Preliminary Results

RNS Number : 8572I

Polar Capital Technology Trust PLC

09 July 2013

 



POLAR CAPITAL TECHNOLOGY TRUST PLC

UNAUDITED PRELIMINARY RESULTS ANNOUNCEMENT

FOR THE FINANCIAL YEAR TO 30 APRIL 2013

9 July 2013

THIS ANNOUNCEMENT CONTAINS REGULATED INFORMATION

Financial Highlights

	Year ended 30 April 2013	Year ended 30 April 2012	Movement %
Total net assets	£528,845,000	£503,292,000	+ 5.1%
Net assets per ordinary share	412.41p	392.56p	+ 5.1%
Ordinary shares in issue	128,231,742	128,208,023	0.0%
Price per ordinary share	398.50p	387.00p	+3.0%
Subscription shares in issue	24,774,460	24, 798, 179	(0.1%)
Price per subscription share	7.88p	12.75p	(38.2%)
Benchmark Change over the year to 30 April 2013 Dow Jones World Technology Index (total return, sterling adjusted)			+ 6.0%

For further information please contact:
Ben Rogoff	Ed Gascoigne-Pees / Jack Hickey
Polar Capital Technology Trust PLC	FTI Consulting
Tel: [phone]	Tel: [phone]

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

Chairman's Statement

Michael Moule

Results

This has been a frustrating year for our managers, as the technology sector has not performed well, with our net asset value increasing by 5.1% and the share price by 3.0% over our financial year. Our benchmark, the Dow Jones World Technology Index, showed an increase of just 1.6% in local currency and 6.0% in Sterling. By contrast leading equity markets have been surprisingly buoyant with the FTSE World Index providing a Sterling adjusted total return of 21.4%

Review of the Past Year

Economic and political uncertainty subdued most equity markets for the first half of our financial year. The cost of supporting Greece and some other Eurozone members increased the fears of a Euro breakup, whilst in the USA some concerns were evident over the run up to the presidential election and the outcome of the fiscal cliff. In China there was anxiety about the leadership change and the extent of the economic slowdown. Despite the difficult macro backdrop the FTSE World Index managed a small positive total return of 2.7%. Technology shares had to contend with an unexpectedly difficult earnings season in the USA which was primarily responsible for a decline of 5.4% for our benchmark index.

The final six months were assisted by a marked improvement in sentiment towards equity markets and a reduced appetite for bonds. In Europe there was rising confidence that the ECB and politicians would provide substantial support to the weaker Euro club members. The news of an Obama second term reduced uncertainty and endorsed the view that QE and negative real interest rates would be sustained. In Japan, determination by the new government and the central bank to put an end to deflation prompted a sharp fall in the Yen, and an explosive rise in its equity market. Against this background developed equity markets exceeded most expectations with the FTSE World Index providing a second half Sterling return of 18.2%, but technology shares lagged the broader equity markets posting a return of 12.0%.

A full explanation of markets and performance can be found in the manager's report.

EU Regulation

An unwelcome but understandable by-product of the large losses sustained by European banks and their private clients on derivatives and certain hedge funds has been a determined push by EU politicians for tighter regulation. In an effort to prevent another "Madoff" scandal the EU has introduced a heavy handed edict called the AIFMD which will apply to a wide range of investment funds. To comply with the new law we will need to appoint an AIFM (Alternative Investment Fund Manager) and a Depositary by July 2014. In abiding by the new law investment trusts will be required to add another, largely unnecessary, layer of oversight to an already transparent and heavily regulated sector. The Board and our managers are looking to minimise the costs of this new unwarranted regulation.

Benchmark Adjustment

Technology companies, particularly in the USA, have historically concentrated on capital growth, with any excess cash flow being directed back into the business to fund acquisitions or to buy back stock. Apple and other large technology companies have generated large cash positions and some more vocal shareholders are requesting that directors look at introducing dividends, either special or regular. Our managers feel that, similar to other sectors, dividends will become a larger part of total return. The managers have hitherto been at a tax disadvantage with our current benchmark which is calculated on a gross total return basis assuming dividends are untaxed. From May 2013 our benchmark, the Dow Jones World Technology Index, will be calculated with the relevant withholding tax deducted from dividends before the total return is calculated, providing a level playing field.

Directors

Peter Dicks will be retiring from the Board at the AGM in September. He has served the company with great distinction since the trust's inception in December 1996, and on behalf of the Board and the management team I would like to thank him for his lively and wise contribution over the past 17 years. Peter also steps down as the Senior Independent Director and as Chairman of the Remuneration Committee. To replace him in these roles I am delighted that Rupert Montagu who has been a director since 2007 has agreed to accept these two appointments.

Every three years the trust engages an external consultant to evaluate the Chairman and the Board of Directors. This process was very thorough and also included contact with all our service providers and some of the largest shareholders. I am relieved to report that we received a clean bill of health and some helpful observations. The review also included a separate external appraisal on the level of Board remuneration which has not changed since 2011. The Board has accepted the recommendation that the fees for Chairman and Directors should rise by just over 8% from May 2013.

AGM

The AGM will be held at 12 noon on Monday 2 September 2013 at the RAC Club, Pall Mall, London. The Board and the management team look forward to meeting as many shareholders as possible. Full details of the meeting are contained in a separate document that will be enclosed with this annual report.

Management Team

Ben Rogoff is responsible for managing the total portfolio, assisted by a team of specialist managers and analysts.  Neil Taylor is our very experienced company secretary who seems to make light work of the extra regulation and the myriad of tasks to ensure the smooth running of the Company. It is a great pleasure to work with such a positive and responsible team and my thanks to them for all their hard work over the past year.

Outlook

We are now just over four years on from the extreme low point in March 2009 in what has aptly been described as a stealth bull market. There is no euphoria, indeed I cannot detect much enthusiasm for holding equities, only the grudging acceptance that equities are the least worst option amongst asset classes and do provide a modest and growing income and some inflation hedge characteristics, compared to the meagre returns on cash and shorter dated government bonds .Given the levels of Government and personal debt in most developed economies, and hence a lack of growth, there is still a nagging fear that we are in a post financial crisis upswing in a protracted long term bear market, which explains why there is so much cash sitting on the sidelines.

In terms of valuation the past seven months has lifted all equity boats and it is difficult for value investors to find anything particularly cheap. Conversely apart from some of the mega cap consumer staples, nothing looks particularly expensive. The good news is that investors are nervous about owning individual technology shares, consequently the sector is modestly rated compared to its historical average. For our manager the constant search for new growth ideas and trying to avoid the many losers in this new paradigm is a massive challenge. From my generalist viewpoint the World Wide Web is a free fountain that keeps on giving. We should not be ashamed to own more of the beneficiaries of the stupendous gift bestowed on the world by Sir Tim Berners-Lee.

Michael Moule

 Chairman

investment manager's report

Market review

After a weak start global equities rallied during the remainder of the fiscal year with decisive intervention by the European Central Bank in July proving a turning point for both investor sentiment and the performance of risk assets, the FTSE World total return index rising 21.4%  during the year. Sterling based returns were augmented by US Dollar and Euro (both +4%) strength, partially offset by pronounced Yen weakness (-17%). Despite a number of significant challenges that presented themselves during 2012, the global economy expanded at a respectable 3.2%, led by emerging economies (+5.1%) with China (+7.8%) once again defying its critics despite the potential disruption of a leadership transition. As expected, developed economies (+1.2%) remained pressured by austerity measures that were most keenly felt in the Eurozone (-0.6%) that additionally had to contend with regional challenges including a banking crisis in Cyprus.

Fortunately, European weakness was offset by economic acceleration in the US (+2.2%), driven by labour and housing market improvement and the absence of fiscal consolidation that only began in earnest towards fiscal year end. Japan (+2%) also made encouraging progress as early weakness relating to deteriorating relations with China over the Senkaku islands was soon forgotten following the decisive election victory by the LDP in December with now PM Shinzo Abe promising to end two decades of deflation via a programme of monetary expansion, fiscal stimulus and Yen depreciation. Once again, corporate earnings outpaced the global economy as S&P earnings increased by more than 8% during the year.

While the economic backdrop proved less deleterious than many had feared in 2012, this was largely due to policymakers proving alive to each major challenge that presented itself. This was most apparent early in the fiscal year with the survival of the Eurozone once again resurfacing as a would-be existential issue. ECB President Mario Draghi's July speech in which he made clear that the ECB would do "whatever it takes to preserve the Euro" was the key turning point for risk assets during the year. It also proved the first of a series of critical market friendly interventions that all but removed worst-case scenarios.

The normalisation that followed ECB intervention also allowed real economic progress to be made with most of the periphery countries making progress in closing the unit labour cost gap with Germany while some, such as Portugal, took advantage of sharply lower sovereign yields to cover their entire financing needs for 2013. This positive feedback loop was also evident post the election of Shinzo Abe in December with Japanese equities responding dramatically to market (if not currency) friendly policies designed to break the deflationary cycle that has stymied the Japanese economy since the 1990s. Likewise, 'resolution' of the so-called 'fiscal cliff' in January when Congress agreed to a compromise that averted automatic spending cuts saw the Dow Jones Industrial index deliver its best January performance since 1989.

The growing recognition that policymakers were likely to avert extreme outcomes allowed investor sentiment to recover dramatically from its 2012 nadir, despite the actual recovery remaining muted evidenced by ten year US Treasury yields that fell by c. 0.25% during the fiscal year, ending the period at just 1.68%. This improvement in sentiment was most evident from equity mutual fund flows that in January registered their largest monthly inflow ($51bn) into stocks since February 2000, while M&A activity rebounded sharply in early 2013 with private equity buyers announcing deals to acquire both Dell and Heinz in January alone. Companies also played their part via accelerated buybacks and increased dividends, the return of capital to shareholders proving a key micro development during the year. This potent combination left equity markets largely impervious to negative developments as and when they occurred, a dynamic most apparent during the final third of the fiscal year when neither the Cypriot banking crisis nor US sequestration had more than an ephemeral impact on risk appetite. During the year, the strongest regional returns (taking into account the impact of foreign exchange movements) were generated by Japanese stocks (+28%) following the LDP's decisive election victory in December. European and US stocks performed broadly in line (+22% and +25% respectively) while Asian equity markets underperformed reflecting heightened tension on the Korean peninsula, market share concerns as a result of Yen depreciation and technology underperformance.

Technology review

In a reversal of last year's fortunes, technology shares materially trailed the broader market, the Dow Jones World index rising 6% in Sterling terms - only the second time the sector has underperformed over a fiscal year since the 2008/9 market lows. The sector did manage to outperform during the weak start to the year, aided by large-caps including Apple, Samsung and TSMC with strong supporting roles played by so-called 'bond proxies' such as IBM. While the poor debut (and subsequent performance) of Facebook following its much anticipated IPO in May was unhelpful to sector progress, Mario Draghi's July speech that buttressed investor sentiment proved a more significant turning point as broader market participation diminished the technology sector's relative lustre. This healthy if adverse rotation became more fundamentally driven in September following the release of the iPhone 5 that concurrently marked the peak of Apple's share price. This rather evolutionary new handset was followed by two disappointing quarterly earnings reports from the company with gross margins pressured by demand shifting in favour of lower priced products such as the iPad mini. As the largest constituent of market-cap weighted indices (and accounting for C.18% of our benchmark at its zenith) the 37% decline in Apple's share price post its September highs and the associated impact this had on its supply chain and other smartphone-related stocks weighed heavily on the overall technology sector.

In addition to Apple-related weakness, the sector's relative progress was hampered by cautious capital spending trends due to mixed macroeconomic conditions and uncertainty associated with Europe, US Presidential elections, fiscal consolidation and the Chinese leadership transition. This uncertainty resulted in overall IT budgets increasing by just 1.2% during 2012 as compared to early expectations of C.3.7%, creating a significant growth headwind made all too apparent by challenging Q3'12 and Q1'13 reporting seasons. As is the norm, weaker IT spending disproportionately impacted legacy technologies such as servers and personal computers (PC) that also had to contend with tablet substitution, IDC reporting that PC units shipped fell 14% year over year in 1Q13 - the industry's worst quarterly performance on record.  However, PC-related stocks (and a number of other mega-cap incumbents such as Cisco) performed materially better than their underlying markets by delivering earnings growth via restructuring and/or significantly increasing their payout ratios via buybacks and dividends. This trend was epitomised by Apple's announcement in April that it would return $100bn to shareholders via dividends and buybacks over the next three years. This new found capital discipline, together with news in January that private equity investors Silver Lake intended to take Dell private in a $24bn transaction, resulted in strong second-half performances from a number of value-orientated incumbents including Cisco, Hewlett Packard, Microsoft and Symantec.

While 2012 proved a quieter year for M&A within the technology sector (and the broader market) there were a number of thesis affirming transactions such as IBM's acquisition of software-as-a-service vendor Kenexa and Oracle's curious purchase of two telecom-related assets, Acme Packet and Tekelec. The healthy take-out premiums associated with these and other M&A transactions helped technology small-caps outperform their larger peers by C.9% (as measured by the Russell 2000 and 1000 technology indices respectively).  However, just as large-cap outperformance in FY2012 was exaggerated by Apple's ascent, so its 23% decline this year flattered the magnitude of small-cap outperformance , the average large-cap performing materially better than headlines suggest - the MLO (an unweighted index of large and mid-cap companies) actually outpacing small-caps over the fiscal year. At the sector level, smartphone-related growth helped Internet stocks perform strongly while semiconductor capital equipment companies benefitted from increased capital spending plans at Intel as it attempted to 'outmuscle' ARM and its foundry partners such as TSMC. Consolidation and supply-side discipline resulted in better than expected pricing and strong stock price performances from hard-drive (HDD) and memory vendors such as Seagate, Hynix, Micron and SanDisk. Weakest performance was reserved for telecom vendors as service provider spending remained lacklustre while enterprise-orientated hardware and software companies fared poorly due to cautious capital spending trends.

Our performance

Weaker than anticipated capital spending negatively impacted a number of our favoured infrastructure stocks which left the Trust modestly trailing its benchmark during the year, our own net asset value rising 5%. Companies such as Citrix (-24%), F5 Networks (-40%) and VMware (-34%) that had previously been strong contributors to performance were all caught up in the capital spending hiatus resulting in sharp share price corrections as investors questioned whether they remained secular growth companies. Relative performance was also hindered by a pronounced rotation in favour of 'value' during the second half of the fiscal year assisting incumbents such as Microsoft (+11%), Symantec (+53%) and Yahoo (+66%). The Trust was also negatively impacted by its exposure to communication equipment stocks as hopes for improved service provider capex proved overly optimistic, equipment spending contracting during 2012 as carriers postponed purchases.

In terms of positives, the Trust was aided by its overweight exposure to off-benchmark Internet companies such as Amazon (+14%), eBay (+33%) and LinkedIn (+85%) that benefitted from growth in e-commerce and online advertising, in part due to smartphone-related usage. Relative performance was also generated by an underweight position in Apple, which was reduced further following the iPhone 5 launch and subsequent earnings disappointments. The Trust continued to benefit from its underweight PC exposure as tablet substitution and a poor reception to Windows 8 weighed on companies such as  Hewlett-Packard and Intel. Relative performance was also generated by M&A activity with five of our holdings (Acme Packet, Kenexa, OPNET, Pervasive Software and Springsoft) being acquired during the year at premiums that ranged from 24-56%.

Economic Outlook

Despite recent economic deceleration related to US fiscal consolidation and associated uncertainty, we remain hopeful that the global economy (forecast to grow 3.3%) will continue to 'muddle through' in 2013 once again led by emerging economies with modest contribution from advanced markets given ongoing Eurozone weakness. Critical to our (long-held) sanguine view is the fact that inflation continues to look well contained, at least in developed economies, due to slack labour markets and well-anchored inflation expectations which - with policymakers focused on downside risk - should ensure monetary policy in developed economies remains remarkably accommodative.

While the US economy is expected to decelerate modestly in 2013, current GDP forecasts of 1.9% capture the impact of fiscal withdrawal, estimated at 1.25% of GDP, obscuring likely underlying improvement in both labour and housing markets. Ongoing fiscal adjustment will likely see the Eurozone economy contract by a further 0.3% in 2013 although this modest recession belies deeper contractions in Italy and Spain offset by growth in Germany. Fortunately, Asia looks likely to accelerate over the coming year with China and India expected to grow at 8.0% and 5.7% respectively. Although recent Chinese data has been more mixed, the absence of inflation should afford the new government sufficient monetary and fiscal firepower to stimulate growth if required. Japan - the world's third largest economy - is also likely to provide a positive impetus in 2013 due to Yen weakness and improving external demand. While growth is currently pegged at 1.6%, estimates remain highly dependent on where the Yen settles given that about half of Japan's GDP growth comes from export industries.

In contrast to last year, risks to this constructive economic outlook have diminished due to decisive action taken by policymakers to defuse the two most significant threats to the global economy - a Eurozone break-up and a severe fiscal contraction associated with the US 'fiscal cliff'. However another systemic challenge could emerge during the coming year, a possibility that increases commensurate with the duration of the current economic 'soft patch'. Europe is likely to remain a focus given that its structural issues remain largely unresolved while prolonged stagnation may lead to more social unrest and electoral setbacks that could force governments to reverse course on austerity. While the January 'fiscal cliff' deal was a significant step in the right direction, the US fiscal consolidation process is far from complete with negotiations over spending cuts and the debt ceiling set to take place over the coming months.

Although these battles are likely to be hard fought, we are hopeful that there will be 'a little less drama' during the next round of political negotiations. Another systemic challenge could come from currency wars should countries look to target exchange rates for competitive purposes, a risk brought into focus by recent Yen weakness. Although talk of a currency war appears premature, the risk of one developing increases with every year of sub-trend growth. Additional risks include inflation that could jeopardise record low interest rates and limit policy options (particularly in developing economies) and renewed focus on high fiscal deficits and debt in both the US and Japan. As in previous years, political risk remains the most potent exogenous factor particularly in the Middle East where prospects of an oil shock remain heightened.

Market outlook

Although markets have got off to a strong start in 2013, we are optimistic that equities can add to their gains over the remainder of the fiscal year. The recovery in investor sentiment and risk appetite that has driven the revaluation of risk assets has seen equity valuations expand materially over the past twelve months, the forward PE on the S&P increasing from 12x to C.14.6x today. While absolute valuations are therefore less compelling today than they were a year ago, they reflect an outlook that has become significantly less uncertain. In the US, stocks appear well supported by a 1.9% dividend yield that has historically grown at a C.5% CAGR (1994-2012) helping them look more attractive than risk free alternatives where negative real returns appear all but guaranteed. Having generated more than $570bn in free cash flow during the past year US non-financial companies are today sitting on more than $1.7tr in cash. This is likely to be deployed on further buybacks, which totalled $375bn over the trailing twelve months to 3Q'12 representing 65% of aggregate free cash flow, resulting in share counts in the S&P 500 reaching their lowest level since 2008. Excess corporate cash is also likely to continue to fuel additional M&A activity with more than $285bn of deals announced during the first six weeks of 2013 alone. The return of private equity and mega-LBOs (such as the $24bn management buyout of Dell and the $23bn acquisition of Heinz) should further support equity valuations.

As we move further from the 2008/9 crisis and 'echoes' become more muted, lower volatility may see equity valuations drift higher by allowing for more rational comparison of risk and risk-free assets. This process appears to be already underway with investors pouring a record $51bn into equity mutual funds in January which may prove a key turning point given that investors are said to be holding C.$10tr of cash at a time when household ownership of equities has fallen dramatically from 2000 level. With spreads having essentially normalised, bond markets look increasingly susceptible to further economic and/or sentiment improvement. As such talk of a so-called 'great rotation' (from bonds into equities) - recently derided as evidence of complacency - may be better understood as a rallying cry similar to the speech given by Imperial Tobacco fund manager George Ross Goobey in 1956 that reminded investors that it is possible to lose capital in gilts and that equities should yield less than bonds. Given that bond funds captured 75% and 85% of net fund inflows in the US and UK in 2012 we are hopeful that equity allocations will continue to improve this year, particularly now that the Federal Reserve appears to have begun the (long) process of disentanglement by articulating what they are targeting (employment) while even a modest uptick in inflation is likely to eliminate real returns given low nominal yields while proving an equity friendly development, a point unlikely to be lost on asset allocators.

While we are confident that a new secular bull market has commenced, there are a number of potential headwinds that could challenge this prognosis. Having enjoyed a strong run from their late 2012 lows, equity markets appear a little extended versus their longer-term moving averages making them more susceptible to profit taking, particularly given strong seasonal tendencies ('sell in May...'). Although investor sentiment remains well below levels associated with complacency, other contrarian indicators such as IPO activity and mutual fund cash levels point to modestly elevated risk of a pullback. A more significant risk relates to loss of policymaker support given that our bullish prognosis since 2009 has depended heavily on the unusual alignment of interests between policymakers and investors equally keen to hold deflationary forces at bay. Our sense is that extremely accommodative policy is likely to prevail until growth is deemed to have become self-sustaining, or as incoming BoE governor Mark Carney described it, until economies have achieved "escape velocity". While there may be headline risk associated with loss of support, investors should be able to stomach the eventual loss of the so-called 'Fed put' in exchange for a real recovery. A further risk relates to corporate tax reform with the legal exploitation of tax loopholes appearing increasingly anachronistic given widespread 'belt tightening'. While we believe that wholesale (and therefore effective) tax reform will prove impossible, the issue has become highly politicised with PM David Cameron (in a thinly veiled reference to Starbucks) warning those that pay no tax in Britain to "wake up and smell the coffee".

Technology outlook

Given that a number of the systemic challenges that acted as spending headwinds last year have diminished, we expect to see some recovery in capital spending which, at 10% of GDP, is at the lower end of the 9-14% range that has prevailed since 1947. With C.60% of industry revenues coming from business spending, the technology sector should be a prime beneficiary of any rebound in capex. However, while forecast IT budget growth of 3% represents welcome acceleration, absolute levels of spending are likely to remain depressed due to lingering uncertainty (a function of the fragility of the recovery) and the deflationary impact of a new technology cycle. With low-single digit IT spending growth entirely at odds with computing needs that continue to grow inexorably we are likely to see further reallocation of IT budgets in favour of cheaper technologies and vendors at the expense of incumbents. Rapid adoption of key technologies such as smartphones and tablets over the past year has left the 'new cycle' looking increasingly pernicious as technology alternatives begin to substitute, rather than complement existing solutions. We expect this headwind to strengthen over the coming year as the basis of computing shifts further from the enterprise in favour of the Cloud. This is likely to result in more uneven value creation and elevated (and expensive) M&A activity as incumbents attempt to ameliorate the deflationary impact of the new cycle.

While the technology sector participated in the overall re-rating of equities, it continues to look inexpensive with US technology stocks currently trading on 12.9x forecast next twelve month earnings. This not only continues to look favourable versus history (the median forward PE post 1976 has averaged C.15.3x) but once the sector's superlative balance sheet is considered, cash-adjusted PEs look more attractive still. Although aggregate valuations continue to be flattered by a number of inexpensive large-caps, this appears to be well understood by investors given that the sector is currently trading at a rare discount to the market. While absolute valuations may drift higher over the coming year (inline with our expectations for the broader market), the sector's increased economic sensitivity and slowing growth trajectory make it difficult to argue for a significant relative re-rating. That said, a number of incumbents have at least begun to acknowledge their slower growth profiles, evident from increased buybacks (that reduced technology shares outstanding by 4% in 2012) and dividends such that our benchmark today sports a C.1.8% gross dividend yield. This positive trend looks set to continue given sector margins, bloated balance sheets (ISI estimate the top tech companies had $512bn of cash in 3Q12) and with more than $1tr of technology shares available for purchase under announced buyback plans.

While we have been pleasantly surprised by this trend of incumbents returning capital to shareholders, it has done little to alter our view that a number of them are likely to look anachronistic as enterprises more fully adopt public cloud computing. To date, new cycle deflation has largely been limited to hardware commoditisation but as units of computing (workloads) continue to move beyond the enterprise this is likely to impact the broader enterprise IT market. For instance, Hadoop may already be impacting demand for existing data tools such as ETL while Amazon's cloud data warehouse offering ('RedShift') is said to cost 1/10th of an equivalent enterprise system. With adoption of 'Software-as-a-service' likely to accelerate now that market penetration has reached c. 12%, legacy software vendors are also likely to feel the impact of the new cycle more fully. As such we expect to take advantage of the recent revaluation of legacy assets by continuing to reposition the portfolio in favour of next-generation companies with much to gain and little to lose from the new cycle. While this may be at odds with the present investor appetite for yield and value, we remain deeply suspicious of the efficacy of this approach within the technology sector given the empirical lack of corporate longevity. In terms of key sector risks, IT budgets remain highly sensitive to the state of the global economy and associated business confidence. Effective tax reform represents an additional threat to technology earnings given that the sector has benefitted disproportionately from global tax arbitrage, evidenced by low effective tax rates and large overseas cash balances.

New cycle update

The new technology cycle continues to be driven by three core themes: cloud computing, Internet applications and mobility, with 'big data' likely to join this list in the future. This view was once again well supported by a recent Gartner CIO survey that revealed the top three IT priorities were 'business analytics', 'cloud computing' and 'mobile technologies', unchanged from last year. With cloud penetration estimated at 10%, adoption appears to be ready to inflect now that companies have virtualised their workloads (60% penetrated today) and have become more comfortable with the risks associated with public clouds. This process began a few years ago as enterprises built out so-called 'private clouds' that aped the purer form of cloud computing already deployed by Internet companies such as Google. Not only did this drive the fortunes of direct beneficiaries such as VMware but it also helped a myriad of infrastructure vendors as enterprises refreshed their datacentres.

However, enterprise focus appears to have shifted to so-called hybrid clouds, Gartner predicting that 70% of enterprises will pursue a hybrid cloud strategy by 2015. In this approach internal IT generates the 'baseload', which they augment with the public cloud ('own the base, rent the spike'). The hybrid approach will require computing to become increasingly automated and software driven which should benefit next-generation IT operations vendors like ServiceNow, as well as companies like Infoblox who help automate DNS, DHCP and IP address management. It also helps explain the excitement over software-defined networks epitomised by VMware's $1.3bn acquisition of Nicira. However, traditional enterprise vendors are likely to fare less well because marginal capacity is likely to gravitate towards cheap, mass produced computing delivered by the likes of Amazon's 'Elastic Compute Cloud' that not only exemplifies the on-demand computing utility model but is also 'setting the pace for the rest of the IT world' by dramatically lowering the marginal cost of computing. Internet applications are also likely to enjoy strong growth over the coming year as penetration rates remain unproblematic in key categories such as online advertising, e-commerce, and Software-as-a-Service (SaaS). The explosion in new ways to access the Internet has driven user engagement, which should remain a key positive for e-commerce companies such as Amazon, eBay and Priceline.com. Although online advertising companies such as Facebook and Google benefit from greater smartphone and tablet usage (helping Facebook increase its monthly active users by 25% y/y in Q4'12) the shift from desktop to mobile is less unequivocally positive given lower monetisation today, Kleiner Perkins recently suggesting that the effective CPM (cost per impression) for desktop Internet remains 4x greater than on mobile. Over time local and/or more targeted adverts could command a premium but for now the mismatch between mobile usage and advertising spend (10% vs. 1% respectively) looks likely to persist. Despite this, Google continues to look well positioned due to its higher share of mobile search (c. 90%) while the proliferation of Android-based devices should further reduce its traffic acquisition costs (TAC).

Increased smartphone usage is also continuing to fuel remarkable growth in new applications made possible by the Cloud that are reinventing markets as diverse as messaging (WhatsApp, Snapchat), music (Spotify, SoundCloud), recruitment (LinkedIn), storage (Dropbox) and video (YouTube, Netflix). The need to support mobile devices bought by employees ('bring your own device') appears to be accelerating broader application migration to the Cloud as a way to secure networks that no longer have a formal perimeter. This should continue to benefit SaaS vendors at the expense of incumbents threatened by share loss and/or the shift to a rental model, which is likely to fuel additional M&A activity.

Although we expect mobility to remain a key industry driver over the coming year, we have materially reduced our smartphone exposure as penetration has reached a stage where unit growth is likely to slow and competition may intensify. With smartphone penetration reaching 42% in Q4'12 - and significantly higher in markets and demographic groups that matter most - 2013 may well prove to be the last year where new users (rather than replacement demand) are the main driver of growth. Pricing trends are also likely to deteriorate given higher penetration rates and the slower pace of innovation (evidenced by the iPhone 5) which also opens the door to new competition from the likes of Amazon who are already disrupting the tablet market with 'good enough' devices sold at near breakeven prices. Slower smartphone growth and a shift towards cheaper devices has already caught up with Apple given its dominance of the high-end (>$600 devices) evidenced by declining market share and downward pressure on gross margins. While a lower-end device (expected later this year) will help address the mass market, it might prove cannibalistic and could introduce risk to Apple's (luxury) brand. As such we have continued to reduce our Apple holding such that today it is our largest underweight position versus our benchmark. That said it continues to represent a c. 6% of net assets which not only reflects our benchmark awareness but also the company's remarkable balance sheet that will fund $100bn of capital return over the next three years, a large and valuable customer base and optionality associated with new product releases that could either expand the market (TV, watch) or obsolete the installed base.

While we have pared our overall smartphone and tablet exposure, we continue to favour the overall mobility theme and this remains well represented across the portfolio. Within devices, we are focused on faster growing segments such as China (which should favour Taiwanese chipmaker Mediatek) and 4G/LTE where handsets are forecast to grow to 243m units this year, an increase of 180% year over year. DRAM manufacturers also look to be unlikely beneficiaries of the next wave of smartphone growth as higher-end devices may have two-thirds of the DRAM as a PC by 2016 and at least three times as many units. Given that the industry has consolidated down to three major players, pricing should remain relatively benign which should help companies such as Micron and SK Hynix. Smartphone growth, together with technology innovation and a strong push by innovation leaders such as eBay and Starbucks is also likely to advance the cause of mobile payments which are forecast to grow at a 42% CAGR reaching $617bn by 2016. This should continue to benefit eBay via its PayPal offering, technology enablers such as Gemalto and Ingenico and the card networks as the $11tr cash payment market is disrupted. We also remain hopeful that continued data traffic growth, forecast to increase thirteen fold between 2012 and 2017, together with the adoption of 4G/LTE devices (that today generate 19x more traffic than non 4G connections) will eventually translate into improved spending on next-generation wireless networks and the network core (100G).

In addition to our core exposure, there are a number of additional themes that are well represented within the portfolio. One of the more significant of these is security as cloud computing, device proliferation and bring your own device (BYOD) have made traditional security techniques focused on the network perimeter look increasingly outmoded. While the cyber threat is already significant today, it is likely to only increase as more and more devices become connected to the Internet (the so-called Internet of Things). As electrical systems, industrial plant and payment systems become Internet-enabled so they become targetable by criminals/countries, evidenced by Russia's attack on Estonia's infrastructure in 2007 and Israel's use of cyberworms to frustrate Iran's nuclear efforts.

This threat, together with growing evidence of Chinese state sponsored cyber-espionage, is driving increased political and regulatory focus on security helping the overall market grow at a 9% CAGR with smaller vendors such as Imperva, Proofpoint and Sourcefire growing significantly faster. Another unrelated though equally fascinating theme relates to 'Moore's Stress', a term used to describe the growing difficulty faced by the semiconductor industry in keeping to Moore's Law, the observation made in 1965 by Intel co-founder Gordon Moore that transistor count on semiconductor circuits would double every two years. While this dynamic may hinder companies whose success has been reliant on leading edge foundry manufacturing, greater manufacturing complexity has induced supply discipline and more rational pricing elsewhere, for instance in the memory market. Moore's Stress is also likely to continue to benefit the semiconductor capital equipment industry given that increased capital intensity is unlikely to reverse ahead of the introduction of Extreme Ultraviolet Lithography (EUV) and 450mm wafers.

Within the portfolio we also have exposure to a number of exciting, emerging themes such as 3D printing, or 'additive manufacturing' that enable the creation of physical objects from three-dimensional digital designs using additive processes as opposed to traditional 'subtractive' production methods such as CNC machining and injection moulding.

While 3D printers have traditionally been used in prototyping (helping accelerate the design process) the real excitement involves their use in making end products (direct digital manufacturing) that account forC.20% of printers today which is forecast to reach 50% by 2020. Whether or not 3D printing can genuinely revive the US manufacturing industry (according to President Obama) remains to be seen, but as the technology improves it looks increasingly likely that parts and products will be stored and delivered digitally and manufactured locally. We have also reinitiated modest exposure to the renewable / environmental theme due to renewed interest in clean energy initiatives from governments and investors alike. Having gone through their own boom and bust cycles, it is not hard to understand why we are excited about investment opportunities in clean energy given large addressable markets and low penetration of both solar (<2% of global generation capacity) and LED lighting (<10%). For now we have dipped our (investment) toe back into this exciting subsector via a holding in Impax Environmental Markets (acquired in late 2012) augmented by a number of smaller positions with direct exposure to LED, solar and smart grid end markets.

Conclusions

With recent global equity markets at or just below all-time highs, we are hopeful that the so-called 'wall of worry' will prove a less formidable obstacle to returns over the coming year. However, given the fragility of the recovery investors are likely to have to contend with more growth scares and associated 'echoes' (of the prior crisis). As previously, sentiment (and therefore market resilience) will depend heavily on the action of policymakers. While support will inevitably have to be tapered at some point, we are confident that this will not occur meaningfully until economies can return to a 'self-sustaining' growth trajectory - unlikely to prove a 2013 event, in our view. Although returns have been driven primarily by PE expansion over the past year, equity valuations can continue to drift higher as new buyers enter the fray. While markets may experience set backs over the year, as at present, we expect the setbacks are likely to prove more modest than in the past given our view that a new secular bull market has commenced. As such we expect to remain fairly fully invested given the improved backdrop, undemanding equity valuations relative to cash and bonds and reflecting the fact that markets remained overbought for extended periods during the 1990s equity bull market.

Turning to technology, our view that the new cycle would become more disruptive has so far been exemplified by the weakest PC market on record and downward revisions to IT budgets at least in part due to new cycle deflation. This belief drove our decision to begin moving more significantly away from our underlying benchmark to - at least so far - mixed effect. While it has been right to reduce our Apple (and overall smartphone exposure), PE expansion in the broader market has disproportionately benefited cheap, large-caps that have further helped their cause by returning more of their excess cash to shareholders. While it may be at odds with the current market concentration on defensives and yield, we remain focused on identifying key beneficiaries of technologies and themes that are taking hold. We also remain convinced that 'value investing' within technology is a dangerous pursuit due to the sector's relative lack of corporate longevity. This feels particularly true today given that cloud penetration has reached a point often associated with rapid subsequent adoption. If so, the new cycle is likely to begin to impact incumbents that have hitherto existed with next generation technology and vendors. Unfortunately for us - at least recently - this finesse has been overwhelmed by investors reallocating to equity markets looking for cash flow generative, dividend paying alternatives to their money market or bond funds. This has resulted in some of the poorest positioned technology companies (at least as we perceive them) generating some of the strongest recent performances, a dynamic likely exacerbated by hedge fund repositioning. While we cannot know when this odd (and so far uncomfortable) set of events will play out, we remain convinced that a less benchmark sensitive approach is required now that disruption associated with the new technology cycle is becoming apparent.

Ben Rogoff

Key data as at 30 April 2013
Financial highlights	Unaudited As at 30 April 2013	Audited As at 30 April 2012	Movement %
Total net assets	£528,845,000	£503,292,000	+5.1%
Net assets per ordinary share	412.41p	392.56p	+5.1%
Ordinary shares in issue	128,231,742	128,208,023	0.0%
Price per ordinary share	398.50p	387.00p	+3.0%
Subscription shares in issue	24,774,460	24, 798, 179	(0.1%)
Price per subscription share	7.88p	12.75p	(38.2%)

Exchange rates	As at 30 April 2013	As at 30 April 2012
US$ to £	1.5564	1.6239
Japanese Yen to £	151.61	129.66
Euro to £	1.1805	1.2269

	For the year to 30 April 2013
Benchmark Change over the year to 30 April 2012	Local Currency %	Sterling adjusted %
Dow Jones World Technology (total return)	1.6	6.0
Other Indices over the year to 30 April 2012 (total return)
FTSE World	-	21.4
FTSE All-share	-	17.8
S&P 500 composite	16.9	22.0

	For the year to 30 April
	Unaudited 2013	Audited 2012
Ongoing charges ratio	1.19%	1.22%
Ongoing charges ratio including performance fee	1.19%	1.22%

Historic Performance for the years ended 30 April

	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013
Total Assets less current liabilities (£m)	221.0	306.6	236.4	358.2	335.5	300.4	274.2	398.6	468.7	503.3	528.8
NAV per share (pence)
- undiluted for warrants which expired in 2005	148.3	208.1	205.0	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
- diluted for warrants which expired 2005	141.3	193.7	189.8	255.9	239.7	226.7	216.8	315.1	368.7	392.6	412.4
- undiluted for subscription shares issued in February 2011	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	368.7	392. 6	412.4
Share price (pence)	120.5	164.8	165.5	245.0	228.0	190.8	183.0	306.8	373.5	387.0	398.5
Indices of Growth
Share price	100.0	136.7	137.3	203.3	189.2	158.3	151.9	254.6	310.0	321.2	330.7
Net asset value per share	100.0	136.6	134.6	180.6	169.4	160.2	153.1	223.0	260.9	277.8	291.8
Dow Jones World Technology Index (Sterling)	100.0	119.9	108.7	143.5	140.6	142.7	134.9	188.4	197.2	213.6	226.4

The Company commenced trading on 16 December 1996 and the share price on the first day was 96.0p per share and the NAV per share was 97.5p.

Notes:

Rebased to 100 at 30 April 2003.

The net asset value per share growth is based on diluted NAV per share as adjusted for warrants.  From 2005 onwards the total net assets figures have been calculated in accordance with IFRS, with investments valued at market bid price. Prior to 2005 investments were valued at market mid price.

All data sourced from Polar Capital LLP

Market Capitalisation of underlying investments
	<£1bn	$1bn-$10bn	>$10bn
% of invested assets as at 30 April 2013	9.1%	24.3%	66.6%
(as at 30 April 2012)	9.9%	20.0%	70.1%

Classification of group investments as at 30 April 2013
				Total
	North  America %	Europe %	Asia %	30 April 2013 %	30 April 2012 %
Semiconductors & Semiconductor Equipment	11.7	2.9	7.5	22.1	19.6
Software	18.4	2.0	1.2	21.6	21.5
Internet Software & Services	11.9	0.6	2.4	14.9	10.0
Computers & Peripherals	9.5	1.2	0.2	10.9	18.7
Communications Equipment	7.9	1.3	0.9	10.1	13.6
IT Services	4.6	-	0.5	5.1	6.1
Electronic Equipment, Instruments & Components	1.6	0.3	1.7	3.6	3.4
Internet & Catalog Retail	2.2	-	-	2.2	1.7
Chemicals	0.6	-	1.4	2.0	-
Other	-	1.0	-	1.0	1.5
Health Care Technology	0.7	-	-	0.7	0.3
Machinery	0.6	-	-	0.6	0.7
Commercial Services & Supplies	0.5	-	-	0.5	-
Health Care Equipment & Supplies	0.5	-	-	0.5	-
Household Durables	0.4	-	-	0.4	-
Aerospace & Defence	0.2	-	-	0.2	-
Total investments	71.3	9.3	15.8	96.4	97.1
Other net assets (excluding loans)	2.5	1.1	3.7	7.3	8.8
Loans	(2.8)	-	(0.9)	(3.7)	(5.9)
Grand total (net assets of £528,845,000)	71.0	10.4	18.6	100.0	-
At 30 April 2012 (net assets of £503,292,000)	72.8	8.6	18.6	-	100.0

Consolidated Statement of Comprehensive Income (UNAUDITED) 

for the year ended 30 April 2013

	Notes	Unaudited Year ended 30 April 2013			Audited Year ended 30 April 2012
		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000	Capital return £'000	Total return £'000
Investment income	3	5,600	-	5,600	3,539	-	3,539
Other operating income	4	17		17	29	-	29
Gains on investments held at fair value	5	-	26,760	26,760	-	34,317	34,317
Loss on derivatives	6	-	-	-	-	(307)	(307)
Other currency gains/(losses)	7	-	367	367	-	(108)	(108)
Total income		5,617	27,127	32,744	3,568	33,902	37,470
Expenses
Investment management fee	8	(5,234)	-	(5,234)	(4,885)	-	(4,885)
Other administrative expenses	9	(694)	-	(694)	(718)	-	(718)
Total expenses		(5,928)	-	(5,928)	(5,603)	-	(5,603)
(Loss)/profit before finance costs and tax		(311)	27,127	26,816	(2,035)	33,902	31,867
Finance costs	10	(637)	-	(637)	(835)	-	(835)
(Loss)/profit before tax		(948)	27,127	26,179	(2,870)	33,902	31,032
Tax	11	(739)	-	(739)	(497)	-	(497)
Net (loss)/profit for the year and total comprehensive income		(1,687)	27,127	25,440	(3,367)	33,902	30,535
Earnings per ordinary share (basic) (pence)	12	(1.32)	21.16	19.84	(2.64)	26.56	23.92
Earnings per ordinary share (diluted) (pence)	12	(1.32)	21.16	19.84	(2.64)	26.56	23.92

The total column of this statement represents the Group's Statement of Comprehensive Income, prepared in accordance with IFRS as adopted by the European Union.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

The Group does not have any other Comprehensive Income.

Consolidated and Company Statements of Changes in Equity (UNAUDITED)

for the year ended 30 April 2013

	Notes	Share capital £'000	Capital redemption  reserve £'000	Share premium £'000	Special non- distributable  reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
Group
Total equity at 1 May 2011		32,031	12,588	119,499	7,536	361,748	(64,686)	468,716
Total comprehensive income:
Profit/(loss) for the year to 30 April  2012		-	-	-	-	33,902	(3,367)	30,535
Transactions with owners, recorded directly to equity:
Subscription shares issue costs	21	-	-	(2)	-	-	-	(2)
Issue of ordinary share capital	19 & 21	150	-	1,901	-	-	-	2,051
Issue of ordinary shares on exercise of subscription shares	19 & 21	119	-	1,873	-	-	-	1,992
Total equity at 30 April 2012		32,300	12,588	123,271	7,536	395,650	(68,053)	503,292
Total comprehensive income:
Profit/(loss) for the year to 30 April 2013		-	-	-	-	27,127	(1,687)	25,440
Transactions with owners, recorded directly to equity:
Issue of ordinary shares on exercise  of subscription shares	19 & 21	6	-	107	-	-	-	113
Total equity at 30 April 2013		32,306	12,588	123,378	7,536	422,777	(69,740)	528,845

*The Company Statement of Changes in Equity is as disclosed above with the exception of the Capital and Revenue reserves, the details of which are provided in notes 23 and 24.

Consolidated and Company Balance Sheets (UNAUDITED)

at 30 April 2013

	Notes	Unaudited 30 April 2013		Audited 30 April 2012
		Group £'000	Company £'000	Group £'000	Company £'000
Non current assets
Investments held at fair value	13 & 14	509,724	510,957	488,587	490,806
Current assets
Overseas tax recoverable		35	35	14	14
Other receivables	15	9,883	9,882	1,334	4,727
Cash and cash equivalents	16	34,651	33,419	49,211	43,599
		44,569	43,336	50,559	48,340
Total assets		554,293	554,293	539,146	539,146
Current liabilities
Other payables	17	(5,559)	(5,559)	(5,909)	(5,909)
Bank loans	18	(19,725)	(19,725)	(9,974)	(9,974)
Bank overdraft	16	(148)	(148)	-	-
Derivative financial instruments	13	(16)	(16)	-	-
		(25,448)	(25,448)	(15,883)	(15,883)
Total assets less current liabilities		528,845	528,845	523,263	523,263
Non current liabilities
Bank loans	18	-	-	(19,949)	(19,949)
Derivative financial instruments	13	-	-	(22)	(22)
		-	-	(19,971)	(19,971)
Net assets		528,845	528,845	503,292	503,292
Equity attributable to equity shareholders
Share capital	19	32,306	32,306	32,300	32,300
Capital redemption reserve	20	12,588	12,588	12,588	12,588
Share premium	21	123,378	123,378	123,271	123,271
Special non-distributable reserve	22	7,536	7,536	7,536	7,536
Capital reserves	23	422,777	424,010	395,650	397,869
Revenue reserve	24	(69,740)	(70,973)	(68,053)	(70,272)
Total equity		528,845	528,845	503,292	503,292
Net asset value per ordinary share (pence)	27	412.41	412.41	392.56	392.56
Net asset value per ordinary share (diluted) (pence)	27	412.41	412.41	392.56	392.56

Consolidated and Company Cash Flow Statements (UNAUDITED) 

for the year ended 30 April 2013

	Notes	2013		2012
		Group £'000	Company £'000	Group £'000	Company £'000
Cash flows from operating activities
Profit before finance costs and tax		26,816	26,816	31,867	31,867
Adjustment for non-cash items:
Foreign exchange losses		(367)	(367)	108	108
Adjusted profit before finance costs and tax		26,449	26,449	31,975	31,975
Adjustments for:
Increase in investments		(21,137)	(20,151)	(30,186)	(30,211)
(Increase)/decrease in receivables		(8,549)	(5,155)	8,296	8,296
Decrease in payables		(296)	(296)	(9,931)	(9,931)
		(29,982)	(25,602)	(31,821)	(31,846)
Net cash (used in)/generated from operating activities before tax		(3,533)	847	154	129
Overseas tax deducted at source		(760)	(760)	(493)	(493)
Net cash (used in)/generated from operating activities		(4,293)	87	(339)	(364)
Cash flows from financing activities
Issue of share capital	19&21	113	113	4,043	4,043
Subscription share issue costs		-	-	(2)	(2)
Loans matured		(9,845)	(9,845)	(30,461)	(30,461)
Loans taken out		-	-	30,250	30,250
Finance costs		(697)	(697)	(830)	(830)
Net cash (used in)/generated from financing activities		(10,429)	(10,429)	3,000	3,000
Net (decrease)/increase in cash and cash equivalents		(14,722)	(10,342)	2,661	2,636
Cash and cash equivalents at the beginning of the year		49,211	43,599	45,505	39,918
Effect of foreign exchange rate changes		14	14	1,045	1,045
Cash and cash equivalents at the end of the year	16	34,503	33,271	49,211	43,599

*The Company Cash Flow Statement includes a dividend receipt of £1,000,000 (2012: nil) from the subsidiary, PCT Finance Limited.

1.      General Information

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS and IFRIC guidance.

The Group's presentational currency is pounds sterling. Pounds sterling is also the functional currency of the Company and its subsidiary because it is the currency which is most relevant to the majority of the Company's shareholders and payables and the currency in which the majority of the Group's operating expenses are paid.

The principal accounting policies followed are set out below:

2.      Accounting Policies

(a) Basis of Preparation

The consolidated 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 January 2009 is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

The financial position of the Group as at 30 April 2013 is shown in the balance sheet.  As at 30 April 2013 the Group's total assets exceeded its total liabilities by a multiple of over 22. The assets of the Group consist mainly of securities that are held in accordance with the Company's investment policy, and these securities are readily realisable. The Directors consider that the Company has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly, the Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the Group's accounts.

Investment income     

	Unaudited Year ended 30 April 2013 £'000	Audited Year ended 30 April 2012 £'000
Franked: Listed investments
Dividend income	123	133
Unfranked: Listed investments
Dividend income	5,447	3,406
	5,600	3,539

Earnings per ordinary share

	Unaudited Year ended 30 April 2013			Audited Year ended 30 April 2012
	Revenue return	Capital return	Total return	Revenue return	Capital return	Total return
The calculation of basic earnings per share is based on the following data:
Net (loss)/profit for the year (£'000)	(1,687)	27,127	25,440	(3,367)	33,902	30,535
Weighted average ordinary shares in issue during the year	128,215,984	128,215,984	128,215,984	127,651,825	127,651,825	127,651,825
From continuing operations
Basic - ordinary shares (pence)	(1.32)	21.16	19.84	(2.64)	26.56	23.92

The Company has in issue 24,774,460 (30 April 2012: 24,798,179) subscription shares which are convertible into ordinary shares.  

The subscription shares were issued on 14 February 2011.

There was no dilutive effect on the return per ordinary share in respect of the conversion rights attaching to the subscription shares as the conversion price is higher than the ordinary share price of the Company.

Portfolio as at 30 April 2013

North America		Value of Holding		% of net assets
	Classification	30 April 2013 £'000	30 April 2012 £'000	30 April 2013 %	30 April 2012 %
Google	Internet Software & Services	38,476	22,921	7.3	4.6
Apple	Computers & Peripherals	34,726	61,142	6.6	12.1
Microsoft	Software	18,975	23,264	3.6	4.6
Qualcomm	Communications Equipment	13,373	13,365	2.5	2.7
IBM	IT Services	12,532	15,293	2.4	3.0
Cisco	Communications Equipment	11,901	10,892	2.3	2.2
Salesforce.com	Software	9,490	6,521	1.8	1.3
Intel	Semiconductors & Semiconductor Equipment	9,384	13,841	1.8	2.7
Texas Instruments	Semiconductors & Semiconductor Equipment	8,917	5,898	1.7	1.2
Amazon.com	Internet & Catalog Retail	8,738	4,120	1.7	0.8
Facebook Inc	Internet Software & Services	8,729	-	1.7	-
Oracle	Software	7,882	11,415	1.5	2.3
Adobe	Software	6,940	3,279	1.3	0.6
Corning	Electronic Equipment, Instruments & Components	6,261	1,487	1.2	0.3
eBay	Internet Software & Services	5,351	4,549	1.0	0.9
LinkedIn	Internet Software & Services	5,021	1,834	0.9	0.4
Cognizant Technology Solutions	IT Services	4,525	2,844	0.9	0.6
Synopsys	Software	4,466	-	0.8	-
Analog Devices	Semiconductors & Semiconductor Equipment	4,451	-	0.8	-
Mastercard	IT Services	4,379	1,115	0.8	0.2
KLA-Tencor	Semiconductors & Semiconductor Equipment	4,145	-	0.8	-
Citrix Systems	Software	3,891	5,148	0.7	1.0
QLIK Technologies	Software	3,795	2,617	0.7	0.5
Infoblox	Software	3,768	125	0.7	-
ON Semiconductor	Semiconductors & Semiconductor Equipment	3,737	-	0.7	-
JDS Uniphase	Communications Equipment	3,571	-	0.7	-
LAM Research	Semiconductors & Semiconductor Equipment	3,507	3,940	0.7	0.8
SanDisk	Computers & Peripherals	3,435	3,214	0.7	0.6
Netsuite	Software	3,425	-	0.6	-
Aruba Networks	Communications Equipment	3,410	3,324	0.6	0.7
Pentair Ltd	Machinery	3,317	-	0.6	-
EMC Corporation	Computers & Peripherals	3,316	7,512	0.6	1.5
Concur Technologies	Software	3,264	3,014	0.6	0.6
Semtech	Semiconductors & Semiconductor Equipment	3,235	2,470	0.6	0.5
Monsanto	Chemicals	3,171	-	0.6	-
Cree Inc	Semiconductors & Semiconductor Equipment	3,147	-	0.6	-
Entergis Inc	Semiconductors & Semiconductor Equipment	3,097	-	0.6	-
NetApp	Computers & Peripherals	2,970	5,124	0.6	1.0
Juniper Networks	Communications Equipment	2,965	4,850	0.6	1.0
Integrated Device Technology	Semiconductors & Semiconductor Equipment	2,868	3,913	0.5	0.8
TripAdvisor	Internet & Catalog Retail	2,865	-	0.5	-
Stratasys	Computers & Peripherals	2,801	-	0.5	-
Imperva	Software	2,773	-	0.5	-
Intuit Com	Software	2,759	2,427	0.5	0.5
Splunk Inc	Software	2,733	-	0.5	-
Fusion-io	Computers & Peripherals	2,724	2,691	0.5	0.5
Akamai Technologies	Internet Software & Services	2,672	-	0.5	-
Ixia	Communications Equipment	2,533	2,037	0.5	0.4
Proofpoint Inc	Software	2,520	-	0.5	-
Enernoc	Commercial Services & Supplies	2,506	-	0.5	-
Lattice Semiconductor	Semiconductors & Semiconductor Equipment	2,503	2,316	0.5	0.5
Align Tech	Health Care Equipment & Supplies	2,496	-	0.5	-
Palo Alto Networks	Communications Equipment	2,449	-	0.5	-
Commvault Services	Software	2,409	769	0.5	0.2
Sourcefire Inc	Software	2,340	1,887	0.4	0.4
Harman International	Household Durables	2,314	-	0.4	-
Micron Tech	Semiconductors & Semiconductor Equipment	2,299	-	0.4	-
VMware	Software	2,283	2,753	0.4	0.5
Ultratech	Semiconductors & Semiconductor Equipment	2,252	-	0.4	-
Red Hat	Software	2,249	5,027	0.4	1.0
Exar Corporation	Semiconductors & Semiconductor Equipment	2,200	-	0.4	-
Cerner	Health Care Technology	2,198	1,748	0.4	0.3
Cavium	Semiconductors & Semiconductor Equipment	2,130	1,986	0.4	0.4
Broadcom	Semiconductors & Semiconductor Equipment	2,024	3,155	0.4	0.6
Autodesk	Software	2,024	-	0.4	-
FEI	Electronic Equipment, Instruments & Components	2,016	-	0.4	-
Qualys	Software	2,001	-	0.4	-
Jive Software	Software	1,840	-	0.4	-
Netscout Systems	Software	1,793	2,688	0.3	0.5
ExactTarget	Internet Software & Services	1,792	-	0.3
PROS Holdings	Software	1,690	708	0.3	0.1
Teradata	IT Services	1,524	2,235	0.3	0.4
Sapient Corporation	IT Services	1,500	-	0.3	-
Vocera Communications	Health Care Technology	1,399	-	0.3	-
Fortinet Inc	Software	1,380	1,447	0.3	0.3
Aerovironment	Aerospace & Defence	1,268	-	0.2	-
Peregrine Semiconductor	Semiconductors & Semiconductor Equipment	937	-	0.2	-
Ruckus Wireless	Communications Equipment	903	-	0.2	-
Polycom	Communications Equipment	865	2,676	0.2	0.5
Silver Spring Networks	Software	754	-	0.1	-
Inphi Corp	Semiconductors & Semiconductor Equipment	710	-	0.1	-
Sciquest	Internet Software & Services	610	659	0.1	0.1
Sunpower	Semiconductors & Semiconductor Equipment	567	-	0.1	-
Cermetek Microel	Other	-	-	-	-
Total North American investments		377,156		71.3

Europe		Value of Holding		% of net assets
	Classification	30 April 2013 £'000	30 April 2012 £'000	30 April 2013 %	30 April 2012 %
SAP	Software	10,380	6,558	2.0	1.3
ARM	Semiconductors & Semiconductor Equipment	6,330	3,353	1.2	0.7
Ericsson	Communications Equipment	5,926	4,502	1.1	0.9
Seagate Technology	Computers & Peripherals	5,099	-	1.0	-
ASML	Semiconductors & Semiconductor Equipment	4,821	2,738	0.9	0.5
Impax Environmental Markets	Other	4,674	-	0.9	-
Blinkx	Internet Software & Services	1,801	-	0.3	-
Ingenico	Electronic Equipment, Instruments & Components	1,731	1,901	0.3	0.4
ASM International	Semiconductors & Semiconductor Equipment	1,570	1,266	0.3	0.3
Telecity Group	Internet Software & Services	1,568	-	0.3	-
Infineon Technologies	Semiconductors & Semiconductor Equipment	1,104	-	0.2	-
Gemalto	Computers & Peripherals	1,080	639	0.2	0.1
Aixtron	Semiconductors & Semiconductor Equipment	1,050	-	0.2	-
Telit Communications	Communications Equipment	819	-	0.2	-
AMS	Semiconductors & Semiconductor Equipment	715	-	0.1	-
Herald Ventures Limited Partnership	Other	327	317	0.1	0.1
Herald Ventures Limited Partnership II	Other	291	261	-	-
Low Carbon Accelerator	Other	31	109	-	-
Total European investments		49,317		9.3

Asia & Pacific		Value of Holding		% of net assets
	Classification	30 April 2013 £'000	30 April 2012 £'000	30 April 2013 %	30 April 2012 %
Samsung Electronics	Semiconductors & Semiconductor Equipment	17,742	19,679	3.4	3.9
Taiwan Semiconductor	Semiconductors & Semiconductor Equipment	9,861	11,193	1.9	2.2
Tencent Holdings	Internet Software & Services	5,621	6,764	1.1	1.3
SK Hynix	Semiconductors & Semiconductor Equipment	4,286	-	0.8	-
Mediatek Inc	Semiconductors & Semiconductor Equipment	4,268	1,179	0.8	0.2
Nitto Denko	Chemicals	3,835	-	0.7	-
Shin-Etsu Chemical	Chemicals	3,397	-	0.6	-
Check Point Software	Software	3,193	4,242	0.6	0.8
Radware	Communications Equipment	3,101	3,920	0.6	0.8
Hirose Electric	Electronic Equipment, Instruments & Components	2,992	-	0.6	-
Yahoo Japan	Internet Software & Services	2,963	-	0.6	-
Keyence	Electronic Equipment, Instruments & Components	2,955	2,427	0.6	0.5
Allot Communications	Software	2,421	-	0.5	-
Digital Garage	IT Services	2,378	1,334	0.4	0.3
Sina	Internet Software & Services	2,264	1,624	0.4	0.3
Chipbond Technology	Semiconductors & Semiconductor Equipment	2,063	-	0.4	-
Silicom	Communications Equipment	1,444	1,659	0.3	0.3
NHN Corporation	Internet Software & Services	1,173	-	0.2	-
Quanta Computer	Computers & Peripherals	1,116	3,498	0.2	0.7
TXC Corporation	Electronic Equipment, Instruments & Components	1,102	-	0.2	-
Hoya	Electronic Equipment, Instruments & Components	1,067	2,356	0.2	0.5
Anritsu Corporation	Electronic Equipment, Instruments & Components	1,064	-	0.2	-
Baidu	Internet Software & Services	864	4,601	0.2	0.9
Attunity Limited	Software	758	-	0.1	-
ASM Pacific Technology	Semiconductors & Semiconductor Equipment	575	1,832	0.1	0.4
Siliconware Precision Industries	Semiconductors & Semiconductor Equipment	547	-	0.1	-
Array Inc	Communications Equipment	201	719	-	0.1
Unus Technologies	Communications Equipment	-	-	-	-
Total Asian & Pacific investments		83,251		15.8

 

Status of announcement 

The figures and financial information contained in this announcement do not constitute statutory accounts for the year ended 30 April 2013.   The Financial Statements for the year ended 30 April 2013 will be finalised on the basis of the information presented to the Directors in this preliminary announcement. The Annual Report and financial statements for the year ended 30 April 2013 have not yet been delivered to the Registrar of Companies but will be following the Annual General Meeting of the Company on 2 September 2013.

The figures and financial information for 2012 are extracted from the published Annual Report and Financial Statements for the year ended 30 April 2012 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements for the year to 30 April 2012 has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 498(2) or Section 498(3) of the Companies Act 2006.

Annual Report and AGM 

The Annual Report and Financial statements for the Year ended 30 April 2013 and a separate Notice of Meeting for the Annual General Meeting will be posted to shareholders in July and will be available thereafter from the company secretary at the Registered Office, 4 Matthew Parker Street London SW1H 9NP or from the company's website at www.polarcapitaltechnologytrust.co.uk

The AGM will be held on 2 September at 12.00 noon at the Royal Automobile Club, 89 Pall Mall, London SW1Y 5HS.

Forward Looking Statements

Certain statements included in this announcement and in the Annual Report and Accounts 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 Business Review of the Annual Report and Accounts. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in Polar Capital Technology Trust plc or any other entity, and must not be relied upon in any way in connection with any investment decision. The Company undertakes no obligation to update any forward-looking statements.

 

END

 

 

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