of 115p per ordinary share, following
which all subscription rights lapsed and the subscription shares were cancelled. As a result of the subscription exercise the
Company issued 30,600,000 new ordinary shares.
In substitution of the fixed seven-year life, Shareholders approved changes to the Company’s Articles of Association to extend
the Company’s life indefinitely, subject to further regular tender offers at the Company’s Annual General Meeting held on
7 April 2020. The Articles of Association require the Board to make tender offers at five-yearly intervals, with the first to
commence on or before 30 June 2025. The Company continues to operate as an investment trust with an independent Board
and third party investment manager.
Share Capital, Voting Rights and Transferability
The Company’s share capital is divided into ordinary shares of 5p each. At the year end, there were 331,750,000 ordinary
shares in issue (2022: 331,750,000 ordinary shares), of which 22,888,313 (2022: 6,356,000) were non-voting shares held in
treasury by the Company. In the year under review the Company bought back a total of 16,532,133 shares (2022: 6,356,000).
After the year end and up to 13 February 2024 (the latest practicable date), the Company bought back a further 2,311,282
ordinary shares remaining 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.polarcapitalglobalfinancialstrust.com
The Company is not aware of arrangements to restrict the votes or transferability of its shares.
The Company is registered under the United States’ FATCA legislation and its Global Intermediary Identification Number (GIIN) is
8KP5BT.99999.SL.826. The Company’s Legal Entity Identifier (LEI) code is 549300G5SWN8EP2P4U41.
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 1 July 2013, 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 103.625p Subscription Shares 11.75p
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.
Capital Gains Tax
Information on Capital Gains Tax (‘CGT’) is available on the HM Revenue & Customs website www.gov.uk/capital-gains-tax.
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.
Corporate Information – Other
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 118
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.
The Company was launched on 1 July 2013 with the issue of ordinary shares at 100 pence per share with subscription shares
attached (on a one-for-five basis).
Company Website
www.polarcapitalglobalfinancialstrust.com
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 different sources including:
• www.theaic.co.uk
• www.ft.com/markets
• www.londonstockexchange.com
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 November 2023 are 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 November 2023 is available on
the Company’s website.
Share Prices 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.com
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.
Corporate Information – Other continued
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 119
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.
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.
Polar Capital Global Financials 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.
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 Financials Trust plc:
Past performance is not a guide to future performance.
Please remember that any investment in the shares of Polar Capital Global Financials 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 Financials 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.
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 – generally for investors with a large lump sum to invest, a private client stockbroker 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 – carry out the share transactions for their clients, they can do this directly but also via a growing number
of platforms that offer investment trusts including AJ Bell, Interactive Investor, Embark, Nucleus, Raymond James, Seven IM and
Transact. For investors looking to find a financial adviser, please visit www.unbiased.co.uk
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 120
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, Interactive
Investor, Barclays Stockbrokers, Halifax Share Dealing 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:
www.theaic.co.uk/how-to-attend-an-AGM
www.theaic.co.uk/how-to-vote-your-shares
Share Dealing Services
The Company has made arrangements with its share registrars, Equiniti Limited, for investors to buy and sell shares through the
Shareview.co.uk service.
BOOST your Dividends
Our share registrar Equiniti have launched a brand-new service EQ BOOST. Now you can use your dividend cash value to purchase
uplifted retail vouchers from a wide range of renowned UK retailers. We have agreed with Equiniti to offer EQ Boost as an exciting
and alternative way of receiving your dividend value.
You will be able to choose EQ Boost through a simple registration/election process on the Shareview link below.
Once you have elected for EQ Boost, on the company’s next dividend payment, you will be notified that your money is available for
you to purchase e-vouchers direct to your phone/ tablet. It is that simple.
If you decide you would like to go back to receiving cash or shares you can, at any time. Visit www.shareview.co.uk/Clients/EQBoost
to start the journey to boost your dividend payments.
For telephone sales call 0345 603 7037 between 8.00am and 5.30pm 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.
Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance
can be given that such expectations will prove to have been correct.
Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that
may affect our business, financial performance or results of operations, we urge you to look at the principal risks and uncertainties
included in the 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 Financials 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.
Corporate Information – Other continued
Shareholder Information
Annual Report and Financial Statements 2023 • Polar Capital Global Financials Trust plc 121
Boiler Room Scams
Shareholders of Polar Capital Global Financials 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
Shareholder Information
Polar Capital Global Financials Trust plc • Annual Report and Financial Statements 2023 122
Contact Information
Company Registration Number
8534332 (Registered in England)
The Company is an investment company as defined under
Section 833 of the Companies Act 2006.
Directors
Simon Cordery, Chair
Cecilia McAnulty
Susie Arnott
Angela Henderson
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
Co-Fund Managers
Nick Brind
George Barrow
Company Secretary
Polar Capital Secretarial Services Limited
Represented by Jumoke Kupoluyi, ACG
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
Stifel Nicolaus Europe Limited
150 Cheapside
London
EC2V 6ET
Identification Codes
Ordinary shares
SEDOL: B9XQT11
ISIN: GB00B9XQT119
TICKER: PCFT
GIIN: 8KP5BT.99999.SL.826
LEI: 549300G5SWN8EP2P4U41
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
Financials 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)
Shareholder website:
www.shareview.co.uk

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.
See more at:
polarcapitalglobalfinancialstrust.com
Strategic Report
2023 Annual Report and Financial Statements for the year ended 30 November 2023