REG-Worldwide Healthcare Trust PLC: Annual Financial Report
11/06/2025 07:02
10 June 2025
Worldwide Healthcare Trust PLC
(the “Company”)
Annual Financial Report for the year ended 31 March 2025
The statements below are extracted from the Company’s annual report for the
year ended 31 March 2025 (the Annual Report). The Annual Report, will be
posted to shareholders on 16 June 2025. Copies of the Annual Report will be
available in hard copy format from the Company Secretary, Frostrow Capital
LLP, 25 Southampton Buildings, London WC2A 1AL or from the Company’s website
at www.worldwidewh.com where up to date information on the Company, including
daily NAV, share prices and fact sheets, can also be found.
The Annual Report will be submitted to the Financial Conduct Authority and
will shortly be available in full, unedited text for inspection on the
National Storage Mechanism (NSM):
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual General Meeting will be held on Wednesday, 9 July 2025.
COMPANY PERFORMANCE
Historic performance
for the years ended 31 March
2020 2021 2022 2023 2024 2025
Net asset value per share (total return)*^ 6.5% 30.0% -5.8% -0.1% 12.0% -10.3%
Benchmark (total return)* 5.7% 16.0% 20.4% 2.5% 10.9% -3.2%
Net asset value per share 286.9p 370.3p 346.5p 343.5p 381.1p 339.5p
Share price 292.0p 369.5p 327.5p 311.5p 335.0p 297.5p
Premium/(discount) of share price to (12.4)%
net asset value per share 1.8% (0.2)% (5.5)% (9.3)% (12.1)%
Dividends per share 2.5p 2.2p 2.7p 3.1p 2.8p 2.4p
Leverage 12.0% 7.6% 10.9% 10.5% 10.8% 12.0%
Ongoing charges^ 0.9% 0.9% 0.9% 0.8% 0.9% 0.8%
Ongoing charges (including performance 0.9% 0.9% 1.4% 0.8% 0.9% 0.8%
fees paid or crystallised during the year)^
Comparative periods have been restated for the sub-division of each share of
25p each into 10 new shares of 2.5p each, approved at the AGM held on 18 July
2023 and effective on 27 July 2023.
* Source: Morningstar
^ Alternative Performance Measure (see Glossary).
STATEMENT FROM THE CHAIR
“Net asset value per share total return during the year was -10.3%.
Long-term returns remain strong, at +13.4% pa since the Company’s
inception”
INVESTMENT PERFORMANCE
In this, the 30th year since the Company’s inception, I am pleased to
present your Company’s Annual Report and Financial Statements for the year
ended 31 March 2025.
Stock market volatility, driven by macro events, was again a hallmark of the
financial year under review. From an investment performance perspective, this
resulted in a frustrating year for the global healthcare sector and the
Company. Strong market gains in the first part of the financial year were
given up by broad declines leading up to the end of 2024. There was then a
sharp sell-off in the first quarter of calendar 2025, driven by a combination
of factors, including escalating trade tensions and a slowing global economy.
The earlier environment in 2024 was positive for our Portfolio Manager’s
strategy. However, there was then a broad shift in investor sentiment, which
favoured a more defensive investment approach. As a result, both the
Company’s absolute and relative performance suffered during the latter part
of the financial year, more than offsetting the strong early returns by year
end.
Against this backdrop, the Company’s net asset value per share total return
in the financial year was -10.3% (2024: +12.0%). In comparison, our Benchmark,
the MSCI World Health Care Index, measured on a net total return, sterling
adjusted basis, returned -3.2% (2024: +10.9%).
The Company’s share price total return during the year was -10.5% (2023:
+8.6%). The small disparity between the performance of the Company’s net
asset value per share and its share price contributed to the slight widening
of our share price discount to our net asset value per share from 12.1% at 31
March 2024 to 12.4% at 31 March 2025.
Amongst the healthcare sectors that the Company invests in, the principal
positive contributor to our performance was the Healthcare Equipment &
Supplies (‘Medtech’) sector. It was largely spared from negative,
industry-specific regulatory changes and was only modestly impacted by broad
country tariffs. In contrast, the therapeutics sector, specifically
biotechnology, was more negatively impacted by the same macro headwinds as
well as higher than expected interest rates worldwide.
The last several years have been difficult for the global healthcare sector
and the Company, with the sector having underperformed the broader markets and
the Company having underperformed our Benchmark on a five-year view. As you
would expect, the Board is not content with this situation. We have been
spending considerable time with our Portfolio Manager challenging and
re-confirming our commitment to the Company’s investment strategy (see
‘Outlook’ below).
Nonetheless, our long-term performance continues to be strong. From the
Company’s inception 30 years ago in 1995 to the end of the financial year,
the total return of our net asset value per share has been +4,254%, equivalent
to a compound annual return of +13.4%. This compares to a cumulative blended
Benchmark return of +2,354% and a compound annual return of +11.3% over the
same period.
Further information on the healthcare sector, the Company’s investments and
performance during the year can be found in the Portfolio Manager’s Review.
CAPITAL
Since the beginning of 2022, and for a variety of reasons, share price
discounts across the investment company sector in the UK have widened. As of 9
June 2025, the average level of discount in the broader sector stands at c.
14.6%*. This compares to the Company’s share price discount of 6.3%.
It is the Board’s policy to buy back our shares if the Company’s share
price discount to the net asset value per share exceeds 6% on an ongoing
basis. Shareholders should note, however, that it remains possible for the
discount to be greater than this for extended periods of time, particularly
when sentiment towards investment trusts generally, the healthcare sector
and/or the Company remains poor. In such an environment, buybacks may prove
unable to sustainably narrow the discount. Nonetheless, even in such an
environment, the Board believes that buybacks are important, as they enhance
the net asset value per share for remaining shareholders and go some way to
dampening discount volatility.
* Source: Winterflood
The Company’s commitment to its share buyback policy is demonstrated by the
fact that we have one of the most active buyback programmes in the investment
trust sector. During the financial year, a total of 51,310,528 shares were
repurchased for treasury at a cost of £176.5m and at an average discount of
10.8%. The shares repurchased during the year equated to 9.4% of the
Company’s share capital at the beginning of the year.
At 31 March 2025, the Company had 494,631,804 shares in issue, excluding the
107,033,396 shares held in treasury.
From the beginning of the new financial year to 9 June 2025, a further
11,291,577 shares have been bought back for treasury, at a cost of £33.2m and
at an average discount of 9.7%. As stated above, our share price discount
since year end has narrowed to 6.3%.
I confirm that all shares held in treasury will continue to be held for
re-issue at a premium to the net asset value per share.
A summary of the Board’s and the Company’s advisers’ activities during
the year, including buyback and marketing activities, is provided on page 7 of
this Annual Report.
REVENUE AND DIVIDEND
Shareholders will be aware that it remains the Company’s investment policy
to pursue capital growth for shareholders and to pay dividends at least to the
extent required to maintain investment trust status. Therefore, the level of
dividends declared can go down as well as up. An unchanged interim dividend of
0.7p per share for the year ended 31 March 2025 was paid on 9 January 2025 to
shareholders on the register on 29 November 2024.
The Company’s net revenue for the year as a whole decreased to £16.1m from
£19.7m. This was due largely to a decrease in exposure to higher yielding
stocks in the portfolio as well as a reduction in the size of the portfolio
due to shares being bought back by the Company during the year. As a result,
the revenue return per share was 2.4p (2024: 2.7p per share).
Accordingly, the Board is proposing a slightly reduced final dividend for the
year of 1.7p per share (2024: 2.1p per share). Together with the interim
dividend already paid, this makes a total dividend for the year of 2.4p per
share (2024: 2.8p per share).
The effect of share buybacks means that the reported dividend per share, which
is based on the number of shares in issue at the end of the financial year, is
higher than the reported revenue return per share, which is based on the
average number of shares in issue over the year.
Based on the closing mid-market share price of 302.0p on 9 June 2025, the
total dividend payment for the year represents a current yield of 0.8%.
The final dividend will be payable, subject to shareholder approval, on 23
July 2025, to shareholders on the register of members on 13 June 2025. The
associated ex-dividend date will be 12 June 2025.
The Company’s dividend policy, which is set out on page 29 of this Annual
Report, will be proposed for approval at the forthcoming Annual General
Meeting.
BOARD OF DIRECTORS
As I mentioned in my statement at the Company’s half year, the Board
appointed two new Directors at the beginning of October. Both Sian Hansen and
William Hemmings have begun to make material contributions to the Board’s
deliberations.
In July 2022, the Board asked me to extend my term on the Board for a period
of three to five years by taking on the role of Board Chair. This was in order
to oversee the renewal of the Board, including the retirement and replacement
of all but one of the then Directors as well as changing the composition and
leadership of all of the Board’s Committees.
Given the good progress being made, I will be retiring from the Board at the
conclusion of the Annual General Meeting to be held in July 2026.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (“ESG”) MATTERS
ESG matters continue to be an important priority for the Board. Our objective
is to have full, transparent disclosure on the topic. Our Senior Independent
Director, Bina Rawal, works closely with our Portfolio Manager on this matter.
Our Portfolio Manager remains committed to taking a leading role in the
development of meaningful ESG engagement practices in the healthcare sector.
As part of this, they facilitate dialogue and an exchange of leading practices
among investors, companies and other relevant experts on ESG, in particular,
the large capitalisation pharmaceutical sector. They also engage with a broad
range of companies on a regular basis about where areas for improvement can be
identified. Further information on both ESG matters and climate change can be
found in the Portfolio Manager’s ESG report.
PERFORMANCE FEE
There is currently no provision within the Company’s NAV for the payment of
a performance fee at a future calculation date. I would highlight that earning
a performance fee is difficult for our Portfolio Manager and is dependent on
the long-term outperformance of the Company. Any outperformance has to be
maintained for 12 months after the relevant calculation date and only becomes
payable to the extent that the outperformance gives rise to a total fee
greater than the total of all performance fees paid to date. This ensures that
a performance fee is not payable for any outperformance that contributes to
the recovery of prior underperformance.
INVESTMENT GUIDELINES
The Board made a minor change to the Company’s investment guidelines during
the year. Previously, the Company could invest a maximum of 30% of the
portfolio, at the time of acquisition, in companies in the Medtech sector.
Given the increasing importance of the sector, we raised the limit to 40% of
the portfolio, as at the time of acquisition. As this amendment was not
considered to be material, the Board was advised that shareholder approval
would not be required prior to making this amendment.
ANNUAL GENERAL MEETING (“AGM”)
The Company’s AGM will again be held at Saddlers’ Hall, 40 Gutter Lane,
London EC2V 6BR on Wednesday, 9 July 2025 from 12.30pm. In addition to the
formal proceedings, there will be an opportunity to meet the Board and the
Portfolio Manager and to receive an update on the Company’s strategy. We
look forward to seeing as many of you as possible there.
For those investors who are not able to attend the meeting in person, a video
recording of the Portfolio Manager’s presentation will be uploaded to the
website after the meeting. Shareholders can submit questions in advance by
sending them to wwh@frostrow.com.
I encourage all shareholders to exercise their right to vote at the AGM and to
register your votes online in advance of the meeting. Registering your vote in
advance will not restrict you from attending and voting at the meeting in
person should you wish to do so. The votes on the resolutions to be proposed
at the AGM will again be conducted on a poll. The results of the proxy votes
will be published following the conclusion of the AGM by way of a stock
exchange announcement and will also be able to be viewed on the Company’s
website at www.worldwidewh.com.
OUTLOOK
While global macroeconomic and geopolitical conditions continue to be
challenging and buffeting stock market indices, your Board believes that the
fundamentals of the healthcare sector remain strong. As frustrating as the
past few years have been, the fundamentals of the sector will be reflected in
share prices over time.
As highlighted in our Portfolio Manager’s recent “Next 30 Years”
presentation, the Board and our Portfolio Manager remain positive about the
outlook for the healthcare sector for many reasons. For example, the overall
level of new product approvals remains high and is delivering significant
levels of quality medicines for patients. Advancements in areas such as
genetic engineering, personalised medicine and synthetic biology are also
generating a strong future pipeline of innovative new therapies and
treatments. In addition, Artificial Intelligence (AI) and machine learning are
beginning to have a positive impact on all aspects of the industry.
All of these advancements are underpinned by global demographic trends, which
are driving demand for new healthcare solutions, particularly in areas such as
cancer treatment, chronic disease management and age-related health issues.
In this sector context, the Board is confident in our Portfolio Manager’s
successful long-term investment strategy of focusing on innovation and growth
opportunities and believes that the Company will continue to generate
attractive long-term returns for shareholders.
Doug McCutcheon
Board Chair
10 June 2025
BOARD AND ADVISER ACTIVITY DURING THE YEAR
BOARD ANNUAL PROCESS
The Board maintains a high level of communication between its members and with
its advisers. During the year, the Board holds quarterly meetings and
additional Board meetings as required.
Meetings of the Management Engagement & Remuneration Committee, Nominations
Committee and Audit & Risk Committee are held on the same days as Board
meetings. In addition, there are two separate Audit & Risk Committee meetings
each year.
On an ongoing basis, the Board oversees and reviews, amongst other things: the
roles and performance of the Portfolio Manager and the Company’s other
advisors; the Company’s investment portfolio, net asset value and share
price performance; operational risks; expenses; the broader investment trust
sector and regulatory environment; shareholder communications and investor
relations; the make-up and evolution of the Board and its committees.
CAPITAL ALLOCATION
The Board understands that long-term shareholder value is driven by
effectively allocating the Company’s capital.
Over the long run, the Board believes that having the Portfolio Manager
reinvest capital into healthcare investments in the Company’s portfolio will
generate the highest overall returns. This is reflected in the Company’s
dividend policy, which involves only paying dividends to the extent required
to maintain investment trust status.
In periods when the Company’s share price is trading at a discount to its
net asset value, the Board is also committed to allocating capital to
repurchasing shares. Particularly when such periods coincide with lower
valuations and attractive investment opportunities in the healthcare sector,
the Board uses its judgement as to how best to split the allocation of the
Company’s capital.
During the year, a total of 51,310,28 shares, representing 9.4% of the shares
outstanding at the beginning of the year, were repurchased at a cost of
£176.5m.
SHAREHOLDER ENGAGEMENT
The Board believes that shareholder engagement is key to generating a
committed and informed investor base. Recently declining incremental investor
demand across the investment trust sector, and an increase in share price
discounts, has reinforced the importance of this activity.
The Company’s efforts are actively supported by our Portfolio Manager
(OrbiMed), our AIFM (Frostrow) and our PR consultant (Quill Communications),
all with the aim of providing information and insight to our existing
shareholders, while also generating new demand for the shares across
professional and retail investors. Some of our more recent activities are
highlighted below.
· During 2024, the Company’s top 40 shareholders, representing almost 89%
of the shares in issue, had 21 meetings with OrbiMed, 10 with the Board Chair
and 59 with Frostrow. In addition, Frostrow held a further 122 professional
investor meetings, which involved existing and potential smaller shareholders.
· Frostrow arranged two professional investor webinars for OrbiMed, in March
and November 2024, involving 66 and 85 investors, respectively. The video
recordings of these events have been viewed 306 and 427 times, respectively.
· The AGM held on 10 July 2024 attracted 26 investors in person and the
video recording of OrbiMed’s presentation has been viewed 337 times.
· An event to mark the Company’s 30th anniversary was held in March 2025.
In addition to the Board and OrbiMed, the event was attended by journalists
and both private and professional investors. The OrbiMed portfolio management
team provided an update on the Company’s investment strategy including a
presentation entitled the “Next 30 Years”, which was followed by a
question-and-answer session.
· Frostrow creates a monthly fact sheet that is circulated by email to a
discreet database of over 2,700 professional investors.
· The Company has a permanent slot at the annual Frostrow Seminar in London
in May, that involves around 200 attendees. Over 4,500 professional investors
are invited, and they all receive the video recording after the event.
· Edison writes two research notes every year and produces accompanying
videos, which are typically viewed by over 2,000 people.
· Quill Communications is constantly engaging with relevant journalists.
During 2024 this resulted in over 50 articles in a mix of publications
including Trustnet, Citywire, Interactive Investor, MoneyWeek, Daily
Telegraph, Shares Magazine, Master Investor, This is Money, Professional
Paraplanner, Financial Times, The Armchair Trader, Money Makers, The Times,
Investors’ Chronicle and IFA Magazine.
Considerable effort is made by both Quill Communications and Frostrow to
engage directly with retail investor platforms, to get them to produce
articles and carry content about the Company. For example, on 10 September
2024 the Company featured in a recorded AJ Bell webinar which attracted over
500 AJ Bell clients.
INVESTMENT OBJECTIVE AND POLICY
INVESTMENT OBJECTIVE
The Company invests in the global healthcare sector with the objective of
achieving a high level of capital growth.
In order to achieve its investment objective, the Company invests worldwide in
a diversified portfolio of shares in pharmaceutical and biotechnology
companies and related securities in the healthcare sector. It uses gearing,
and derivative transactions to enhance returns and mitigate risk. Performance
is measured against the MSCI World Health Care Index on a net total return,
sterling adjusted basis (“Benchmark”).
INVESTMENT STRATEGY
The implementation of the Company’s Investment Objective has been delegated
to OrbiMed by Frostrow (as “AIFM”) under the Board’s and Frostrow’s
supervision and guidance.
Details of OrbiMed’s investment strategy and approach are set out in the
Portfolio Manager’s Review.
While the Board’s strategy is to allow flexibility in managing the
investments, in order to manage investment risk it has imposed various
investment, gearing and derivative guidelines and limits, within which
Frostrow and OrbiMed are required to manage the investments, as set out below.
Any material changes to the Investment Objective, Policy and Benchmark or the
investment, gearing and derivative guidelines and limits require approval from
shareholders.
INVESTMENT POLICY
INVESTMENT LIMITS AND GUIDELINES
· The Company will not invest more than 15% of the portfolio in any one
individual stock at the time of acquisition;
· At least 50% of the portfolio will normally be invested in larger
companies (i.e. with a market capitalisation of at least U.S.$10bn);
· At least 20% of the portfolio will normally be invested in smaller
companies (i.e. with a market capitalisation of less than U.S.$10bn);
· Investment in unquoted securities will not exceed 10% of the portfolio at
the time of acquisition;
· A maximum of 5% of the portfolio, at the time of acquisition, may be
invested in each of debt instruments, convertibles and royalty bonds issued by
pharmaceutical and biotechnology companies;
· A maximum of 40% of the portfolio, at the time of acquisition, may be
invested in companies in the healthcare equipment and supplies sector; and a
maximum of 30% of the portfolio, at the time of acquisition, may be invested
in companies in the healthcare providers and services sector.
· The Company will not invest more than 10% of its gross assets in other
closed ended investment companies (including investment trusts) listed on the
London Stock Exchange, except where the investment companies themselves have
stated investment policies to invest no more than 15% of their gross assets in
other closed ended investment companies (including investment trusts) listed
on the London Stock Exchange, where such investments shall be limited to 15%
of the Company’s gross assets at the time of acquisition.
DERIVATIVE STRATEGY AND LIMITS
In line with the Investment Objective, derivatives are employed, when
appropriate, in an effort to enhance returns and to improve the risk-return
profile of the Company’s portfolio. Only Equity Swaps were employed within
the portfolio during the year.
The Board has set the following limits within which derivative exposures are
managed:
· Derivative transactions (excluding equity swaps) can be used to mitigate
risk and/or enhance capital returns and will be restricted to a net exposure
of 5% of the portfolio; and
· Equity Swaps may be used in order to meet the Company’s investment
objective of achieving a high level of capital growth, and counterparty
exposure through these is restricted to 12% of the gross assets of the Company
at the time of acquisition.
The Company does not currently hedge against foreign currency exposure.
GEARING LIMIT
The Board has set a maximum gearing level, through borrowing, of 20% of the
net assets.
LEVERAGE LIMITS
Under the AIFMD the Company is required to set maximum leverage limits.
Leverage under the AIFMD is defined as any method by which the total exposure
of an AIF is increased.
The Company has two current sources of leverage: the overdraft facility, which
is subject to the gearing limit; and, derivatives, which are subject to the
separate derivative limits. The Board and Frostrow have set a maximum leverage
limit of 140% on both the commitment and gross basis.
Further details on the gearing and leverage calculations, and how total
exposure through derivatives is calculated, are included in the Glossary.
Further details on how derivatives are employed can be found in note 16.
PORTFOLIO
INVESTMENTS HELD AS AT 31 MARCH 2025
Market value % of
Investments Sector Country £’000 investments
Eli Lilly Pharmaceuticals United States 188,640 11.4
Boston Scientific Health Care Equipment & Supplies United States 173,761 10.5
AstraZeneca Pharmaceuticals Britain 118,630 7.2
Intuitive Surgical Health Care Equipment & Supplies United States 89,839 5.5
Stryker Health Care Equipment & Supplies United States 85,936 5.2
UnitedHealth Group Health Care Providers & Services United States 76,896 4.7
Edwards Lifesciences Health Care Equipment & Supplies United States 69,611 4.2
Pfizer Pharmaceuticals United States 64,413 3.9
Argenx Biotechnology Netherlands 57,225 3.5
Daiichi Sankyo Pharmaceuticals Japan 50,227 3.0
Top 10 investments 975,178 59.1
Integer Holdings Health Care Equipment & Supplies United States 48,754 2.9
Neurocrine Biosciences Biotechnology United States 47,950 2.9
Vertex Pharmaceuticals Biotechnology United States 44,457 2.7
Natera Life Sciences Tools & Services United States 44,261 2.7
Thermo Fisher Scientific Life Sciences Tools & Services United States 43,184 2.6
Alnylam Pharmaceuticals Biotechnology United States 40,009 2.4
Tenet Healthcare Health Care Providers & Services United States 39,117 2.4
Caris Life Sciences* Life Sciences Tools & Services United States 34,029 2.1
Ionis Pharmaceuticals Biotechnology United States 33,683 2.0
Cytokinetics Biotechnology United States 31,103 1.9
Top 20 investments 1,381,725 83.7
SI-BONE Health Care Equipment & Supplies United States 24,947 1.5
Crossover Health* Health Care Providers & Services United States 24,810 1.5
CG Oncology Biotechnology United States 22,698 1.4
Axsome Therapeutics Biotechnology United States 21,626 1.3
Shanghai INT Medical Instruments Health Care Equipment & Supplies China 20,151 1.2
Apellis Pharmaceuticals Biotechnology United States 20,137 1.2
UCB Pharmaceuticals Belgium 16,952 1.0
Avidity Biosciences Biotechnology United States 15,998 1.0
Sino Biopharmaceutical Pharmaceuticals Hong Kong 15,512 0.9
Beijing Yuanxin Technology* Health Care Providers & Services China 14,068 0.8
Top 30 investments 1,578,623 95.5
Jiangxi Rimag Health Care Providers & Services China 13,012 0.8
Exact Sciences Life Sciences Tools & Services United States 12,504 0.8
Akeso Biotechnology China 12,125 0.7
Ruipeng Pet Group* Health Care Providers & Services China 11,006 0.7
EDDA Healthcare & Technology* Health Care Equipment & Supplies China 8,716 0.5
VISEN Pharmaceuticals Biotechnology China 7,691 0.5
MabPlex* Health Care Providers & Services China 4,932 0.3
New Horizon Health^ Life Sciences Tools & Services China 4,492 0.3
Gushengtang Health Care Providers & Services China 4,443 0.3
API Holdings* Health Care Providers & Services India 4,230 0.3
Top 40 investments 1,661,774 100.7
* Unquoted holding
^ Suspended holding
Market value % of
Investments Sector Country £’000 investments
Shandong Weigao Group Medical Polymer Health Care Equipment & Supplies China 3,561 0.2
Sinopharm Group Health Care Providers & Services China 3,413 0.2
Shanghai Bio-heart Biological Technology Health Care Equipment & Supplies China 2,776 0.2
Ikena Oncology Biotechnology United States 1,613 0.1
Peloton Therapeutics Milestone* Biotechnology United States 523 0.0
Total equities 1,673,659 101.4
Biotech M&A Target Swap Swap Baskets United States 160,737 9.7
Jiangsu Hengrui Medicine Pharmaceuticals China 30,485 1.8
Apollo Hospitals Enterprise Health Care Providers & Services India 16,343 1.0
Less: Gross exposure on financed swaps (231,356) (14.0)
Total OTC Swaps (23,791) (1.4)
Total investments including OTC Swaps 1,649,868 100.0
* Unquoted holding
SUMMARY
Market value % of
Investments £’000 investments
Quoted Equities 1,566,854 94.9
Unquoted Equities 106,805 6.5
Equity Swaps (23,791) (1.4)
Total of all investments 1,649,868 100.0
PORTFOLIO MANAGER’S REVIEW
MARKETS
Global equity markets experienced a turbulent 12 months for the year ended 31
March 2025, marked by strong gains in 2024 followed by heightened volatility
and declines in early 2025. U.S. equities surged in 2024 driven by optimism
around technological advancements and a more accommodative Federal Reserve.
European markets also advanced in 2024 but returns underperformed the U.S.
However, both geographies experienced significant challenges and volatility in
the first quarter of 2025 amid concerns over inflation, slowing economic
growth, and most notably escalating trade disputes triggered by the second
Trump administration in the U.S.
To note, after markets regained all-time highs in February 2025 post the
November 2024 U.S. Presidential election and again after the January 2025
inauguration, volatility moved higher in late February and into March (and
spiked in April). As tariff and retaliatory tariff headlines escalated, the
resulting global trade war prompted precipitous declines in global markets,
with both the MSCI and S&P500 falling as much as 10% in March (only to slide
further in April).
Global healthcare stocks followed a slightly different path in the financial
year and underperformed relative to the broader equity markets. Whilst
advancing mostly in-line in the first half of the reporting period, healthcare
stocks began to decline in the autumn of 2024 as investors showed a strong
preference for high-growth sectors, particularly information technology and
generative artificial intelligence, eschewing the traditional defensive
healthcare sector. Policy-related uncertainties both into and out of the U.S.
Presidential election also weighed on the sector as did tariff uncertainty
late in the financial year.
ALLOCATION
Overall, our allocation strategy represents a diverse distribution of
investments across all major sub-sectors and global geographies within the
healthcare industry. This allows investors to view the Company as a
“one-stop-shop” for all of their healthcare investment needs given the
broad exposure of the portfolio to the entirety of the healthcare ecosystem
– from therapeutics, to services, to medical technologies, to growth of
emerging markets – given the embedded diversification of the portfolio of
companies represented in the portfolio.
In the reported period, the Company’s long-standing allocation strategy –
a clear focus on innovation and growth – remained intact. Specific key
traits of our strategy remained deployed, although they were more dynamic
given the changing landscape of healthcare over the past 12 months. Allocation
to Biotechnology remained above the Benchmark weighting, with the absolute
weighting decreasing modestly to 29.6% by the financial year end. This was
20.6% above the Benchmark owing to (1) the enormous therapeutic innovation and
new drug production that stems from Emerging Biotech companies and (2) the
relatively small weight that is represented in the Benchmark (9.0%).
Allocation to Large Cap Pharma remained underweight, owing to (1) disparate
fundamentals across the group and (2) the relatively large weight that is
represented within the Benchmark. Over the course of the reported period, our
exposure here declined from 29.9% to 22.1% by the financial year end. We
exited three investments due to fundamental reasons and chose not to fully
replace them given lack of conviction and an uncertain policy environment in
the fourth quarter of the financial year. We allocated 1% of the proceeds to
Spec Pharma companies.
In Healthcare Equipment & Supplies (‘Medtech’), we increased the weighting
significantly over the course of the financial year, by 11.4% to 29.4%
(absolute) and 11.4% above the Benchmark. This was due to high conviction
ideas, share price appreciation, and relative insulation from rising policy
uncertainty around the U.S. Presidential election outcome. Other sectors of
import, including Healthcare Providers & Services (‘Services’) and Life
Sciences Tools & Services (‘Tools’) remained underweight throughout the
duration of the financial year owing to our fundamental view and the expected
volatility again around the U.S. Presidential election outcome. In Japan, our
exposure decreased by half to 3.0% as we exited a single stock idea.
ALLOCATION BY SUB-SECTOR
(WWH vs. MSCI World Healthcare Index)
PERFORMANCE
The reported financial year was a challenging year, performance wise, for the
Company. Overall, the Company’s NAV per share total return was -10.3%
compared to the MSCI World Health Care Index return was -3.2% on a net total
return, sterling adjusted basis.
In what was a “tale of two halves,” consistent alpha generation and
performance above the Benchmark in the first nine months of the year was
obfuscated by historic volatility in the final quarter of the reported period.
Global stock markets experienced a significant downturn in late February and
March 2025, driven by a combination of escalating trade tensions, economic
concerns, and shifts in investor sentiment. The former environment favoured a
“risk on” investment tactic, which favoured our allocation strategy,
whilst the latter favoured a more defensive posture, incongruent with our
allocation. As a result, relative gains were lost, negative performance
ensued, all predominantly in the last two months of the financial year.
Despite these volatile periods, we do note that a record high net asset value
was achieved during the reported period. A closing net asset value per share
of 408.7p was achieved on 8 August 2024 eclipsing the previous high set in
January 2021. Performance since inception to 31 March 2025 remains strong,
with a return of +4,253.8% since April 1995. This represents an average
annualised return of 13.5% over the 30-year period. This ranks the Company in
third place among all closed end trusts across this period, regardless of
industry (source: Winterflood).
SUBSECTOR PERFORMANCE
During this unprecedented period of turbulence, one subsector stood out to the
positive, Medtech. Whilst many healthcare sectors were targeted at times by
President Trump, predominantly therapeutics and pharmacy benefit managers,
Medtech was largely spared any industry specific regulations, and only
modestly impaired by broad country tariffs (Mexico, Canada, China). In fact,
the largest fiscal headwind for the sector thus far has been reciprocal
tariffs from China (i.e. the importation of U.S. made products into China).
Stock picking in Medtech was a key factor in performance, with two investments
– Boston Scientific and Intuitive Surgical – being among the top five
contributors to performance (see below). Allocation effect – sector
overweight with large cap investments preferred over small cap – was also a
positive factor for this sector being the largest positive contributor in the
financial year.
On the negative side was therapeutics, specifically bio-pharmaceuticals, which
faced a constellation of macro factors: persistently elevated 10-year interest
rates, a slower-than-expected pace of global interest rate cuts, concerns
about global economic growth, and President Trump’s tariff policies. This
was coupled with some healthcare-specific macro concerns including staff cuts
at the U.S. Food and Drug Administration (“FDA”), the prospect of
pharmaceutical-specific tariffs, additional administration changes, and
renewed drug price reform rhetoric. Further downside was realised by some key
investments after company specific negative newsflow weighed on share prices
(see section on Major Detractors below).
From a temporal perspective, Biotechnology returns were mostly positive
throughout the first nine months of the financial year, including the
contribution from our proprietary M&A basket. In fact, those returns peaked
when the Trump victory was confirmed as the market began to price in the
positive implications of a Republican controlled federal government on future
mergers and acquisitions (“M&A”). However, Biotechnology stocks (and our
M&A basket) experienced declines subsequently, given the combination of macro
and industry concerns that precipitated from the new administration in the
final quarter of the financial year.
PRIVATE HOLDINGS
During the reported financial year, the Company strategically refrained from
making new investments in private companies, as we continued to cautiously
navigate the challenging public offering market for small and mid-cap
healthcare firms. While the capital market funding landscape continues to
improve, most of our private companies are well capitalised and are being
selective with regards to pursuing listings. We remain optimistic about the
ability of our unquoted investments to achieve listings within the next year
as we anticipate further improvement of the capital market funding
environment.
Despite the difficult capital markets environment, two unquoted investments
completed their Initial Public Offering (“IPO”) in Hong Kong during the
financial year. Jiangxi Rimag Group, a medical imaging company, and Visen
Pharmaceuticals, a biotechnology company, completed their IPO’s in June 2024
and March 2025, respectively.
At the end of the financial year, private investments made up 6.1% of the
portfolio. For the financial year, the Company’s private investments fell
£7.4 million, from an opening market value of £133.1 million across ten
companies. Unquoted names added £6.5 million in the second half of the
financial year to partially offset losses in the first half.
The existing private portfolio constitutes a diverse set of companies.
Geographically, exposure is evenly distributed among Emerging Markets and
North American companies. On a sub-sector basis, the exposure is concentrated
in Services and Tools, with small exposures to Biotechnology and Medtech.
MAJOR CONTRIBUTORS TO PERFORMANCE
The top contributor in the financial year was Boston Scientific, a leading
diversified medical devices manufacturer with particular expertise in the
cardiovascular space. The top-tier management team continued to deliver
exceptional returns for shareholders on the back of a material acceleration in
organic sales growth. This was primarily driven by the company’s next
generation pulsed field ablation device, the FARAPULSE PFA System, for the
treatment of atrial fibrillation and cardiac arrythmias. The roll-out of this
product, alongside continued strength in most other areas of the business, has
helped lift the company’s sales profile from low double-digit growth to a
mid- to high-teens growth rate. Looking ahead, investors are optimistic that
the pulsed field ablation market transition can move more rapidly than
consensus expectations, capturing well north of 50% of the multi-billion
dollar atrial fibrillation ablation market. Moreover, Boston Scientific has
several important trials evaluating pulsed field ablation in combination with
the company’s Watchman left atrial appendage closure device, which has
already helped to drive a reacceleration in growth of the multi-billion
Watchman market. We believe the ongoing company algorithm of best-in-class
organic sales growth, differentiated margin expansion potential and ongoing
M&A should result in continued strong and durable profit growth for the
foreseeable future.
The undisputed leaders in robotic surgery, Intuitive Surgical continued to
drive strong outperformance on the back of the new Dv5 surgical robot system
launch, which serves to further embed the company’s monopoly status in the
surgical robotics market. While other companies are working on competing
systems, we think Intuitive Surgical’s competitive moat is simply too large
at this point, and we see upcoming competitor system launches as market
expansive as opposed to driving material share gains against Intuitive. Over
the past financial year, investor expectations have rapidly improved for the
future growth prospects of the new Dv5 system launch with the company posting
strong system placements both for Dv5 as well as legacy systems. Procedure
volumes have continued to grow at elevated levels as well, and new instruments
have allowed the company to generate a higher sales per procedure. Lastly, the
company’s margin profile has improved in recent quarters, which has
historically been a point of contention amongst investors. With the Dv5 system
launch still in the early stages, we see continued strong trends for the
company for the next several years.
Another strong contributor to fund performance was Tenet Healthcare, a
Dallas-based, diversified healthcare services company and a leading U.S.
hospital operator. One of the main drivers of performance has been a robust
healthcare utilisation environment in the U.S., particularly for higher acuity
procedures that drive a higher sales and earnings for hospitals. On a more
company specific basis, Tenet Healthcare has also been highly efficient at
executing some value-creative divestitures of hospitals at attractive
valuations and acquisitions of ambulatory surgery centres. As more high acuity
procedures (such as hip and knee implants) switch from hospitals to ambulatory
surgery centres, Tenet should benefit given its increasing exposure to the
ambulatory site of care. Lastly, Tenet was able to procure improvements in
reimbursement from its Medicaid programs over the past financial year, and has
been exceptional at cost control management, both of which have driven
improvements to the margin profile of the company.
One of the more innovative companies in the diagnostics sector, Natera,
develops and offers liquid biopsy tests to inform personalised healthcare
decisions in oncology, women’s health, and organ health. The company is the
clear leader in this rapidly growing market and currently operates as a near
monopoly. Over the past financial year, the company has been delivering strong
upside to expectations for both sales and earnings whilst solid margin
expansion has been a recent focus for investors. Strength has been driven
across the whole business with exceptional performance in the company’s key
Signatera product used to detect circulating tumour DNA. We believe ongoing
rapid uptake of liquid biopsy tests should continue for the foreseeable
future, and with limited viable competition on the near-term horizon, we view
Natera as the clear ongoing primary beneficiary of these trends.
The Netherlands is the home for Argenx, a commercial-stage, global biopharma
company specialising in the development and commercialisation of therapies for
autoimmune diseases. The stock’s outperformance in the financial year was
driven by exceptional commercial execution, with global product sales reaching
U.S.$2.2 billion in 2024, an 84% year-over-year increase. This growth was
largely fuelled by the success of Vyvgart (efgartigimod), an antibody fragment
used to treat rare autoimmune diseases. First approved in late 2021 for
generalised myasthenia gravis, Vyvgart usage surpassed 10,000 patients in 2024
with additional indications for chronic inflammatory demyelinating
polyneuropathy and primary immune thrombocytopenia, and the approval of a
self-administered formulation called Hytrulo. Investors continued to be
engaged as Argenx’s “Vision 2030” messaging set ambitious goals,
including treating 50,000 patients globally with Vyvgart across 10 labelled
indications and advancing five pipeline candidates into Phase III development
by 2030. The stock continues to be a core holding in the portfolio.
MAJOR DETRACTORS TO PERFORMANCE
Merck is a U.S. based, global large cap pharmaceutical company that is well
regarded as a pioneer in immuno-oncology and vaccine development. Company
sales approached U.S.$65 billion in 2024 with 60% of revenues coming from
these two areas. Sales in China comprise an important portion of the
company’s growth strategy. However, an unexpected slowdown in the sales of
Gardasil, a cancer-preventing vaccine, throughout the year in China pressured
the stock. The first sign of a slowdown was in the second quarter report in
which the company maintained the issue was acute and maintained long-term
guidance for Gardasil. However, the issue recurred in the third quarter report
as well, yet the company continued to maintain its guidance. Nevertheless, we
exited the stock at that time. The share price continued to drop in the fourth
quarter as Gardasil sales in China once again disappointed and the company
finally capitulated and withdrew guidance, and the stock reached a three-year
low.
Evolent Health is a healthcare services company specialising in value-based
care, particularly in specialty areas like oncology, cardiology, and
musculoskeletal care. Evolent Health’s business centres around contracts
with health plans, notably Humana and Molina, to assist in managing the
oncology patient risk pools of those plans. At the beginning of the year,
Evolent priced its oncology plans with an expectation for a normalised year of
both disease prevalence and acuity levels. However, as the year progressed an
unforeseen rise in both oncology prevalence and acuity, as well as healthcare
utilisation more generally, began to unfold, leading to downward revisions to
estimates and forward expectations. Compounding these issues, Evolent was not
fully aware of the extent to which these trends had taken place until the
third quarter of the year due to a six-month catch-up in claims data. This
inhibited the company’s ability to renegotiate its rates with the
company’s clients. After the share price fell post the third quarter
announcement in November 2024, we exited the stock.
One of the most innovative new drugs over the past 20 years is Leqembi
(lecanemab), an antibody developed and commercialised by Eisai and partnered
with U.S. biotech giant, Biogen, for the treatment of mild to moderate
Alzheimer’s disease. The positive pivotal trial announced in September 2022,
CLARITY AD, was a landmark study that surprised both the clinical and
investment communities. The subsequent filing with the FDA, a positive
Advisory Committee meeting, an accelerated approval (January 2023) and a full
approval (July 2023) set the stage for a much-anticipated launch. However,
some 18 months later, the uptake for Leqembi remained modest and was even
denied a first-pass approval in Europe over safety concerns. Despite positive
expert opinion on the clinical importance of Leqembi for Alzheimer’s
patients and their families and caregivers, obstacles for uptake remain,
including lack of a blood-based diagnostic, infusion centre availability,
burden of dose frequency, and a launch primarily presided over by an
inexperienced Tokyo-based pharmaceutical company. All of which pressured the
share price of Biogen in the reported period. As the calendar turned from 2024
to 2025 and uptake for Leqembi still did not inflect and we exited the stock.
Pharmaceutical brand names rarely become part of popular culture, but Novo
Nordisk has recently succeeded with two, Ozempic and Wegovy, joining the ranks
such as Viagra and Lipitor. With the immense popularity and insatiable demand
for these drugs, the share price enjoyed similar popularity, rising over 30%
since the beginning of 2024 and peaking above 1,000 Danish Kroner in late June
2024. However, a series of idiosyncratic, negative events conspired to re-rate
the stock lower. First, a solid but less-than-perfect second quarter report in
August 2024 exacerbated a macro sell-off that had commenced in late July 2024.
Second, in late September 2024, when the company announced Phase II data for
monlunabant, a novel CB1 inverse agonist, the company’s lead oral asset in
the obesity space. The positive trial was sufficient for Novo Nordisk to
advance the agent into the next stage of clinical trials, but the reported
efficacy and safety data disappointed investors. Third, the stock tumbled
again after the third quarter report after the company CFO talked down
consensus estimates for 2025. Fourth, the stock fell over 20% in late December
after the company announced their next generation weight loss medication,
CagriSema, did not reach the expected -25% threshold of weight loss in a
pivotal trial. Finally, whilst demand for Wegovy proved to be largely
insatiable since its approval and launch in the U.S. in 2021, the absence of a
material inflection in prescriptions at the start of the calendar year 2025
prompted us to exit the stock.
The emerging biotech company, Apellis Pharmaceuticals has displayed all of the
hallmarks of investing in a speculative Biotechnology company, with high
rewards and high risks. The company developed Syfovre (pegcetacoplan
injection), a first-in-class treatment for geographic atrophy, a specific form
of progressive blindness. Its approval in early 2023 heralded a new treatment
for a devastating disease for which there was no treatment – a breakthrough
innovation – and the company’s valuation soared to over U.S.$10 billion by
mid-2023. However, a rare, unexpected, but serious side effect (ocular
vasculitis) leading to irreversible blindness emerged in real world use.
European approval was subsequently denied. Concerns around the magnitude of
visual acuity benefit relative to the risk of ocular vasculitis, in
combination with pressure from a competitor, led to slowing revenue growth for
Syfovre over 2024. However, the fund believes there is still potential for
Syfovre to be a blockbuster drug given the multi-billion dollar geographic
atrophy market is underpenetrated. The company’s market capitalisation at
the end of March of less than U.S. $3 billion presents an attractive
valuation.
DERIVATIVE STRATEGY
The Company has the ability to utilise equity swaps and options as part of its
financial strategy. Equity swaps are a financial tool (a derivative contract)
that allow for synthetic exposure to a single stock (Single Stock Equity
Swaps) or a basket of single stocks (Equity Basket Swaps).
Equity basket swaps are typically constructed within a well-defined theme and
basket facilitates management of the investment theme and tracking of
performance. For example, having 15 to 50+ additional positions at smaller
weights in the portfolio (i.e., non-core) is suboptimal. The equity basket
swap contains multiple single stock long positions and the basket swap
counterparty is Goldman Sachs, allowing for confidence in forward trading and
rebalancing strategies.
The Company strategically invested in two customised tactical basket swaps,
targeting growth opportunities in undervalued small and mid-capitalisation
Biotechnology, Pharmaceutical and Medtech companies. These baskets were
constructed to capitalise on two prevailing themes: 1) investment
opportunities possessing considerable potential as attractive acquisition
targets for larger corporations (M&A swap basket) and 2) substantial valuation
dislocations in small and mid-capitalisation medical device companies brought
about by the GLP-1 weight loss craze.
During the period under review, the equity basket swaps lost £41.3 million,
which detracted 2.0% from performance. The losses were primarily attributed
to the proprietary Biotechnology M&A Target Swap, which suffered from steep
declines in the biotechnology sector towards the end of the financial year.
Throughout the year, the Company also used single stock equity swaps to access
Chinese and Indian investments, which would otherwise be inaccessible through
more traditional investment methods. During the period under review, single
stock equity swaps contributed £1.1 million to performance, and we remain
confident in the long-term prospects of emerging market securities,
particularly those trading locally in mainland China.
LEVERAGE STRATEGY
Historically, the typical leverage level employed by the Company has been in
the mid-to-high teens range. Considering the market volatility during the past
four financial years, we have, more recently, used leverage in a more tactical
fashion.
In the current financial year, we flexed leverage modestly in response to the
economic climate, including in consideration of a putative recession earlier
in the period and interest rate fluctuations and speculation. Through the
middle of 2024, leverage was increased to the low-to-mid teens range, a
reflection of our overall bullishness on the portfolio and a turn in
biotechnology stocks. As we approached November 2024, we lowered leverage to
11% owing to the uncertainty of the U.S. Presidential election. Post-election,
we levered up to high teens, given our assessment at the time that a
Republican sweep was the optimal long-term outcome for the healthcare industry
given the history of that party and healthcare and the positive impact of
President Trump’s first administration on the industry. However, the
unexpected tumult created in Trump’s first 100 days in office prompted us to
lower leverage in three successive months, ultimately reaching 12.0% at the
end of March 2025.
SECTOR DEVELOPMENTS
The largest – and most unexpected – development in the financial year was
the election of Donald Trump to a second term, a Republican sweep of Congress,
and the ripple effect of federal policy initiatives on both global markets and
the healthcare industry. We had a more optimistic view on the implications of
President Trump’s election win and its impact on healthcare, and we still
do, however the immediate fallout and resulting volatility was not anticipated
by most investors.
In terms of ramifications of the new administration on healthcare, it is
impossible not to start with the appointment and confirmation of Robert F.
Kennedy Jr. as Secretary of Health and Human Services (“HHS”), the
presiding federal agency responsible for protecting the health and well-being
of all Americans and provides essential human services. Whilst we believed RFK
Jr. would be part of President Trump’s inner-circle post-election, we did
not originally foresee his rise to the #1 healthcare seat in the country. His
controversial views on healthcare and conspiracies on vaccines did not sit
well with investors, who initially sold the sector late in 2024 after then
President-elect Trump nominated him for HHS Secretary. However, since that
time and through his February 2025 Senatorial confirmation, the rhetoric and
commentary coming from RFK Jr has become much less controversial and, in some
cases, constructive. It has become clear that his top priority is on food,
food safety, nutrition, and obesity – putting the “F” back in FDA. One
area of controversy he has not backed down on, however, is vaccines and
vaccine safety, in particular paediatric vaccines. These views and potential
legislative changes to clinical trial requirements, regulatory overview, and
usage recommendations are negative and have created an overhang to the
industry. We have, in turn, reduced exposure to vaccines in the portfolio to
effectively zero as a result.
Meanwhile, U.S. FDA staffing cuts and the departure of some senior agency
officials in early 2025 caused investor fears about potential drug approval
delays to come to fore. That said, a look back at the drug approvals in 2024
and there was a near record number at 59. It is too early in the new
administration to determine if the recent changes will have an adverse impact
or not, but we are supportive of the new FDA Commissioner, Dr. Martin Makary a
British-American surgeon, professor, author, and medical commentator. Dr.
Makary’s accomplishments as a researcher, clinician, and prolific author are
numerous. We believe he will bring a pro-innovation platform to the FDA which
could prove positive for new drug approvals, efficiency, and industry
engagement.
Source: opinion of OrbiMed Advisors LLC
The situation of FDA leadership also took a turn at the end of March 2025,
when the long time (and industry friendly) head of the Centre for Biologics
Evaluation and Research (“CBER”) announced his resignation. CBER is the
Centre within FDA that regulates biological products for human use, such as
vaccines, blood products, cell & gene therapies, tissues products and certain
diagnostics. Dr. Peter Marks served as the Director of CBER since 2016, after
joining the division in 2012. Whilst not completely unexpected, his departure
was a disappointment for the industry and investors alike, as Dr. Marks had
been a leading advocate for the advancement and approval of gene and cell
therapies, a supporter of vaccine development and utilisation, played a
pivotal regulatory role during the COVID pandemic, and was an unequivocal
patient advocate. However, he openly disagreed with Robert F. Kennedy Jr.’s
views on vaccines and openly said so in his public resignation letter.
Dr. Mark’s replacement, Dr. Vinay Prasad, was named in May 2025. New to the
FDA, Dr. Prasad has been an outspoken critic of both the Agency and the
biopharmaceutical industry and rose in public prominence during the COVID
pandemic with sharp criticism of the mandatory usage of COVID vaccines. Dr.
Prasad’s agenda for his new position had yet to be revealed at the time of
publication but investor reaction to this news was decidedly negative as it
was assumed that this appointment was a blow to innovation and a new headwind
for biological drug development and new biologic launches. Whilst we wait for
transparency about the course of CBER in the coming months, we do note that
CBER has no regulatory authority on small molecules or antibodies. We would
also pause and hope that Dr. Prasad, like Dr. Makary, may bring some
progressive ideas to the Centre, such as novel benefit/risk analysis for new
drugs, more appropriate checks and balances on the regulatory front, and new
ways to bring new therapies for rare and severe diseases to market.
Whilst Biotech is largely insulated from the impact of tariffs, the prospect
of potential tariffs still diminished investor enthusiasm for the
bio-pharmaceutical sector generally. The month of March 2025 brought further
weakness in the broader markets due to concerns about President Trump’s
tariff policies and a possible economic slowdown in the U.S. Through the
first quarter reporting period of 2025, however, we have deduced from multiple
company commentaries that the overall impact of tariffs – both those enacted
and potentially industry specific – appear to be manageable and all
companies are already undertaking mitigation strategies to reduce the
potential impact of any future tariffs.
Tariffs on Canada, Mexico and China have had a de-minimis financial impact on
pharmaceuticals whilst the impact from reciprocal China tariffs have been
modestly greater. As of the authoring of this report, there were no concrete
industry specific proposals. Nevertheless, industry participants have been
engaging in numerous mitigation strategies, including stock piling inventory
in the U.S., shuffling manufacturing to the U.S. wherever they can find
capacity (both internal and external through contract manufacturing), and
lowering operating expenses, where possible.
Pharmaceutical company executives have also been aggressively campaigning
against any industry specific tariffs. Given the current global supply chain
dynamics for the industry, tariffs on pharmaceutical manufacturing would
likely result in supply disruption and drug shortages, adversely affecting
both companies and patients alike. The industry has acknowledged President
Trump’s concern about some gaps in domestic manufacturing that may be of
national importance. To that end, there has been support from both sides for
the U.S. Department of Commerce initiated Section 232 investigation under the
Trade Expansion Act, specifically examining the national security implications
of pharmaceutical and pharmaceutical ingredient imports. This investigation
aims to assess whether these imports pose a threat to U.S. national security.
Many companies have also issued statements and commitments to investing and
expanding manufacturing in the U.S., likely in hopes that President Trump’s
tariff threat is just a negotiating tactic. To that end, JNJ, Eli Lilly,
Novartis, Roche, Abbvie, Merck, and Bristol-Myers Squibb have cumulatively
pledged well in excess of U.S.$250 billion of investment in U.S. manufacturing
and R&D.
Drug pricing rhetoric from the new administration has been equal parts
concerning and opaque. Many headlines and quotes from President Trump have
spooked investors on this issue. However, his executive order of 15 April
2025, entitled “President Donald J. Trump Announces Actions to Lower
Prescription Drug Prices” was rather benign and builds off of policy and
tactics that he endorsed during his previous administration, which we viewed
much more industry friendly. Perhaps most importantly, it did not include a
mandate to use “Most Favoured Nation” as a U.S. drug price reference
system, which we would view as calamitous to the industry. Rather, there was a
keen focus – in-line with pharma industry view – on rebate reform: “By
addressing the influence of middlemen and promoting open competition,
President Trump’s actions aim to create a fairer prescription drug market
that lowers costs and ensures accountability across the health care system”.
Another rallying cry from both sides is the call for other developed
countries, most notably Europe, to “pay their fair share” for healthcare
and pharmaceutical innovation, to raise drug prices to be more in-line with
the U.S.
Nevertheless, President Trump did announce an executive order on 12 May 2025
calling for MFN pricing for drugs in the U.S., after teasing so just the week
before. That said, this announcement was not entirely unexpected as it
mirrored a similar executive order that Trump issued in September 2020 during
his first administration – an order was overturned on procedural grounds and
was never implemented. Whilst investors feared that Trump may be targeting the
pharmaceutical industry with this legislation, he did not do so during the
press conference where he signed this order. For example, Trump said he was
not upset with the pharmaceutical industry but rather placed the blame on
countries in Europe who were freeloading by not paying their fair share of
research & development costs. He also praised Eli Lilly, for their innovation
and newly announced investments in U.S. manufacturing.
There were few details in the executive order, but it did call for the
Commerce secretary and US trade representative to make sure ex-US countries
pay their fair share of pharmaceutical R&D (suggesting this could be part of
the ongoing tariff negotiations with other countries). Additionally, it called
for facilitation of direct-to-consumer sale of drugs at MFN prices and
reimportation of drugs from low-cost countries (which is already permitted).
Overall, we believe that this executive order does not have much teeth, as any
significant changes mandating reference pricing to ex-US countries would
require legislation by Congress – a near impossible task. One may even
conclude that this was yet another negotiating tactic employed by President
Trump. With fears stoked ahead of this event, pharma and biotech stocks
rallied upon the formal announcement of this executive order. That said, we
recognise that lingering MFN may create uncertainty in the minds of investors
but that this uncertainty will gradually subside, just as it did in 2020.
Meanwhile in the U.S., the Inflation Reduction Act, a law passed in 2022 under
the President Biden administration to lower drug pricing continues to move
forward. In 2024, the government announced the final negotiated price for the
first “List of 10” drugs on the Medicare list. Whilst the new prices will
not take effect until 2026, the companies with the greatest exposure –
Bristol-Myers Squibb, Pfizer, AstraZeneca, and JNJ – have described the
impact as “manageable”. The second “list” of drugs to be negotiated,
now totalling 15, was published in January 2025 and did not contain any
surprises.
Market reaction to IRA-related newsflow has become benign. On a positive
front, Trump’s executive order from April 2025 did call for the correction
of the “Pill Penalty”, a portion of the IRA in which exclusivity for
biologic drugs was set at 13 years whilst for small molecules, only 9 years.
We and others expected the new Trump administration to correct this
aberration. Industry litigation against the government for harm induced by the
IRA continues, but we had no material developments during the reported period.
OUTLOOK
Whilst the malaise that hung over the Biotechnology industry post-COVID has
now evaporated, the market continues to struggle to refocus on the positive
fundamentals of the bio-pharma space. The most recent macro conditions that
presided over the final quarter of the reported financial year were an
unfortunate continuation of an incessant, multi-year macro headwind that
continues to obfuscate and undervalue an industry that continues to benefit
from significant technological advancements and accelerating innovation in
drug discovery and development. Across therapeutics, continuous advancements
in genetic engineering, personalised medicine, and synthetic biology are
fostering a robust pipeline of new therapies and treatments. Increased
investment in early-stage science feeds long-term opportunities. Artificial
intelligence and machine learning are already impacting all facets of the
industry despite still being in their infancy. New product approvals are
delivering a quantity and quality of medicines never seen before. The growing
elderly demographic worldwide is driving demand for new healthcare solutions,
particularly in areas such as cancer treatment, chronic disease management,
and age-related health issues. Overall, the future of healthcare will remain
robust and dynamic, driven by data, shaped by innovation, improving access and
quality for patients on a global basis.
Sven H. Borho and Trevor M. Polischuk
OrbiMed Capital LLC
Portfolio Manager
10 June 2025
ABSOLUTE CONTRIBUTION BY INVESTMENT FOR THE YEAR ENDED 31 MARCH 2025
Principal contributors to and detractors from net asset value performance
Contribution
Top five contributors Contribution per share
Sector Country £’000 p
Boston Scientific Healthcare Equipment & Supplies United States 60,625 11.7
Intuitive Surgical Healthcare Equipment & Supplies United States 33,089 6.4
Tenet Healthcare Healthcare Providers & Services United States 20,869 4.0
Natera Life Sciences Tools & Services United States 17,799 3.4
Argenx Biotechnology Netherlands 16,505 3.2
Contribution
Top five detractors Contribution per share
Sector Country £’000 p
Apellis Pharmaceutical Biotechnology United States (23,988) -4.6
Merck* Pharmaceuticals United States (25,861) -5.0
Evolent Health* Healthcare Providers & Services United States (27,970) -5.4
Biogen* Biotechnology United States (32,352) -6.2
Novo Nordisk* Pharmaceuticals Denmark (50,692) -9.8
* Not held at 31 March 2025
ENVIRONMENTAL, SOCIAL AND GOVERNANCE AND CLIMATE CHANGE
ORBIMED’S APPROACH TO ESG
The Company’s Portfolio Manager, OrbiMed, is guided by its Responsible
Investing Policy in its approach to integrating environmental, social and
governance (“ESG”) issues into its investment processes. The Portfolio
Manager seeks to invest in innovative healthcare companies that are working
towards addressing significant unmet medical needs, across biopharmaceuticals,
medical devices, diagnostics, and healthcare services sectors, globally.
OrbiMed believes that there is a high congruence between companies that seek
to act responsibly and those that succeed in building long-term shareholder
value. The Portfolio Manager seeks to integrate ESG into the overall
investment process, with the objective of maximising investment returns.
Investment decisions are based on a variety of financial and non-financial
company factors, including ESG information. The Portfolio Manager has
appointed a Director – ESG to oversee the integration of ESG analysis.
As a responsible investor, OrbiMed negatively screens potential investments
and business sectors that may objectively lead to negative impacts on public
health or wellbeing. The importance of robust governance and social safeguards
in healthcare has grown significantly; regulators and investors are
increasingly scrutinising financially material ESG issues such as clinical
trial transparency, equitable access to therapies, and pricing practices.
Governance issues, including board structure and executive pay, are also
financially relevant. For companies that do not have a manufacturing
capability and focus on drug discovery and development, environmental factors
such as greenhouse gas (“GHG”) emissions are not generally regarded as
financially material. The Portfolio Manager generally utilises healthcare
sector-specific guidance from the Sustainability Accounting Standards Board
(“SASB”) and in-house analysis to guide its selection of material ESG
factors as part of its investment research.
Healthcare and life sciences sectors are highly regulated globally. Regulation
is well-established across developed markets and emerging markets for the
sector. To that end, OrbiMed considers compliance with local laws and
regulations as one of the factors in its investment evaluation. Depending on
the investment, all or a subset of the ESG factors that are financially
material and relevant are considered in OrbiMed’s research.
MONITORING AND ENGAGEMENT
OrbiMed utilises ESG scores for public equity holdings from third-party
service providers. To supplement the information from the third-party service
providers, OrbiMed also conducts proprietary analysis on ESG performance. The
scores from the third-party service providers are integrated with OrbiMed’s
analysis onto a business intelligence platform via a programming interface,
for regular monitoring.
The Portfolio Manager also generally engages on a regular basis with its
portfolio companies through meetings with management, proxy voting, and in
some cases, through board representation.
OrbiMed’s analysts track financially material ESG information such as safety
of clinical trials, drug safety, product safety, ethical marketing, call-backs
and other materially relevant factors. As part of these efforts, OrbiMed
engages with companies directly or through brokers, and facilitates dialogue
and an exchange of leading practices among investors, companies, and other
relevant experts on ESG in the healthcare sector.
Between 1 April 2024 and 31 March 2025, a total of 235 proposals were subject
to a vote within the Company’s portfolio. Of these, 234 were management
proposals and 1 was a shareholder proposal.
ORBIMED VOTING DURING THE YEAR ENDED 31 MARCH 2025
Proposed by Total number of Voted Votes abstained/
proposals Voted for against withheld
Management 234 192 36 6
Shareholder 1 0 1 0
Most proposals focused on director elections (94), auditor appointments (10),
and executive compensation (15). There were no management or shareholder
proposals referring to ESG that came to vote. The Portfolio Manager provides a
periodic update to the Board on ESG, including the evolving regulatory
landscape in different regions.
Sven H. Borho and Trevor M. Polischuk
OrbiMed Capital LLC
Portfolio Manager
10 June 2025
STRATEGIC REPORT/BUSINESS REVIEW
The Strategic Report, on pages 1 to 43 of the Annual Report, contains a review
of the Company’s business model and strategy, an analysis of its performance
during the financial year and its future developments and details of the
principal risks and challenges it faces. Its purpose is to inform shareholders
in the Company and help them to assess how the Directors have performed their
duty to promote the success of the Company.
The Strategic Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the information
available to them up to the date of this report. Such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying such forward-looking
information.
BUSINESS MODEL
Worldwide Healthcare Trust PLC is an externally managed investment trust. Its
shares are admitted to the closed-ended investment funds category of the
FCA’s Official List and to trading on the main market of the London Stock
Exchange.
The purpose of the Company is to achieve a high level of capital growth for
its shareholders by offering a single investment that provides exposure to the
global healthcare sector. This is achieved through a diversified portfolio of
shares in pharmaceutical, biotechnology and other healthcare related
companies.
The Company’s investment objective and policy are detailed on pages 8 and 9
of the Annual Report.
The Company’s strategy focuses on creating shareholder value by meeting its
investment objective.
As an externally managed investment trust, the Company outsources all
day-to-day management and administrative functions. Consequently, it has no
executive directors, employees or internal operations. The Company engages the
following key service providers: Frostrow Capital LLP (“Frostrow”) as its
Alternative Investment Fund Manager (“AIFM”); OrbiMed Capital LLC
(“OrbiMed”) as its Portfolio Manager; J.P. Morgan Europe Limited as its
Depositary; and J.P. Morgan Securities LLC as its Custodian and Prime Broker.
Further details about these appointments can be found in the Business Review.
The Board retains responsibility for all aspects of the Company’s affairs,
including:
· Setting and monitoring the investment strategy;
· Reviewing investment performance and policy; and
· Overseeing strategic matters such as dividend policy, share issuance and
buybacks, gearing, share price monitoring, and corporate governance.
The Company qualifies as an investment company under Section 833 of the
Companies Act 2006 and has been approved by HM Revenue & Customs as an
investment trust under Section 1158 of the Corporation Tax Act 2010. This
approval exempts the Company from taxation on capital gains. The Directors
have no reason to believe that this status will not be maintained.
Additionally, the Company is not considered a close company for taxation
purposes.
CONTINUATION OF THE COMPANY
A resolution was passed at the Annual General Meeting (“AGM”) held in 2024
that the Company continues as an investment trust for a further five year
period. In accordance with the Company’s Articles of Association,
shareholders will have an opportunity to vote on the continuation of the
Company at this year’s AGM and every five years thereafter.
THE BOARD
The Board of the Company comprises Doug McCutcheon (Chair), Sven Borho, Sian
Hansen, William Hemmings, Tim Livett, Jo Parfrey and Dr Bina Rawal. With the
exception of Sian Hansen and William Hemmings, all of these Directors served
throughout the year. All are independent non-executive Directors with the
exception of Sven Borho who is not considered to be independent by the Board.
All Directors, are seeking election or re-election by shareholders at this
year’s AGM.
DIVIDEND POLICY
It is the Company’s policy to pay out dividends to shareholders at least to
the extent required to maintain investment trust status for each financial
year. Such dividends will typically be paid twice a year by means of an
interim dividend and a final dividend.
COMPANY PROMOTION
The Company has appointed Frostrow to provide marketing and investor relations
services, in the belief that a well-marketed investment company is more likely
to grow over time, have a more diverse and stable shareholder register and
trade at a superior rating to its peers.
Frostrow actively promotes the Company in the following ways:
Engaging regularly with institutional investors, discretionary wealth managers
and a range of execution-only platforms: Frostrow regularly talks and meets
with institutional investors, discretionary wealth managers and execution-only
platform providers to discuss the Company’s strategy and to understand any
issues and concerns, covering both investment and corporate governance
matters;
Making Company information more accessible: Frostrow works to raise the
profile of the Company by targeting key groups within the investment
community, holding annual investment seminars, overseeing PR output and
managing the Company’s website and wider digital offering, including
Portfolio Manager videos and social media;
Disseminating key Company information: Frostrow performs the Investor
Relations function on behalf of the Company and manages the investor database.
Frostrow produces all key corporate documents, distributes monthly Fact
Sheets, the Interim and Annual Report and updates from OrbiMed on portfolio
and market developments; and
Monitoring market activity, acting as a link between the Company, shareholders
and other stakeholders: Frostrow maintains regular contact with sector broker
analysts and other research and data providers, and conducts periodic investor
perception surveys, liaising with the Board to provide up-to-date and accurate
information on the latest shareholder and market developments.
KEY PERFORMANCE INDICATORS (“KPIs”)
The Board assesses the Company’s performance in meeting its objectives
against KPI’s as follows. The KPI’s have not changed from the previous
year:
· Net asset value (“NAV”) per share total return* against the Benchmark;
· Discount/premium of share price to NAV per share*; and
· Ongoing charges*.
* Alternative Performance Measure (see Glossary)
Information on the Company’s performance is provided in the Statement from
the Chair and the Portfolio Manager’s Review and a record of these measures
is shown on pages 1, 2 and 3 of the Annual Report. Further information can be
found in the Glossary.
NAV per share total return* against the Benchmark
The Directors regard the Company’s NAV per share total return as being the
overall measure of value delivered to shareholders over the long term. This
reflects both net asset value growth of the Company and dividends paid to
shareholders.
The Board considers the most important comparator, against which to assess the
NAV per share total return performance, to be the MSCI World Health Care Index
measured on a net total return, sterling adjusted basis (the ‘Benchmark’).
OrbiMed has flexibility in managing the investments and are not limited by the
make up of the Benchmark. As a result, investment decisions are made that
differentiate the Company from the Benchmark and therefore the Company’s
performance may also be different from that of the Benchmark.
A full description of performance during the year under review is contained in
the Portfolio Manager’s Review.
Share price discount/premium to NAV per share*
The share price discount/premium to the NAV per share is considered a key
indicator of performance as it impacts the share price total return of
shareholders and can provide an indication of how investors view the
Company’s performance and its Investment Objective.
Ongoing charges*
The Board continues to be conscious of expenses and works hard to maintain a
balance between good quality service and costs.
As at 31 March 2025 the ongoing charges figure was 0.8% (2024: 0.9%).
* Alternative Performance Measure (See Glossary).
PRINCIPAL SERVICE PROVIDERS
The principal service providers to the Company are: the AIFM, Frostrow; the
Portfolio Manager, OrbiMed; the Custodian and Prime Broker J.P. Morgan
Securities LLC; and the Depositary, J.P. Morgan Europe Limited. Details of
their key responsibilities follow and further information on their contractual
arrangements with the Company are included in the Report of the Directors.
Alternative investment fund manager (“AIFM”)
Frostrow under the terms of its AIFM agreement with the Company provides,
inter alia, the following services:
· oversight of the portfolio management function delegated to OrbiMed;
· portfolio administration and valuation;
· risk management services;
· marketing and shareholder services;
· share price discount and premium management;
· administrative and secretarial services;
· advice and guidance in respect of corporate governance requirements;
· maintenance of the Company’s accounting records;
· maintenance of the Company’s website;
· preparation and dispatch of annual and half-year reports (as applicable)
and monthly fact sheets; and
· ensuring compliance with applicable legal and regulatory requirements.
During the year, under the terms of the AIFM Agreement, Frostrow received a
fee as follows:
On market capitalisation up to £150 million: 0.3%; in the range £150 million
to £500 million: 0.2%; in the range £500 million to £1 billion: 0.15%; in
the range £1 billion to £1.5 billion: 0.125%; over £1.5 billion: 0.075%. In
addition, Frostrow receives a fixed fee per annum of £57,500.
Portfolio manager
OrbiMed under the terms of its portfolio management agreement with the AIFM
and the Company provides, inter alia, the following services:
· the seeking out and evaluating of investment opportunities;
· deciding on the manner by which monies should be invested, disinvested,
retained or realised;
· advising on how rights conferred by the investments should be exercised;
· analysing the performance of investments made; and
· advising the Company in relation to trends, market movements and other
matters which may affect the investment objective and policy of the Company.
OrbiMed receives a base fee of 0.65% of NAV and a performance fee of 15% of
outperformance against the Benchmark as detailed on page 47 of the Annual
Report.
Depositary, custodian and prime broker
J.P. Morgan Europe Limited acts as the Company’s Depositary and J.P. Morgan
Securities LLC as its Custodian and Prime Broker.
J.P. Morgan Europe Limited, as Depositary, must take reasonable care to ensure
that the Company is managed in accordance with the Financial Conduct
Authority’s Investment Funds Sourcebook, the AIFMD and the Company’s
Articles of Association. The Depositary must in the context of this role act
honestly, fairly, professionally, independently and in the interests of the
Company and its shareholders.
The Depositary receives a variable fee based on the size of the Company as set
out on pages 47 and 48 of the Annual Report.
J.P. Morgan Europe Limited has discharged certain of its liabilities as
Depositary to J.P. Morgan Securities LLC. Further details of this arrangement
are set out on page 48 of the Annual Report. J.P. Morgan Securities LLC, as
Custodian and Prime Broker, provides the following services under its
agreement with the Company:
· safekeeping and custody of the Company’s custodial investments and cash;
· processing of transactions;
· provision of an overdraft facility. Assets up to 140% of the value of the
drawn overdraft can be taken as collateral. See page 91 of the Annual Report
for further details; and
· foreign exchange services.
AIFM AND PORTFOLIO MANAGER EVALUATION AND RE-APPOINTMENT
The performance of the AIFM and the Portfolio Manager is reviewed continuously
by the Board and the Management Engagement & Remuneration Committee (the
“Committee”) with a formal evaluation being undertaken each year. As part
of this process, the Committee monitors the services provided by the AIFM and
the Portfolio Manager and receives regular reports and views from them. The
Committee also receives comprehensive performance measurement reports to
enable it to determine whether or not the performance objectives set by the
Board have been met. The Committee reviewed the appropriateness of the
appointment of the AIFM and the Portfolio Manager in March 2025 with a
positive recommendation being made to the Board.
The Board believes the continuing appointment of the AIFM and the Portfolio
Manager is in the interests of shareholders as a whole. In coming to this
decision, it took into consideration, inter alia, the following:
· the quality of the service provided and the depth of experience of the
company management, company secretarial, administrative and marketing team
that the AIFM allocates to the management of the Company; and
· the quality of the service provided and the quality and depth of
experience allocated by the Portfolio Manager to the management of the
portfolio and the long-term performance of the portfolio in absolute terms and
by reference to the Benchmark.
RISK MANAGEMENT
The Board is responsible for the management of risks faced by the Company.
Through delegation to the Audit & Risk Committee, the Board has established
procedures to manage risk, to review the Company’s internal control
framework and establish the level and nature of the principal risks the
Company is prepared to accept in order to achieve its long-term strategic
objective. At least twice a year the Audit & Risk Committee carries out a
robust assessment of the principal risks and uncertainties with the assistance
of Frostrow (the Company’s AIFM) identifying the principal risks faced by
the Company. These principal risks and the ways they are managed or mitigated
are detailed in the Strategic Report. Further details on financial risks and
exposure to them is included in note 16.
Principal risks and uncertainties Mitigation
Market risks
Systematic market risks By the nature of its activities, the Company’s portfolio is exposed to fluctuations in market price (both individual security prices and FX rates) and due to exposure to the global healthcare sector, it is expected to have higher While this risk is accepted as inherent to the nature of the Company’s objective the Board monitor exposures and ensure that the risk is adequately disclosed to investors. In addition, the Board and the AIFM have appointed OrbiMed to manage the portfolio within the remit of the investment objective and policy, and imposed various limits and guidelines, set out on pages 8 and 9 of the Annual Report. These limits ensure that the portfolio is diversified, reducing the risks associated with individual stocks, and that the maximum exposure (through derivatives and an overdraft facility) is limited. The compliance with those limits and guidelines is monitored daily by Frostrow and OrbiMed and reported to the Board monthly.
volatility than the wider market. As such investors should be aware that by investing in the Company they are exposing themselves to market risks and those additional risks specific to the sectors in which the Company invests, such as political
interference in drug pricing.
Discount risk The Company is exposed to the risk that, particularly in periods when the investment strategy or its implementation underperforms, it may become less attractive to investors. This could lead to reduced demand for the Company’s shares, In managing this risk the Board: · reviews the Company’s Investment Objective and performance in relation to market, and economic, conditions and the operation of the Company’s peers; · actively seeks to promote the Company to current and potential investors and have appointed Quill PR to assist with this; and · has implemented an active discount/premium control mechanism. Frostrow have been appointed to provide Investor relations and Company promotional activities. They report to the Board at each Board meeting on these activities. Further information on these activities can be found on page 30 of the Annual Report.
resulting in a widening of the discount between the share price and the Net Asset Value (NAV) per share. Persistent underperformance, or a lack of clear communication regarding the Company’s strategy and positioning, may contribute to negative market
sentiment. This can, in turn, affect shareholder confidence and trading liquidity.
Strategic risks
Active Management Risk The appointment of a Portfolio Manager with a high - conviction, actively managed investment style, while potentially enhancing long-term returns, can result in higher portfolio volatility and returns diverging from those of the The Board conducts regular and detailed performance reviews of the Portfolio Manager assessing both absolute and relative returns over appropriate time horizons. The investment performance and portfolio is monitored at each Board meeting with scrutiny on performance, concentration, sector weightings, and volatility metrics. The Board on at least an annual basis reviews, and considers, the appointment of the Portfolio Manager to ensure the Portfolio Managers approach aligns with the Company’s long-term strategic objectives and shareholder interests. The Company’s communications and marketing strategy materials seek to outline the high-conviction, unconstrained nature of the investment approach.
Benchmark. Such divergence may not align with shareholder expectations for performance consistency relative to the Benchmark and could contribute to share price discount volatility or investor dissatisfaction.
Macro economic risk, Geopolitical and regulatory risks The Company’s performance may be adversely affected by macroeconomic instability, geopolitical tensions, and changes in global regulatory or fiscal policy. Such risks can lead to market volatility, While macroeconomic and geopolitical events remain outside the direct control of the Company, the Board conducts regular reviews of the broader economic, political, and regulatory environment, in close consultation with the Portfolio Manager. Particular attention is paid to emerging developments that may materially impact the healthcare sector or the geographies in which the portfolio is invested. The Board monitors the execution of the Company’s investment strategy in the context of long-term objectives and the evolving risk landscape. This includes reviewing portfolio exposures to specific countries, sectors, and currencies, particularly in relation to areas of heightened geopolitical tension such as the Asia Pacific region, and in light of potential risks stemming from trade disputes, tariffs, or regulatory reform — including those under the new U.S. administration. The Portfolio Manager’s risk team undertakes systematic risk analysis, including ongoing monitoring of country-specific, sector-specific, and issuer-level risks. In addition, the Board is supported by a specialist Alternative Investment Fund Manager (AIFM) and Company Secretary, who provide regular updates on market developments, industry regulation, and relevant legislative or tax changes, enabling timely and informed oversight.
shifts in investor sentiment, currency fluctuations, and disruptions to the business models of underlying portfolio companies. The appointment of the new U.S. administration may introduce material uncertainty, particularly in relation to healthcare policy,
trade relationships, taxation, and regulatory oversight. Given the portfolio’s substantial exposure to U.S.-domiciled healthcare companies, political intervention — including reforms to drug pricing, regulatory approval processes, or public healthcare
funding — could materially impact the valuations and earnings outlook of certain holdings. Further risks include: · Geopolitical conflict or rising protectionism, which may disrupt supply chains, affect cross-border investment flows, or trigger volatility
in global equity markets; · Deteriorating diplomatic or trade relationships between key economies, which may indirectly impair the operating environment for the Company’s portfolio companies; · Rising levels of cybercrime, particularly where healthcare
companies are targeted for sensitive commercial or patient data, potentially leading to operational or reputational damage; · Emerging market exposure, which introduces heightened political risk, legal and regulatory unpredictability, and currency
instability.
Leverage Risk The Company permits the use of gearing to enhance capital growth. While day-to-day decisions on leverage levels are delegated to the Portfolio Manager (OrbiMed) within Board-approved limits, the strategic setting of these parameters involves The Board periodically reviews the Company’s leverage limits in consultation with the AIFM and Portfolio Manager, considering market conditions, risk tolerance, and long-term strategic objectives.
balancing the potential for enhanced returns with the risk of amplified losses during market downturns. An inappropriate leverage policy could misalign with shareholder expectations, increase volatility, or result in underperformance relative to the
Benchmark.
Activism Risk The increasing visibility of activist investors on investment trust share registers poses a potential governance and strategic risk. Activists may seek to influence the Company’s investment policy, fee structure, share buyback programme, or In monitoring this risk the Board: · discusses at each Board meeting the Company’s future development and strategy; · reviews the shareholder register at each Board meeting; · has implemented an active discount/premium control mechanism; · both the Chair and SID make themselves available to meet with major shareholders, if requested; and, · all Directors attend the AGM are available to answer any questions, and discuss any matters, with shareholders. Frostrow and OrbiMed maintains regular and transparent communication with shareholders. Feedback from shareholders, including any shareholder concerns, are provided to each board meeting.
strategic direction, which may not align with the Company’s long-term objective or those of other shareholders.
Investment risks
Performance risks OrbiMed’s approach is expected to result in performance that deviates meaningfully from market indices and other healthcare-focused investment companies. While this style may enhance long-term returns, it can also lead to periods of To manage this risk the Board monitor the portfolio (both performance and composition) and compliance with the stated limits and on an, at least, annual basis consider the re-appointment of the Portfolio Manager. Investment performance is a primary discussion item at all Board meetings. OrbiMed reports at each Board meeting on the performance of the Company’s portfolio, which encompasses the rationale for stock selection decisions, the make-up of the portfolio, potential new holdings and, derivative activity and strategy (further details on derivatives can be found in note 16).
significant under- or outperformance relative to comparators. In addition, the Company employs leverage, both through the use of derivatives and traditional gearing. While leverage is intended to enhance returns, it also increases the Company’s exposure to
market movements, thereby amplifying both gains and losses. In periods of market volatility or adverse performance, the use of leverage may increase the risk of capital loss and contribute to greater net asset value volatility.
Unquoted investment risk The Company invests in unquoted companies with the objective of achieving enhanced long-term returns. However, these investments carry a higher degree of risk compared to quoted securities. Unquoted holdings are typically illiquid, To mitigate this risk the Board and AIFM have set a limit of 10% of the portfolio, calculated at the time of investment, that can be held in unquoted investments and have established a robust and consistent valuation policy and process as set out in Note 1(b), which is in line with UK GAAP requirements and the International Private Equity and Venture Capital (“IPEV”) Guidelines. The Board also monitors the performance of these investments compared to the additional risks involved.
meaning they may be more difficult to purchase, realise, or value accurately. As such, their valuations can be more volatile and subject to greater uncertainty than those of listed investments. Valuation of unquoted investments requires significant
judgement and is conducted in accordance with the accounting policies set out in Note 1(a). There is a risk that exit proceeds may ultimately be materially lower than the valuations estimated by the Company. In addition, external events beyond the
Company’s control — including market conditions, political developments, or company-specific events — may significantly affect both the valuation of, and the Company’s ability to exit from, these investments.
ESG related risk Both the Board and the Portfolio Manager recognise the importance of maintaining a coherent and credible approach to environmental, social and governance (“ESG”) considerations. There is a risk that failure to incorporate ESG factors The Portfolio Manager provides ESG reports at each Board meeting, highlighting examples where ESG issues influenced investment decisions and/or led to engagement with an investee company. The Portfolio Manager also produces a quarterly ESG update. The Board ensures that the Portfolio Manager’s ESG approach is in line with standards elsewhere and the Board’s expectations. A summary of the Portfolio Manager’s approach to Responsible Investing can be found on page 28 of the Annual Report.
effectively into the investment decision-making process could negatively impact long-term investment returns. Companies that disregard ESG issues may face regulatory, reputational, or operational challenges that could impair their financial performance.
Furthermore, insufficient emphasis on ESG within the Company’s investment framework may reduce its attractiveness to current and prospective shareholders, particularly as investor expectations and stewardship standards continue to evolve. A perceived lack
of ESG integration could also affect the Company’s inclusion in ESG-compliant investment mandates and indices.
Operational risks
Counterparty risk In addition to market and foreign currency risks, discussed above, the Company is exposed to risk arising from the use of counterparties. If a counterparty were to fail, the Company could be adversely affected through either delay in This risk is managed by the Board through: · reviews of the arrangements with, and services provided by, the Depositary and the Custodian and Prime Broker to ensure that the security of the Company’s assets is being maintained. Legal opinions are sought, where appropriate, as part of this review. Also, the Board regularly monitors the credit rating of the Company’s Custodian and Prime Broker; · monitoring of the assets taken as collateral (further details can be found in note 16); · reviews of OrbiMed’s approved list of counterparties, the Company’s use of those counterparties and OrbiMed’s process for monitoring, and adding to, the approved counterparty list; · monitoring of counterparties, including reviews of internal control reports and credit ratings, as appropriate; · by primarily investing in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates the risk of losing the principal of a trade during the settlement process; and · J.P. Morgan Securities LLC is subject to regular monitoring by J.P. Morgan Europe Limited, the Company’s Depositary, and the Board receives regular reports from J.P. Morgan Europe Limited.
settlement or loss of assets. The most significant counterparty the Company is exposed to is J.P. Morgan Securities LLC which is responsible for the safekeeping of the Company’s assets and provides the overdraft facility to the Company. As part of the
arrangements with J.P. Morgan Securities LLC they may take assets, up to 140% of the value of the drawn overdraft, as collateral and have first priority security interest or lien over all of the Company’s assets. Such assets taken as collateral may be
used, loaned, sold, rehypothecated or transferred by J.P. Morgan Securities LLC. Although the Company maintains the economic benefit from the ownership of those assets it does not hold any of the rights associated with those assets. Any of the Company’s
assets taken as collateral are not covered by the custody arrangements provided by J.P. Morgan Securities LLC. The Company is, however, afforded protection in accordance with SEC rules and U.S. legislation equal to the value of the assets that have been
rehypothecated.
Service provider risk The Company is reliant on the systems of its service providers to run its business and as such disruption to, or a failure of, those systems could lead to a failure to comply with law and regulations leading to reputational damage To manage these risks the Board: · receives a monthly compliance report from Frostrow, which includes, inter alia , details of compliance with applicable laws and regulations; · reviews internal control reports, key policies, including measures taken to combat cyber security issues, and also the disaster recovery procedures of its service providers; · maintains a risk matrix with details of risks the Company is exposed to, the controls relied on to manage those risks and the frequency of the controls operation; · receives updates on pending changes to the regulatory and legal environment and progress towards the Company’s compliance with these; and · has considered the increased risk of cyber-attacks and received reports and assurance at meetings with its service providers where the information security controls in place were reviewed.
and/ or financial loss. Given the reliance on connected systems by the Company’s service provider cyber risks are considered to be heightened currently.
Emerging risks
The Company has carried out a robust assessment of its emerging risks, and the
procedures in place to identify and monitor them are described below. The
International Risk Governance Council defines an ‘emerging’ risk as one
that is new, or a known risk appearing in a new or unfamiliar context, or
under new contextual conditions (i.e. re-emerging). Failure to identify
emerging risks may result in reactive responses rather than proactive
management and, in extreme cases, could render the Company unviable or force a
fundamental change to its structure, objective, or strategy.
The Audit & Risk Committee reviews a risk schedule at its half-yearly
meetings. Emerging risks are discussed during these sessions and are also
considered on an ongoing basis to ensure that both new and evolving risks are
identified and, where practicable, mitigated.
The Audit & Risk Committee continues to monitor and assess the following key
emerging risks:
· Technological disruption in global healthcare markets, including the
impact of artificial intelligence, precision medicine, and digital health
platforms;
· Evolving ESG expectations and regulatory standards, particularly relating
to climate disclosure, social impact, and governance frameworks;
· Cybersecurity threats affecting the Company’s service providers and/or
portfolio companies, particularly relating to the protection of sensitive
medical or patient data;
· Long-term changes in global healthcare policy, public funding models, and
innovation frameworks, especially in the U.S. and emerging markets; and
· Potential long-term impacts of tariffs and trade barriers, which may arise
from protectionist policy shifts or the deterioration of trade relationships.
These could disrupt pharmaceutical and biotechnology supply chains, impact
cross-border investment flows, and raise input costs for portfolio companies,
thereby adversely affecting operating margins and investment returns over
time.
The Committee recognises that such risks can also present opportunities for
companies that adapt early, and it remains alert to both the threats and
potential strategic implications they may pose.
DISCOUNT/PREMIUM CONTROL
The Board undertakes a regular review of the level of discount/premium and
consideration is given to ways in which share price performance may be
enhanced, including the effectiveness of marketing, share issuance and share
buybacks, where appropriate.
It is the Board’s policy to buy back the Company’s shares if the share
price discount to the net asset value per share exceeds 6% on an ongoing
basis. Shares repurchased are held as treasury shares. Treasury shares can be
sold back to the market at a later date at a premium to the cum-income net
asset value per share (See Glossary). Shareholders should note, however, that
it remains very possible for the discount to be greater than 6% for extended
periods of time particularly when sentiment towards the Company, the sector
and to investment trusts generally remains poor.
While buybacks may prove unable to prevent the discount from widening, they
also enhance the net asset value per share for remaining shareholders and go
some way to dampening discount volatility which can adversely affect
investors’ risk adjusted returns.
At times when there are unsatisfied buying orders for the Company’s shares
in the market, the Company has the ability to issue new shares or to re-issue
treasury shares at a small premium to the cum income net asset value per
share. This acts as an effective share price premium management tool.
SOCIAL, HUMAN RIGHTS AND ENVIRONMENTAL MATTERS
The Directors, through the Company’s Portfolio Manager, encourage companies
in which investments are made to adhere to best practice with regard to
corporate governance. In light of the nature of the Company’s business there
are no relevant human rights issues and the Company does not have a human
rights policy.
The Company recognises that social and environmental issues can have an effect
on some of its investee companies.
The Company is an investment trust and so its own direct environmental impact
is minimal. As an externally-managed investment trust, the Company does not
have any employees or maintain any premises, nor does it undertake any
manufacturing or other physical operations itself. All its operational
functions are outsourced to third party service providers. Therefore, the
Company has no material, direct impact on the environment or any particular
community and the Company itself has no environmental, human rights, social or
community policies. The Board of Directors consists of seven Directors, five
of whom are resident in the UK, one in Canada and one in the U.S. The Board
holds the majority of its regular meetings in the UK, with usually one meeting
held each year in New York, and has a policy that travel, as far as possible,
is minimal, thereby minimising the Company’s greenhouse gas emissions.
Further details concerning greenhouse gas emissions can be found within the
Report of the Directors. Video conferencing has proved to be a very effective
way of holding meetings, and this medium continues to be used alongside in
person meetings.
The Portfolio Manager engages with the Company’s underlying investee
companies in relation to their corporate governance practices and the
development of their policies on social, community and environmental matters.
INTEGRITY AND BUSINESS ETHICS
The Company is committed to carrying out business in an honest and fair manner
with a zero-tolerance approach to bribery, tax evasion and corruption. As
such, policies and procedures are in place to prevent this. In carrying out
its activities, the Company aims to conduct itself responsibly, ethically and
fairly, including in relation to social and human rights issues.
The Company believes that high standards of ESG make good business sense and
have the potential to protect and enhance investment returns. The Portfolio
Manager’s investment criteria provide that ESG and ethical issues are taken
into account and best practice is encouraged by the Board. The Board’s
expectations are that its principal service providers have appropriate
governance policies in place.
TASKFORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”)
The Company notes the TCFD recommendations on climate-related financial
disclosures. The Company is an investment trust with no employees, internal
operations or property and, as such, it is exempt from the Listing Rules
requirement to report against the TCFD framework.
GOING CONCERN
The financial statements have been prepared on a going concern basis. The
Directors consider this is the appropriate basis as the Company has adequate
resources to continue in operational existence for the foreseeable future,
being taken as 12 months from the date of approval of this report on 10 June
2025. The Company’s shareholders are asked every five years to vote for the
continuation of the Company, this will next be put to shareholders at the
Annual General Meeting to be held in 2029. The content of the Company’s
portfolio, trading activity, the Company’s cash balances and revenue
forecasts, and the trends and factors likely to affect the Company’s
performance are reviewed and discussed at each Board meeting. The Board has
considered a detailed assessment of the Company’s ability to meet its
liabilities as they fall due, including stress and liquidity tests which
modelled the effects of substantial falls in markets and significant
reductions in market liquidity, on the Company’s net asset value, its cash
flows and its expenses. Further information is provided in the Audit & Risk
Committee Report.
Based on the information available to the Directors at the date of this
report, including the results of these stress tests, the conclusions drawn in
the Viability Statement below, the Company’s cash balances, and the
liquidity of the Company’s listed investments, the Directors are satisfied
that the Company has adequate financial resources to continue in operation for
at least the next 12 months and that, accordingly, it is appropriate to
continue to adopt the going concern basis in preparing the financial
statements.
VIABILITY STATEMENT
The Directors have assessed the Company’s position and prospects, including
consideration of the Company’s principal risks, and have formed a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the next five financial years. The Board
has chosen a five-year horizon in view of both the long-term outlook adopted
by the Portfolio Manager when making investment decisions and also the
investment horizon adopted by investors.
To make this assessment, the Audit & Risk Committee has considered the
Company’s financial position, its ability to liquidate the portfolio and to
meet its liabilities as they fall due. The following points were noted:
· The portfolio is comprised principally of investments traded on major
international stock exchanges. Based on recent market volumes 80.7% of the
current portfolio could be liquidated within one trading day. There is no
current expectation that the nature of the investments held within the
portfolio will be significantly different in future.
· The Board has considered the viability of the Company under various
scenarios, including periods of stock market and economic volatility, and
concluded that it would expect to be able to ensure the financial stability of
the Company due, in large part, to having a diversified portfolio comprising
principally of listed and readily realisable assets. As illustrated in note 16
to the financial statements, the Board has considered the following risks with
appropriate sensitivity analysis having been undertaken: market risk
(including foreign currency risk, interest rate risk and other price risk),
liquidity risk and credit risk.
With an ongoing charges ratio of 0.8%, the expenses of the Company are
predictable and modest in comparison with the assets and there are no known
capital commitments which would alter that position.
· The Company has an overdraft facility which can be used to meet its
liabilities. Details of the Company’s current liabilities as at 31 March
2025 are set out in notes 10 and 12 to the financial statements.
· The Company has no employees. Therefore, it does not have redundancy or
other employment related liabilities or responsibilities.
The Audit & Risk Committee, in addition to considering the potential impact of
the Company’s principal risks and various plausible downside scenarios, has
made the following assumptions in considering the Company’s longer-term
viability:
· There will continue to be demand for investment trusts;
· The Portfolio Manager will continue to adopt a long-term view when making
investments;
· The Company invests principally in the securities of listed companies
traded on international stock exchanges to which investors will wish to
continue to have exposure;
· Shareholders will vote for the continuation of the Company at the Annual
General Meeting to be held in 2029 and at five-year intervals thereafter;
· Due to the closed-ended nature of the Company, unlike open-ended funds, it
does not have to sell investments when shareholders wish to sell their shares;
· The Company will continue to be able to fund share buybacks when required.
The Company bought back 51,310,528 shares in the year under review at a total
cost of £176.5 million. It had shareholders’ funds in excess of £1,687
million at the year end; and
· The long-term performance of the Company will continue to be satisfactory.
STAKEHOLDER INTERESTS AND BOARD DECISION-MAKING (SECTION 172 OF THE COMPANIES
ACT 2006)
The Directors are required to explain more fully how they have discharged
their duty under s172 of the Companies Act 2006 in promoting the success of
the Company for the benefit of the members as a whole. This includes the
likely consequences of the Directors’ decisions in the long term and how
they have taken wider stakeholders’ needs into account.
The Directors aim to act fairly between the Company’s stakeholders. The
Board’s approach to shareholder relations is summarised in the Corporate
Governance Report. The Statement from the Chair provides an explanation of
actions taken by the Directors during the year to achieve the Board’s
long-term aim of ensuring that the Company’s shares trade at a price close
to the NAV per share.
As an externally managed investment trust, the Company has no employees,
customers, operations or premises. Therefore, the Company’s key stakeholders
(other than its shareholders) are considered to be its service providers.
The need to foster business relationships with the service providers and
maintain a reputation for high standards of business conduct are central to
the Directors’ decision-making as the Board of an externally managed
investment trust. The Directors believe that fostering constructive and
collaborative relationships with the Company’s service providers will assist
in their promotion of the success of the Company for the benefit of all
shareholders.
The Board engages with representatives from its service providers throughout
the year. Representatives from OrbiMed and Frostrow are in attendance at each
Board meeting. As the Portfolio Manager and the AIFM respectively, the
services they provide are fundamental to the long-term success and smooth
running of the Company. The Statement from the Chair and also in the Business
Review, describe relevant decisions taken during the year relating to OrbiMed
and Frostrow. Further details about the matters discussed in Board meetings
and the relationship between OrbiMed and the Board are set out in the
Corporate Governance Report.
Representatives from other service providers are asked to attend Board
meetings when deemed appropriate.
Further details are set out overleaf.
Stakeholder group The benefits of engagement with the Company's stakeholders How the board, the portfolio manager and the AIFM have engaged with the Company’s stakeholders
Investors Clear communication of the Company’s strategy and the performance against the Company’s objective can help the share price trade at a narrower discount or a premium to its net asset value per share which benefits shareholders. New shares can be issued to meet demand without net asset value per share dilution to existing shareholders. Increasing the size of the Company can benefit liquidity as well as spread costs. Share buybacks are undertaken at the discretion of the Directors. The Portfolio Manager and Frostrow, on behalf of the Board, complete a programme of investor relations throughout the year. An analysis of the Company’s shareholder
register is provided to the Directors at each Board meeting along with marketing reports from Frostrow. The Board reviews and considers the marketing plans on a regular
basis. Reports from the Company’s broker are submitted to the Board on investor sentiment and industry issues. Key mechanisms of engagement include: · The Annual General
Meeting, where the Portfolio Manager provides an update on the Company’s performance and strategy. This is followed by a question and answer section. · The Company’s
website which hosts reports, articles and insights, and monthly fact sheets. · One-on-one and group investor meetings. · Should any significant votes be cast against a
resolution proposed at the Annual General Meeting the Board will engage with shareholders. · The Board will explain in its announcement of the results of the Annual
General Meeting any actions it intends to take to consult shareholders in order to understand the reasons behind any significant votes against. · If required, following
any consultation, an update would be published no later than six months after the Annual General Meeting and the Annual Report will detail the impact shareholder feedback
has had on any decisions the Board has taken and any actions or resolutions proposed.
What were the key areas of engagement? What actions were taken, including main decisions?
Key areas of engagement with investors · Ongoing dialogue with shareholders concerning the strategy of the Company, performance and the portfolio. · The Portfolio Manager and Frostrow meet regularly with shareholders and potential investors to discuss the Company’s strategy, performance and portfolio. The Chair of the Board and the Senior Independent Director also met with key shareholders during the
year to discuss corporate governance matters and also the Company’s investment strategy. Frostrow and the Portfolio Manager engage with retail investors through a number of different channels: (i) The Company’s website, which is maintained by Frostrow,
contains articles, webinars and quarterly updates; (ii) A distribution list of shareholders (retail and professional) which is maintained by Frostrow and is used to communicate with investors on a regular basis; (iii) The Portfolio Manager provides annual
presentations online – (webcasts) and offline (Annual General Meeting), which shareholders are able to attend and participate in; and (iv) Frostrow ensures that the Company is available through a wide range of leading execution only platforms.
Stakeholder group The benefits of engagement with the Company's stakeholders How the board, the portfolio manager and the AIFM have engaged with the Company’s stakeholders
Portfolio Manager Engagement with the Company’s Portfolio Manager is necessary to evaluate their performance against the Company’s stated strategy and to understand any risks or The Board met regularly with the Company’s Portfolio Manager throughout the year. The Board also receives monthly performance and compliance reporting. The Portfolio Manager’s attendance at each Board meeting provides the opportunity for the Portfolio Manager and Board to further reinforce their mutual understanding of what is expected from both parties. The Board encourages the Company’s Portfolio Manager to engage with companies and in doing so expects ESG issues to be an important consideration. The Board receives an update on Frostrow’s engagement activities by way of a dedicated report at Board meetings and at other times during the year as required.
opportunities this may present. The Board ensures that the Portfolio Manager’s environmental, social and governance (“ESG”) approach is in line with standards elsewhere
and the Board’s expectations. Engagement also helps ensure that the Portfolio Manager’s fees are closely monitored and remain competitive. Gaining a deeper understanding
of the portfolio companies and their strategies as well as incorporating consideration of ESG factors into the investment process assists in understanding and mitigating
risks of an investment as well as identifying future potential opportunities.
Service Providers The Company contracts with third parties for other services including: custody, company secretarial, accounting & administration and registrar. The Company ensures that The Board and Frostrow, acting in its capacity as AIFM, engage regularly with other service providers both in one-to-one meetings and via regular written reporting. This regular interaction provides an environment where topics, issues and business development needs can be dealt with efficiently and collegiately. The Board together with Frostrow also carried out a review of the service providers’ business continuity plans and additional cyber security provisions. The review of the performance of the Portfolio Manager and Frostrow is a continuous process carried out by the Board and the Management Engagement & Remuneration Committee with a formal evaluation being undertaken annually.
the third parties to whom the services have been outsourced complete their roles in line with their service level agreements thereby supporting the Company in its success
and ensuring compliance with its obligations.
What were the key areas of engagement? What actions were taken, including main decisions?
Key areas of engagement with the Portfolio Manager on an ongoing basis are portfolio composition, performance, outlook and business updates.
· Regular review of the performance and make up of the investment portfolio. · The integration of ESG factors into the Portfolio Manager’s investment processes. · The Board engaged with the Portfolio Management team to discuss the Company’s overall performance as well as developments in individual portfolio companies and wider macroeconomic developments. · The Portfolio Manager reports on ESG issues at each Board
meeting.
Key areas of engagement with Service Providers
· The Directors have frequent engagement with the Company’s other service providers through the annual cycle of reporting. This engagement is completed with the aim of maintaining an effective working relationship and oversight of the services provided. · No specific action required as the reviews of the Company’s service providers, have been positive and the Directors believe their continued appointment is in the best interests of the Company.
Key areas of engagement with the broker
· The Board is cognisant that the trading of the Company‘s shares at a persistent and significant discount or premium to the prevailing NAV per share is not in the interests of shareholders. · Throughout the year the Board closely monitored the Company’s discount/premium to NAV per share and received regular updates from the broker. 51,310,528 shares were bought back during the year, and a further 11,291,577 shares were bought back since the
year end to 9 June 2025. No new shares were issued during the year, nor following the year end to 9 June 2025. (Please see the statement from the Chair for further information.)
PERFORMANCE AND FUTURE DEVELOPMENTS
A review of the Company’s year, its performance and the outlook for the
Company can be found in the Chair’s Statement and in the Portfolio
Manager’s Review.
The Company’s overall strategy remains unchanged.
LOOKING TO THE FUTURE
The Board concentrates its attention on the Company’s investment performance
and OrbiMed’s investment approach and on factors that may have an effect on
this approach. Marketing reports are given to the Board at each board meeting
by the AIFM which include how the Company will be promoted and details of
planned communications with existing and potential shareholders. The Board is
regularly updated by the AIFM on wider investment trust industry issues and
discussions are held at each Board meeting concerning the Company’s future
development and strategy.
A review of the Company’s year, its performance since the year end and the
outlook for the Company can be found in the Chair’s Statement and in the
Portfolio Manager’s Review. It is expected that the Company’s Strategy
will remain unchanged in the coming year.
ALTERNATIVE PERFORMANCE MEASURES
The Financial Statements set out the required statutory reporting measures of
the Company’s financial performance. In addition, the Board assesses the
Company’s performance against a range of criteria which are viewed as
particularly relevant for investment trusts, which are explained in greater
detail in the Strategic Report, under the heading ‘Key Performance
Indicators’.
By order of the Board
Frostrow Capital LLP
Company Secretary
10 June 2025
REPORT OF THE DIRECTORS
The Directors present their Annual Report on the affairs of the Company
together with the audited financial statements and the Independent Auditors’
Report for the year ended 31 March 2025.
SIGNIFICANT AGREEMENTS
Details of the services provided under these agreements are included in the
Strategic Report.
Alternative investment fund management agreement
Frostrow is the designated AIFM for the Company on the terms and subject to
the conditions of the alternative investment fund management agreement between
the Company and Frostrow (the “AIFM Agreement”).
The notice period on the AIFM Agreement with Frostrow is 12 months,
termination can be initiated by either party.
Details of the fee payable to Frostrow can be found in the Strategic Report.
Portfolio management agreement
Under the AIFM Agreement Frostrow has delegated the portfolio management
function to OrbiMed, under a portfolio management agreement between it, the
Company and Frostrow (the “Portfolio Management Agreement”).
OrbiMed receives a periodic fee equal to 0.65% p.a. of the Company’s NAV and
a performance fee as set out in the Performance Fee section below. Its
agreement with the Company may be terminated by either party giving notice of
not less than 12 months.
Performance fee
Dependent on the level of long-term outperformance of the Company, OrbiMed is
entitled to a performance fee. The performance fee is calculated by reference
to the amount by which the Company’s NAV performance has outperformed the
Benchmark (see inside front cover for details of the Benchmark).
The fee is calculated quarterly by comparing the cumulative performance of the
Company’s NAV with the cumulative performance of the Benchmark since the
launch of the Company in 1995. The performance fee amounts to 15.0% of any
outperformance over the Benchmark. Provision is made within the daily NAV per
share calculation as required and in accordance with generally accepted
accounting standards.
In order to ensure that only sustained outperformance is rewarded, at each
quarterly calculation date any performance fee payable is based on the lower
of:
(i) The cumulative outperformance of the portfolio over the Benchmark as at
the quarter end date; and
(ii) The cumulative outperformance of the portfolio over the Benchmark as at
the corresponding quarter end date in the previous year
less any cumulative outperformance on which a performance fee has already been
paid.
The effect of this is that outperformance has to be maintained for a twelve
month period before it is paid.
As at 31 March 2025 no performance fees were accrued or payable (31 March
2024: £nil). Since the last performance fee was paid in 2021, the Company has
underperformed its Benchmark and as such no performance fee has been provided
for in the current or comparative year.
Depositary agreement
The Company appointed J.P. Morgan Europe Limited (the “Depositary”) as its
Depositary in accordance with the AIFMD on the terms and subject to the
conditions of the Depositary agreement between the Company, Frostrow and the
Depositary (the “Depositary Agreement”).
Under the terms of the Depositary Agreement the Company has agreed to pay the
Depositary a fee calculated at 1.75bp on net assets up to £150 million, 1.50
bps on net assets between £150 million and £300 million, 1.00bps on net
assets between £300 million and £500 million and 0.50bps on net assets above
£500 million.
The Depositary has delegated the custody and safekeeping of the Company’s
assets to J.P. Morgan Securities LLC (the “Custodian and Prime Broker”)
pursuant to a delegation agreement between the Company, Frostrow, the
Depositary and the Custodian and Prime Broker (the “Delegation
Agreement”).
The Delegation Agreement transfers the Depositary’s liability for the loss
of the Company’s financial instruments held in custody by the Custodian and
Prime Broker to the Custodian and Prime Broker as permitted by the AIFMD. The
Company has consented to the transfer and reuse of its assets by the Custodian
and Prime Broker (known as “rehypothecation”) in accordance with the terms
of an institutional account agreement between the Company, the Custodian and
Prime Broker and certain other J.P. Morgan entities (as defined therein). See
page 31 of the Annual Report for further details.
Prime brokerage agreement
The Company appointed J.P. Morgan Securities LLC on the terms and subject to
the conditions of the prime brokerage agreement between the Company, Frostrow
and the Depositary (the “Prime Brokerage Agreement”). The Custodian and
Prime Broker receives interest on the drawn overdraft as detailed in note 12.
The Custodian and Prime Broker is a registered broker-dealer and is regulated
by the United States Securities and Exchange Commission.
RESULTS AND DIVIDENDS
The results attributable to shareholders for the year and the transfer to
reserves are shown on pages 74 and 75 of the Annual Report. Details of the
Company’s dividend record can be found on page 3 of the Annual Report.
Substantial interests in share capital
As at 31 March 2025, the Company had not been notified of any substantial
interests in the Company’s voting rights. Between the year-end and the date
of this report the Company was notified of the following substantial interest
in the Company’s voting rights.
Number of % held
shares held
Saba Capital Management L.P. 26,476,555* 5.4
* The number and percentage of voting rights attributable to shares held
directly was 4,275,644 equating to 0.9% of the Company’s issued share
capital. The number and percentage of voting rights attributable to shares
held through a total return swap was 22,200,911 equating to 4.5% of the
Company’s issued share capital.
This table reflects those shareholders who have notified the Company of a
substantial interest in its shares when they have crossed certain thresholds
and may not reflect their current holding. The table does not reflect the full
range of investors in the Company. The shareholder register is principally
comprised of private wealth managers and retail investors owning their shares
through a variety of online platforms.
CAPITAL STRUCTURE
The Company’s capital structure comprises solely ordinary shares. During the
financial year, a total of 51,310,528 shares were repurchased for treasury at
a cost of £176.5m and at an average discount of 10.8%. The shares repurchased
during the year equated to 9.4% of the Company’s share capital at the
beginning of the year.
At 31 March 2025 the Company had 494,631,804 shares in issue, excluding the
107,033,396 shares held in treasury.
Voting rights in the Company’s shares
Details of the voting rights in the Company’s shares at the date of this
Annual Report are given in note 9 to the Notice of Annual General Meeting.
Each shareholder is entitled to one vote on a show of hands and, on a poll,
one vote for every share held.
DIRECTORS’ & OFFICERS’ LIABILITY INSURANCE COVER
Directors’ & officers’ liability insurance cover was maintained by the
Company during the year ended 31 March 2025 and to the date of this report.
It is intended that this policy will continue for the year ending 31 March
2026 and subsequent years.
DIRECTORS’ INDEMNITIES
During the year under review and to the date of this report, indemnities were
in force between the Company and each of its Directors under which the Company
has agreed to indemnify each Director, to the extent permitted by law, in
respect of certain liabilities incurred as a result of carrying out his or her
role as a Director of the Company. The Directors are also indemnified against
the costs of defending any criminal or civil proceedings or any claim by the
Company or a regulator as they are incurred provided that where the defence is
unsuccessful the Director must repay those defence costs to the Company. The
indemnities are qualifying third party indemnity provisions for the purposes
of the Companies Act 2006.
A copy of each deed of indemnity is available for inspection at the
Company’s registered office during normal business hours and will be
available for inspection at the Annual General Meeting. Please refer to the
Statement from the Chair for details of this year’s Annual General Meeting
arrangements.
POLITICAL AND CHARITABLE DONATIONS
The Company has not in the past and does not intend in the future to make
political or charitable donations.
MODERN SLAVERY ACT 2015
The Company does not provide goods or services in the normal course of
business, and as a financial investment vehicle does not have customers. The
Directors do not therefore consider that the Company is required to make a
statement under the Modern Slavery Act 2015 in relation to slavery or human
trafficking.
ANTI-BRIBERY AND CORRUPTION POLICY
The Board has adopted a zero tolerance approach to instances of bribery and
corruption. Accordingly, it expressly prohibits any Director or associated
persons when acting on behalf of the Company, from accepting, soliciting,
paying, offering or promising to pay or authorise any payment, public or
private in the UK or abroad to secure any improper benefit for themselves or
for the Company.
The Board ensures that its service providers apply the same standards in their
activities for the Company.
A copy of the Company’s Anti Bribery and Corruption Policy can be found on
its website at www.worldwidewh.com. The policy is reviewed regularly by the
Audit & Risk Committee.
CRIMINAL FINANCES ACT 2017
The Company has a commitment to zero tolerance towards the criminal
facilitation of tax evasion.
A copy of the Company’s Prevention of the Facilitation of Tax Evasion Policy
can be found on its website at www.worldwidewh.com. The policy is reviewed
regularly by the Audit & Risk Committee.
GLOBAL GREENHOUSE GAS EMISSIONS
The Company has no greenhouse gas emissions to report from its operations, nor
does it have responsibility for any other emissions producing sources under
the Companies Act 2006 (Strategic Reports and Directors’ Reports)
Regulations 2013 or the Companies (Directors’ Report) and Limited Liability
Partnerships (Energy and Carbon Report) Regulations 2018, including those
within the Company’s underlying investment portfolio. Consequently, the
Company consumed less than 40,000 kWh of energy during the year in respect of
which the Report of the Directors is prepared and therefore is exempt from the
disclosures required under the Streamlined Energy and Carbon Reporting
criteria.
COMMON REPORTING STANDARD (“CRS”)
CRS is a global standard for the automatic exchange of information
commissioned by the Organisation for Economic Cooperation and Development and
incorporated into UK law by the International Tax Compliance Regulations 2015.
CRS requires the Company to provide certain additional details to HMRC in
relation to certain shareholders. The reporting obligation began in 2016 and
is an annual requirement. The Registrars, Link Group, have been engaged to
collate such information and file the reports with HMRC on behalf of the
Company.
CORPORATE GOVERNANCE
The Corporate Governance Report is set out on pages 51 to 58 of the Annual
Report.
ARTICLES OF ASSOCIATION
Amendments of the Company’s Articles of Association require a special
resolution to be passed by shareholders.
REQUIREMENTS OF THE UK LISTING RULES
The UK Listing Rules require the Company to include certain information in a
single identifiable section of the Annual Report or a cross reference table
indicating where the information is set out. The Directors confirm that there
are no disclosures to be made under the UK Listing Rules.
UK SANCTIONS
The Board has made due diligence enquiries of the service providers that
process the Company’s shareholder data, to ensure the Company’s compliance
with the UK sanctions regime. The relevant service providers have confirmed
that they check the Company’s shareholder data against the UK sanctions list
on a daily basis. At the date of this report, no sanctioned individuals had
been identified on the Company’s shareholder register. The Board notes that
stockbrokers and execution-only platforms also carry out their own due
diligence.
By order of the Board
Frostrow Capital LLP
Company Secretary
10 June 2025
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations. In
preparing these financial statements, the Directors are required to:
· select suitable accounting policies and apply them consistently;
· make judgements and estimates that are reasonable and prudent;
· follow applicable UK accounting standards comprising FRS 102;
· prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in business; and
· prepare a director’s report, a strategic report and a directors’
remuneration report which comply with the requirements of the Companies Act
2006.
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 also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for ensuring that the Report of the Directors
and other information included in the Annual Report is prepared in accordance
with company law in the United Kingdom. They are also responsible for ensuring
that the Annual Report includes information required by the UK Listing Rules.
The Directors are also responsible for ensuring that the Annual Report and the
Financial Statements are made available on a website. The Annual Report and
the Financial Statements are published on the Company’s website at
www.worldwidewh.com and via Frostrow’s website at www.frostrow.com. The
maintenance and integrity of these websites, so far as it relates to the
Company, is the responsibility of Frostrow. The work carried out by the
Auditors does not involve consideration of the maintenance and integrity of
these websites and, accordingly, the Auditors accept no responsibility for any
changes that have occurred to the financial statements since they were
initially presented on these websites. Visitors to the websites need to be
aware that legislation in the United Kingdom governing the preparation and
dissemination of the financial statements may differ from legislation in their
jurisdiction.
DISCLOSURE OF INFORMATION TO THE AUDITORS
So far as the Directors are aware, there is no relevant information of which
the Auditors are unaware. The Directors have taken all steps they ought to
have taken to make themselves aware of any relevant audit information and to
establish that the Auditors are aware of such information.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL
REPORT
The Directors confirm to the best of their knowledge that:
· the Annual Report and the Financial Statements have been prepared in
accordance with applicable accounting standards, give a true and fair view of
the assets, liabilities, financial position and the return for the year ended
31 March 2025; and
· the Annual Report and the Financial Statements, includes a fair review of
the development and performance of the Company and of its financial position,
together with a description of the principal risks and uncertainties it faces.
Also, that taken as a whole they are fair, balanced and understandable and
provide the information necessary to assess the Company’s performance,
business model and strategy.
On behalf of the Board
Doug McCutcheon
Chair
10 June 2025
CORPORATE GOVERNANCE
THE BOARD AND COMMITTEES
Responsibility for effective governance lies with the Board. The governance
framework of the Company reflects the fact that as an investment company it
has no employees and outsources portfolio management to OrbiMed and risk
management, company management, company secretarial, administrative and
marketing services to Frostrow.
THE BOARD Chair – Doug McCutcheon Senior Independent Director – Dr. Bina Rawal Five additional non-executive Directors, all considered independent, except for Sven Borho. Key responsibilities: * to provide leadership and set strategy, values and standards within a framework of prudent effective controls which enable risk to be assessed and managed;
* to ensure that a robust corporate governance framework is implemented; and
* to challenge constructively and scrutinise performance of all outsourced activities.
Management Engagement & Remuneration Committee Chair Jo Parfrey All Independent Directors Key Audit & Risk Committee Chair Tim Livett* Nominations Committee Chair Dr. Bina Rawal All Independent Directors Key responsibilities: * to review regularly the Board’s structure and composition; and
responsibilities: * to review regularly the contracts, the performance and remuneration of the All Independent Directors (excluding the Chair of the Company Doug McCutcheon) Key responsibilities: * to review the Company’s financial reports; * to make recommendations for any changes or new appointments; and
Company’s principal service providers; * to oversee the risk and control environment and financial reporting; and * to manage the Board evaluation process.
* to set the Directors’ Remuneration Policy; and * to have primary responsibility for the relationship with the Company’s external Auditors, to review their independence and performance, and to determine their remuneration.
* to review the terms and conditions of the Directors’ appointments.
* The Board believes that Tim Livett has the necessary recent and relevant
financial experience to Chair the Company’s Audit & Risk Committee.
Copies of the full terms of reference, which clearly define the
responsibilities of each Committee, can be obtained from the Company Secretary
and can be found at the Company’s website at www.worldwidewh.com. Copies
will also be available for inspection on the day of the Annual General
Meeting.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to maintaining and demonstrating high standards of
corporate governance. The Board has considered the principles and
recommendations of the AIC Code of Corporate Governance published in February
2019 (the “AIC Code”). The AIC Code addresses all the principles set out
in the UK Corporate Governance Code (the “UK Code”), as well as setting
out additional provisions on issues that are of specific relevance to the
Company.
In January 2024 the FRC published a revised UK Corporate Governance Code which
applies to financial years beginning on or after 1 January 2025. The AIC
published a revised Code of Corporate Governance in August 2024, which applies
with effect from the same date. The 2018 UK Code and the 2019 AIC Code apply
until this time.
The Board considers that reporting in accordance with the principles and
recommendations of the AIC Code (which has been endorsed by the Financial
Reporting Council) provides more relevant and comprehensive information to
shareholders. By reporting against the AIC Code, the Company meets its
obligations under the UK Code (and associated disclosure requirements under
paragraph 6.6.6 of the UK Listing Rules) and as such does not need to report
further on issues contained in the UK Code which are irrelevant to the Company
as an externally managed investment company, including the provisions relating
to the role of the chief executive, executive directors’ remuneration and
the internal audit function.
The Company has complied with the principles and recommendations of the AIC
Code.
The AIC Code can be viewed at www.theaic.co.uk and the UK Code can be viewed
on the Financial Reporting Council website at www.frc.org.uk. The Corporate
Governance Report forms part of the Report of the Directors.
BOARD LEADERSHIP AND PURPOSE
Purpose and strategy
The purpose and strategy of the Company are described in the Strategic Report.
THE BOARD
The Board is responsible for the effective Stewardship of the Company’s
affairs. Strategy issues and all operational matters of a material nature are
considered at its meetings.
The Board consists of seven non-executive Directors, each of whom, with the
exception of Sven Borho, is independent of OrbiMed and the Company’s other
service providers. No member of the Board is a Director of another investment
company managed by OrbiMed, nor has any Board member (with the exception of
Sven Borho) been an employee of OrbiMed or any of the Company’s service
providers.
The Board carefully considers the various guidelines for determining the
independence of non-executive Directors, placing particular weight on the view
that independence is evidenced by an individual being independent of mind,
character and judgement. All Directors retire at the AGM each year and, if
appropriate, seek election or re-election. Each Director has signed a letter
of appointment to formalise the terms of their engagement as a non-executive
Director, copies of which are available on request at Frostrow’s offices.
BOARD CULTURE
The Board aims to consider and discuss differences of opinion, unique vantage
points and to exploit fully areas of expertise. The Chair encourages open
debate to foster a supportive and co-operative approach for all participants.
Strategic decisions are discussed openly and constructively. The Board aims to
be open and transparent with shareholders and other stakeholders and for the
Company to conduct itself responsibly, ethically and fairly in its
relationships with service providers.
The Board has gained assurance on whistleblowing procedures at the Company’s
principal service providers to ensure employees at those companies are
supported in speaking up and raising concerns. No concerns relating to the
Company were raised during the year.
SHAREHOLDER RELATIONS
The Company has appointed Frostrow to provide marketing and investor relations
services, in the belief that a well-marketed investment company is more likely
to grow over time, have a more diverse, stable list of shareholders and its
shares will trade at close to net asset value per share over the long run.
Frostrow actively promotes the Company.
SHAREHOLDER COMMUNICATIONS
The Board, the AIFM and the Portfolio Manager consider maintaining good
communications with shareholders and engaging with larger shareholders through
meetings and presentations a key priority. Shareholders are kept informed by
the publication of annual and half-year reports which include financial
statements. These reports are supplemented by the daily release of the net
asset value per share to the London Stock Exchange and the publication of
monthly fact sheets. All this information, including interviews with the
Portfolio Manager, is available on the Company’s website at
www.worldwidewh.com.
The Board monitors the share register of the Company; it also reviews
correspondence from shareholders at each meeting and maintains regular contact
with major shareholders. Shareholders who wish to raise matters with a
Director may do so by writing to them at the registered office of the Company.
The Board supports the principle that the AGM be used to communicate with
private investors, in particular. Shareholders are encouraged to attend the
AGM, where they are given the opportunity to question the Chair, the Board and
representatives of the Portfolio Manager. In addition, the Portfolio Manager
makes a presentation to shareholders covering the investment performance and
strategy of the Company at the AGM. Voting at the AGM is conducted on a poll
and details of the proxy votes received in respect of each resolution will be
made available on the Company’s website.
SIGNIFICANT HOLDINGS AND VOTING RIGHTS
Details of the shareholders with substantial interests in the Company’s
shares, the Directors’ authorities to issue and repurchase the Company’s
shares, and the voting rights of the shares are set out in the Directors’
Report.
BOARD MEETINGS
The Board meets formally at least four times each year. A representative of
OrbiMed attends all meetings; representatives from Frostrow are also in
attendance at each Board meeting. The Independent Directors also meet before
each formal Board meeting without representatives from Frostrow and OrbiMed
being present. The Chair encourages open debate to foster a supportive and
co-operative approach for all participants.
The Board has agreed a schedule of matters specifically reserved for decision
by the Board. This includes establishing the investment objectives, strategy
and the Benchmark, the permitted types or categories of investments, the
markets in which transactions may be undertaken, the amount or proportion of
the assets that may be invested in any geography or category of investment or
in any one investment, and the Company’s share issuance and share buyback
policies.
The Board, at its regular meetings, undertakes reviews of key investment and
financial data, revenue projections and expenses, analyses of asset
allocation, transactions and performance comparisons, share price and net
asset value performance, marketing and shareholder communication strategies,
the risks associated with pursuing the investment strategy, peer group
information and industry issues.
The Chair is responsible for ensuring that the Board receives accurate, timely
and clear information. Representatives of OrbiMed and Frostrow Capital LLP
report regularly to the Board on issues affecting the Company.
The Board is responsible for strategy and has established an annual programme
of agenda items under which it reviews the objectives and strategy for the
Company at each meeting.
CONFLICTS OF INTEREST
Company Directors have a statutory obligation to avoid a situation in which
they (and connected persons) have, or can have, a direct or indirect interest
that conflicts, or may possibly conflict, with the interests of the Company.
The Board has in place procedures for managing any actual or potential
conflicts of interest. No conflicts of interest arose during the year under
review.
BOARD FOCUS AND RESPONSIBILITIES
With the day to day management of the Company outsourced to service providers
the Board’s primary focus at each Board meeting is reviewing the investment
performance and associated matters, such as, inter alia, future outlook and
strategy, gearing, asset allocation, investor relations, marketing, and
industry issues.
In line with its primary focus, the Board retains responsibility for all the
key elements of the Company’s strategy and business model, including:
· the Investment Objective, Policy and Benchmark, incorporating the
investment and derivative guidelines and limits, and changes to these;
· the maximum level of gearing and leverage the Company may employ;
· a review of performance against the Company’s KPIs;
· a review of the performance and continuing appointment of service
providers; and
· the maintenance of an effective system of oversight, risk management and
corporate governance.
The Investment Objective, Policy, and Benchmark, including the related limits
and guidelines, are set out on pages 8 and 9 of the Annual Report, along with
details of the gearing and leverage levels allowed.
Details of the principal KPIs and further information on the principal service
providers, their performance and continuing appointment, along with details of
the principal risks, and how they are managed, are set out in the Strategic
Report.
The Corporate Governance Report includes a statement of compliance with
corporate governance codes and best practice, and the Business Review includes
details of the internal control and risk management framework within which the
Board operates.
BOARD COMPOSITION AND SUCCESSION
Succession planning
During the year, the Nominations Committee considered the structure of the
Board, recognising the need for progressive refreshment. The Nominations
Committee led the recruitment process during the year to find a replacement
for Humphrey van der Klugt who retired in July 2024 and also for Doug
McCutcheon ahead of his planned retirement in July 2026.
The Board has an approved succession planning policy to ensure that (i) there
is a formal, rigorous and transparent procedure for the appointment of new
Directors; and (ii) the Board is comprised of members who collectively display
the necessary balance of professional skills, experience, length of service
and industry/Company knowledge.
Policy on the tenure of the Board Chair and other Directors
All Directors seek election or re-election every year. The Board subscribes to
the view that long-serving Directors should not necessarily be prevented from
forming part of an independent majority. The Board considers that a
Director’s tenure does not necessarily reduce his or her ability to act
independently and will continue to assess each Director’s independence
annually through a formal performance evaluation.
The tenure of each Director is not ordinarily expected to exceed nine years.
However, the Board has agreed that the tenure of the Board Chair may be
extended in order to facilitate the Board’s overall orderly succession. The
Board believes that this more flexible approach to the tenure of the Chair is
appropriate in the context of the regulatory rules that apply to investment
companies, which ensure that the Board Chair remains independent after
appointment, while being consistent with the need for regular refreshment and
diversity.
The Board asked Doug McCutcheon to take on the role of Board Chair from July
2022 for a period of three to five years. This was in order to oversee the
renewal of the Board, including the retirement and replacement of all but one
of the then Directors as well as changing the composition and leadership of
all of the Board’s Committees.
Since then, good progress has been made and the Board structure now in place
allows Director renewal on a more regular basis than has occurred
historically. In the light of this progress, Doug McCutcheon will be retiring
from the Board at the conclusion of the Annual General Meeting to be held in
2026.
Portfolio Manager Representative on the Board
The Company was founded in 1995 with OrbiMed as the Portfolio Manager. Since
that time, the Company has performed strongly, producing a compound net asset
value per share annual return of +13.5%, well above our Benchmark and making
us the third best performing trust in the UK across all sectors over the
period (Source: Winterflood Investment Trusts).
Since our inception, a representative of OrbiMed has served as a Director of
the Company. While less common in the investment trust sector today than when
the Company was founded, the Board believes that the Company’s long-term
performance and its shareholders have and will continue to benefit from this
arrangement. The Board has also taken steps to avoid any potential conflicts
of interest – the current OrbiMed representative, Sven Borho, does not sit
on any of the Board’s Committees and he does not receive a salary for
serving as a Director.
Appointments to the Board
The Nominations Committee considers annually the skills possessed by the Board
and identifies any skill shortages to be filled by new Directors.
The rules governing the appointment and replacement of Directors are set out
in the Company’s articles of association and the aforementioned succession
planning policy. Where the Board appoints a new Director during the year, that
Director will stand for election by shareholders at the next AGM. Subject to
there being no conflict of interest, all Directors are entitled to vote on
candidates for the appointment of new Directors and on the recommendation for
shareholders’ approval for the Directors seeking election or re-election at
the AGM. When considering new appointments, the Board endeavours to ensure
that he or she has the capabilities required to be effective and oversee the
Company’s strategic priorities. This will include an appropriate range,
balance and diversity of skills, experience and knowledge. The Company is
committed to ensuring that any vacancies arising are filled by the most
qualified candidates.
During the year, the Board appointed Sian Hansen and William Hemmings as a
non-executive Directors, following the retirement of Humphrey van der Klugt in
July 2024 and ahead of the planned retirement of Doug McCutcheon at the
conclusion of the AGM to be held in 2026. The Board engaged the services of a
specialist recruitment agency, Nurole, to assist with the search process.
Nurole sourced and prepared a diverse long list of potential candidates for
consideration by the Nominations Committee. The Nominations Committee then
selected a short list of candidates to interview. Following the interviews, a
recommendation was made to the Board that Mrs Hansen and Mr Hemmings be
appointed as Directors. Nurole has no other connection with the Company.
Diversity policy
The Board supports the principle of Boardroom diversity, of which gender and
ethnicity are two important aspects. The Company’s policy is that the Board
and its committees should be comprised of directors with a diverse range of
skills, knowledge and experience and that appointments should be made on merit
against objective criteria, including diversity in its broadest sense.
The objective of the policy is to have a broad range of approaches,
backgrounds, skills, knowledge and experience represented on the Board. To
this end, achieving a diversity of perspectives and backgrounds on the Board
will be a key consideration in any director search process. The Board
encourages any recruitment agencies it engages to find a diverse range of
candidates that meet the criteria agreed for each appointment and, from the
shortlist, aims to ensure that a diverse range of candidates is brought
forward for interview.
The Board will continue to give due regard to the new diversity targets in the
UK Listing Rules set out below. The Board will not discriminate unfairly on
the grounds of gender, ethnicity, age, sexual orientation, disability or
socio-economic background when considering the appointment of a new Director.
Candidates’ educational and professional backgrounds, their cognitive and
personal strengths, are considered against the specification prepared for each
appointment.
The UK Listing Rules require companies to report against the following
diversity targets:
a) At least 40% of individuals on the board are women;
b) At least one of the senior board positions (Chair, CEO, CFO or SID) is
held by a woman; and
c) At least one individual on the board is from a minority ethnic background.
As an externally managed investment company, the Company does not have the
positions of CEO or CFO and therefore, as permitted by the UK Listing Rules,
it has not reported formally against the second target as it is not
applicable. As shown in the tables below, the Company has met both the first
and the third targets. The Board will have due regard to these targets in
future Director recruitment processes.
In accordance with the UK Listing Rules, the Board has provided the following
information in relation to its diversity as at the year end.
Number of
Number of senior
Board Percentage of positions on
Members the Board the Board*
Men 4 57% n/a
Women 3 43% n/a
Not specified/prefer not to say – – n/a
Number of
Number of senior
Board Percentage of positions on
Members the Board the Board*
White British or other White (including minority-white groups) 6 63% n/a
Mixed/Multiple Ethnic Groups – – n/a
Asian/Asian British 1 14% n/a
Black/African/Caribbean/Black British – – n/a
Other ethnic group, including Arab – – n/a
Not specified/ prefer not to say – – n/a
* This column is does not apply to the Company as it is externally managed
and does not have executive management functions, specifically it does not
have a CEO or CFO. The Chair of the Board is a man and the SID is woman. Also,
the Company considers that the chairs of the permanent sub-committees of the
Board are senior roles in an investment company context. Of the three
permanent sub-committees of the Board, two are chaired by a woman: the
Nominations Committee and the Management Engagement & Remuneration Committee.
The information above was obtained by asking the Directors to indicate on an
anonymous form, how they should be categorised for the purposes of the UK
Listing Rules disclosures.
MEETING ATTENDANCE
The number of meetings held during the year of the Board and its Committees,
and each Director’s attendance level, is shown below:
Type and number of meetings held in 2024/25 Board (6) Audit & Risk Committee (2) Nominations Committee (2) Management Engagement & Remuneration Committee (1)
Doug McCutcheon~ 6 – 2 1
Dr Bina Rawal 6 2 2 1
Tim Livett 6 2 2 1
Sven Borho^ 5 – – –
Sian Hansen ‡ 3 1 1 1
William Hemmings ‡ 3 1 1 1
Jo Parfrey 6 2 2 1
Humphrey van der Klugt* 2 1 – –
* Retired from the Board on 10 July 2024.
^ Sven Borho does not sit on any of the Company’s Committees.
~ Not a member of the Audit & Risk Committee.
‡ Joined the Board on 1 October 2024.
All of the serving Directors attended the Annual General Meeting held on 10
July 2024.
BOARD EVALUATION
Following last year’s external Board evaluation, an internal review of the
Board its committees and individual Directors (including each Director’s
independence) was carried out in the form of performance evaluation
questionnaires.
The review concluded that the Board works in a collegiate, efficient and
effective manner, and there were no material weaknesses or concerns
identified. The Board is satisfied that the structure, mix of skills and
operation of the Board, its committees, and individual Directors continue to
be effective.
The Board pays close attention to the capacity of individual Directors to
carry out their work on behalf of the Company. In recommending individual
Directors to shareholders for election and re-election, it considered their
other Board positions and their time commitments and is satisfied that each
Director has the capacity to be fully engaged with the Company’s business.
The Board has considered the position of all of the Directors as part of the
evaluation process, and believes that it would be in the Company’s best
interests to propose them for election and re-election for the following
reasons:
Doug McCutcheon joined the Board in November 2012 and became Chair in July
2022. Doug was an investment banker at S.G. Warburg and then UBS for 25 years,
most recently as the head of Healthcare Investment Banking for Europe, the
Middle East, Africa and Asia-Pacific. It is noted that Doug has been a
Director of the Company for more than nine years. The Board has agreed to this
period of longer service to ensure an orderly succession. The Senior
Independent Director conducted a preliminary evaluation of the Chair shortly
after his appointment with no issues being raised. The Board continues to
believe that Doug remains independent in thought and judgement.
Sven Borho joined the Board in June 2018. Sven is a founder and Managing
Partner of OrbiMed and heads their public Equity team and is the portfolio
manager for OrbiMed’s public equity and hedge funds.
Having a senior OrbiMed representative on the Board dates back to the
Company’s inception in 1995. The Board believes that there is great value in
the current representative, Sven Borho, being a Director of the Company as a
result of his considerable knowledge and experience. Sven does not receive a
fee for being a Director, neither is he a member of any of the Company’s
Committees.
Tim Livett joined the Board in September 2022. A qualified accountant, Tim is
Chair of the Audit & Risk Committee. Tim was formerly the Chief Financial
Officer at Caledonia Investments PLC. Prior to this role he was Chief
Financial Officer at Wellcome Trust, the global charitable foundation focused
on health research and at Virgin Atlantic Limited. Tim is a non-executive
Director of British Standards Institution and of Oxford University Endowment
Management, plus a Trustee of Babraham Institute; he chairs the respective
Audit and Risk Committees of these institutions. Tim is also a Director and
Trustee of the Shell Foundation. He has an extensive and broad financial
background.
Jo Parfrey joined the Board in September 2022. Jo is Chair of the Management
Engagement & Remuneration Committee. She is a non-executive Director of
Octopus AIM VCT. She is also the non-executive Chair of Babraham Research
Campus Limited. A Chartered Accountant, Jo has extensive experience of both
global investment trusts and healthcare, including life sciences.
Dr Bina Rawal joined the Board on November 2019. A physician with 25 years’
experience in life sciences research and development, she has held senior
executive roles in drug development and scientific evaluation in four global
pharmaceutical companies. She has also worked in senior roles with two medical
research funding organisations. She is also a non-executive Director of PHP
Plc.
Sian Hansen was previously Chief Operating Officer of C|T Group, Executive
Director of the Legatum Institute and before that, Managing Director of the UK
think tank Policy Exchange. Earlier in her career, Sian was a senior equity
analyst and Co-Director of Sales for Asian Emerging Markets at Société
Générale. Sian enhances the Board’s knowledge of sustainability, enabling
meaningful debates with the Portfolio Manager to take place. As a thought
leader in political and other forums, she brings a valuable perspective on
geo-political matters. She is a non-executive Director of Pacific Assets Trust
plc and of The Lindsell Train Investment Trust plc.
William Hemmings has extensive experience in the investment trust sector from
his previous roles as Head of Closed End Funds and Head of Investment
Companies at Aberdeen Group (formerly Aberdeen Asset Management PLC). He was
also formerly a Non-Executive Director on the board of Primary Health
Properties Plc and a Director of the Association of Investment Trust
Companies. He is consultant to board performance and external evaluation
specialist Cyclico.
The Chair is pleased to report that following a formal performance evaluation,
the Directors’ performance continues to be effective and they continue to
demonstrate commitment to the role.
TRAINING AND ADVICE
New appointees to the Board are provided with a full induction programme. The
programme covers the Company’s investment strategy, policies and practices.
The Directors are also given key information on the Company’s regulatory and
statutory requirements as they arise including information on the role of the
Board, matters reserved for its decision, the terms of reference of the Board
Committees, the Company’s corporate governance practices and procedures and
the latest financial information. It is the Chair’s responsibility to ensure
that the Directors have sufficient knowledge to fulfil their role and
Directors are encouraged to participate in training courses where appropriate.
The Directors have access to the advice and services of a Company Secretary
through its appointed representative which is responsible to the Board for
ensuring that Board procedures are followed and that applicable rules and
regulations are complied with. The Company Secretary is also responsible for
ensuring good information flows between all parties.
There is an agreed procedure for Directors, in the furtherance of their
duties, to take independent professional advice if necessary at the
Company’s expense.
RISK MANAGEMENT AND INTERNAL CONTROLS
The Board has overall responsibility for the Company’s risk management and
internal control systems and for reviewing their effectiveness. The Company
applies the guidance published by the Financial Reporting Council on internal
controls. Internal control systems are designed to manage, rather than
eliminate, the risk of failure to achieve the business objective and can
provide only reasonable and not absolute assurance against material
misstatement or loss. These controls aim to ensure that the assets of the
Company are safeguarded, that proper accounting records are maintained and
that the Company’s financial information is reliable. The Directors have a
robust process for identifying, evaluating and managing the significant risks
faced by the Company, which are recorded in a risk matrix. The Audit & Risk
Committee, on behalf of the Board, considers each risk as well as reviewing
the mitigating controls in place. Each risk is rated for its “likelihood”
and “impact” and the resultant numerical rating determines its ranking
into ‘Principal/Key’, ‘Significant’ or ’Minor’. This process was
in operation during the year and continues in place up to the date of this
report. The process also involves the Audit & Risk Committee receiving and
examining regular reports from the Company’s principal service providers.
The Board then receives a detailed report from the Audit & Risk Committee on
its findings. The Directors have not identified any significant failures or
weaknesses in respect of the Company’s internal control systems.
BENEFICIAL OWNERS OF SHARES – INFORMATION RIGHTS
Beneficial owners of shares who have been nominated by the registered holder
of those shares to receive information rights under section 146 of the
Companies Act 2006 are required to direct all communications to the registered
holder of their shares rather than to the Company’s registrar, MUFG
Corporate Markets, or to the Company directly.
The Company has adopted a nominee share code.
The annual and half-year financial reports, and a monthly fact sheet are
available to all shareholders. The Board, with the advice of Frostrow, reviews
the format of the annual and half-year financial reports so as to ensure they
are useful to all shareholders and others taking an interest in the Company.
In accordance with best practice, the annual report, including the Notice of
the AGM, is sent to shareholders at least 20 working days before the meeting.
Separate resolutions are proposed for substantive issues.
ANNUAL GENERAL MEETING
The following information to be considered at the forthcoming annual general
meeting is important and requires your immediate attention.
If you are in any doubt about the action you should take, you should seek
advice from your stock broker, bank manager, solicitor, accountant or other
financial adviser authorised under the Financial Services and Markets
Act 2000 (as amended). If you have sold or transferred all of your ordinary
shares in the Company, you should pass this document, together with any other
accompanying documents, including the form of proxy, at once to the purchaser
or transferee, or to the stock broker, bank or other agent through whom the
sale or transfer was effected, for onward transmission to the purchaser or
transferee
The Company’s Annual General Meeting will be held at Saddlers’ Hall, 40
Gutter Lane, London EC2V 6BR on Wednesday, 9 July 2025 from 12.30 p.m. Please
refer to the Chair’s Statement for details of this year’s arrangements.
In particular, resolutions relating to the following items will be proposed at
the forthcoming Annual General Meeting.
Resolution 13 Authority to allot shares
Resolution 14 Authority to disapply pre-emption rights
Resolution 15 Authority to sell shares held in treasury on a non pre-emptive
basis
Resolution 16 Authority to buy-back shares
Resolution 17 Authority to hold General Meetings (other than the Annual
General Meeting) on at least 14 clear days’ notice
Resolution 13 will be proposed as an Ordinary Resolution and resolutions 14
to 17 will be proposed as Special Resolutions.
The full text of the resolutions can be found in the Notice of Annual General
Meeting.
EXERCISE OF VOTING POWERS
The Board and the AIFM have delegated authority to OrbiMed to vote the shares
owned by the Company. The Board has instructed that OrbiMed submit votes for
such shares wherever possible. This accords with current best practice whilst
maintaining a primary focus on financial returns. OrbiMed may refer to the
Board on any matters of a contentious nature. The Board has reviewed
OrbiMed’s Voting Guidelines and is satisfied with their approach.
The Company does not retain voting rights on any shares that are held as
collateral in connection with the overdraft facility provided by J.P. Morgan
Securities LLC.
NOMINEE SHARE CODE
Where shares are held in a nominee company name, the Company undertakes:
· to provide the nominee company with multiple copies of shareholder
communications, so long as an indication of quantities has been provided in
advance; and
· to allow investors holding shares through a nominee company to attend
general meetings, provided the correct authority from the nominee company is
available.
Nominee companies are encouraged to provide the necessary authority to
underlying shareholders to attend the Company’s general meetings.
By order of the Board
Frostrow Capital LLP
Company Secretary
10 June 2025
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2025
2025 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments 9 – (200,614) (200,614) – 213,794 213,794
Exchange losses on currency balances – (157) (157) – (5,492) (5,492)
Income from investments 2 15,243 – 15,243 21,398 – 21,398
AIFM, portfolio management and performance fees 3 (765) (14,542) (15,307) (813) (15,454) (16,267)
Other expenses 4 (1,252) – (1,252) (1,294) – (1,294)
Net return/(loss) before finance charges and taxation 13,226 (215,313) (202,087) 19,291 192,848 212,139
Finance costs 5 (354) (6,726) (7,080) (406) (7,718) (8,124)
Net return/(loss) before taxation 12,872 (222,039) (209,167) 18,885 185,130 204,015
Taxation 6 (601) – (601) (2,853) – (2,853)
Net return/(loss) after taxation 12,271 (222,039) (209,768) 16,032 185,130 201,162
Return/(loss) per share* 7 2.4p (42.8)p (40.4)p 2.7p 31.7p 34.4p
The “Total” column of this statement is the Income Statement of the
Company. The “Revenue” and “Capital” columns are supplementary to this
and are prepared under guidance published by The Association of Investment
Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has no recognised gains and losses other than those shown above
and therefore no separate Statement of Total Comprehensive Income has been
presented.
The accompanying notes are an integral part of these statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2025
Capital Share Total
Share redemption premium Capital Revenue shareholders’
capital reserve account reserve reserve funds
£’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2024 15,042 9,564 841,599 1,193,396 20,816 2,080,417
Net (loss)/return after taxation – – – (222,039) 12,271 (209,768)
Final dividend paid in respect of year ended 31 March 2024 – – – – (11,197) (11,197)
Interim dividend paid in respect of year ended 31 March 2025 – – – – (3,582) (3,582)
Shares purchased for treasury – – – (176,524) – (176,524)
At 31 March 2025 15,042 9,564 841,599 794,833 18,308 1,679,346
FOR THE YEAR ENDED 31 MARCH 2024
Capital Share Total
Share redemption premium Capital Revenue shareholders’
capital reserve account reserve reserve funds
£’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2023 16,265 8,341 841,599 1,261,025 23,491 2,150,721
Net return after taxation – – – 185,130 16,032 201,162
Final dividend paid in respect of year ended 31 March 2023 – – – – (14,709) (14,709)
Interim dividend paid in respect of year ended 31 March 2024 – – – – (3,998) (3,998)
Shares purchased for treasury – – – (252,759) – (252,759)
Treasury Shares cancelled from treasury (1,223) 1,223 – – – –
At 31 March 2024 15,042 9,564 841,599 1,193,396 20,816 2,080,417
STATEMENT OF FINANCIAL POSITION
As at 31 March 2025
Notes 2025 £’000 2024 £’000
Fixed assets
Investments 9 1,673,659 2,108,235
Derivative – OTC swaps 9 & 10 1,487 944
1,676,146 2,109,179
Current assets
Debtors 11 8,003 10,232
Cash 93,584 73,797
101,587 84,029
Current liabilities
Creditors: amounts falling due within one year 12 (72,109) (100,373)
Derivative – OTC swaps 9 & 10 (25,278) (12,418)
(97,387) (112,791)
Net current assets/(liabilities) 4,200 (28,762)
Total net assets 1,679,346 2,080,417
Capital and reserves
Share capital 13 15,042 15,042
Capital redemption reserve 9,564 9,564
Share premium account 841,599 841,599
Capital reserve 17 794,833 1,193,396
Revenue reserve 18,308 20,816
Total shareholders’ funds 1,679,346 2,080,417
Net asset value per share 14 339.5p 381.1p
The financial statements were approved by the Board of Directors and
authorised for issue on 10 June 2025 and were signed on its behalf by:
Doug McCutcheon
Chair
The accompanying notes are an integral part of this statement.
Worldwide Healthcare Trust PLC – Company Registration Number 3023689
(Registered in England)
STATEMENT OF CASH FLOWS
For the year ended 31 March 2025
2025 2024
Notes £’000 £’000
Net cash (outflow)/inflow from operating activities 18 (1,544) 2,262
Purchases of investments and derivatives (1,048,871) (975,783)
Sales of investments and derivatives 1,272,404 1,260,461
Realised loss on foreign exchange transactions (157) (5,535)
Net cash inflow from investing activities 223,376 279,143
Shares repurchased 13 (179,317) (252,760)
Equity dividends paid (14,779) (18,707)
Interest paid (7,080) (8,124)
Net cash outflow from financing activities (201,176) (279,591)
Increase in net cash 20,656 1,814
Cash flows from operating activities include interest received of £3,722,000
(2024: £3,219,000) and dividends received of £14,151,000 (2024:
£17,463,000).
RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET CASH/(DEBT)
2025 2024
£’000 £’000
Increase in net cash/debt resulting from cashflows 20,656 1,814
Gains on foreign currency cash and cash equivalents – 44
Movement in net cash/debt in the year 20,656 1,858
Net cash/(debt) at 1 April 4,855 2,997
Net cash at 31 March 25,511 4,855
Net cash includes the drawn overdraft of £68,073,000 (2024: £68,942,000)
(see note 12) and cash as per the balance sheet of £93,584,000 (2024:
£73,797,000).
The accompanying notes are an integral part of this statement.
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The principal accounting policies, all of which have been applied consistently
throughout the year in the preparation of these financial statements, are set
out below:
(A) Basis of preparation
These financial statements have been prepared in accordance with the Companies
Act 2006, FRS 102 ‘The Financial Reporting Standard applicable in the UK and
Ireland’ (‘UK GAAP’) and the guidelines set out in the Statement of
Recommended Practice (‘SORP’), published in July 2022, for Investment
Trust Companies and Venture Capital Trusts issued by the Association of
Investment Companies (‘AIC’), the historical cost convention, as modified
by the valuation of investments and derivatives at fair value. The Board has
considered a detailed assessment of the Company’s ability to meet its
liabilities as they fall due, including stress and liquidity tests which
modelled the effects of substantial falls in markets and significant
reductions in market liquidity (including further stressing the current
economic conditions) on the Company’s financial position and cash flows.
The results of the tests showed that the Company would have sufficient cash,
or the ability to liquidate a sufficient proportion of its listed holdings, to
meet its liabilities as they fall due. Based on the information available to
the Directors at the time of this report, including the results of the stress
tests, the Company’s cash balances, and the liquidity of the Company’s
listed investments, the Directors are satisfied that the Company has adequate
financial resources to continue in operation for at least the next 12 months
from the date of approval of these financial statements and that, accordingly,
it is appropriate to adopt the going concern basis in preparing these
financial statements.
The Company’s financial statements are presented in sterling, being the
functional and presentational currency of the Company. All values are rounded
to the nearest thousand pounds (£’000) except where otherwise indicated.
In addition, investments and derivatives held at fair value are categorised
into a fair value hierarchy based on the degree to which the inputs to the
fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
· Level 1 – Quoted prices in active markets.
· Level 2 – Inputs other than quoted prices included within Level 1 that
are observable (i.e. developed using market data), either directly or
indirectly.
· Level 3 – Inputs are unobservable (i.e. for which market data is
unavailable).
Presentation of the Income Statement
In order to reflect better the activities of an investment trust company and
in accordance with the SORP, supplementary information which analyses the
Income Statement between items of a revenue and capital nature has been
presented alongside the Income Statement. The net revenue return is the
measure the Directors believe appropriate in assessing the Company’s
compliance with certain requirements set out in Sections 1158 and 1159 of the
Corporation Tax Act 2010.
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
Critical accounting judgements and key sources of estimation uncertainty used
in preparing the financial information are continually evaluated and are based
on historical experience and other factors, including expectations of future
events that are believed to be reasonable. The resulting estimates will, by
definition, seldom equal the related actual results.
In the course of preparing the financial statements, the only key source of
estimation uncertainty in the process of applying the Company’s accounting
policies, is in relation to the valuation of the unquoted (Level 3)
investments. The nature of estimation means that the actual outcomes could
differ from those estimates, possibly significantly. The estimates relate to
the investments where there is no appropriate market price i.e. the private
investments. Whilst the board considers the methodologies and assumptions
adopted in the valuation are supportable, reasonable and robust, because of
the inherent uncertainty of valuation, those estimated values may differ
significantly from the values that would have been used had a ready market for
the investment existed. As at 31 March 2025, there is no single key assumption
used in the valuation of the unquoted investments, or other key source of
estimation uncertainty, that, in the Directors’ opinion has a significant
risk of causing a material adjustment to the carrying values of assets and
liabilities within the next financial year.
Unquoted investments are all valued in line with the accounting policy set out
below.
(B) Investments
Investments are measured under FRS 102 and are measured initially, and at
subsequent reporting dates, at fair value. Investments are recognised and
de-recognised at trade date where a purchase or sale is under a contract whose
terms require delivery within the time frame established by the market
concerned. Changes in fair value and gains or losses on disposal are included
in the Income Statement as a capital item.
For quoted securities fair value is either bid price or last traded price,
depending on the convention of the exchange on which the investment is listed.
Fair value is the price for which an asset could be exchanged between
knowledgeable, willing parties in an arm’s length transaction. In estimating
the fair value of unquoted investments, the AIFM and Board apply valuation
techniques which are appropriate in light of the nature, facts and
circumstances of the investment, and use reasonable current market data and
inputs combined with judgement and assumptions and apply these consistently.
The following principles used in determining the valuation of unquoted
investments, are consistent with the International Private Equity and Venture
Capital Valuation (“IPEV”) Guidelines. The assumptions and estimates made
in determining the fair value of each unquoted investment are considered at
least each six months or sooner if there is a triggering event. An example of
where a valuation would be considered out of the six-month cycle is the
success or failure of a drug under development to meet an anticipated outcome
of its trial, announcement of the company undergoing an initial public
offering, or other performance against tangible development milestones.
The primary valuation method applied in the valuation of the unquoted
investments is the probability-weighted expected return method (“PWERM”),
which considers on a probability weighted basis the future outcomes for the
investment. When using the PWERM method significant judgements are made in
estimating the various inputs into the model and recognising the sensitivity
of such estimates. Examples of the factors where significant judgement is made
include, but are not limited to, the probability assigned to potential future
outcomes; discount rates; and, the likely exit scenarios for the investor
company, for example, IPO or trade sale.
Where the investment being valued was itself made recently, or there has been
a third party transaction in the investment, the price of the transaction may
provide a good indication of fair value. Using the Price of Recent Investment
technique is not a default and at each reporting date the fair value of recent
investments is estimated to assess whether changes or events subsequent to the
relevant transaction would imply a material change in the investment’s fair
value.
When using the price of a recent transaction in the valuations the Company
looks to ‘re-calibrate’ this price at each valuation point by reviewing
progress within the investment, comparing against the initial investment
thesis, assessing if there are any significant events or milestones that would
indicate the value of the investment value has changed materially and
considering whether an alternative methodology would be more appropriate.
(C) Derivative financial instruments
The Company uses derivative financial instruments (namely put and call options
and equity swaps).
All derivative instruments are valued initially, and at subsequent reporting
dates, at fair value in the Statement of Financial Position.
The equity swaps are accounted for as Fixed Assets or Current Liabilities.
All gains and losses on over-the-counter (OTC) equity swaps are accounted for
as gains or losses on investments. Where there has been a re-positioning of
the swap, gains and losses are accounted for on a realised basis. All such
gains and losses have been debited or credited to the capital column of the
Income Statement.
Cash collateral held by counterparties is included within cash, except where
there is a right of offset against the overdraft facility.
(D) Investment income
Dividends receivable are recognised on the ex-dividend date. Where no
ex-dividend date is quoted, dividends are recognised when the Company’s
right to receive payment is established. Foreign dividends are grossed up at
the appropriate rate of withholding tax, with the withholding tax recognised
in the taxation charge.
Income from fixed interest securities is recognised on a time apportionment
basis so as to reflect the effective interest rate. Deposit interest is
accounted for on an accruals basis.
(E) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
through the revenue column of the Income Statement except as follows:
· expenses which are incidental to the acquisition or disposal of an
investment are charged to the capital column of the Income Statement; and
· expenses are charged to the capital column of the Income Statement where a
connection with the maintenance or enhancement of the value of the investments
can be demonstrated. In this respect the portfolio management and AIFM fees
have been charged to the Income Statement 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, 5% of the portfolio management and AIFM
fees are charged to the revenue column of the Income Statement and 95% are
charged to the capital column of the Income Statement.
Any performance fee is charged in full to the capital column of the Income
Statement.
(F) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are
charged to the Income Statement 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 5% of the finance costs are charged to the
revenue column of the Income Statement and 95% are charged to the capital
column of the Income Statement. Finance charges are accounted for on an
accruals basis in the Income Statement using the effective interest rate
method and are added to the carrying amount of the instrument to the extent
that they are not settled in the period in which they arise.
(G) Taxation
The tax effect of different items of expenditure is allocated between capital
and revenue using the marginal basis.
Deferred taxation is provided on all timing differences that have originated
but not been reversed by the Statement of Financial Position date other than
those differences regarded as permanent. This is subject to deferred tax
assets only being recognised when it is probable that there will be suitable
profits from which the reversal of timing differences can be deducted. Any
liability to deferred tax is provided for at the rate of tax enacted or
substantially enacted.
(H) Foreign currency
Transactions recorded in overseas currencies during the year are translated
into sterling at the appropriate daily exchange rates. Assets and liabilities
denominated in overseas currencies at the Statement of Financial Position date
are translated into sterling at the exchange rates ruling at that date.
Exchange gains/losses on foreign currency balances
Any gains or losses on the translation of foreign currency balances, including
foreign currency overdrafts, whether realised or unrealised, are taken to the
capital or the revenue column of the Income Statement, depending on whether
the gain or loss is of a capital or revenue nature.
(I) Capital redemption reserve
This reserve arose when ordinary shares were redeemed by the Company and
subsequently cancelled. When ordinary shares are redeemed by the Company and
subsequently cancelled, an amount equal to the par value of the ordinary share
capital is transferred from the ordinary share capital to the capital
redemption reserve.
(J) Capital reserve
The following are transferred to this reserve:
· gains and losses on the disposal of investments;
· exchange differences of a capital nature, including the effects of changes
in exchange rates on foreign currency borrowings;
· expenses, together with the related taxation effect, in accordance with
the above policies; and
· changes in the fair value of investments and derivatives.
This reserve can be used to distribute realised capital profits by way of
dividend or share buybacks. Any gains in the fair value of investments that
are not readily convertible to cash are treated as unrealised gains in the
capital reserve. Distributions are only payable out of the capital reserve if
realised capital reserves are greater than the proposed distribution and
positive on the date of distribution.
(K) Revenue reserve
The revenue reserve is distributable by way of dividend. Dividends are only
payable out of the revenue reserve if revenue reserves are greater than the
proposed dividend and positive on the date of distribution.
(L) Dividend payments
Dividends paid by the Company on its shares are recognised in the financial
statements in the year in which they become payable and are shown in the
Statement of Changes in Equity.
(M) Cash and cash equivalents
Cash comprises cash at bank and cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and are
subject to an insignificant risk of changes in value.
Drawn overdrafts are considered a component of cash and cash equivalents as
they are repayable on demand and form an integral part of the Company’s cash
management.
2. INCOME FROM INVESTMENTS
2025 2024
£’000 £’000
Income from investments
Overseas dividends 8,358 14,699
UK dividends 3,163 3,480
11,521 18,179
Other income
Derivatives 470 27
Deposit interest 3,252 3,192
Total income from investments 15,243 21,398
Total income comprises:
Dividends 11,521 18,179
Interest 3,722 3,219
15,243 21,398
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
AIFM fee 139 2,640 2,779 141 2,689 2,830
Portfolio management fee 626 11,902 12,528 672 12,765 13,437
765 14,542 15,307 813 15,454 16,267
See page 47 of the Annual Report for further information on the performance
fee.
Further details on the above fees are set out in the Strategic Report and in
the Report of the Directors.
4. OTHER EXPENSES
2025 2024
£’000 £’000
Directors’ remuneration 222 211
Employer’s NIC on Directors’ remuneration 19 17
Auditors’ remuneration for the audit of the Company’s financial statements 75 56
Depositary and custody fees 208 227
Listing fees 98 101
Registrar fees 52 58
Legal and professional costs 157 267
Other costs 421 357
1,252 1,294
Details of the amounts paid to Directors are included in the Directors’
Remuneration Report on page 65 of the Annual Report.
5. FINANCE COSTS
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Finance costs 354 6,726 7,080 406 7,718 8,124
6. TAXATION
(A) Analysis of charge in year
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax at 25% (2024: 25%) – – – – – –
Overseas taxation 601 – 601 2,853 – 2,853
601 – 601 2,853 – 2,853
(B) Factors affecting the tax charge for the year
Approved investment trusts are exempt from tax on capital gains made within
the Company.
The tax charged for the year is lower (2024: lower) than the standard rate of
corporation tax of 25% (2024: 25%).
The difference is explained below.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return before taxation 12,872 (222,039) (209,167) 18,885 185,130 204,015
Corporation tax at 25% (2024: 25%) 3,218 (55,510) (52,292) 4,721 46,283 51,004
Non-taxable losses/(gains) on investments – 50,194 50,194 – (52,076) (52,076)
Overseas withholding taxation 601 – 601 2,853 – 2,853
Non taxable dividends (2,881) – (2,881) – – –
Brought forward excess expenses utilised – – – (4,545) – (4,545)
Excess management expenses (337) 4,977 4,640 (176) 5,056 4,880
Disallowed expenses – 339 339 – 737 737
Total tax charge 601 – 601 2,853 – 2,853
(C) Provision for deferred tax
No provision for deferred taxation has been made in the current or prior year.
The Company has not provided for deferred tax on capital profits and losses
arising on the revaluation or disposal of investments, as it is exempt from
tax on these items because of its status as an investment trust company.
The Company has not recognised a deferred tax asset of £59,499,000 (25% tax
rate) (2024: £54,349,000 (25% tax rate)) as a result of excess management
expenses and overdraft expenses. It is not anticipated that these excess
expenses will be utilised in the foreseeable future.
7. RETURN/(LOSS) PER SHARE
2025 2024
£’000 £’000
The return/(loss) per share is based on the following figures:
Revenue return 12,271 16,032
Capital (loss)/return (222,039) 185,130
(209,768) 201,162
Weighted average number of ordinary shares in issue during the year 518,984,143 585,308,530
Revenue return per ordinary share 2.4p 2.7p
Capital (loss)/return per ordinary share (42.8)p 31.7p
(40.4)p 34.4p
The calculation of the total, revenue and capital (loss)/return per ordinary
share is carried out in accordance with IAS 33, “Earnings per Share”, in
accordance with the requirements of FRS 102.
8. DIVIDENDS
Under UK Company Law, final dividends are not recognised until they are
approved by shareholders and interim dividends are not recognised until they
are paid. They are also debited directly from reserves. Amounts recognised as
distributable in these financial statements were as follows:
2025 2024
£’000 £’000
Final dividend in respect of the year ended 31 March 2024 11,197 –
Interim dividend in respect of the year ended 31 March 2025 3,582 –
Final dividend in respect of the year ended 31 March 2023 – 14,709
Interim dividend in respect of the year ended 31 March 2024 – 3,998
14,779 18,707
In respect of the year ended 31 March 2025, an interim dividend of 0.7p per
share was paid on 9 January 2025. A final dividend of 1.7p will be payable,
subject to shareholder approval, on 23 July 2025, the associated ex-dividend
date will be 12 June 2025. The total dividends payable in respect of the year
ended 31 March 2025 amount to 2.4p per share (2024: 2.8p per share,). The
aggregate cost of the final dividend, based on the number of shares in issue
(excluding shares held in treasury) at 9 June 2025, will be £8,217,000. In
accordance with FRS 102 dividends will be reflected in the financial
statements for the year in which they become payable. Total dividends in
respect of the financial year, which is the basis on which the requirements of
s1158 of the Corporation Tax Act 2010 are considered, are set out below.
2025 2024
£’000 £’000
Revenue available for distribution by way of dividend for the year 12,271 16,032
Interim dividend in respect of the year ended 31 March 2024 – (3,998)
Final dividend in respect of the year ended 31 March 2024 – (11,241)
Interim dividend in respect of the year ended 31 March 2025 (3,582) –
Final dividend in respect of the year ended 31 March 2025* (8,217) –
Net retained revenue 472 793
* based on 485,340,227 shares in issue (excluding shares held in treasury) as
at 9 June 2025.
9. INVESTMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
Derivative
Financial
Quoted Unquoted Instruments- Total
Investments Investments Total Net Investments
£’000 £’000 £’000 £’000 £’000
Cost at 1 April 2024 1,549,252 124,985 1,674,237 – 1,674,237
Investment holdings gains/(losses) at 1 April 2024 425,856 8,142 433,998 (11,474) 422,524
Valuation at 1 April 2024 1,975,108 133,127 2,108,235 (11,474) 2,096,761
Movement in the year:
Transfer* (8,774) 8,774 – – –
Purchases at cost 1,024,898 – 1,024,898 – 1,024,898
(Sales proceeds)/Close-out costs (1,296,397) (3,138) (1,299,535) 28,358 (1,271,177)
Net movement in investment holdings gains/losses (127,981) (31,958) (159,939) (40,675) (200,614)
Valuation at 31 March 2025 1,566,854 106,805 1,673,659 (23,791) 1,649,868
Cost at 31 March 2025 1,260,233 119,894 1,380,127 – 1,380,127
Investment holding gains/(losses) at 31 March 2025 306,621 (13,089) 292,532 (23,791) 269,741
Valuation at 31 March 2025 1,566,854 106,805 1,673,659 (23,791) 1,649,868
* See Note 16. One quoted investment was transferred to the unquoted category
following the suspension of its shares.
The Company received £1,271,177,000 (2024: £1,266,878,000) from investments
and derivatives sold in the year. The book cost of these was £1,319,008,000
(2024: £1,266,824,000). These investments and derivatives have been revalued
over time and until they were sold any unrealised gains/losses were included
in the fair value of the investments.
2025 2024
£’000 £’000
Net movement in investment holding (losses)/gains in the year (189,939) 176,063
Net movement in derivative holding (losses)/gains in the year (40,675) 37,731
(Losses)/gains on investments (200,614) 213,794
Purchase transaction costs were £646,000 (2024: £992,000). Sales transaction
costs were £915,000 (2024: £1,299,000). These comprise mainly commission and
stamp duty.
10. DERIVATIVES
2025 2024
£’000 £’000
Fair value of OTC equity swaps - asset 1,487 944
Fair value of OTC equity swaps - liability (25,278) (12,418)
(23,791) (11,474)
See note 9 above for movements during the year.
11. DEBTORS
2025 2024
£’000 £’000
Amounts due from brokers 5,281 6,508
Withholding taxation recoverable 1,949 1,665
Prepayments and accrued income 773 2,059
8,003 10,232
12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2025 2024
£’000 £’000
Amounts due to brokers – 23,973
Overdraft drawn* 68,073 68,942
Other creditors and accruals 4,036 7,458
72,109 100,373
* The Company’s borrowing requirements are met through the utilisation of
an overdraft facility provided by J.P. Morgan Securities LLC. The overdraft is
drawn down in U.S. dollars. Interest on the drawn overdraft is charged at the
United States Overnight Bank Funding Rate plus 45 basis points.
J.P. Morgan Securities LLC may take investments up to 140% of the value of the
overdrawn balance as collateral and has been granted a first priority security
interest or lien over the Company’s assets.
13. SHARE CAPITAL
2025 2024
Number Number
As at 1 April 545,942,332 62,620,763
Purchase of shares into treasury pre-share split – (2,507,439)
Issue of shares following 10 for 1 share split – 541,019,916
Purchase of shares into treasury post-share split (51,310,528) (55,190,908)
As at year end:
In circulation 494,631,804 545,942,332
In Treasury 107,033,396 55,722,868
Listed 601,665,200 601,665,200
Nominal Value of 2.5p (2024: 2.5p) ordinary shares (£000) 15,042 15,042
During the year, the Company bought back ordinary shares at a cost of
£176,524,000 (Year ended 31 March 2024: £252,759,000).
At the July 2023 AGM shareholders approved a resolution for a ten for one
share split such that each shareholder would receive ten shares with a nominal
value of 2.5 pence each for every one share held. 541,498,680 additional
shares (541,019,916 to shareholders and 478,764 in relation to shares held in
treasury) were issued on 27 July 2023 following this approval.
14. NET ASSET VALUE PER SHARE
2025 2024
Net asset value per share 339.5p 381.1p
The net asset value per share is based on the assets attributable to equity
shareholders of £1,679,346,000 (2024: £2,080,417,000) and on the number of
shares in issue at the year end (excluding those shares held in treasury) of
494,631,804 (2024: 545,942,332) in issue.
15. RELATED PARTIES AND TRANSACTIONS WITH THE AIFM
The following are considered to be related parties:
· Frostrow Capital LLP (the Company’s AIFM, a related party under the
Listing Rules only)
· OrbiMed Capital LLC (the Company’s Portfolio Manager)
· The Directors of the Company
Sven Borho is a Managing Partner at OrbiMed and has waived his Director’s
fee of £35,596 (2024: £34,244). Details of fees paid to OrbiMed by the
Company can be found in note 3. All material related party transactions have
been disclosed in notes 3 and 4.
Details of the remuneration of all Directors can be found on page 65 of the
Annual Report. Details of the Directors’ interests in the capital of the
Company can also be found on page 65 of the Annual Report.
Three current and two former partners at OrbiMed have a minority financial
interest totalling 19.2% in Frostrow, the Company’s AIFM. Details of the
fees paid to Frostrow by the Company can be found in note 3.
16. FINANCIAL INSTRUMENTS
Risk management policies and procedures
The Company’s financial instruments comprise securities and other
investments, derivative instruments, cash balances, overdrafts and debtors and
creditors that arise directly from its operations.
As an investment trust, the Company invests in equities and other investments
for the long term so as to secure its investment objective. In pursuing its
investment objective, the Company is exposed to a variety of risks that could
result in a reduction in the Company’s net assets.
The main risks that the Company faces arising from its financial instruments
are:
(i) market risk (including foreign currency risk, interest rate risk and
other price risk)
(ii) liquidity risk
(iii) credit risk
These risks, with the exception of liquidity risk, and the Directors’
approach to the management of them have not changed from the previous
accounting year. The AIFM, in close co-operation with the Board and the
Portfolio Manager, co-ordinates the Company’s risk management.
Use of derivatives
Equity swaps are used within the Company’s portfolio.
OTC equity swaps
The Company uses OTC equity swap positions to gain access to the Indian and
Chinese markets when it is more cost effective to gain access via swaps or to
gain exposure to thematic baskets of stocks.
Offsetting disclosure
Swap trades and OTC derivatives are traded under ISDA† Master Agreements.
The Company currently has such agreements in place with Goldman Sachs and JP
Morgan.
These agreements create a right of set-off that becomes enforceable only
following a specified event of default, or in other circumstances not expected
to arise in the normal course of business. As the right of set-off is not
unconditional, for financial reporting purposes, the Company does not offset
derivative assets and derivative liabilities.
† International Swap Dealers Association Inc.
(i) Other price risk
In pursuance of the Company’s Investment Objective the Company’s
portfolio, including its derivatives, is exposed to the risk of fluctuations
in market prices and foreign exchange rates.
The Board manage these risks through the use of limits and guidelines, monthly
compliance reports from Frostrow and reports from Frostrow and OrbiMed
presented at each Board meeting.
Other price risk exposure
The Company’s gross exposure to other price risk is represented by the fair
value of the investments and the underlying exposure through the derivative
investments held at the year end as shown in the table below.
2025 2024
Notional* Notional*
Assets Liabilities exposure Assets Liabilities exposure
£’000 £’000 £’000 £’000 £’000 £’000
Investments 1,673,659 – 1,673,659 2,108,235 – 2,108,235
OTC equity swaps 1,487 (25,278) 207,565 944 (12,418) 198,082
1,675,146 (25,278) 1,881,224 2,109,179 (12,418) 2,306,317
* The notional exposure is calculated in accordance with the AIFMD
requirements for calculating exposure via derivatives. See glossary.
Other price risk sensitivity
If market prices of all of the Company’s financial instruments including the
derivatives at the Statement of Financial Position date had been 25% higher or
lower (2024: 25% higher or lower) while all other variables remained constant:
the revenue return would have decreased/increased by £0.2 million (2024:
£0.2 million); the capital return would have increased/decreased by £462.8
million (2024: £572.5 million); and, the return on equity would have
increased/decreased by £462.6 million (2024: £468.5 million). The
calculations are based on the portfolio as at the respective Statement of
Financial Position dates and are not representative of the year as a whole.
(ii) Foreign currency risk
A significant proportion of the Company’s portfolio and derivative positions
are denominated in currencies other than sterling (the Company’s functional
currency, and the currency in which it reports its results). As a result,
movements in exchange rates can significantly affect the sterling value of
those items.
Foreign currency exposure
The fair values of the Company’s monetary assets and liabilities that are
denominated in foreign currencies are shown below.
2025 2024
Current Current Current Current
assets liabilities Investments assets liabilities Investments
£’000 £’000 £’000 £’000 £’000 £’000
U.S. dollar 98,209 (68,073) 1,371,703 140,646 (166,711) 1,579,696
Swiss franc 1,301 – – 11,102 – 11,652
Japanese yen 386 – 50,227 1,041 – 130,007
Hong Kong dollar – – 87,177 – – 62,058
Other 643 – 22,132 993 – 132,435
100,539 (68,073) 1,531,239 153,782 (166,711) 1,915,848
Foreign currency sensitivity
The following table details the sensitivity of the Company’s net return for
the year and shareholders’ funds to a 10% increase and decrease in sterling
against the relevant currency (2024: 10% increase and decrease).
These percentages have been determined based on market volatility in exchange
rates over the previous 12 months. The sensitivity analysis is based on the
Company’s significant foreign currency exposures at each Statement of
Financial Position date.
2025 2024
USD YEN CHF HKD USD YEN CHF HKD
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Sterling depreciates 181,466 5,624 145 9,686 195,910 14,561 2,528 6,895
Sterling appreciates (148,472) (4,601) (118) (7,925) (160,290) (11,913) (2,069) (5,642)
(iii) Interest rate risk
Interest rate changes may affect:
– the interest payable on the Company’s variable rate borrowings;
– the level of income receivable from floating and fixed rate securities
and cash at bank and on deposit;
– the fair value of investments in fixed interest securities.
Interest rate exposure
The Company’s main exposure to interest rate risks is through its overdraft
facility with J.P. Morgan Securities LLC, which is repayable on demand, and
its holding in fixed interest securities. The exposure of financial assets and
liabilities to fixed and floating interest rates, is shown below.
The interest rate exposure is shown in the table below.
2025 2024
Floating Floating
rate rate
£’000 £’000
Cash 101,502 78,721
Drawn overdraft (75,991) (73,866)*
Financed swap positions (231,356) (209,556)
(205,845) (204,701)
* In the 2024 financial statements, the figure for the overdraft facility
was incorrectly disclosed as £12,412,000. The correct amount, which is
properly reflected above, is £73,866,000. This correction relates solely to
the disclosure and had no impact on the previously reported financial position
or results.
All interest rate exposures are held in U.S. dollars.
Cash of £76.0 million (2024: £73.9 million) was held as collateral against
the financed swap positions, of which £7.9 million (2024: £4.9 million) was
offset against the drawn overdraft.
Interest rate sensitivity
If interest rates had been 1% higher or lower and all other variables were
held constant, the Company’s net return for the year ended 31 March 2025 and
the net assets would increase/decrease by £2.1 million (2024:
increase/decrease by £1.4 million).
(iv) Liquidity risk
This is the risk that the Company will encounter difficulty in meeting
obligations associated with financial liabilities.
Management of the risk
Liquidity risk is not considered significant as the Company is a closed ended
vehicle and the majority of the portfolio is invested in quoted securities
that are readily realisable within one week, in normal market conditions.
There may be circumstances where market liquidity is lower than normal. Stress
tests have been performed to understand how long the portfolio would take to
realise in such situations. The Board is comfortable that in such a situation
the Company would be able to meet its liabilities as they fall due.
Liquidity exposure and maturity
Contractual maturities of the financial liability exposures as at 31 March
2025, based on the earliest date on which payment can be required, are as
follows:
2025 2024
3 to 12 3 months 3 to 12 3 months
months or less months or less
£’000 £’000 £’000 £’000
Drawn overdraft – 75,991 – 73,866
Amounts due to brokers and accruals – 4,036 – 31,461
OTC equity swaps 25,278 – 12,418 –
25,278 80,027 12,418 43,873
(v) Credit risk
Credit risk is the risk of failure of a counterparty to discharge its
obligations resulting in the Company suffering a financial loss.
The carrying amounts of financial assets best represent the maximum credit
risk at the Statement of Financial Position date. The Company’s quoted
securities are held on its behalf by J.P. Morgan Securities LLC acting as the
Company’s Custodian and Prime Broker.
Certain of the Company’s assets can be held by J.P. Morgan Securities LLC as
collateral against the drawn overdraft provided by them to the Company. As at
31 March 2025 such assets held by J.P. Morgan Securities LLC are available for
rehypothecation (see Glossary). As at 31 March 2025, assets with a total
market value of £100.8 million (2024: £104.1 million) were available to J.P.
Morgan Securities LLC to be used as collateral against the drawn overdraft
which equates to 140% of the overdrawn position (calculated on a settled
basis).
CREDIT RISK EXPOSURE
2025 2024
£’000 £’000
Derivative – OTC equity swaps 1,487 944
Current assets:
Other receivables (amounts due from brokers, dividends and interest receivable) 8,003 10,232
Cash 93,584 73,797
(vi) Fair value of financial assets and financial liabilities
Financial assets and financial liabilities are either carried in the Statement
of Financial Position at their fair value (investments and derivatives) or the
Statement of Financial Position amount is a reasonable approximation of fair
value (due from brokers, dividends and interest receivable, due to brokers,
accrual, cash at bank, and the drawn overdraft).
(vii) Hierarchy of investments
The Company has classified its financial assets designated at fair value
through profit or loss and the fair value of derivative financial instruments
using a fair value hierarchy that reflects the significance of the inputs used
in making the fair value measurements. The hierarchy has the following levels:
· Level 1 – quoted prices (unadjusted) in active markets for identical
assets or liabilities;
· Level 2 – inputs other than quoted prices included with Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
· Level 3 – inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total
As of 31 March 2025 £’000 £’000 £’000 £’000
Investments held at fair value through profit or loss 1,566,854 – 106,805 1,673,659
Derivatives: OTC swaps (assets) – 1,487 – 1,487
Derivatives: OTC swaps (liabilities) – (25,278) – (25,278)
Financial instruments measured at fair value 1,566,854 (23,791) 106,805 1,649,868
As at 31 March 2025, nine equity investments (2024: ten) and a deferred
consideration investment have been classified as level 3. All level 3
positions have been valued in accordance with the accounting policy set out in
Note 1(b).
During 2025 two unquoted investments (2024: none) were transferred to Level 1
following their initial public offering and one Level 1 investment was
transferred to level 3 following the suspension of its shares.
As of 31 March 2024 Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments held at fair value through profit or loss 1,975,108 – 133, 127 2,108,235
Derivatives: OTC swaps (assets) – 944 – 944
Derivatives: OTC swaps (liabilities) – (12,418) – (12,418)
Financial instruments measured at fair value 1,975,108 (11,474) 133,127 2,096,761
(viii) Capital management policies and procedures
The Company’s capital management objectives are to ensure that it will be
able to continue as a going concern and to maximise the income and capital
return to its equity shareholders through an appropriate level of gearing or
leverage.
The Board’s policy on gearing and leverage is set out on page 9 of the
Annual Report.
As at 31 March 2025 the Company had a net leverage percentage of 12.0% (2024:
10.8%).
The capital structure of the Company consists of the equity share capital,
retained earnings and other reserves as shown in the Statement of Financial
Position.
The Board, with the assistance of the AIFM and the Portfolio Manager, monitors
and reviews the broad structure of the Company’s capital on an ongoing
basis. This includes a review of:
– the planned level of gearing, which takes into account the Portfolio
Manager’s view of the market;
– the need to buy back equity shares, either for cancellation or to hold in
treasury, in light of any share price discount to net asset value per share in
accordance with the Company’s share buy-back policy;
– the need for new issues of equity shares, including issues from treasury;
and
– the extent to which revenue in excess of that which is required to be
distributed should be retained.
The Company’s objectives, policies and processes for managing capital are
unchanged from the preceding accounting year.
17. CAPITAL RESERVE
Capital Reserves
Investment
Holding
Other Gains* Total
£’000 £’000 £’000
At 1 April 2024** 770,872 422,524 1,193,396
Net losses on investments (47,831) (152,783) (200,614)
Expenses and taxation charged to capital (21,268) – (21,268)
Exchange loss on currency balances (157) – (157)
Shares repurchased for Treasury (176,524) – (176,524)
At 31 March 2025 525,092 269,741 794,833
* Investment holding gains relate to the revaluation of investments and
derivatives held at the reporting date. (See note 9 for further details).
** In the 2024 financial statements, the breakdown of capital reserves
between Other and Investment holding gains was misclassified as £607,590,000
and £585,806,000, respectively. This misclassification did not affect the
total capital reserves figure or any other totals in the Statement of
Financial Position.
The opening figures in the capital reserves table in these financial
statements have been corrected accordingly. The comparative information has
been restated solely to correct the presentation of these components; no
changes have been made to the overall total capital reserves figure.
Under the Company’s Articles of Association, sums within “capital reserves
– other” are also available for distribution.
18. RECONCILIATION OF OPERATING RETURN/(LOSS) TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
2025 2024
£’000 £’000
(Loss)/gain before finance charges and taxation (202,087) 212,139
Add: capital loss/(gains) before finance charges and taxation 215,313 (192,848)
Revenue return before finance charges and taxation 13,226 19,291
Expenses charged to capital (14,542) (15,454)
Decrease/(increase) in other debtors 1,286 (653)
(Decrease)/increase in other creditors (629) 714
Net taxation suffered on investment income (885) (1,636)
Net cash (outflow)/inflow from operating activities (1,544) 2,262
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (“APMS”)
Active Share*
Active Share is expressed as a percentage and shows the extent to which a
fund’s holdings and their weightings differ from those of the fund’s
benchmark index. A fund that closely tracks its index might have a low Active
Share of less than 20% and be considered passive, while a fund with an Active
Share of 60% or higher is generally considered to be actively managed.
Alternative Investment Fund Managers Directive (“AIFMD”)
Agreed by the European Parliament and the Council of the European Union and
transported into UK legislation, the AIFMD classifies certain investment
vehicles, including investment companies, as Alternative Investment Funds
(AIFs) and requires them to appoint an Alternative Investment Fund Manager
(AIFM) and a depositary to manage and oversee the operations of the investment
vehicle. The Board of the Company retains responsibility for strategy,
operations and compliance and the Directors retain a fiduciary duty to
shareholders.
Alternative performance measure (“APM”)
An APM is a numerical measure of the Company’s current, historical or future
financial performance, financial position or cash flows, other than a
financial measure defined or specified in the applicable financial framework.
In selecting these Alternative Performance Measures, the Directors considered
the key objectives and expectations of typical investors in an investment
trust such as the Company.
Benchmark
The performance of the Company is measured against the MSCI World Health Care
Index on a net total return, sterling adjusted basis.
The net total return is calculated by reinvesting dividends after the
deduction of withholding taxes.
Large Cap Biotech
Biotechnology companies with fully-integrated discovery, development and
commercial capabilities and considered sustainably profitable.
Large Cap Pharma
Global, multinational pharmaceutical companies with fully-integrated
discovery, development and commercial capabilities.
Discount or premium*
A description of the difference between the share price and the net asset
value per share. The size of the discount or premium is calculated by
subtracting the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the share
price is higher than the net asset value per share the result is a premium. If
the share price is lower than the net asset value per share, the shares are
trading at a discount.
Emerging Biotech
Biotechnology companies that do not fit the criteria of Large Cap Biotech,
ranging from early-stage development to newly profitable.
Equity swaps
An equity swap is an agreement where one party (counterparty) transfers the
total return of an underlying equity position to the other party (swap holder)
in exchange for a payment of the principal, and interest for financed swaps,
at a set date. Total return includes dividend income and gains or losses from
market movements. The exposure of the holder is the market value of the
underlying equity position.
The Company currently only uses financed equity swaps, where payment is made
on maturity. Financed swaps increase exposure by the value of the underlying
equity position, with no initial outlay and no increase in the investment
portfolio’s value – there is therefore embedded leverage within a financed
swap due to the deferral of payment to maturity.
* Alternative Performance Measure
The Company employs swaps for two purposes:
· To gain access to individual stocks in the Indian, Chinese and other
emerging markets, where the Company is not locally registered to trade or is
able to gain in a more cost efficient manner than holding the stocks directly;
and,
· To gain exposure to thematic baskets of stocks (a Basket Swap). Basket
Swaps are used to build exposure to themes, or ideas, that the Portfolio
Manager believes the Company will benefit from and where holding a Basket Swap
is more cost effective and operationally efficient than holding the underlying
stocks or individual swaps.
Gearing
Gearing is calculated as the drawn overdraft, less net current assets
(excluding dividends), divided by Net Assets, expressed as a percentage. For
years prior to 2013, the calculation was based on borrowings as a percentage
of Net Assets.
Generics
Any therapeutics company, domestic or global, that focuses a majority of its
efforts (not necessarily 100%) on developing and selling generic and/or
biosimilar prescription and/or OTC products.
Leverage
Leverage is defined in the AIFMD as any method by which the AIFM increases the
exposure of an AIF. In addition to the gearing limit the Company also has to
comply with the AIFMD leverage requirements. For these purposes the Board has
set a maximum leverage limit of 140% for both methods. This limit is expressed
as a % with 100% representing no leverage or gearing in the Company. There are
two methods of calculating leverage as follows:
The Gross Method is calculated as total exposure divided by Shareholders’
Funds. Total exposure is calculated as net assets, less cash and cash
equivalents, adding back cash borrowing plus derivatives converted into the
equivalent position in their underlying assets.
The Commitment Method is calculated as total exposure divided by Shareholders
Funds. In this instance total exposure is calculated as net assets, less cash
and cash equivalents, adding back cash borrowing plus derivatives converted
into the equivalent position in their underlying assets, adjusted for netting
and hedging arrangements.
See the definition of Equity Swaps for more details on how exposure through
these instruments is calculated.
2025 £’000 2024 £’000
Fair Value Exposure* Fair Value Exposure*
Investments 1,673,659 1,673,659 2,108,235 2,108,235
OTC equity swaps (23,791) 207,565 (11,474) 198,082
1,649,868 1,881,224 2,096,761 2,306,317
Shareholders’ funds 1,679,346 2,080,417
Leverage % 12.0% 10.8%
* Calculated in accordance with AIFMD requirements using the Commitment
Method
MSCI World Health Care Index (the Company’s Benchmark)
The MSCI World Health Care Index is designed to capture the large and mid
capitalisation segments across 23 developed markets countries: All securities
in the index are classified as healthcare as per the Global Industry
Classification Standard (GICS). Developed Markets countries include:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong
Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland the UK and the U.S. The net
total return of the Index is used which assumes the reinvestment of any
dividends paid by its constituents after the deduction of relevant withholding
taxes. The performance of the Index is calculated in U.S.$ terms. Because the
Company’s reporting currency is £ the prevailing U.S.$/£ exchange rate is
applied to obtain a £ based return.
* Alternative Performance Measure
NAV per share (pence)
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’ per share. 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 share price is determined by the relationship between the demand
and supply of the shares.
Net asset value (NAV) per share total return*
The theoretical total return on shareholders’ funds per share, reflecting
the change in NAV assuming that dividends paid to shareholders were reinvested
at NAV at the time the shares were quoted ex-dividend. A way of measuring
investment management performance of investment trusts which is not affected
by movements in discounts/premiums.
NAV Total Return 2025 £’000 2024 p
Opening NAV 381.1 343.5
Increase/(decrease) in NAV (41.6) 37.6
Closing NAV 339.5 381.1
% increase/(decrease) in NAV (10.9)% 10.9%
Impact of reinvested dividends 0.6% 1.1%
NAV Total Return (10.3)% 12.0%
Ongoing Charges*
Ongoing charges are calculated by taking the Company’s annualised ongoing
charges, excluding finance costs, taxation, performance fees and exceptional
items, and expressing them as a percentage of the average daily net asset
value of the Company over the year.
2025 2024
£’000 £’000
AIFM & Portfolio Management fees (Note 3) 15,307 16,267
Other Expenses – Revenue (Note 4) 1,252 1,294
Total Ongoing Charges 16,559 17,561
Performance fees paid/crystallised – –
Total 16,559 17,561
Average net assets 1,984,818 2,036,653
Ongoing Charges 0.8% 0.9%
Ongoing Charges (including performance fees paid or crystallised during the year) 0.8% 0.9%
Rehypothecation
Rehypothecation is the practice by banks and brokers of using, for their own
purposes, assets that have been posted as collateral by clients.
* Alternative Performance Measure
Share Price Total Return*
Return to the investor on mid-market prices assuming that all dividends paid
were reinvested.
2025 2024
Share Price Total Return £’000 p
Opening share price 335.0 311.5
Increase/(decrease) in share price (37.5) 23.5
Closing share price 297.5 335.0
% increase/(decrease) in share price (11.2)% 7.5%
Impact of reinvested dividends 0.7% 1.1%
Share Price Total Return (10.5)% 8.6%
Spec Pharma
Any other therapeutics company that does not fit the criteria of Large Cap
Pharma or Generics that develop and sell pharmaceutical products, often
focused on a limited number of therapeutic areas (or technologies), with a
domestic and sometimes global footprint.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of Worldwide Healthcare
Trust PLC will be held at Saddlers' Hall, 40 Gutter Lane, London EC2V 6BR on
Wednesday, 9 July 2025 from 12.30 pm for the following purposes:
Ordinary Resolutions
To consider and, if thought fit, pass the following resolutions which will be
proposed as ordinary resolutions:
1. That the Report of the Directors and the audited Accounts for the year
ended 31 March 2025 together with the Report of the Auditors thereon be
received and adopted.
2. To approve the payment of a final dividend of 1.7p per ordinary share for
the year ended 31 March 2025.
3. To approve the Company’s dividend policy, as set out on page 29 of the
Annual Report for the year ended 31 March 2025.
4. To elect Ms Sian Hansen as a Director of the Company.
5. To elect Mr William Hemmings as a Director of the Company.
6. To re-elect Mr Doug McCutcheon as a Director of the Company.
7. To re-elect Mr Sven Borho as a Director of the Company.
8. To re-elect Dr Bina Rawal as a Director of the Company.
9. To re-elect Mr Tim Livett as a Director of the Company.
10. To re-elect Ms Jo Parfrey as a Director of the Company.
11. To re-appoint PricewaterhouseCoopers LLP as the Company’s Auditors and
to authorise the Audit & Risk Committee to determine their remuneration.
12. To approve the Directors’ Remuneration Report for the year ended 31
March 2025.
Authority to Allot Shares
13. THAT in substitution for all existing authorities the Directors be and
are hereby generally and unconditionally authorised in accordance with section
551 of the Companies Act 2006 (the “Act”) to exercise all powers of the
Company to allot relevant securities (within the meaning of section 551 of the
Act) up to a maximum aggregate nominal amount equal to 10% of the issued share
capital of the Company at 9 June 2025 (or, if changed, the number representing
10% of the issued share capital of the Company at the date at which this
resolution is passed), provided that this authority shall expire at the
conclusion of the Annual General Meeting of the Company to be held in 2026 or
15 months from the date of passing this resolution, whichever is the earlier,
unless previously revoked, varied or renewed, by the Company in General
Meeting and provided that the Company shall be entitled to make, prior to the
expiry of such authority, an offer or agreement which would or might require
relevant securities to be allotted after such expiry and the Directors may
allot relevant securities pursuant to such offer or agreement as if the
authority conferred hereby had not expired.
Special Resolutions
To consider and, if thought fit, pass the following resolutions which will be
proposed as special resolutions:
Disapplication of Pre-Emption Rights
14. THAT in substitution for all existing powers (and in addition to any
power conferred on them by resolution 15 set out in the notice convening the
Annual General Meeting at which this resolution is proposed (“Notice of
Annual General Meeting”)) the Directors be and are hereby generally
empowered pursuant to Section 570 of the Companies Act 2006 (the “Act”) to
allot equity securities (within the meaning of Section 560 of the Act) for
cash pursuant to the authority conferred on them by resolution 13 set out in
the Notice of Annual General Meeting or otherwise as if Section 561(1) of the
Act did not apply to any such allotment:
(a) pursuant to an offer of equity securities open for acceptance for a
period fixed by the Directors where the equity securities respectively
attributable to the interests of holders of shares in the capital of the
Company (“Shares”) are proportionate (as nearly as may be) to the
respective numbers of Shares held by them but subject to such exclusions or
other arrangements in connection with the issue as the Directors may consider
necessary, appropriate or expedient to deal with equity securities
representing fractional entitlements or to deal with legal or practical
problems arising in any overseas territory, the requirements of any regulatory
body or stock exchange, or any other matter whatsoever;
(b) provided that (otherwise than pursuant to sub-paragraph (a) above) this
power shall be limited to the allotment of equity securities up to an
aggregate nominal value equal to 10% of the issued share capital of the
Company at 9 June 2025 (or, if changed, the number representing 10% of the
issued share capital of the Company at the date at which this resolution is
passed) and provided further that (i) the number of equity securities to which
this power applies shall be reduced from time to time by the number of
treasury shares which are sold pursuant to any power conferred on the
Directors by resolution 13 set out in the Notice of Annual General Meeting and
(ii) no allotment of equity securities shall be made under this power which
would result in Shares being issued at a price which is less than the net
asset value per Share as at the latest practicable date before such allotment
of equity securities as determined by the Directors in their reasonable
discretion; and
such power shall expire at the conclusion of the next Annual General Meeting
of the Company after the passing of this resolution or 15 months from the date
of passing this resolution, whichever is earlier, unless previously revoked,
varied or renewed by the Company in General Meeting and provided that the
Company shall be entitled to make, prior to the expiry of such authority, an
offer or agreement which would or might otherwise require equity securities to
be allotted after such expiry and the Directors may allot equity securities
pursuant to such offer or agreement as if the power conferred hereby had not
expired.
15. THAT in substitution for all existing powers (and in addition to any
power conferred on them by resolution 14 set out in the Notice of Annual
General Meeting) the Directors be and are hereby generally empowered pursuant
to Section 570 of the Companies Act 2006 (the “Act”) to sell relevant
shares (within the meaning of Section 560 of the Act) if, immediately before
the sale, such shares are held by the Company as treasury shares (as defined
in Section 724 of the Act (“treasury shares”)), for cash as if Section
561(1) of the Act did not apply to any such sale provided that:
(a) this power shall be limited to the sale of relevant shares having an
aggregate nominal value equal to 10% of the issued share capital of the
Company at 9 June 2025 (or, if changed, the number representing 10% of the
issued share capital of the Company at the date at which this resolution is
passed) and provided further that the number of relevant shares to which power
applies shall be reduced from time to time by the number of Shares which are
allotted for cash as if Section 561(1) of the Act did not apply pursuant to
the power conferred on the Directors by resolution 14 set out in the Notice of
Annual General Meeting,
and such power shall expire at the conclusion of the next Annual General
Meeting of the Company after the passing of this resolution or 15 months from
the date of passing this resolution, whichever is earlier, unless previously
revoked, varied or renewed by the Company in General Meeting and provided that
the Company shall be entitled to make, prior to the expiry of such authority,
an offer or agreement which would or might otherwise require treasury shares
to be sold after such expiry and the Directors may sell treasury shares
pursuant to such offer or agreement as if the power conferred hereby had not
expired.
Authority to Repurchase Ordinary Shares
16. THAT the Company be and is hereby generally and unconditionally
authorised in accordance with section 701 of the Companies Act 2006 (the
“Act”) to make one or more market purchases (within the meaning of section
693 of the Act) of ordinary shares in the capital of the Company
(“Shares”) (either for retention as treasury shares for future reissue,
resale, transfer or cancellation), provided that:
(a) the maximum aggregate number of Shares authorised to be purchased shall
be that number of shares which is equal to 14.99% of the issued share capital
of the Company as of the value of the date of the passing of this resolution;
(b) the minimum price (exclusive of expenses) which may be paid for a Share
is 2.5 pence;
(c) the maximum price (exclusive of expenses) which may be paid for a Share
is an amount equal to the greater of (i) 105% of the average of the middle
market quotations for a Share as derived from the Daily Official List of the
London Stock Exchange for the five business days immediately preceding the day
on which that Share is purchased and (ii) the higher of the price of the last
independent trade and the highest then current independent bid on the London
Stock Exchange as stipulated in the technical standards referred to in Article
5(6) of the Market Abuse Regulation (EU) No. 596/2014 (which forms part of UK
law by virtue of the European Union (Withdrawal) Act 2018);
(d) the authority hereby conferred shall expire at the conclusion of the
Annual General Meeting of the Company to be held in 2025 or, if earlier, on
the expiry of 15 months from the date of the passing of this resolution unless
such authority is renewed prior to such time; and
(e) the Company may make a contract to purchase Shares under this authority
before the expiry of such authority which will or may be executed wholly or
partly after the expiration of such authority, and may make a purchase of
Shares in pursuance of any such contract.
General Meetings
17. THAT the Directors be authorised to call general meetings (other than the
Annual General Meeting of the Company) on not less than 14 clear days’
notice, such authority to expire on the conclusion of the next Annual General
Meeting of the Company, or, if earlier, on the expiry 15 months from the date
of the passing of the resolution.
By order of the Board Registered Office:
One Wood Street
Frostrow Capital LLP London EC2V 7WS
Company Secretary
10 June 2025
NOTES
1. Members are entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at the meeting. A
shareholder may appoint more than one proxy in relation to the meeting
provided that each proxy is appointed to exercise the rights attached to a
different share or shares held by that shareholder. A proxy need not be a
shareholder of the Company.
2. A vote withheld is not a vote in law, which means that the vote will not
be counted in the calculation of votes for or against the resolutions. If no
voting indication is given, a proxy may vote or abstain from voting at his/her
discretion. A proxy may vote (or abstain from voting) as he or she thinks fit
in relation to any other matter which is put before the meeting.
3. This year, hard copy forms of proxy have not been included with this
notice. Members can vote by: logging onto
https://uk.investorcentre.mpms.mufg.com/ and following instructions;
requesting a hard copy form of proxy directly from the registrars, MUFG
Corporate Markets at shareholderenquiries@cm.mpms.mufg.com or in the case of
CREST members, utilising the CREST electronic proxy appointment service in
accordance with the procedures set out below. To be valid any proxy form or
other instrument appointing a proxy must be completed and signed and received
by post or (during normal business hours only) by hand at MUFG Corporate
Markets, PXS1, Central Square, 29 Wellington Street, Leeds LS1 4DL no later
than 12.30 p.m. on Monday, 7 July 2025. Alternatively if you are an
institutional shareholder you may also be able to appoint a proxy
electronically via the Proxymity platform (see note 14 below). Shareholders
can vote electronically via the Investor Centre, a free app for smartphone and
tablet provided by MUFG Corporate Markets (the Company’s registrar). It
allows you to securely manage and monitor your shareholdings in real time,
take part in online voting, keep your details up to date, access a range of
information including payment history and much more. The app is available to
download on both the Apple App Store and Google Play.
4. In the case of a member which is a company, the instrument appointing a
proxy must be executed under its seal or signed on its behalf by a duly
authorised officer or attorney or other person authorised to sign. Any power
of attorney or other authority under which the instrument is signed (or a
certified copy of it) must be included with the instrument.
5. The return of a completed proxy form, other such instrument or any CREST
Proxy Instruction or appointing a proxy via Proxymity (as described below)
will not prevent a shareholder attending the meeting and voting in person if
he/she wishes to do so.
6. Any person to whom this notice is sent who is a person nominated under
section 146 of the Companies Act 2006 to enjoy information rights (a
“Nominated Person”) may, under an agreement between him/her and the
shareholder by whom he/she was nominated, have a right to be appointed (or
have someone else appointed) as a proxy for the meeting. If a Nominated Person
has no such proxy appointment right or does not wish to exercise it, he/she
may, under any such agreement, have a right to give instructions to the
shareholder as to the exercise of voting rights.
7. The statement of the rights of shareholders in relation to the appointment
of proxies in paragraphs 1 and 3 above does not apply to Nominated Persons.
The rights described in these paragraphs can only be exercised by shareholders
of the Company.
8. Pursuant to regulation 41 of the Uncertificated Securities Regulations
2001, only shareholders registered on the register of members of the Company
(the “Register of Members”) at the close of business on Monday, 7 July
2025 (or, in the event of any adjournment, on the date which is two days
before the time of the adjourned meeting) will be entitled to attend and vote
or be represented at the meeting in respect of shares registered in their name
at that time. Changes to the Register of Members after that time will be
disregarded in determining the rights of any person to attend and vote at the
meeting.
9. As at 9 June 2025 (being the last business day prior to the publication of
this notice) the Company’s issued share capital consists of 483,340,227
ordinary shares, carrying one vote each. The Company holds 118,324,873 shares
in treasury. Therefore, the total voting rights in the Company as at 9 June
2025 are 483 340,227.
10. CREST members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST Personal Members or other CREST sponsored
members, and those CREST members who have appointed a service provider(s),
should refer to their CREST sponsor or voting service provider(s), who will be
able to take the appropriate action on their behalf.
11. In order for a proxy appointment or instruction made using the CREST
service to be valid, the appropriate CREST message (a “CREST Proxy
Instruction”) must be properly authenticated in accordance with the
specifications of Euroclear UK and International (“CRESTCo”), and must
contain the information required for such instruction, as described in the
CREST Manual. The message, regardless of whether it constitutes the
appointment of a proxy or is an amendment to the instruction given to a
previously appointed proxy must, in order to be valid, be transmitted so as to
be received by the issuer’s agent (ID RA10) no later than 48 hours before
the time appointed for holding the meeting. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied
to the message by the CREST Application Host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST in the manner prescribed
by CREST. After this time any change of instructions to proxies appointed
through CREST should be communicated to the appointee through other means.
12. CREST members and, where applicable, their CREST sponsors, or voting
service providers should note that CRESTCo does not make available special
procedures in CREST for any particular message. Normal system timings and
limitations will, therefore, apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member, or sponsored member, or
has appointed a voting service provider, to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable,
their CREST sponsors or voting system providers are referred, in particular,
to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
13. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
14. If you are an institutional investor you may also be able to appoint a
proxy electronically via the Proxymity platform, a process which has been
agreed by the Company and approved by the Registrar. For further information
regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged
by 12.30pm on 7 July 2025 in order to be considered valid or, in the event of
any adjournment, close of business on the date which is two working days
before the time of the adjourned meeting. Before you can appoint a proxy via
this process you will need to have agreed to Proxymity’s associated terms
and conditions. It is important that you read these carefully as you will be
bound by them and they will govern the electronic appointment of your proxy.
An electronic proxy appointment via the Proxymity platform may be revoked
completely by sending an authenticated message via the platform instructing
the removal of your proxy vote.
15. In the case of joint holders, where more than one of the joint holders
purports to appoint a proxy, only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by the order in which the
names of the joint holders appear in the Register of Members in respect of the
joint holding (the first named being the most senior).
16. Members who wish to change their proxy instructions should submit a new
proxy appointment using the methods set out above. Note that the cut-off time
for receipt of proxy appointments (see above) also applies in relation to
amended instructions; any amended proxy appointment received after the
relevant cut-off time will be disregarded.
17. Members who have appointed a proxy using the hard-copy proxy form and who
wish to change the instructions using another hard-copy form, should contact
MUFG Corporate Markets on 0371 664 0300 or +44 371 664 0300. Calls are charged
at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom are charged at the applicable international rate. Lines are
open 09.00 to 17.30 Monday to Friday excluding public holidays in England and
Wales.
18. If a member submits more than one valid proxy appointment, the
appointment received last before the latest time for the receipt of proxies
will take precedence.
19. In order to revoke a proxy instruction, members will need to inform the
Company. Members should send a signed hard copy notice clearly stating their
intention to revoke a proxy appointment to MUFG Corporate Markets, PXS1, 29
Wellington Street, Central Square, Leeds LS1 4DL. In the case of a member
which is a company, the revocation notice must be executed under its common
seal or signed on its behalf by an officer of the company or an attorney for
the company. Any power of attorney or any other authority under which the
revocation notice is signed (or a duly certified copy of such power of
attorney) must be included with the revocation notice. If a member attempts to
revoke their proxy appointment but the revocation is received after the time
for receipt of proxy appointments (see above) then, subject to paragraph 4
above, the proxy appointment will remain valid.
EXPLANATORY NOTES TO THE RESOLUTIONS
Resolution 1 – To receive and adopt the Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2025 will be
presented to the Annual General Meeting (“AGM”). These accounts accompany
this Notice of Meeting.
Resolution 2 – To approve a Final Dividend
The rationale for the payment of a final dividend is set out in the Statement
from the Chair, in the Business Review and the Report of the Directors.
Resolution 3 – Approval of the Company’s Dividend Policy
Resolution 3 seeks shareholder approval of the Company’s dividend policy,
which is set out on page 29 of the Annual Report.
Resolutions 4 to 10 – Election/Re-election of Directors
Resolutions 4 to 10 deal with the election/re-election of each Director.
Biographies of each of the Directors can be found on pages 44 to 46 of the
Annual Report.
The Board has confirmed, following a performance review, that the Directors
standing for re-election and election continue to perform effectively.
Resolution 11 – Re-appointment of Auditors and the determination of their
remuneration
Resolution 11 relates to the re-appointment of PricewaterhouseCoopers LLP as
the Company’s independent Auditors to hold office until the next AGM of the
Company and also authorises the Audit & Risk Committee to set their
remuneration.
Resolution 12 – Directors’ Remuneration Report
The Directors’ Remuneration Report can be found on pages 64 to 66 of the
Annual Report.
Resolutions 13, 14 and 15 – Issue of Shares
Ordinary Resolution 13 in the Notice of AGM will renew the authority to allot
the unissued share capital up to an aggregate nominal amount equal to 10% of
the aggregate nominal amount of the Company’s issued share capital on 9 June
2025, being the nearest practicable date prior to the signing of this Report
(or if changed, the number representing 10% of the issued share capital of the
Company at the date at which the resolution is passed).
Such authority will expire on the date of the next AGM or after a period of 15
months from the date of the passing of the resolution, whichever is earlier.
This means that the authority will have to be renewed at the next AGM.
When shares are to be allotted for cash, Section 551 of the Companies Act 2006
(the “Act”) provides that existing shareholders have pre-emption rights
and that the new shares must be offered first to such shareholders in
proportion to their existing holding of shares. However, shareholders can, by
special resolution, authorise the Directors to allot shares otherwise than by
a pro rata issue to existing shareholders. Special Resolution 14 will, if
passed, give the Directors power to allot for cash equity securities up to an
aggregate nominal amount equal to 10% of the Company’s share capital on
9 June 2025 (or if changed, the number representing 10% of the issued share
capital of the Company at the date at which the resolution is passed), as if
Section 551 of the Act does not apply. This is the same nominal amount of
share capital which the Directors are seeking the authority to allot pursuant
to Resolution 15. This authority will also expire on the date of the next
Annual General Meeting or after a period of 15 months, whichever is earlier.
This authority will not be used in connection with a rights issue by the
Company.
Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations
2003 (as amended) (the “Treasury Share Regulations”) the Company is
permitted to buyback and hold shares in treasury and then sell them at a later
date for cash, rather than cancelling them. The Treasury Share Regulations
require such sale to be on a pre-emptive, pro rata, basis to existing
shareholders unless shareholders agree by special resolution to disapply such
pre-emption rights. Accordingly, in addition to giving the Directors power to
allot unissued share capital on a non pre-emptive basis pursuant to Resolution
14, Resolution 15, if passed, will give the Directors authority to sell shares
held in treasury on a non pre-emptive basis. No dividends may be paid on any
shares held in treasury and no voting rights will attach to such shares. The
benefit of the ability to hold treasury shares is that such shares may be
resold. This should give the Company greater flexibility in managing its share
capital, and improve liquidity in its shares. It is the intention of the Board
that any re-sale of treasury shares would only take place at a premium to the
cum income net asset value per share. It is also the intention of the Board
that sales from treasury would only take place when the Board believes that to
do so would assist in the provision of liquidity to the market. The number of
treasury shares which may be sold pursuant to this authority is limited to an
aggregate nominal amount equal to 10% of the Company’s share capital on 9
June 2025 (or if changed, the number representing 10% of the issued share
capital of the Company at the date at which the resolution is passed) (reduced
by any equity securities allotted for cash on a non-pro rata basis pursuant to
Resolution 14, as described above). This authority will also expire on the
date of the next Annual General Meeting or after a period of 15 months,
whichever is earlier.
The Directors intend to use the authority given by Resolutions 13, 14 and 15
to allot shares and disapply pre-emption rights only in circumstances where
this will be clearly beneficial to shareholders as a whole. The issue proceeds
would be available for investment in line with the Company’s investment
policy. No issue of shares will be made which would effectively alter the
control of the Company without the prior approval of shareholders in general
meeting.
New Shares will only be issued at a premium to the Company’s cum income net
asset value per share at the time of issue.
Resolution 16 – Share Repurchases
The Directors wish to renew the authority given by shareholders at the
previous AGM. The principal aim of a share buyback facility is to enhance
shareholder value by acquiring shares at a discount to net asset value, as and
when the Directors consider this to be appropriate. The purchase of Shares,
when they are trading at a discount to net asset value per share should result
in an increase in the net asset value per share for the remaining
shareholders. This authority, if conferred, will only be exercised if to do so
would result in an increase in the net asset value per share for the remaining
shareholders and if it is in the best interests of shareholders generally. Any
purchase of shares will be made within guidelines established from time to
time by the Board. It is proposed to seek shareholder authority to renew this
facility for another year at the AGM.
Under the current Listing Rules, the maximum price that may be paid on the
exercise of this authority must not exceed the higher of (i) 105% of the
average of the middle market quotations for the shares over the five business
days immediately preceding the date of purchase and (ii) the higher of the
last independent trade and the highest current independent bid on the trading
venue where the purchase is carried out. The minimum price which may be paid
is 2.5p per Share. Existing shares which are purchased under this authority
will either be cancelled or held as Treasury Shares.
Special Resolution 16 in the Notice of AGM will renew the authority to
purchase in the market a maximum of 14.99% of the issued share capital of the
Company as at the date of the passing of the resolution, 14.99% of the issued
share capital of the Company as changed by that resolution. Such authority
will expire on the date of the next AGM or after a period of 15 months from
the date of passing of the resolution, whichever is earlier. This means in
effect that the authority will have to be renewed at the next AGM or earlier
if the authority has been exhausted.
Resolution 17 – General Meetings
Special Resolution 17 seeks shareholder approval for the Company to hold
General Meetings (other than the AGM) at 14 clear days’ notice. The Board
confirms that the shorter notice period would only be used where it was
merited by the purpose of the meeting.
Recommendation
The Board considers that the resolutions relating to the above items are in
the best interests of shareholders as a whole. Accordingly, the Board
unanimously recommends to the shareholders that they vote in favour of the
above resolutions to be proposed at the forthcoming AGM as the Directors
intend to do in respect of their own beneficial holdings totalling 628,455
shares.
ENDS-
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.
For further information please contact
Mark Pope
For and on behalf of Frostrow Capital LLP
Company Secretary
0203 008 4913
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