W O R L D W I D E H E A LT H C A R E T R U S T P LC
A N N UA L R E P O R T & F I N A N C I A L S TAT E M E N TS
F O R T H E YE A R E N D E D 3 1 MA R C H 2 0 1 2
2012
W
O
R
L
D
W
I
D
E
H
E
A
L
T
H
C
A
R
E
T
R
U
S
T
P
L
C
A
N
N
U
A
L
R
E
P
O
R
T
F
O
R
T
H
E
Y
E
A
R
E
N
D
E
D
3
1
M
A
R
C
H
2
0
1
2
ACC E S S I N G T H E G LO B A L MA R K E T
The healthcare sector is a global one and accessing this global market as a UK investor can be difficult. Within the UK, there are
diminishing options for investment as the universe of healthcare companies is shrinking through mergers and acquisitions.
Worldwide Healthcare Trust PLC offers an opportunity to gain exposure to pharmaceutical, biotechnology and related companies
in the healthcare sector on a global scale.
I N V E S T M E N T O B J E C T I V E A N D P O L I C Y
Worldwide Healthcare Trust PLC 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 mitigate risk and also to enhance returns. Further details of the Company’s investment policy are set out in the
Report of the Directors beginning on page 17.
CO N T I N UAT I O N V OT E
The next continuation vote of the Company shall be held at the Annual General Meeting in 2014, and further opportunities to vote
on the continuation of the Company shall be given to shareholders every five years thereafter.
G E A R I N G
The Company’s borrowing requirements are met through the utilisation of a loan facility, repayable on demand provided by
Goldman Sachs & Co. New York. At 31 March 2012 £64.4m was drawn down from this facility.
1
Financial Highlights
2-3
Chairman’s Statement
4
OrbiMed Capital LLC - Investment Manager
5-9
Review of Investments
10
Historic Performance
11
Champions of Innovation
12-14
Portfolio
15
Analysis of the Portfolio
Your Board
16
Report of the Directors (Incorporating the Business Review) 17-25
26
Statement of Directors’ Responsibilities
27-32
Corporate Governance
32
Shareholder Analysis
Directors’ Remuneration Report
Independent Auditors’ Report
Income Statement
Reconciliation of Movements in Shareholders’ Funds
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
Notice of Annual General Meeting
How to Invest
Glossary
Company Information
33-34
35-36
37
38
39
40
41-56
57-62
63
64
65
F I N A N C I A L C A L E N DA R
Financial Year End
Financial Results Announced
Half Year End
Half Year Results Announced
Interim Management Statements Announced
Dividends payable
2012 Annual General Meeting
31 March
May
30 September
November
February/August
January/July
12 noon, Tuesday, 17 July
to be held in the Barber-Surgeon’s Hall,
Monkwell Square, Wood Street,
London EC2Y 5BL
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 01
Financial Highlights
Share price (total return)*
Net asset value per share (total return)*
Benchmark index (total return)**
Dividend per share
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
01
Year ended Year ended
31 March
2011
-0.9%
31 March
2012
+18.2%
+14.4%
+13.4%
17.5p
+4.0%
+2.5%
15.0p
*Source – Morningstar.
The net asset value per share has been diluted for subscription shares and treasury shares.
**With effect from 1 October 2010, the performance of the Company is measured against the MSCI World Health Care Index on a net total return, sterling adjusted basis. Prior
to this date, performance was measured against the Datastream World Pharmaceutical & Biotechnology Index (total return, sterling adjusted). The return for the year ended
31 March 2011, therefore, consists of a blended figure containing both indices. (Source: Thomson Reuters and Morningstar).
Details of the Company’s historic performance can be found on page 10.
P E R F O R MA N C E S I N C E L AU N C H TO 3 1 MA R C H 2 0 1 2
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
Apr
95
Mar
96
Mar
97
Mar
98
Mar
99
Mar
00
Mar
01
Mar
02
Mar
03
Mar
04
Mar
05
Mar
06
Mar
07
Mar
08
Mar
09
Mar
10
Mar
11
Mar
12
WWH Net Asset Value (total return)
WWH Share Price (total return)
Benchmark Index (total return)**
Rebased to 100 as at 28 April 1995
*Source – Morningstar, Thomson Reuters and Bloomberg.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 02
02
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Chairman’s Statement
“…the Company’s net asset value per share total return was 14.4% and the share
price total return was 18.2%, both substantially outperforming the Company’s
benchmark…”
R E V I E W O F T H E
YE A R A N D
P E R F O R MA N C E
Having reported a slightly negative
net asset value per share total
return over the first half of the year, I
am delighted to report that returns
in the second half have shown a
significant improvement.
Martin Smith
Overall, during the year ended 31 March 2012, the Company’s
net asset value per share total return was 14.4% and the share
price total return was 18.2%, both substantially outperforming
the Company’s benchmark, the MSCI World Health Care Index
on a total return, sterling adjusted basis, which rose by 13.4%.
Since the Company’s inception in 1995, the total return of the
Company’s net asset value per share is 858.2%, equivalent to a
compound annual return of 14.3%. This compares to a
cumulative “blended” benchmark return of 428.1%, equivalent
to a compound annual return of 10.3% over the same period.
At 31 March 2012, the discount of the Company’s share price to
the diluted net asset value was 8.7% (31 March 2011: 11.3%). The
average discount of the share price to the diluted net asset
value per share during the year was 7.1% this compares to 7.6%
during the previous year.
The Company has continued to benefit
from strong
performance from emerging biotechnology companies, the
release of important positive product data and merger and
acquisition activity in the healthcare sector. Further information
on the Company’s investments can be found in the Review of
Investments beginning on page 5.
C A P I TA L
In implementing our policy of actively managing the share price
discount we repurchased a total of 908,586 ordinary shares for
treasury at a cost of £6.9m (including expenses) during the year.
In addition, 238,125 subscription shares were repurchased for
cancellation at a cost of £294,000 (including expenses). As
mentioned above, the average discount during the year of the
Company’s share price to the diluted net asset value per share
was 7.1%, slightly wider than the stated target of 6%. As we have
previously highlighted it remains possible for the discount to be
greater than 6% at times as the share price reflects the overall
balance between supply and demand for the Company’s shares
in the secondary market. The volatility of the net asset value per
share in an asset class such as healthcare is another factor over
which we have no control however, the Board remains fully
committed to a discount protection through an active share
buy-back programme. Shareholder approval to renew the
authority to buy-back shares will be sought at the Annual
General Meeting. The execution and timing of any share
buy-back will continue to be at the absolute discretion of the
Board.
I would like to remind shareholders that the Board has resolved
that any shares held in treasury will be cancelled on the date of
the Annual General Meeting each year and consequently all
shares held in treasury on 17 July 2012 will be cancelled.
The next exercise date for the Company’s subscription shares is
31 July 2012 and the exercise price is 638p. This is the last
opportunity for holders of subscription shares to exercise their
subscription rights at this price as, after this date, the exercise
price will increase to 699p where it will remain until the expiry
date of the subscription shares on 31 July 2014. During the year
and to the date of this report a total of 3,061,723 new shares
were issued, raising £19.5m of additional funds for the
Company, as a result of holders of subscription shares exercising
their subscription rights.
R E V E N U E A N D D I V I D E N D
I reported last year that the Company’s net revenue return had
been boosted by a higher yield from a number of investments
within the portfolio. I am pleased to report that this has again
been the case this year with our net revenue return for the year
rising to £9.5 million (2011: £7.2 million). In order to maintain
investment trust status the Board has declared an interim
dividend of 17.5p per share, compared to last year’s interim
dividend of 15.0p per share, an increase of 16.7%. It is the Board’s
intention to maintain this level of distribution as long as the
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 03
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
03
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 0 8
yield from the portfolio permits us to do so. Based on the
current mid-market share price of 769p the interim dividend
represents a yield of 2.3%.
The interim dividend will be payable on 6 July 2012 to ordinary
shareholders on the register of members on 8 June 2012. The
associated ex-dividend date will be 6 June 2012.
In light of the increase in the Company’s net revenue the Board
has given consideration to the frequency of dividends paid to
shareholders. It has been decided that in future the Company
will declare two interim dividends per year, one at the half-year
stage and one shortly after the year-end. It is therefore expected
that in respect of the year ending 31 March 2013 a first interim
dividend will be declared in November 2012 and a second
interim dividend will be declared in May 2013.
G E A R I N G
The Company’s borrowing requirements are met through a loan
facility, negotiated on competitive terms, which is repayable on
demand, provided by the custodian Goldman Sachs & Co New
York. As at 31 March 2012 a total of £64.4m of this facility was
drawn down, representing 16.4% of the Company’s net assets.
Your Company has used a modest level of gearing over a
number of years and the Board believes that the availability of a
meaningful gearing facility is very useful for a closed end
investment company such as ours.
T H E B OA R D
Professor Duncan Geddes, who has been a Director of the
Company since its launch in 1995, will be retiring from the Board
at the conclusion of this year’s Annual General Meeting.
Duncan’s knowledge and experience have been an essential
part of your Board’s deliberations and I would like to thank him
for his hard work during his time on the Board. His experience
and wise counsel will be greatly missed. Anthony Townsend will
be succeeding him as the Senior Independent Director.
Your Board is currently in discussions with external advisers
concerning the appointment of a successor.
O U T LO O K
We continue to experience difficult and volatile markets and
after two successive quarters of negative growth the U.K. is
officially in a “double dip” recession. There is also doubt about
the health of the U.S. economy and the sustainability of its
recovery. Further uncertainty exists in Europe where in recent
elections the first socialist president for 30 years was elected in
France and in Greece no clear result was obtained, prompting
the need for a further election in the summer. The recent
banking problems in Spain have also contributed to the doubts
over the future of the euro.
Our Investment Manager believes, however, that the outlook for
the healthcare sector is positive and that there is potential for
strong performance both in relative and absolute terms. In
particular, they believe that the portfolio is well positioned to
benefit from such factors as historically low valuations, a rise in
the prospects for emerging markets and increased levels of
productivity driven by research and development.
Our focus continues to be on the selection of stocks with strong
prospects and we continue to believe that the long term
investor in our sector will be well rewarded.
A N N UA L G E N E R A L M E E T I N G
The Annual General Meeting of the Company will be held at the
Barber-Surgeons’ Hall, Monkwell Square, Wood Street, London
EC2Y 5BL on Tuesday, 17 July 2012 at 12 noon, and we hope as
many shareholders as possible will attend. This will be an
opportunity to meet the Board and to receive a presentation
from our Investment Manager.
Martin Smith
Chairman
1 June 2012
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 04
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
04
OrbiMed Capital LLC – Investment Manager
OrbiMed has managed the portfolio since the Company’s
launch in 1995, and the many awards won by the Company over
the years are a testament to the strength and talent harnessed
by the OrbiMed team.
OrbiMed had approximately US$6 billion in assets under
management as at 31 March 2012, across a range of funds,
including investment trusts, hedge funds and private equity
funds. OrbiMed’s investment management activities were
founded in 1989 by Samuel D. Isaly.
OrbiMed emphasises investments in companies with under-
appreciated products in the pipeline, high quality management
teams and adequate financial resources.
A disciplined portfolio construction process is utilised to ensure
that the portfolio is focused on 60 to 70 “high conviction”
positions.
Finally, the portfolio is subject to a rigorous risk management
process to moderate portfolio volatility.
T H E T E A M
OrbiMed’s investment team, headed up by Samuel D.
Isaly,
includes over 30 experienced professionals with expertise in
science, medicine, finance and law, many of whom have
advanced degrees and broad experience in science and
medicine. Collectively, the team currently serves on the boards
of over 25 biotechnology and healthcare companies.
With a coverage universe of over 750 public companies,
OrbiMed’s professionals maintain an exceptional level of
research intensity. The team has a demonstrated record of
investing successfully across market cycles in both public and
private companies.
I N V E S T M E N T S T R AT E G Y A N D
P R O C E S S
‘Bottom-up’ fundamental research provides the investment thesis
for all positions. In addition to meeting frequently with industry
executives and healthcare practitioners, OrbiMed attends many
major medical conferences worldwide. Portfolio positions are
discussed and selected during daily portfolio management
meetings. OrbiMed invests with a worldwide perspective,
selecting ideas from across all major geographical markets.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 05
Review of Investments
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
05
“Our confidence in the potential performance of the healthcare sector is high…
Conditions are ripe for both positive absolute and relative performance.”
P E R F O R MA N C E R E V I E W
The fiscal year ended 31 March, 2012
was one of volatility and ultimately
modest returns for the global equity
markets. This is evidenced by the
MSCI World Index, which experienced
slight declines early in the year that
were followed by a sharp drop in the
summer months of July and August.
This fall presaged a market rally into
the year end, with the index posting a
total return of 1.0% in sterling terms.
Samuel D. Isaly
Global healthcare equities followed a similar pattern but
unequivocally outperformed the broader market in the year.
Healthcare stocks also saw a fiscal year end rally, but to a greater
and more sustained magnitude, ending on new highs. The total
return for the MSCI World Healthcare Index was 13.4% in sterling
terms for the year.
In comparison, the total return of the Company’s net asset value
per share was14.4% for the year. The share price total return was
18.2% in the same period.
Since the Company’s inception in 1995, the total return of the
Company’s net asset value per share measures 858.2%,
equivalent to a compound annual return of 14.3%, this
compares to a cumulative blended benchmark return of
428.1%, equivalent to a compound annual return of 10.3%.
While currency movements have been volatile in recent times,
including swings in 2011, the currency impact was modest this
fiscal year. A significant majority of the portfolio holdings are
denominated in U.S. dollars, but the net movement in sterling
versus the dollar was close to zero in the period.
CO N T R I B U T I O N TO P E R F O R MA N C E
Emerging biotechnology companies over the past decade have
become critical providers of clinical innovation and drug
discovery for the pharmaceutical industry. The top contributors
to the Company’s performance are certainly reflective of this
trend. Medivation Inc. of San Francisco, California is a typical
example of this. The stock soared in response to phase III data
unveiled by the company for their novel oral therapy for the
treatment of prostate cancer. The compound was licensed to
and is being co-developed by Astellas Pharma Inc. During the
fiscal period, Medivation rose by approximately 300% with the
share price moving to $74.72 at 31 March 2012 from $18.64 at
31 March 2011; this was the top contributor to the Company’s
net asset value total return (see page 9).
VIVUS Inc., another emerging biopharmaceutical company,
enjoyed some regulatory success in their pursuit to bring a drug
for obesity to the market. The stock more than doubled in
response to a positive recommendation for approval by a panel
convened by the U.S. Food and Drug Administration (“FDA”). We
expect approval in 2012. The company also possesses pipeline
assets that help support its valuation, most notably in erectile
dysfunction.
The viral disease of hepatitis C (“HCV”) is highly prevalent and is
a burden to healthcare systems on a worldwide basis. The past
5 years have shown incredible advances in the treatment of this
chronic disease. Pharmasset Inc. became a leader in the next
wave of therapies for HCV. Their lead compound, GS-7977,
became a desired asset in the race for the next standard of care
and a bidding war ensued. Pharmasset was the next largest
contributor in the period, specifically in the form of merger and
acquisition (“M&A”) activity. Gilead Sciences Inc.’s U.S. $11 billion
purchase of Pharmasset Inc., represented nearly a 100%
premium to the previous close and was a record high in the
industry for an acquisition of a company with no revenues and
a lead asset in phase II clinical development. Pharmasset’s shares
ceased trading on 18 January 2012 at U.S. $136.97 which
represented a 248% increase during the Company’s fiscal year.
Roche Holding AG remains an important holding and was
another top contributor to performance in the fiscal year. The
stock rebounded from a difficult year in 2010, in which news
flow was decidedly negative, and rose by a further 20% in local
currency terms during the Company’s fiscal year. Nevertheless,
we viewed the stock as oversold and our patience was
rewarded in 2011. The company remains the worldwide leader
in oncology and their cancer pipeline consists of important late
stage products whose visibility should continue to grow and
provide a defence against potential “bio-similars”. This should
foster a critical life cycle strategy for the company’s respective
cancer franchises. Not to be overlooked is the company’s efforts
to broaden the scope of the therapeutic categories in which it
sells drugs, in particular cardiovascular disease. Roche has some
high-risk, high-reward compounds in development that should
bear fruit over the next two years.
Alzheimer’s disease represents a major unmet medical need
and the commercial potential of a truly disease modifying agent
is huge. Thus, it is no surprise that a company geared to the
pursuit of a new therapy was a top contributor in the period.
Elan Corporation plc, in conjunction with Johnson & Johnson
and Pfizer,
is nearing the completion of a multi-year
development programme for an antibody to treat this brain
in
disorder. The stock enjoyed enormous momentum
anticipation of the results, expected in 2012.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 06
06
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Review of Investments (continued)
We would be remiss not to mention the contribution of
Bristol-Myers Squibb to performance. The company was the
best performing large capitalisation holding in 2011 as its
industry leading pipeline moves through regulators and onto
the commercial market. We expect this to continue as the
company has been able to demonstrate research and
development (“R&D”) leadership in diabetes, oncology, virology,
and cardiovascular medicine, just to name a few. The stock was
a key contributor to outperformance versus the benchmark in
the fiscal year.
Key detractors from performance were diverse in the fiscal year,
both in terms of sub-sector and geography. Human Genome
Sciences Inc., an emerging biotechnology company, was the
largest detractor from performance in the period. The company,
in conjunction with GlaxoSmithKline,
launched the first new
drug for the treatment of lupus in decades in March 2011.
Expectations were appropriately high for the novel compound,
known as Benlysta (belimumab). However, the sales of the drug
in its first year fell short of these lofty expectations and the drug
sold off. We feel the sell off was excessive and that the company
is currently undervalued given the remaining opportunity for
Benlysta and other compounds in Human Genome’s pipeline.
leader
in generic
injectable drugs and
Hospira, Inc. is a specialty pharmaceutical company that is a
infusion
world
technologies. The stock performed poorly during the year as
manufacturing issues affecting both its drug and device
operations forced management to reduce its growth outlook.
Although the company’s shares have partially recovered from
their December 2011 lows, we found the stock’s risk-reward
profile unattractive. As a result, we exited the position.
The mid-tier Japanese pharmaceutical company, Mitsubishi
Tanabe Pharma Corp., was besieged by bad news this year. Of
course, there was the lingering impact of the great East Japan
earthquake and subsequent tsunami, although the stock
rebounded nicely from that sell off. Two other unexpected
events occurred and their impacts have been more enduring.
First, Japanese regulators, who are responsible for setting all
pharmaceutical prices in that country, priced the company’s
innovative new HCV treatment, Telavic (telaprevir, licensed from
In fact, the set price is
Vertex), well below expectations.
approximately 70% of the price payable in the United States.
Second, a safety scare for the company’s multiple sclerosis drug,
Gilenya (fingolimod, licensed to Novartis), prompted another fall
in share price. We believe the valuation dropped to a
compelling level that overly discounted the prospects for
Gilenya and we added to our position on the dip. We expect
Gilenya to reach blockbuster status in 2012.
Illumina, Inc. is a leading developer of next-generation
sequencing instruments in a fast growing applied genomics
research market. Illumina’ s stock underperformed the general
market during second half of the calendar year 2011 as its key
end-markets in academia and government funded research labs
deteriorated due to concerns arising from the federal debt
ceiling and the ensuing budget cuts. The failure of the Joint
Super Committee (“JSC”) enacted a mandatory cut in federal
spending for 2013, known as sequestration, potentially cutting
2013 budget by as much as 8% to the National Institute of
Health (“NIH”) which funds academic research end market. We
exited the position in Illumina after a lacklustre third quarter
results pre-announcement due to limited visibility and the
continued debate around budgetary sequestration planned
for 2013.
the
fiscal year due
Sinopharm Group Co. is the largest drug distributor in China.
The shares declined during
to
government-mandated price cuts on drugs, restrictions on the
use of antibiotics in hospitals, cash flow challenges in the
business, and diminished ability of Sinopharm to acquire smaller
distributors at compelling prices. We believe that Chinese
healthcare policies will continue to act as headwinds to
Sinopharm’s business in the near-term.
S E C TO R U P DAT E
the
We believe therapeutic stocks rose due to two important
observations – R&D productivity has been on an upswing and
more new products are being approved. As a metric, we look to
the FDA approvals record. 2011 was the best year for approvals
lacklustre approval
since 2004, easily surpassing
performance of 2010. A total of 30 “new chemical entities”
(including biologics) were approved in 2011, nine more than
those approved in 2010 (source: Washington Analysis). We
expect this trend to continue. The start of 2012 (January
through March) saw a continuation of this trend as approval
numbers are once again up on a year-over-year basis. Certainly
pharmaceutical and biotechnology companies are doing their
part with new product applications, but the recent trend also
reflects the increasing “industry friendliness” we have been
observing at the FDA. This includes an increase in priority
reviews, approvals in the absence of advisory committees, and a
willingness to extend deadlines to get a drug approved (rather
than simply rejecting it to ensure a deadline “was met”).
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 07
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Review of Investments (continued)
07
Moreover, 2012 may bring the approval of a drug for obesity –
which we would hail as a watershed moment for the FDA, the
industry, and patients.
M&A is a constant theme in the therapeutics space and,
although there can be some ebbs and flows, we believe we are
approaching another inflection point of M&A activity. The
market downturn witnessed in mid-2008 eventually led to a
bout of acquisition activity as acquirers took advantage of lower
valuations. The market downturn starting in mid-2011 may lead
to another bout of acquisition activity. There is evidence to
suggest that this is happening as a number of M&A plays
occurred in late 2011 including Pharmasset (by Gilead), Inhibitex
(by Bristol-Myers Squibb), and Adolor (by Cubist) just to name
a few.
2012 represents a pivotal political year for the U.S. healthcare
landscape. In addition to being an election year, the Supreme
Court of the United States will be ruling on President Obama’s
sweeping healthcare reforms, and Congress will need to address
budgetary and debt ceiling concerns. The Supreme Court’s
decision in June will determine whether the Affordable Care Act
(“ACA”) will stand or be repealed. If the whole act is repealed, the
Managed Care industry will be the subsector that is most
positively affected while hospital companies will be hurt. If the
ACA is upheld, the reforms will continue as planned with
Medical Device taxes being levied in 2013 and Health Insurance
Market reforms beginning in 2014. The next political catalyst will
be the elections in November. If the Republicans are able to win
both the White House and a majority in the Senate, they may try
to repeal ACA by defunding its programs. Lastly, Congress has
been able thus far to delay its implementation as it relates to the
national debt and budgetary issues. However, they may decide
to enact broad budget cuts and sequestration which may put all
government funded healthcare programs at risk (Medicaid,
Medicare, and NIH).
P H A R MAC E U T I C A L S
Recently we have grown more bullish on the large capitalisation
pharmaceutical stocks. The calendar-year end rally in 2011
proved to be a flight-to-safety for the generalist investor rather
than a fundamental rotation into these stocks.
However, the much discussed patent cliff will reach its
maximum extent in 2012 with the genericisation of some of the
largest pharmaceutical brands in history, including Lipitor
(Pfizer), Plavix (Bristol-Myers Squibb and Sanofi), Zyprexa
(Eli Lilly), and Diovan (Novartis). On the anniversary of these
patent expirations the growth outlook becomes more clear and
positive for the industry, attracting growth investors who have
avoided the space for years.
We also believe R&D productivity, coupled with a more industry
friendly FDA, will continue to produce new product flow and
drug launches that will be above the pace seen in the previous
decade. This should also add to the earnings growth in 2013
and beyond.
Emerging markets have finally reached critical mass for the large
capitalisation pharmaceutical companies. With revenues from
emerging markets reaching up to 30% of total sales for some
companies and a growth outlook decidedly above developed
markets, this creates a new growth driver the sector.
Finally, valuations remain near the low end of the historical
range for pharmaceuticals. And while these stocks have been
cheap for some time, the improvement in fundamentals and
the return to growth certainly portends the possibility of
significant multiple expansion.
That said, we continue to be selective in the space. We remain
focused on companies with pipeline opportunities, new
product flow, and catalyst rich. Additionally, we will pursue
contrarian ideas. Valuation, dividends and potential M&A will
also be considered.
B I OT E C H N O LO G Y
A number of the large capitalisation biotechnology stocks have
become catalyst driven growth stories, in particular pipeline
related catalysts. This will be our focus for 2012. In the small and
mid-capitalisation biotechnology space, we will continue to
focus on “hot” therapeutic classes where significant advances
should drive stock performance including HCV, oncology
(mainly prostate cancer and liquid tumors), orphan diseases,
multiple sclerosis, and Alzheimer’s disease. Certainly we
continue to expect acquisitions in the emerging biotechnology
space as well. Finally we note that several product launches fell
short of expectations in 2011 which engendered a negative
attitude amongst investors. We see a contrarian opportunity in
stocks that we believe will exceed launch expectations.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 08
08
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Review of Investments (continued)
S P E C I A LT Y P H A R MAC E U T I C A L S
in
strategy
specialty pharmaceuticals
Our
remains
multi-pronged given the inherent heterogeneity of this
sub-sector. First, we search for high growth companies with
attractive, growth adjusted valuations. Second, we consider
stocks with rock bottom valuations with underappreciated
business opportunities that are often contrarian ideas. Third, we
look, ex-U.S., on a highly selective basis as we await improved
fundamentals and more attractive valuations considering the
significant pricing headwinds across European markets owing
to sever austerity measures that have occurred. Finally, M&A is a
consideration as we look for companies that are themselves
potential acquisition targets.
G E N E R I C S
The generic drug manufactures face a mixed landscape,
particularly on a global basis. Like their specialty pharmaceutical
brethren, European austerity has adversely impacted this group.
Additionally, increased regulatory scrutiny, especially on
manufacturing, has affected many players. Continual changes in
reimbursement create uncertainty, a dynamic shunned by the
generalist investor. The role of the pure play generic drug maker
in the U.S. is becoming a more and more difficult business
model to sustain. However, there are many tailwinds for this
sector as well. Patent expirations for branded products reaches
its zenith in 2012 and is a boon for companies exposed to the
U.S. market. In the U.S., we prefer small/mid-sized generic
players with emerging branded franchises who can seize both
near term opportunities but also sustain long term growth.
Japan possesses the fastest growing generic drug market in the
world and 2012 promises to be the most dynamic in history. In
India, we prefer companies with geographic and product
diversification with strong management teams in place.
M E D I C A L D E V I C E S
We remain cautious on the medical device sector, an industry
that has underperformed due to multi-year head winds.
Innovation and pricing go hand-in-hand and this sector has
been devoid of both. Uncertain economic times have lead to
lower utilisation and decreased demand, clearly a headwind for
these companies. An inflection is possible if not inevitable, so
we continuously monitor utilisation trends across the healthcare
space. These metrics are critical in considering the large
and
capitalisation medical device
stocks.
small
For
mid-capitalisation companies, we look for undervalued quality
and misunderstood product cycles that allow for opportunistic
buys.
H E A LT H C A R E S E R V I C E S
It is a fascinating time for the managed care players in the U.S.,
the so-called “HMOs” or Health Maintenance Organisations.
Privatisation of Medicare/Medicaid/Dual eligibles is an area of
growth as stretched government budgets encourage shifting
these individuals to a managed care platform. The HMOs have
been able to maintain premiums by assuming a recovery in
utilisation, however this is unlikely to recover until the broader
macro and employment environment improves. Uncertainty
around the upcoming Supreme Court ruling and eventual
“ObamaCare” implementation continues to weigh on the sector.
But with attractive valuations and a resolution expected in 2012
for the above, we are positive on the group.
L I F E S C I E N C E TO O L S A N D
D I AG N O S T I C S
We are bullish on the life science tools and diagnostics
sub-sectors as we enter 2012. The sector should continue its
rebound from the depressed valuation levels seen in the second
half of 2011 as the uncertainty over the academic budget
receeds with the emergence of news-flow supporting a less
draconian cut to the NIH budget. The political will to support a
well-funded academic research environment is strong as we
head into the general election cycle in November.
On a micro level, specialty capitalisation diagnostic names
continue to attract attention as we continue to overweight
assets with new product launch stories that are also viewed as
attractive acquisition targets. We remain positive on stories with
transformative products as wide ranging as sophisticated
cancer diagnostics
to use
over-the-counter tests for home use. We also remain optimistic
the
but cautious
next-generation-sequencing market. There is the prospect of
sequencing a human genome for U.S.$1,000 later in 2012.
stocks with
to simple
the clinic
leverage
about
to
in
E M E R G I N G MA R K E TS
The 2011 sell off
in emerging market stocks created an
opportunity for bold purchases. Thus, the portfolio’s holdings in
emerging markets substantially increased during the year. The
weighting here to direct holdings has increased from under 4%
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 09
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Review of Investments (continued)
09
O U R G A M E P L A N F O R 2 0 1 2 A N D
B E YO N D
Our confidence in the potential performance in the healthcare
sector is high. The beginning of the 2012 calendar year was
perhaps a preview of things to come. Fundamentals continue to
improve and valuations remain on the low end of historic levels.
Conditions are ripe for both positive absolute and relative
performance.
at the end of fiscal year 2010 to more than doubling that
exposure during 2011. The diversity of holdings has also
increased dramatically, from two positions to nine that span
numerous healthcare subsectors. Second, the portfolio gains
indirect exposure to emerging markets through our global large
capitalisation holdings, in particular pharmaceutical stocks, in
which emerging market sales can range up to 30% of total
revenues for those companies. For the period ended the 2011
fiscal year, we estimate that this contributed an additional 5% of
exposure.
Nevertheless, our geographic exposure continues to place
significant emphasis on our holdings in North America, with
over 65% of the portfolio in that region. The balance of our
exposure resides in Europe (which has increased to above 20%),
Asia and emerging markets (approaching 15%).
Samuel D. Isaly
OrbiMed Capital LLC
Investment Manager
1 June 2012
CO N T R I B U T I O N BY I N V E S T M E N T – E XC LU D I N G D E R I VAT I V E S
Principal contributors to and detractors from net asset value performance over the year to 31 March 2012
Top Five Contributors
Medivation
VIVUS
Pharmasset
Roche Holding
Elan Corporation
Top Five Detractors
Human Genome Sciences
Hospira
Mitsubishi Tanabe Pharma Corporation
Illumina
Sinopharm
Contribution
for the year to
31 March 2012
£’000
Contribution
per share
(pence)*
7,258
7,128
6,273
3,686
3,425
(3,478)
(2,336)
(2,330)
(2,242)
(2,175)
16.74
16.44
14.47
8.50
7.90
64.05
(8.02)
(5.39)
(5.37)
(5.17)
(5.02)
(28.97)
*based on the weighted average number of shares in issue during the year ended 31 March 2012 (43,362,962).
Source: Frostrow Capital LLP
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 10
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
10
Historic Performance
31 March
2007
31 March
2008
31 March
2009
31 March
2010
31 March
2011
31 March
2012
Net asset value per share – diluted
(dilution for warrants/subscription shares)
511.2p 482.4p
600.5p
752.7p
773.5p
871.0p
Net asset value per share – basic
520.9p 486.6p
635.9p
780.8p
799.2p
909.4p
Share price
477.8p 457.0p
550.5p
701.5p
686.0p
795.0p
Warrant/subscription share price
106p
27.50p
62p
98p
84.5p
133.5p
% Change
for the
year ended
31 March
2012
+12.6
+13.8
+15.9
+58.0
Discount of share price to diluted
net asset value per share
Average month end discount of
share price to diluted net asset value
per share
Gearing ^
Ongoing charges †
Ongoing charges (including performance
fees crystallised during the period)†
(6.5%)
(5.3%)
(8.3%)
(6.8%)
(11.3%)
(8.7%)
n/a
(3.1%)
(6.4%)
(7.5%)
(7.1%)
(7.6%)
5.7%
1.3%
1.8%
15.3%
10.4%
13.3%
1.3%
1.2%
1.0%
1.0%
(7.1%)
16.4%
1.1%
n/a
n/a
n/a
1.3%
1.3%
1.2%
1.0%
1.8%
1.3%
n/a
^Calculated using the Association of Investment Companies definition (prior charges as a percentage of average net assets).
†See glossary on page 64.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 11
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Champions of Innovation
I N D U S T RY L E A D I N G I N V E S T M E N TS I N T H E P O R T F O L I O D U R I N G T H E YE A R
11
1) M E D I VAT I O N I N C .
Medivation Inc. of San Francisco, California is a typical example of
a small “biopharmaceutical” company that rose to prominence in
late 2011 on the heels of a single compound. The company, with
just over 100 employees, released data for their
lead
investigational compound, enzalutamide (MDV3100), the first
oral androgen receptor signaling inhibitor (ARSI) in development
for the treatment of early-stage and advanced prostate cancer.
The data was spectacular and promises to change the treatment
of this highly prevalent disease. The stock has more than
quadrupled since the first phase III data release in November
2011. It is this type of opportunity that we strive to identify.
3 ) E X P R E S S S C R I P TS H O L D I N G
CO M PA NY
Express Scripts is the largest full service pharmacy benefit
management and specialty managed care company. The
company processes and pays prescription drug claims for
customers
like managed care companies, third party
administrators, and employers. With the recent acquisition of
competitor Medco Health Solutions and a management team
with deep business integration experience, Express Scripts
should have good visibility into driving significant integration
synergies and greater percentage of generics dispensed
through mail. As we move through 2012 to 2014, Express Scripts
should also benefit from large generic opportunities to drive
operating profitability. The company’s business has a high
return on equity exceeding 25%.
2) V I V U S I N C .
Another small biopharmaceutical company with a blockbuster
opportunity is VIVUS, Inc. Also based in California, the company
has long pursued the development of a drug for the treatment of
obesity, often considered the “Holy Grail” of pharmaceutical
indications commercially but also regarded as the “graveyard” of
indications from a regulatory perspective. Undaunted by previous
failure, VIVUS is on the verge of launching the first new treatment
for obesity to be approved in over a decade. The stock rose to
prominence in February 2012 when a U.S. Food and Drug
Administration panel of experts nearly unanimously
recommended the approval of Qnexa (phentermine and
topiramate). We anticipate final approval in 2012 and expect
Qnexa to be the biggest drug launch of the year.
4) BRISTOL-MYERS SQUIBB
We have viewed Bristol-Myers Squibb as a Champion of
Innovation in the past. The company has not rested on its laurels
and continues to be one of the leading research and
development organisations amongst global pharmaceutical
companies. Yervoy (ipilimumab) for metastatic melanoma was
successfully launched in 2011 with a trajectory that is indicative
of a blockbuster. Eliquis (apixaban) is a best-in-class blood
thinning compound for stroke prevention that will launch in
2012. Dapagliflozin, a
first-in-class compound diabetes
compound has been filed with regulatory authorities in U.S. and
Europe. Declatisvir and INX-189 combined represent the next
wave of all-oral therapy for the treatment of hepatitis C. The
company’s PD-1
represent
paradigm-shifting immunotherapy for oncology. Finally, the
in
company has mid-stage development opportunities
Alzheimer’s disease. The company’s new drug pipeline remains
unparalleled in comparison to its peers.
antibody platform may
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 12
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
12
Portfolio
as at 31 March 2012
Investments
Pfizer
Roche
Novartis
Sanofi-Aventis
Merck & Co.
Mitsubishi Tanabe Pharma
Abbott Laboratories
Gilead Sciences
United Health
Watson Pharmaceuticals
Top 10 Investments
Life Technologies
Allergan
Wellpoint
Incyte Corp +
Bristol-Myers Squibb
Dendreon Λ
GlaxoSmithKline
Aetna
Elan~
Baxter International
Top 20 Investments
Humana
Medtronic
Warner Chilcott
Sawai Pharmaceutical
Shire
Medco Health Solutions
Shandong Weigao Group
Onyx Pharmaceuticals
Nichi-Iko Pharmaceutical
Zimmer
Top 30 Investments
Country
USA
Switzerland
Switzerland
France
USA
Japan
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
UK
USA
Ireland
USA
USA
USA
Ireland
Japan
Ireland
USA
China
USA
Japan
USA
Market value
£’000
% of
investments
25,123
22,047
20,187
17,712
15,610
15,598
15,334
13,450
12,911
12,596
5.3
4.7
4.3
3.8
3.3
3.3
3.3
2.9
2.8
2.7
170,568
36.4
11,336
11,047
11,039
11,027
10,773
10,410
9,600
8,571
8,330
7,891
2.4
2.4
2.4
2.3
2.3
2.2
2.0
1.8
1.8
1.7
270,592
57.7
7,814
7,496
7,493
6,995
6,882
6,600
6,491
5,740
5,735
5,631
1.7
1.6
1.6
1.5
1.5
1.4
1.4
1.2
1.2
1.2
337,469
72.0
+includes Incyte 4.75% 01/10/15 (Conv) equating to 1.5% of investments
^includes Dendreon 2.875% 15/01/16 (Conv) equating to 1.6% of investments
~includes Elan 8.75% 15/10/16 equating to 0.6% of investments
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 13
Portfolio (continued)
as at 31 March 2012
Investments
Towa Pharmaceutical
Thermo Fisher Scientific
VIVUS
Volcano #
VWR Funding 10.25% 15/07/15
Questcor Pharmaceutical
Align Technology
Impax Laboratories
Exact Sciences
HCA
Top 40 Investments
Biogen Idec
Valeant Pharmaceutical
Regeneron Pharmaceuticals
BioMarin Pharmaceutical
Actelion
Carefusion
3SBio
Angiotech Pharmaceutical FRN 01/12/13
Forest Laboratories
Biosensors
Top 50 Investments
K-V Pharmaceutical•
China Shineway Pharmaceutical
McKesson
Fluidigm
Lyrica Royalty 11% 01/05/19
Ono Pharmaceutical
NPS Pharmaceuticals
Given Imaging
Orasure Technologies
Sequenom
Top 60 Investments
Country
Japan
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Canada
USA
USA
Switzerland
USA
China
USA
USA
Singapore
USA
China
USA
USA
USA
Japan
USA
Israel
USA
USA
#includes Volcano 2.875% 01/09/15 (Conv) equating to 0.2% of investments
•includes KV Pharmaceutical 12% 15/03/15 equating to 0.4% of investments
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
13
Market value
£’000
% of
investments
5,613
5,215
4,560
4,398
4,380
4,354
4,035
3,998
3,838
3,778
1.2
1.1
1.0
0.9
0.9
0.9
0.9
0.9
0.8
0.8
381,638
81.4
3,737
3,698
3,655
3,600
3,541
3,489
3,381
3,342
3,257
2,901
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.6
416,239
88.8
2,860
2,855
2,637
2,630
2,589
2,567
2,560
2,520
2,519
2,478
0.6
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
442,454
94.4
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 14
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
14
Portfolio (continued)
as at 31 March 2012
Investments
Country
Market value
£’000
% of
investments
Cardinal Health
Ariad Pharmaceuticals
Sinopharm
Neurocrine Biosciences
Immunogen
Human Genome Science
QHP Royalty 10.25% 15/03/15
USA
USA
China
USA
USA
USA
USA
Total equities and fixed interest investments
Derivatives – (OTC Equity Swaps)
Options - (Put & Call)
Total investments
2,429
2,008
1,868
1,850
1,709
1,391
592
454,301
13,691
940
468,932
0.5
0.4
0.4
0.4
0.4
0.3
0.1
96.9
2.9
0.2
100.0
S U M MA RY
as at 31 March 2012
Equities (including options & swaps)
Convertibles
Fixed Interest Securities
Total of all investments
Market value
£’000
% of
investments
437,358
15,871
15,703
468,932
93.3
3.4
3.3
100.0
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 15
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
15
Analysis of the Portfolio
as at 31 March 2012
BY G E O G R A P HY
2 0 1 2
Europe 21%
Emerging
Markets
6%
Asia 8%
2 0 1 1
Europe
23%
Asia
11%
Emerging
Markets
3%
North America
63%
North America
65%
BY MA R K E T C A P I TA L I S AT I O N
2 0 1 2
Small Cap
North America
20%
Large Cap
Europe
16%
2 0 1 1
Small Cap
Far East incl.
Japan 8%
Large Cap
Far East incl.
Japan 6%
Small Cap
Europe 4%
Large Cap
Europe
19%
Small Cap
Far East
incl.
Japan 10%
Small Cap
Europe
5%
Large
Cap
Far
East
incl.
Japan
4%
Small Cap
North
America
20%
Large Cap
North America
45%
Large Cap
North America 43%
Note:
A small capitalisation company is defined as being one with a market capitalisation of less than U.S.$5bn and a large capitalisation
company is one with a market capitalisation of more than U.S.$5bn.
224634 Finsbury WWP pp01-pp16 07/06/2012 07:21 Page 16
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
16
Your Board
The Board of Directors, all of whom are non-executive, supervise
the management of Worldwide Healthcare Trust PLC and look
after the interests of shareholders.
MA R T I N S M I T H + (C H A I R MA N )
Martin Smith, aged 69, joined the Board in 2007. He was a
founder of Phoenix Securities, a private investment banking
firm. Following the acquisition of Phoenix in 1997 by Donaldson
Lufkin and Jenrette (“DLJ”), he chaired DLJ’s European
Investment Banking Group. He subsequently founded and was
a non executive director of New Star Asset Management Group
PLC. He attended Oxford University and has an MBA from
Stanford University.
J O S E P H I N E D I XO N * +
Josephine (Jo) Dixon aged 52, joined the board in 2004 and is
Chairman of the Audit Committee. She is currently the Interim
Finance Director at the Eden project in Cornwall and a non-
executive Director and Chairman of the Audit Committee of
Standard Life Equity Income Trust PLC and Baring Emerging
Europe PLC. Jo is a graduate Chartered accountant having
trained with Touche Ross in London. She has held a number of
roles in her career including Commercial Director UK Europe
and Middle East of Serco Group and Finance Director at
Newcastle United PLC. She also held a number of senior
executive positions in investment banking and at the group
head office of NatWest Group.
P R O F E S S O R D U N C A N G E D D E S * +
Professor Geddes, aged 70, joined the Board at launch in 1995
and has been designated as the Senior Independent Director.
An author of numerous publications on respiratory medicine,
Professor Geddes is self-employed.
D R DAV I D H O L B R O O K * +
Dr David Holbrook, aged 52, joined the Board in 2007. He is a
qualified physician and a Director of MTI Partners Limited, a
leading technology venture capital investor. He attended
London and Oxford Universities, and has an MBA from Harvard
Business School. He has held senior positions in a number of
including
blue chip biopharmaceutical organisations
GlaxoSmithKline and Roche.
S A M U E L D. I S A LY
Sam Isaly, aged 67, joined the Board at launch in 1995. Sam is
Managing Partner of OrbiMed Capital LLC, the Company’s
Investment Manager, and has been an international
pharmaceutical investment specialist for more than 20 years
having worked in New York and Europe with Chase Manhattan,
Société Générale, Crédit Suisse and UBS Warburg.
A N T H O NY TO W N S E N D * +
Anthony Townsend, aged 64, joined the Board at launch in 1995.
Anthony has spent over 40 years working in the City and was
Chairman of The Association of Investment Companies from
2001 to 2003. Anthony is Chairman of Baronsmead VCT 3 plc,
British & American Investment Trust PLC, F&C Global Smaller
Companies PLC, Finsbury Growth & Income Trust PLC and Miton
Worldwide Growth Investment Trust Plc.
Other than those stated above, none of the Directors has any
other connections with the Investment Manager and is not
employed by any of the companies in which the Company
holds an investment.
*Member of the Audit Committee
+Member of the Nominations and Management Engagement and
Remuneration Committees
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 17
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors
Incorporating the Business Review
17
In accordance with the requirements of the Companies Act 2006
(the ‘Act’) and the UK Listing and Transparency Rules, 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 2012.
performance has been measured against the MSCI World Health
Care Index (total return, sterling adjusted). Prior to this date,
performance was measured against the Datastream World
Pharmaceutical & Biotechnology Index (total return, sterling
adjusted).
I N T R O D U C T I O N
The Report of the Directors includes the Business Review and
Corporate Governance Statement. The Business Review contains
a review of the Company’s business, the principal risks and
uncertainties it faces and an analysis of its performance during
the financial period and the position at the period end and the
future business plans of the Company. To aid understanding of
these areas the Board has included an analysis using appropriate
Key Performance Indicators. The Business Review should be read
in conjunction with the Chairman’s Statement on pages 2 and 3,
the Review of Investments on pages 5 to 9 and the analyses on
pages 10 to 15.
B U S I N E S S A N D S TAT U S O F T H E CO M PA NY
The Company is registered as a public limited company and is
an investment company within the terms of Section 833 of the
Companies Act 2006 (the ‘Act’).
Its shares are listed on the
Official List of the UK Listing Authority and traded on the main
market of the London Stock Exchange, which is a regulated
market as defined in Section 1173 of the Act. The Company has
received approval from HM Revenue & Customs as an
authorised investment trust under Sections 1158 and 1159 of
the Corporation Tax Act 2010 (CTA 2010’) for the year ended
31 March 2011. This approval is subject to there being no
subsequent enquiry under corporation tax self-assessment. In
the opinion of the Directors, the Company continues to direct
its affairs so as to enable it to qualify for such approval.
CO N T I N UAT I O N O F T H E CO M PA NY
A resolution was passed at the Annual General Meeting held in
2009 that the Company continue 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 the Annual General
Meeting in 2014 and every five years thereafter.
I N V E S T M E N T O B J E C T I V E A N D B E N C H MA R K
The Company invests worldwide in pharmaceutical and
biotechnology companies and related securities in the
healthcare sector with the objective of achieving a high level of
capital growth. With effect from 1 October 2010, the Company’s
I N V E S T M E N T P O L I C Y
In order to achieve its investment objective, the Company
invests in a diversified portfolio of shares in pharmaceutical and
biotechnology companies and related securities in the
healthcare sector on a worldwide basis. It uses gearing and
derivative transactions to mitigate risk and also to enhance
capital returns.
Investment Limitations and Guidelines
The Board seeks to manage the Company’s risk by imposing
various investment limits and restrictions:
(cid:129)
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
investment companies
Exchange, except where the
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.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
The Company will not invest more than 15% of the portfolio
in any one individual stock at the time of acquisition;
At least 60% of the portfolio will normally be invested in
larger companies (i.e. with a market capitalisation of at least
US$5bn);
At least 20% of the portfolio will normally be invested in
smaller companies (i.e. with a market capitalisation of less
than US$5bn);
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
issued by pharmaceutical and
royalty bonds
biotechnology companies;
A maximum of 15% of the portfolio, at the time of
acquisition, may be invested in companies in each of the
following sectors:
–
–
–
healthcare equipment
healthcare technology
providers of healthcare and related services
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 18
18
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
(cid:129)
The Company’s gearing policy is to borrow up to the lower
of £90m or 20% of the Company’s net asset value;
(cid:129)
Share price premium/discount to net asset value per share
(see page 10)
(cid:129) Derivative transactions can be used to mitigate risk and/or
enhance capital returns and will be restricted to 5% of the
portfolio; and
(cid:129)
Equity Swaps may be used in order to meet the Company’s
investment objective of achieving a high level of capital
growth and is restricted to 8% of the portfolio.
Compliance with the Board’s investment limitations and
guidelines is monitored continuously by Frostrow Capital LLP
(“Frostrow” or the “Manager”) and OrbiMed Capital LLC
(“OrbiMed” or the “Investment Manager”) and is reported to the
Board on a monthly basis.
P E R F O R MA N C E
In the year to 31 March 2012, the Company’s net asset value
total return was 14.4% compared to a rise of 13.4% in the
Company’s benchmark. With effect from 1 October 2010, the
Company’s performance is measured against the MSCI World
Health Care Index (total return, sterling adjusted). Prior to this
date, performance was measured against the Datastream World
Pharmaceutical & Biotechnology Index (total return, sterling
adjusted). Historic data, therefore, consists of a blended figure
containing both indices. The Company’s share price total return
was 18.2% during the year.
The Review of Investments on pages 5 to 9 includes a review of the
principal developments during the year, together with information
on investment activity within the Company’s portfolio.
R E S U LTS A N D D I V I D E N D
The results attributable to shareholders for the year and the
transfer to reserves are shown on page 37. In order to maintain
investment trust status the Directors have declared an interim
dividend for the year of 17.5p per share (2011: interim dividend of
15.0p) payable on 6 July 2012.
K E Y P E R F O R MA N C E I N D I C ATO R S ( ‘ K P I s’ )
At each Board meeting the Board assesses the Company’s
performance in meeting its investment objective and against
the following key performance indicators:
(cid:129) Net asset value total return (see pages 1 and 10)
(cid:129)
Share price total return (see pages 1, 10 and 34)
(cid:129)
Stock contribution analysis (see page 9)
Benchmark performance (see pages 1, 10 and 34)
Issue of new shares/repurchase of own shares (see page 20)
(cid:129) Ongoing charges (see page 10)
(cid:129)
(cid:129)
The management of the portfolio is conducted by the
Investment Manager and the management of the Company’s
affairs, including marketing, administration and company
secretarial matters is conducted by the Manager. Each provider
is responsible to the Board which is ultimately responsible to the
shareholders for performing against, inter alia, the above KPIs
within the terms of their respective agreements by utilising the
capabilities of the experienced professionals within each firm.
P R I N C I PA L R I S K S A N D T H E I R
M I T I G AT I O N
The Company’s assets consist principally of listed equities; its
main area of risk is therefore stockmarket-related. The specific
key risks faced by the Company, together with the Board’s
mitigation approach, are as follows:
Investment Activity and Strategy
level of gearing, may
The Board regularly reviews the Company’s investment mandate
and its long-term investment strategy in relation to market and
economic conditions, and the operation of the Company’s peers,
thereby monitoring whether the Company should continue in its
present form. An inappropriate investment strategy, for example
lead to
asset allocation or the
underperformance against the Company’s benchmark index and
peer companies, resulting in the Company’s shares trading on a
wider discount. The Board manages these risks by diversification of
investments through its investment restrictions and guidelines
which are monitored and reported on by the Manager. A
continuation vote was held at the Annual General Meeting held in
2009 and will be held every five years thereafter. Each month the
Board receives a monthly review, which monitors the Company’s
investment performance (both on an absolute basis and against
the benchmark and peer group) and its compliance with the
investment guidelines. Additional reports and presentations are
regularly presented to investors by the Company’s Manager,
Investment Manager and also by Winterflood Securities, the
Company’s Corporate Stockbroker.
The Board undertakes a regular review of the level of
discount/premium and consideration is given to ways in which
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 19
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
19
share price performance may be enhanced, including the
effectiveness of marketing and share buy-backs, where
appropriate. The Board has implemented a discount control
mechanism intended to establish a target level of no more than
a 6% discount of share price to the diluted net asset value per
share. Shareholders should note, however, that it remains
possible for the share price discount to net asset value per share
to be greater than 6% on any one day and is due to the fact that
the share price continues to be influenced by overall supply and
demand for the Company’s shares in the secondary market. The
volatility of the net asset value per share in an asset class such as
healthcare is another factor over which the Board has no
control. The average month end share price discount during the
year was 7.1%. The making and timing of any share buy-backs is
at the absolute discretion of the Board.
A significant proportion of the Company’s assets are, and will
continue to be, invested in securities denominated in foreign
currencies, in particular U.S. dollars. As the Company’s shares are
denominated and traded in sterling, the return to shareholders
will be affected by changes in the value of sterling relative to
those foreign currencies. The Board has made clear the
Company’s position with regard to currency fluctuation, which is
that it does not currently hedge against currency exposure.
Shareholder Relations and Corporate Governance
The Board regularly reviews investment performance against the
benchmark and against peer group. The Board also receives
regular reports that show an analysis of performance compared
with other relevant indices. The Investment Manager provides an
explanation of stock selection decisions and an overall rationale
for the make-up of the portfolio. The Investment Manager
discusses current and potential investment holdings with the
Board on a regular basis in addition to new initiatives, which may
enhance shareholder returns.
Operational
Disruption to, or failure of accounting, dealing or payments
systems or the custodian’s records could prevent accurate
reporting and monitoring of the Company’s financial position.
The Board reviews both the internal control and the disaster
recovery procedures put in place by its principal service providers
on a regular basis.
Financial
Industry risk exists in all specialist industries. Risks are inherent in
pharmaceutical companies with, for example, the potential for
drug withdrawals from the market or failures after launch and
lack of expected profit growth.
The Board meets on a quarterly basis during the year and on an
ad hoc basis if necessary. At each meeting they consider the
asset allocation of the portfolio. The Investment Manager has
responsibility for selecting investments in accordance with the
Company’s investment objective and seeks to ensure that
individual stocks meet an acceptable risk-reward profile.
The Company’s assets comprise mainly readily realisable liquid
securities, which can be sold to meet funding requirements if
necessary.
The Company’s assets can be held by Goldman Sachs & Co. New
York as collateral for the loan provided by them to the Company.
Such assets taken as collateral may be used, loaned, sold,
rehypothecated or transferred by Goldman Sachs & Co. New
York, although the Company maintains the economic benefits
from ownership of those assets. Goldman Sachs & Co. New York
may take up to 140% of the value of the outstanding loan as
collateral. The Company is protected, such protection being
equal to the net assets held by Goldman Sachs & Co. New York,
by SEC rules and U.S. legislation. (Also see glossary on page 64).
Assets held by Goldman Sachs & Co. New York, as custodian, that
are not used as collateral, are held in segregated client accounts.
Further information on financial instruments and risk, as
required by FRS 29, can be found in note 18 to the financial
statements beginning on page 50.
The Company is also exposed to the risk that the custodian
and/or counterparties may fail and that title to stocks does not
survive an ensuing liquidation. The Company’s Investment
Manager is responsible for undertaking reviews of the credit
worthiness of the counterparties that it uses. The Board regularly
reviews
list of
the
counterparties.
Investment Manager’s approved
Accounting, Legal and Regulatory
In order to qualify as an investment trust, the Company must
comply with Section 1158 of the Corporation Tax Act 2010
(‘Section 1158’). Were the Company to breach Section 1158, it
might lose investment trust status and, as a consequence, gains
within the Company’s portfolio could be subject to Capital
Gains Tax. The Section 1158 qualification criteria are continually
monitored by the Manager and the results reported to the
Board each month. The Company must also comply with the
provisions of the London Stock Exchange, the UKLA Listing
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 20
20
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
P R O S P E C TS
The Company’s Investment Manager is confident in the potential for
good performance in the healthcare sector. They believe that the
beginning of the 2012 calendar year was a preview of things to
come. Fundamentals continue to improve and valuations remain on
the low end of historic levels. They believe that conditions are ripe for
both positive absolute and relative performance.
The Alternative Investment Fund Managers Directive came into force
in July 2011 and is required to be implemented into national
legislation by July 2013. Companies then have until July 2014 to
obtain the relevant authorisation. Currently, European regulators are
preparing the more detailed rules and UK regulators are considering
how to implement the rules in the UK. The Board is keeping
developments here under close review.
HMRC’s regulations on the modernisation of investment trust tax
rules have been finalised and were approved by Parliament in
December 2011. The new regime became effective for this company
from 1 April 2012.
I N V E S T M E N T MA N AG E M E N T
Investment Management Agreement:
The Investment Manager receives a periodic fee equal to
0.65% p.a. of the Company’s net asset value. The Investment
Management Agreement may be terminated by either party
giving notice of not less than 12 months. The Investment Manager
under the terms of the agreement provides, inter alia, the
following services:
(cid:129)
(cid:129)
recommending the manner by which monies should be
invested, disinvested, retained or realised;
seeking out and evaluating investment opportunities;
(cid:129)
(cid:129)
(cid:129)
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 policy of the Company.
Rules and Disclosure & Transparency Rules (‘DTRs’). A breach of
the Companies Act could result in the Company and/or the
Directors being fined or subject to criminal proceedings. Breach
of the UKLA Listing Rules or DTRs could result in the Company’s
shares being suspended in listing which in turn would breach
Section 1158. The Board relies on the services of its Manager to
ensure compliance with The Companies Act and The UKLA
Listing Rules.
LOA N FAC I L I T Y
The Company’s borrowing requirements are met through the
utilisation of a loan facility, repayable on demand, provided by
Goldman Sachs & Co. New York. Further details can be found in
note 11 on page 48 and in note 18 beginning on page 50.
S H A R E C A P I TA L
On 4 September 2009, the Company made a bonus issue of
subscription shares on the basis of one subscription share for
every five ordinary shares held at that date. The subscription
shares have quarterly subscription dates and the following
shares were allotted by the Company as a result of holders of
the subscription shares exercising their subscription rights
during the year:
15,599 shares were allotted on 18 May 2011 raising £100,000.
354,240 shares were allotted on 2 August 2011 raising £2,260,000.
10,813 shares were allotted on 1 November 2011 raising £69,000.
467,487 shares were allotted on 2 February 2012 raising £2,980,000.
Subsequent to the year-end 2,213,584 shares were allotted on
2 May 2012 raising £14,120,000.
During the year under review the Company re-purchased a total
of 908,586 shares to be held in treasury, at a cost of £6,942,000
(including expenses). Since the year end and to 31 May 2012
1,063,722 shares have been repurchased by the Company. In
aggregate, to 31 May 2012, the shares re-purchased equate to a
total of 4.4% of the issued share capital (excluding shares held in
treasury) at the beginning of the year. As indicated in the
Chairman’s Statement, the Board has agreed that any treasury
shares remaining on 17 July 2012, the date of the Annual General
Meeting, will be cancelled. A total of 358,607 shares held in
treasury were cancelled on 26 July 2011.
During the year 238,125 Subscription Shares were re-purchased
for cancellation at a cost of £294,000 (including expenses). To
31 May 2012 the Subscription Shares re-purchased equate to a
total of 2.9% of the subscription shares in issue at the beginning
of the year.
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 21
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
21
MA N AG E M E N T
Company Management, Company Secretarial and Administrative
Services Agreement:
The Manager, receives a periodic fee equal to 0.30% per annum
of the Company’s market capitalisation up to £150m, 0.20% per
annum of the market capitalisation in excess of £150m and up
to £500m, and 0.125% per annum of the market capitalisation in
excess of £500m, plus a fixed amount equal to £57,500
per annum.
The notice period on the Company Management, Company
Secretarial and Administration Agreement with Frostrow is
12 months, termination can be initiated by either party.
The Manager, under the terms of the agreement provides, inter
alia, the following services:
(cid:129) marketing and shareholder services;
(cid:129)
(cid:129)
administrative services;
advice and guidance in respect of corporate governance
requirements;
(cid:129) maintaining the books of account and record in respect of
Company dealing, investments, transactions, dividends and
other income, the income account, balance sheet and cash
books and statements;
(cid:129)
(cid:129)
preparation and despatch of the audited annual and
unaudited interim report and accounts and interim
management statements; and
attending to general tax affairs where necessary.
Performance Fee:
Dependent on the level of long term outperformance of the
Company, the Investment Manager and the Manager are entitled
to the payment of a performance fee. The performance fee is
calculated by reference to the amount by which the Company’s
net asset value (‘NAV’) performance has outperformed the
benchmark index. (See page 1 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 16.5% of
any outperformance over the benchmark, the investment
manager receiving 15% and the manager receiving 1.5%
respectively. Provision is also 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 is based on the lower of:
i)
The cumulative out-performance of the investment portfolio
over the benchmark as at the quarter end date; and
ii) The cumulative out-performance of the
investment
portfolio over the benchmark as at the corresponding
quarter end date in the previous year.
In addition, a performance fee only becomes payable to the
extent that the cumulative outperformance gives rise to a total
fee greater than the total of all performance fees paid to date.
As at 31 March 2012 no fee was payable in relation to
maintained outperformance.
During the year a performance fee of £909,000 crystallised (year
ended 31 March 2011: £2,624,000) in relation to maintained
outperformance.
CO N T I N U I N G A P P O I N T M E N T O F T H E
MA N AG E R A N D I N V E S T M E N T MA N AG E R
The Board has concluded that it is in shareholders’ interests that the
Manager and the Investment Manager continue in their roles. The
review undertaken by the Board considered the Company’s
investment performance over both the short and longer terms,
together with the quality and adequacy of other services provided.
The Board also reviewed the appropriateness of the terms of the
Investment Management and Management Agreements, in
particular the length of notice period and the fee structures.
G O I N G CO N C E R N
The Company’s business activities together with the factors likely to
affect its future development, performance and position are set out
in the Report of the Directors on pages 17 to 25. The financial
position of the Company, its liquidity position and its borrowing
facility are set out in the notes to the financial statements beginning
on page 41. In addition, the Corporate Governance Report, the
Financial Statements and the associated notes give details of the
Company’s objectives, policies and processes, its financial risk
management objectives and its exposure to risks. The Company has
considerable financial resources and a good spread of investments
across different geographical areas. The majority of the Company’s
investments are listed on recognised stock exchanges and are
readily realisable. Having considered the Company’s prospects, the
Directors believe that it is appropriate to adopt the going concern
basis in preparing the financial statements as the assets of the
Company consist mainly of securities that are readily realisable and,
accordingly, the Company has adequate financial resources to
continue in operational existence for the foreseeable future.
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 22
22
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
C R E D I TO R S PAYM E N T P O L I C Y
I N D I V I D UA L S AV I N G S ACCO U N TS
Terms of payment are negotiated with suppliers when agreeing
settlement details for transactions. While the Company does not
follow a formal code, it is the Company’s continuing policy to
pay amounts due to creditors as and when they become due. As
at 31 March 2012, the Company did not have any trade creditors
(2011: nil).
C H A R I TA B L E A N D P O L I T I C A L D O N AT I O N S
The Company has not in the past and does not intend in future
to make any charitable or political donations.
E N V I R O N M E N TA L A N D E T H I C A L P O L I C Y
investment
The Company’s primary objective is to achieve a high level of
capital growth by
in pharmaceutical and
biotechnology companies and the Board recognises that this
should be done in an environmentally responsible way. The
Directors support the action being taken by the major
pharmaceutical companies to make products more affordable
to patients in developing countries. The Directors believe that
the Company would be in breach of its fiduciary duties to
shareholders if investment decisions were based solely on
ethical or environmental considerations. The Company
encourages a positive approach to corporate governance and
engagements with investee companies.
The Company’s shares are eligible to be held in the stocks and
shares component of an ISA or Junior ISA, subject to applicable
annual subscription limits (£11,280 for an ISA and £3,600 for a
Junior ISA for the 2012/2013 tax year). Investments held in ISAs
or Junior ISAs will be free of UK tax on both capital gains and
income. The opportunity to invest in Ordinary Shares through
an ISA is restricted to certain UK resident individuals aged 18 or
over. Junior ISAs are available for UK resident children aged
under 18 and born before 1 September 2002 or after 2 January
2011. Sums received by a shareholder on a disposal of Ordinary
Shares held within an ISA or Junior ISA will not count towards
the shareholder’s annual limit. Individuals wishing to invest in
Ordinary Shares through an
ISA should contact their
professional advisers regarding their eligibility as should
individuals wishing to invest through a Junior ISA for children
under 18 years old.
D I R E C TO R S
The Directors of the Company, all of whom served throughout
the year, except as noted, are all non-executive and are listed
below. Their biographies can be found on page 16.
Martin Smith (Chairman)
Jo Dixon
Paul Gaunt (retired on 7 July 2011)
Professor Duncan Geddes
Dr David Holbrook
Samuel D. Isaly
Anthony Townsend
D I R E C TO R S’ I N T E R E S TS
The beneficial interests of the Directors and their families in the Company were as set out below:
Martin Smith
Josephine Dixon
Professor Duncan Geddes
Paul Gaunt (retired on 7 July 2011)
Dr David Holbrook
Samuel D. Isaly
Anthony Townsend
Shares of 25p each
Subscription Shares
31 March 2012
1 April 2011
31 March 2012
1 April 2011
5,859
3,000
42,250
–
–
353,600
21,619
5,859
3,000
42,250
–
–
353,600
18,785
400
600
8,450
–
–
100,720
25,793
400
600
8,450
–
–
100,720
3,757
As at 1 June 2012 there had been no changes in the above details.
Samuel D. Isaly is a partner in OrbiMed Capital LLC which is party to the Investment Management Agreement with the Company
and receives fees as described on pages 20 and 21. A number of the partners at OrbiMed Capital LLC have a minority financial
interest totalling 20% in Frostrow Capital LLP, the Company’s Manager.
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 23
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
23
D I R E C TO R S’ F E E S
D I R E C TO R S’ I N D E M N I T I E S
A report on Directors’ Remuneration is set out on pages 33 and 34.
D I R E C TO R S’ & O F F I C E R S’ L I A B I L I T Y
I N S U R A N C E CO V E R
Directors’ & officers’ liability insurance cover was maintained by
the Company during the year ended 31 March 2012. It is
intended that this policy will continue for the year ending
31 March 2013 and subsequent years.
As at the date of this report, indemnities are 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.
S U B S TA N T I A L S H A R E H O L D I N G S
As at 31 March 2012 the Company was aware of the following interests in the shares of the Company, which exceeded 3% of the
issued share capital (excluding treasury shares):
Beneficial
shareholder
Investec Wealth & Investment
Henderson Global Investors
East Riding of Yorkshire Council
Alliance Trust Savings
Newton Investment Management
Smith & Williamson
Brewin Dophin
Legal & General Investment Management
Investec Asset Management
Deutsche Bank Private Wealth Management
Speirs & Jeffrey, Stockbrokers
Charles Stanley, Stockbrokers
Registered holder
Various Nominees
Various Nominees
Nortrust Nominees
Alliance Trust Savings Nominees
Various Nominees
Various Nominees
Various Nominees
Various Nominees
Various Nominees
Pershing Nominees
Various Nominees
Various Nominees
Number of
shares
2,891,852
2,512,549
2,503,520
2,212,892
2,125,163
1,982,518
1,653,497
1,590,944
1,574,030
1,446,657
1,381,534
1,359,707
% of issued
share capital
6.57
5.71
5.69
5.03
4.83
4.51
3.76
3.62
3.58
3.29
3.14
3.09
I N D E P E N D E N T AU D I TO R S
Ernst & Young LLP have indicated their willingness to continue
to act as Independent Auditors to the Company and a
resolution for their re-appointment will be proposed at the
forthcoming Annual General Meeting.
AU D I T I N F O R MAT I O N
The Directors who held office at the date of approval of this
Directors’ Report confirm that, so far as they are aware, there is
no relevant audit information of which the Auditors are
unaware; and that each Director has taken all steps they ought
to have taken as a Director to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of such information.
S E C T I O N 9 9 2 O F T H E CO M PA N I E S AC T 2 0 0 6
The following disclosures are made in accordance with Section
992 of the Companies Act 2006.
Capital Structure
The Company’s capital structure is summarised in note 13 on
page 48.
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 24
24
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
Voting Rights in the Company’s shares
General Meeting.
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 on page 60.
CO R P O R AT E G O V E R N A N C E
A formal statement on Corporate Governance, which forms part
of this Report of the Directors, is set out on pages 27 to 32.
B E N E F I C I A L O W N E R S O F S H A R E S –
I N F O R MAT I O N R I G H TS
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, Capita Registrars,
or to the Company directly.
N OT I C E P E R I O D F O R G E N E R A L M E E T I N G S
Recent amendments made to the Company’s Articles of
Association included a provision allowing general meetings of
the Company to be called on the minimum notice period
provided for in the Companies Act 2006. For meetings other than
annual general meetings this is currently a period of 14 clear days.
A Special Resolution was passed by shareholders at last year’s
Annual General Meeting approving this. The Board is proposing
Resolution 14 as a Special Resolution to renew this approval for
a further year. The notice period for annual general meetings
will remain 21 clear days.
A N N UA L G E N E R A L M E E T I N G
The formal Notice of Annual General Meeting is set out on
pages 57 to 62 of this Annual Report.
Resolutions relating to the following items of special business
will be proposed at the forthcoming Annual General Meeting:
Issue of Shares
Ordinary Resolution 9 in the Notice of Annual General Meeting
gives authority to the Directors to allot the unissued share capital
up to an aggregate nominal amount of £1,105,775 (equivalent to
4,423,102 shares, or 10% of the Company’s existing issued share
capital on 31 May 2012, being the nearest practicable date prior to
the signing of this Report). Such authority will expire on the date of
the next Annual General Meeting 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 be renewed at the next Annual
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 10 will, if passed, give the Directors power to allot for
cash equity securities up to 10% of the Company’s existing share
capital on 31 May 2012 (reduced by any treasury shares sold by
the Company pursuant to Special Resolution 11, as described
below), 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 10. 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 buy back 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 10, Resolution 11, 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 narrower discount to the net asset value per
share than that at which they had been bought into treasury, and
in any event at a discount no greater than 5% to the prevailing net
asset value per share, and this is reflected in the text of
Resolution 11. 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
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 25
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Report of the Directors (continued)
Incorporating the Business Review
25
authority is limited to 10% of the Company’s existing share capital
on 31 May 2012 (reduced by any equity securities allotted for cash
on a non-pro rata basis pursuant to Resolution 10, 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.
intend
to use
The Directors
the authority given by
Resolutions 9, 10 and 11 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.
Authority for the Company to purchase its own shares
The Company’s Articles of Association permit the purchase by
the Company of its own Ordinary and Subscription shares
subject to shareholders’ prior approval being obtained.
Resolutions 12 and 13, if passed, would authorise the Company
to buy back up to 6,630,230 Ordinary shares and 733,200
Subscription shares, which represents approximately 14.99% of
the Company’s issued ordinary share capital (excluding shares
held in treasury) and 14.99% of the Company’s Subscription
shares as at 31 May 2012 respectively. If given, these authorities
will expire at the conclusion of the next AGM of the Company
after the passing of the resolution or, if earlier, 15 months from
the date of the passing of the resolution. The Directors intend to
seek a renewal of such powers at each AGM.
The resolutions specify the maximum and minimum prices at
which shares may be bought, reflecting the requirements of the
Companies Act 2006 and the Listing Rules. Any buy back would
only be made on the London Stock Exchange.
Any purchases of Ordinary shares will be made within
guidelines established from time to time by the Directors, but
they will only exercise the authority if, in their opinion, it would
be in the interests of the Company to do so and would result in
an increase in net asset value per Ordinary share for the
remaining shareholders and if it is in the best interests of
shareholders generally. Such purchases will only be made at
prices below the prevailing net asset value per Ordinary share
and within the price constraints set out in paragraphs (b) and (c)
of the resolution.
Under the Companies Act 2006, the Company is allowed to hold
its own Ordinary shares in treasury following a buy back, instead
of cancelling them. This gives the Company the ability to re-
issue treasury shares quickly and cost-effectively and provides
the Company with additional flexibility in the management of
its capital base. Shares held in treasury may be resold for cash
but all rights attaching to them including voting rights and any
right to receive dividends, are suspended while they are held in
treasury. If the Directors exercise the authority conferred by
resolution 12, the Company will have the option of either
holding in treasury or of cancelling any of its own shares
purchased pursuant to the authority and will decide at the time
of purchase which option to pursue. The Directors will have
regard to any guidelines issued by investor groups at the time of
any such purchase, holding or re-sale of treasury shares.
Purchases of Subscription shares will only be made through the
market at prices where the Directors believe such purchases will
enhance Ordinary shareholder value and within the price
constraints set out in paragraphs (b) and (c) of the resolution.
Any Subscription shares repurchased by the Company will be
cancelled and will not be held in treasury for reissue or resale.
General Meetings
Special Resolution 14 seeks shareholder approval for the
Company to hold General Meetings (other than Annual General
Meetings) at 14 clear days’ notice.
The authorities being sought under Resolutions 9, 10, 11, 12, 13
and 14 will last until the conclusion of the next Annual General
Meeting or, if less, a period of 15 months.
The Board considers that the resolutions set out above are, in
the Board’s opinion, in the best interests of shareholders as a
whole. Accordingly, the Board unanimously recommends to
shareholders that they vote in favour of the above resolutions to
be proposed at the forthcoming Annual General Meeting.
By order of the Board
Frostrow Capital LLP
Company Secretary
1 June 2012
224634 Finsbury WWP pp17-pp26 07/06/2012 07:23 Page 26
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
26
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable
United Kingdom law and regulations.
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.
Company law in the United Kingdom requires the Directors to
prepare financial statements for each financial year. Under this
law the Directors have elected to prepare the financial
statements in accordance with United Kingdom Generally
Accepted Accounting Practice, (United Kingdom standards and
applicable law). Under Company law the Directors must not
approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company and the profit and loss of the Company for that period.
The Directors, whose details can be found on page 16, each
confirm that to the best of their knowledge the financial
statements, within the Annual Report, have been prepared in
accordance with applicable accounting standards, give a true and
fair view of the assets, liabilities, financial position and the profit for
the year ended 31 March 2012, and that the Chairman’s Statement,
Review of Investments and the Report of the Directors include a
fair review of the information required by 4.1.8R to 4.1.11R of the
FSAs Disclosure and Transparency Rules.
In preparing these financial statements, the Directors are
required to:
(cid:129)
select suitable accounting policies and applied them
consistently;
(cid:129) make judgements and estimates that are reasonable and
On behalf of the Board
Martin Smith
Chairman
1 June 2012
prudent; and
(cid:129)
state whether applicable UK Accounting Standards have
been followed, subject to any material departures disclosed
and explained in the financial statements.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and which disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the financial statements 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.
Under applicable law and regulation, the Directors are also
responsible for preparing a Report of the Directors, including a
formal statement on Corporate Governance and a Directors’
Remuneration Report that comply with such law and regulations.
The financial statements are published on the Company’s website
(website address: www.worldwidewh.com), which is a website
maintained by the Manager. The maintenance and integrity of the
website is, so far as it relates to the Company, the responsibility of
the Manager. The work carried out by the Auditors does not
involve consideration of the maintenance and integrity of this
website and accordingly, the Auditors accept no responsibility for
any changes that have occurred to the financial statements since
they were initially presented on the website. Visitors to the website
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 27
Corporate Governance
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
27
This Corporate Governance Statement forms part of the Report of the Directors.
CO M P L I A N C E
The Board has considered the principles and recommendations of
the Association of Investment Companies (“AIC”) Code of
Corporate Governance (“AIC Code”) by reference to the AIC
Corporate Governance Guide for Investment Companies (“AIC
Guide”), both of which can be found on the AIC website
www.theaic.co.uk. The AIC Code, as explained by the AIC Guide,
addresses all the principles set out in the UK Corporate Governance
Code (the “UK Governance Code”) as well as setting out additional
principles and recommendations on issues that are of specific
relevance to the Company. The Board considers that reporting
against the principles and recommendations of the AIC Code, and
by reference to the AIC Guide (which incorporates the UK
Governance Code), provides better information to shareholders. A
copy of the UK Governance Code can be found at www.frc.org.uk.
The Board considers that it has managed its affairs throughout
the year ended 31 March 2012 in compliance with the
recommendations of the AIC Code and the relevant provisions
of the UK Governance Code, except as set out below:
(cid:129)
(cid:129)
(cid:129)
the role of the chief executive;
executive directors’ remuneration; and
the need for an internal audit function.
For the reasons set out in the AIC Guide, and in the preamble to
the AIC Code, the Board considers these provisions are not
relevant to the position of the Company, being an externally
managed investment trust. The Company has therefore not
reported further in respect of these provisions.
In view of its non-executive nature, the Board considers that it is
not appropriate for the Directors to be appointed for a specified
term as recommended by provision B.7.1 of the UK Corporate
Governance Code and principle 3 of the AIC Code. The Board
has agreed that all Directors of the Company will seek
re-election annually. Professor Duncan Geddes, however, will
not be seeking re-election at this years’Annual General Meeting.
I N T E R N A L AU D I T
As the Company delegates its day-to-day operations to third
parties and has no employees, the Board has determined that
there are no requirements for an internal audit function. The
Board reviews annually whether a function equivalent to an
internal audit is needed annually and it will continue to monitor
its systems of internal controls in order to provide assurance that
they operate as intended.
B OA R D I N D E P E N D E N C E , CO M P O S I T I O N A N D
T E N U R E
Martin Smith as Chairman is responsible for leadership of the
Board and for ensuring its effectiveness in all aspects of its role,
currently consists of six non-executive Directors. The Directors’
biographical details, set out on page 16, demonstrate a breadth
of investment, commercial and professional experience. Professor
Duncan Geddes has been designated as the Senior Independent
Director who can act as a sounding board for the Chairman and
also acts as an intermediary for the other Directors when
necessary. Professor Geddes will not be seeking re-election at
this year’s Annual General Meeting. He will be succeeded as the
Senior Independent Director by Anthony Townsend. The
Directors review their independence annually.
Samuel D. Isaly is Managing Partner of OrbiMed, the Company’s
Investment Manager, and has also served on the Board for over
nine years. Mr Isaly is therefore not considered to be an
Independent Director. Professor Geddes and Anthony Townsend
have both also served on the Board for over nine years. The Board
subscribes to the view expressed within the AIC Code that
long-serving Directors should not be prevented from forming part
of an independent majority. It does not consider that a Director’s
tenure necessarily reduces his or her ability to act independently
and, following formal performance evaluations, believes that, with
the exception of Samual D. Isaly, each of the Directors is
independent in character and judgement and that there are no
relationships or circumstances which are likely to effect their
judgement. Jo Dixon joined the Board in 2004 and Martin Smith
and Dr David Holbrook joined the Board in 2007 and are all
considered by the Board to be independent. The Board has
considered the position of Ms Dixon and Messrs Isaly, Smith,
Townsend and Dr Holbrook as part of the evaluation process, and
believes that it would be in the Company’s best interests to
propose them for re-election at the forthcoming Annual General
Meeting. In line with the Company’s strong commitment to its
corporate governance responsibilities, the Board regularly reviews
its performance and composition to ensure it has the correct mix
of relevant skills and experience for the good conduct of the
Company’s business. As part of this process the Board has agreed
a programme of refreshment, which will see its membership
change as current Directors retire in an orderly manner, and new
Directors are appointed.
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 28
28
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Corporate Governance (continued)
None of the Directors has a service contract with the Company.
New Directors are appointed with the expectation that they will
serve for a minimum period of three years. Any Director may
resign in writing to the Board at any time. The terms of their
appointment are detailed in a letter sent to them when they join
the Board. These letters are available for inspection at the offices of
the Company’s Manager and will be available at the Annual
General Meeting. When a new Director is appointed to the Board,
they are provided with all relevant information regarding the
Company and their duties and responsibilities as a Director. In
addition, a new Director will also spend time with representatives
of the Manager and Investment Manager in order to learn more
about their processes and procedures. The Chairman also regularly
reviews the training and development needs of each Director. The
Board receives regular briefings from, amongst others, the
Auditors and the Company Secretary regarding any proposed
developments or changes in laws or regulations that could affect
the Company and/or the Directors.
T H E B OA R D ’S R E S P O N S I B I L I T I E S
The Board is responsible for efficient and effective leadership of the
Company and regularly reviews the schedule of matters reserved
for its decision. The Board meets at least on a quarterly basis and at
other times as necessary. The Board is responsible for all aspects of
the Company’s affairs, including the setting of parameters for and
the monitoring of investment strategy, the review of investment
performance (including peer group performance) and investment
policy. It also has responsibility for all corporate strategy issues,
dividend policy, share buy-back policy, gearing, share price and
discount/premium monitoring and corporate governance
matters. To enable them to discharge their responsibilities, prior to
each meeting the Directors are provided, in a timely manner, with
a comprehensive set of papers giving detailed information on the
Company’s transactions, financial position and performance.
Representatives of the Manager and Investment Manager attend
each Board meeting, enabling the Directors to seek clarification on
specific issues or to probe further on matters of concern; a full
written report is also received from the Manager and Investment
Manager at each quarterly meeting. In light of these reports, the
Board gives direction to the Investment Manager with regard to
the Company’s investment objectives and guidelines. Within these
established guidelines, the Investment Manager takes decisions as
to the purchase and sale of individual investments.
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. The Directors have access
to the advice and services of the Company Secretary, through its
appointed representative, who is responsible to the Board for
ensuring that Board procedures are followed.
EXTERNAL INDEPENDENT BOARD EVALUATION
The results of the external independent evaluation process were
presented to and discussed by the Board in March 2012 and, as
a result, it was agreed that the current Directors contributed
effectively and that all had the skills and experience which are
relevant to the leadership and direction of the Company.
CO N F L I C T O F I N T E R E S T
On 1 October 2008 it became a statutory requirement that a
Director must avoid a situation in which he or she has, or can
have, a direct or indirect interest that conflicts, or possibly may
conflict, with the Company’s interests (a “situational conflict”).
The Company’s Articles of Association have been amended to
give the Directors authority to approve such situations, where
appropriate.
It is the responsibility of each individual Director to avoid an
unauthorised conflict situation arising. He or she must request
authorisation from the Board as soon as he or she becomes
aware of the possibility of a situational conflict arising.
The Board is responsible for considering Directors’ requests for
authorisation of situational conflicts and for deciding whether
they should be authorised. The factors to be considered will
include whether the situational conflict could prevent the
Director from performing his or her duties, whether it has, or
could have, any impact on the Company and whether it could
be regarded as likely to affect the judgment and/or actions of the
Director in question. When the Board is deciding whether to
authorise a conflict or potential conflict, only Directors who have
no interest in the matter being considered are able to take the
relevant decision, and in taking the decision the Directors must
act in a way they consider, in good faith, will be most likely to
promote the Company’s success. The Directors are able to
impose limits or conditions when giving authorisation if they
think this is appropriate in the circumstances.
A register of conflicts is maintained by the Company Secretary
and is reviewed at quarterly Board meetings, to ensure that any
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 29
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Corporate Governance (continued)
29
authorised conflicts remain appropriate. Directors are required
to confirm at these meetings whether there has been any
change to their position.
Chairman of the committee. Details of the membership of the
Committees as at 31 March 2012 are shown with the Directors’
biographies on page 16.
The Directors must also comply with the statutory rules requiring
company directors to declare any interest in an actual or
proposed transaction or arrangement with the Company.
CO M M I T T E E S O F T H E B OA R D
During the year the Board delegated certain responsibilities and
functions to committees. Copies of the full terms of reference,
which clearly define the responsibilities of each Committee, can
be obtained from the Company Secretary, will be available for
inspection at the Annual General Meeting, and can be found at
the Company’s website at www.worldwidewh.com. Following a
review by the Board in 2008, it was agreed that due to the size of
the Board, the membership of the Management Engagement
and Remuneration and Nominations Committees should
comprise the whole Board, under the chairmanship of the
Chairman of the Company and Professor Geddes respectively
(provided that a majority of the Directors present are
independent). It was further agreed at a Board Meeting held in
March 2011 that Mr Isaly, due to his role at OrbiMed the
Company’s Investment Manager, should cease to be a member
of the Management Engagement and Remuneration and
Nominations Committees. The membership of the Audit
Committee comprises the following independent Directors: Jo
Dixon (Chairman), Dr David Holbrook, Professor Duncan Geddes
and Anthony Townsend. Directors who are not members of the
Company’s committees may attend at the invitation of the
The table below details the number of Board and Committee
meetings attended by each Director. During the year there were
four Board meetings, two Audit Committee meetings, one
meeting of the Nominations Committee and one meeting of the
Management Engagement and Remuneration Committee.
N O M I N AT I O N S CO M M I T T E E
The Nominations Committee is responsible for the Board
appraisal process and for making recommendations to the Board
on the appointment of new Directors. Where appropriate, each
Director is invited to submit nominations and external advisers
may be used to identify potential candidates.
MA N AG E M E N T E N G AG E M E N T A N D
R E M U N E R AT I O N CO M M I T T E E
The level of Directors’ fees is reviewed on a regular basis relative
to other comparable investment companies and in the light of
Directors’ responsibilities. Neither the Chairman nor individual
Directors participate
involving personal
remuneration. Details of the fees paid to the Directors in the
year under review are detailed in the Directors’ Remuneration
Report on pages 33 and 34.
in discussions
This committee also reviews the terms of engagement of the
Investment Manager, the Manager and the Company’s other
service providers.
M E E T I N G AT T E N DA N C E
The number of meetings held during the year of the Board and its Committees, and each Director’s attendance level, is shown below:
M a n a g e m e n t
and
R e m u n e r a t i o n
Committee
(1)
Type and number of meetings
held in 2011/12
Nominations
Committee
(1)
Audit
Committee
(2)
Engagement
Board
(4)
Martin Smith
Jo Dixon
Professor Duncan Geddes
Paul Gaunt (retired as a director on 7 July 2011)
Dr David Holbrook
Samuel D. Isaly*
Anthony Townsend
4
4
3
2
4
4
4
N/A
2
2
N/A
2
N/A
2
1
1
–
–
1
1
1
1
1
–
–
1
1
1
All of the Directors attended the Annual General Meeting held on 7 July 2011.
*Mr Isaly ceased to be a member of the Management Engagement & Remuneration and Nominations Committees after the meetings of those committees held in March 2011.
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 30
30
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Corporate Governance (continued)
AUDIT COMMITTEE
BOARD DIVERSITY
The Audit Committee meets at least twice a year and is
responsible for the review of the interim and annual financial
statements, the nature and scope of the external audit and the
findings therefrom and the terms of appointment of the Auditors,
including their remuneration and the provision of any non-audit
services by them.
The Audit Committee meets representatives of the Manager and
Investment Manager and their Compliance Officers who report as
to the proper conduct of business in accordance with the
regulatory environment in which the Company, Manager and
Investment Manager operate. The Company’s external Auditors
also attend meetings of this Committee at its request and report
on their work procedures and their findings in relation to the
Company’s statutory audit. They also have the opportunity to
meet with the Committee without representatives of the Manager
or the Investment Manager being present. The Audit Committee
reviews the need for non-audit services to be provided by the
auditor and authorises such on a case by case basis, having
consideration to the cost effectiveness of the services and the
independence and objectivity of the Auditors. Non-audit fees of
£11,000 were paid to Ernst & Young LLP during the year for agreed
upon procedures in relation to the Company’s option positions,
performance fee review and tax services. The Board has
concluded, on the recommendation of the Audit Committee, that
the Auditors continued to be independent and that their
reappointment be proposed at the Annual General Meeting.
THE BRIBERY ACT 2010
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 applies the same Standards to its service providers 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 Company welcomes the objectives of the Davies Report to
improve the performance of Corporate boards by encouraging
the appointment of the best people from a range of differing
perspectives and backgrounds. The Company recognises the
benefits of diversity on the board, including gender, and takes this
into account in its board appointments. The Company is
committed to ensuring that any Director search processes actively
seek persons with the right qualifications so that appointments
can made, on the basis of merit, against objective criteria from a
diverse selection of candidates. To this end the Board will continue
to dedicate time to consider diversity during any director search
process.
INTERNAL CONTROLS
The Directors are responsible for the Company’s system of internal
control which is designed to safeguard the Company’s assets,
maintain proper accounting records and ensure that financial
information used within the business, or published, is reliable.
However, such a system can only be designed to manage rather
than eliminate the risk of failure to achieve business objectives and
therefore can only provide reasonable, but not absolute, assurance
against fraud, material misstatement or loss.
Risk assessment and the review of internal controls are undertaken
by the Board in the context of the Company’s overall investment
objective. The review covers the key business, operational,
compliance and financial risks facing the Company. In arriving at its
judgement of what risks the Company faces, the Board has
considered the Company’s operations in the light of the
following factors:
(cid:129)
the nature and extent of risks which it regards as acceptable
for the Company to bear within its overall business
objective;
(cid:129)
(cid:129)
the threat of such risks becoming a reality; and
the Company’s ability to reduce the incidence and impact
of risk on its performance.
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 31
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Corporate Governance (continued)
31
Against this background, the Board has split the review of risk
and associated controls into five sections reflecting the nature
of the risks being addressed. These sections are as follows:
(cid:129)
(cid:129)
(cid:129)
information, compliance with
investment activity;
corporate strategy;
laws and
published
regulations;
(cid:129)
(cid:129)
service providers; and
financial activity.
The Company has appointed Frostrow Capital LLP to provide
Company management, Company secretarial and administrative
services to the Company. The Company has obtained from its
various service providers assurances and information relating to
their internal systems and controls to enable the Board to make an
appropriate risk and control assessment, including the following:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
identification and evaluation of risks and control objectives;
review of communication methods and procedures; and
details of the control environment in operation;
assessment of the control procedures.
The key procedures which have been established to provide
internal financial controls are as follows:
(cid:129)
investment management is provided by OrbiMed Capital LLC.
The Board is responsible for setting the overall investment
policy and monitors the actions of the Investment Manager at
regular Board meeting;
(cid:129)
(cid:129)
administration, company secretarial and marketing duties for
the Company are performed by Frostrow Capital LLP;
custody of assets is undertaken by Goldman Sachs & Co. New
York;
(cid:129)
the Board clearly defines the duties and responsibilities of their
agents and advisers. The appointment of agents and advisers
to the Company is conducted by the Board after consideration
of the quality of the parties involved; the Board monitors their
ongoing performance and contractual arrangements;
(cid:129) mandates for authorisation of investment transactions and
expense payments are set by the Board; and
(cid:129)
the Board reviews financial information produced by the
Investment Manager and the Manager in detail on a regular
basis.
All of the Company’s management functions are performed by
third parties whose internal controls are reviewed by the Board or
on its behalf by Frostrow Capital LLP.
In accordance with guidance issued to directors of listed
companies, (“the Turnbull Guidance”) the Directors confirm that
they have carried out a review of the effectiveness of the system of
internal financial control during the year and up to the date of
approval of the financial statements, as set out above.
RELATIONS WITH SHAREHOLDERS
its
The Board reviews the shareholder register at each Board meeting.
The Company has regular contact with
institutional
shareholders particularly through the Manager. The Board
supports the principle that the Annual General Meeting be used
to communicate with private investors. The full Board attends the
Annual General Meeting under the Chairmanship of the Chairman
of the Board. Details of proxy votes received in respect of each
resolution are made available to shareholders at the meeting and
the Company’s website at
are also published on
www.worldwidewh.com. Representatives from the Investment
Manager attend the Annual General Meeting and give a
presentation on investment matters to those present. The
Company has adopted a nominee share code which is set out on
page 32.
The Board receives marketing and public relations reports from
the Manager to whom the marketing function has been
delegated. The Board reviews and considers the marketing plans
of the Manager on a regular basis.
The annual and interim financial reports, the interim management
statements and a monthly fact sheet are available to all
shareholders. The Board considers the format of the annual and
interim 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 Annual General Meeting, is sent to shareholders at
least 20 working days before the meeting. Separate resolutions are
proposed for substantive issues.
224634 Finsbury WWP pp27-pp32 07/06/2012 07:28 Page 32
32
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Corporate Governance (continued)
EXERCISE OF VOTING POWERS
The Board has delegated authority to the Investment Manager to
vote the shares owned by the Company that are held on its behalf
by its custodian, Goldman Sachs & Co. New York. The Board has
instructed that the Investment Manager submit votes for such
shares wherever possible. This accords with current best practice
whilst maintaining a primary focus on financial returns. The
Investment Manager may refer to the Board on any matters of a
contentious nature. The Company does not retain voting rights on
any shares that are subject to rehypothecation in connection with
the loan facility provided by Goldman Sachs & Co. New York.
ACCOUNTABILITY AND AUDIT
The Statement of Directors’ Responsibilities in respect of the
financial statements is set out on page 26. The report of the
Auditors is set out on pages 35 and 36. The Board has delegated to
external agencies, including the Manager and the Investment
Manager, the management of the portfolio, custodial services
(which includes the safeguarding of the Company’s assets), the
day to day marketing, accounting administration, company
secretarial requirements and registration services. Each of these
contracts was entered into after full and proper consideration by
the Board of the quality and cost of the services offered, including
the control systems in operation in so far as they relate to the
affairs of the Company. The Board receives and considers regular
reports from the Manager and the Investment Manager and ad
hoc reports and information are supplied to the Board as required.
NOMINEE SHARE CODE
Where shares are held in a nominee company name, the
Company undertakes:
(cid:129)
to provide the nominee company with multiple copies of
shareholder communications, so long as an indication of
quantities has been provided in advance;
(cid:129)
(cid:129)
to allow investors holding shares through a nominee
company to attend general meetings, provided the correct
authority from the nominee company is available; and
that investors in the Alliance Trust Savings Scheme or ISA are
automatically sent shareholder communications, including
details of general meetings, together with a form of direction
to facilitate voting and to seek authority to attend.
Nominee companies are encouraged to provide the necessary
authority to underlying shareholders to attend the Company’s
general meetings.
Shareholder Analysis
% of shares held at 31 March 2012
Retail Holders
(including private client,
Stockbrokers & the
Alliance Trust Savings
& ISA Clients)
60.6%
Institutional &
Corporate Holders
19.5%
Mutual Funds
(including Investment
Trusts)
19.9%
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 33
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Directors’ Remuneration Report
33
eligible for bonuses, pension benefits, share options, long-term
incentive schemes or other benefits. The policy is for the
Chairman of the Board, Chairman of the Audit Committee and
the Senior Independent Director to be paid higher fees than the
other Directors to reflect their additional responsibilities.
D I R E C T O R S ’ S E R V I C E C O N T R A C T S
It is the Board’s policy that none of the Directors has a service
contract. The terms of their appointment provide that Directors
shall retire and be subject to election at the first Annual General
Meeting after their appointment and re-election annually
thereafter. The terms also provide that a Director may resign by
notice in writing to the Board at any time and may be removed
without notice and that compensation will not be due on
leaving office. The Company’s policy is for the Directors to be
remunerated in the form of fees payable quarterly in arrears, to
the Director personally or to a specified third party.
Y O U R C O M P A N Y ’ S P E R F O R M A N C E
The Regulations require a line graph be included in the
Directors’ Remuneration Report comparing, for a period of five
years, on a cumulative basis, the total share price return
(assuming all dividends are reinvested) to shareholders and the
total shareholder return on a notional investment made up of
shares of the same kind and number as those by reference to
the Company’s stated benchmark. With effect from 1 October
2010, the performance of the Company has been measured
against the MSCI World Health Care Index on a net total return,
sterling adjusted basis. Prior to this date, performance was
measured against the Datastream World Pharmaceutical &
Biotechnology Index (total return, sterling adjusted). Therefore,
the benchmark return for the year ended 31 March 2011
represented in the graph overleaf consists of a blended figure
containing both indices.
The Board has prepared this report in accordance with the
requirements of Section 420 to 422 of the Companies Act 2006.
An ordinary resolution for the approval of this report will be put
to the members at the forthcoming Annual General Meeting.
The law requires the Company’s auditors to audit certain of the
disclosures provided. Where disclosures have been audited,
they are indicated as such. The Auditors’ opinion is included in
their report on pages 35 and 36.
M A N A G E M E N T E N G A G E M E N T A N D
R E M U N E R A T I O N C O M M I T T E E
The Company has six non-executive Directors, five of whom are
considered by the Board to be independent. The whole Board,
with the exception of Mr Isaly, fulfils the function of the
Management Engagement and Remuneration Committee
(provided that a majority of the Directors present are
independent). The Board may utilise the services of the
Company Secretary or external advisers to provide advice when
the Directors consider the level of Directors’ fees.
The Directors’ fees are reviewed annually by the Management
Engagement and Remuneration Committee and such review
will not necessarily result in a change to the rates paid. During
the year, the Management Engagement and Remuneration
Committee carried out a review of the level of Directors’ fees in
relation both to fees paid to the boards of other investment
trust companies and also to the Board’s corporate governance
obligations. The Board decided, on the advice of the
Management Engagement and Remuneration Committee, that
the fees paid to the Directors should be increased with effect
from 1 April 2012. The revised fee levels are set out on page 34.
P O L I C Y O N D I R E C T O R S ’ F E E S
The Board’s policy is that the remuneration of Directors should
reflect the experience of the Board as a whole, be fair and
comparable to that of other investment trusts that are similar in
size, have a similar capital structure and have a similar
investment objective. It is intended that this policy will continue
for the year ending 31 March 2013 and subsequent years.
The fees for the Directors are determined within the limits set
out in the Company’s Articles of Association, the maximum
aggregate amount currently being £200,000. Directors are not
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 34
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
34
Directors’ Remuneration Report (continued)
D I R E C T O R S ’ E M O L U M E N T S F O R T H E Y E A R ( A U D I T E D )
The Directors who served in the year received the following emoluments in the form of fees:
Level of fees
with effect from
1 April 2012 Fees Fees
(unaudited) 2012 2011
£’000 £’000 £’000
Martin Smith (Chairman of the Board) 38.0 36.5 35.0
Jo Dixon (Chairman of the Audit Committee) 27.0 26.0 25.0
Paul Gaunt (retired on 7 July 2011) – 8.0 22.0
Professor Duncan Geddes (Senior Independent Director) 24.5 23.5 22.0
Dr David Holbrook 24.0 23.0 22.0
Samuel D. Isaly 24.0 23.0 22.0
Anthony Townsend 24.0 23.0 22.0
161.5 163.0 170.0
S H A R E H O L D E R T O T A L R E T U R N F O R T H E F I V E Y E A R S T O 3 1 M A R C H 2 0 1 2
200
180
160
140
120
100
80
60
Mar
07
Mar
08
Worldwide Healthcare Share price
Mar
09
Rebased to 100 as at 31 March 2007
Source: Morningstar, Thomson Reuters and Bloomberg
Mar
10
Mar
11
Benchmark index
Mar
12
A P P R O V A L
The Directors’ Remuneration Report on pages 33 and 34 was approved by the Board of Directors on 1 June 2012 and signed on its
behalf by:
Martin Smith
Chairman
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 35
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Independent Auditors’ Report
to the Members of Worldwide Healthcare Trust PLC
35
We have audited the financial statements of Worldwide
Healthcare Trust PLC for the year ended 31 March 2012 which
comprise the Income Statement, the Reconciliation of
Movements in Shareholders’ Funds, the Balance Sheet, the Cash
Flow Statement and the related notes 1 to 19. The financial
reporting framework that has been applied in their preparation
is applicable law and United Kingdom Accounting Standards
(United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might
state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
R E S P E C T I V E R E S P O N S I B I L I T I E S O F
D I R E C T O R S A N D A U D I T O R S
As explained more fully in the Directors’ Responsibilities
Statement set out on page 26, the directors are responsible for
the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is
to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for
Auditors.
S C O P E O F T H E A U D I T O F T H E F I N A N C I A L
S T A T E M E N T S
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company’s circumstances and have been
consistently applied and adequately disclosed;
the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial
In addition, we read all the financial and
statements.
non-financial information in the Report of the Directors to
identify material inconsistencies with the audited financial
statements. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications
for our report.
O P I N I O N O N F I N A N C I A L S T A T E M E N T S
In our opinion the financial statements:
• give a true and fair view of the state of the company’s affairs
as at 31 March 2012 and of its profit for the year then ended;
• have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements
of the Companies Act 2006.
O P I N I O N O N O T H E R M A T T E R S P R E S C R I B E D
B Y T H E C O M P A N I E S A C T 2 0 0 6
In our opinion:
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
Companies Act 2006; and
• the information given in the Directors’ Report for the
financial year for which the financial statements are
prepared is consistent with the financial statements.
M A T T E R S O N W H I C H W E A R E R E Q U I R E D T O
R E P O R T B Y E X C E P T I O N
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
• adequate accounting records have not been kept, or
returns adequate for our audit have not been received from
branches not visited by us; or
• the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 36
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
36
Independent Auditors’ Report (continued)
• certain disclosures of directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations
we require for our audit.
Amarjit Singh (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
1 June 2012
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 37
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
37
Income Statement
for the year ended 31 March 2012
2012 2012 2012 2011 2011 2011
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains on investments held at fair
value through profit or loss 9 – 52,193 52,193 – 5,477 5,477
Exchange (losses)/gains on currency balances – (535) (535) – 710 710
Income from investments held at fair value
through profit or loss 2 11,653 – 11,653 9,125 – 9,125
Investment management, management and
and performance fees 3 (162) (5,953) (6,115) (147) (2,658) (2,805)
Other expenses 4 (548) – (548) (586) – (586)
Net return before
finance charges and taxation 10,943 45,705 56,648 8,392 3,529 11,921
Finance costs 5 (14) (272) (286) (13) (247) (260)
Net return before taxation 10,929 45,433 56,362 8,379 3,282 11,661
Taxation on net return on ordinary
activities 6 (1,456) 406 (1,050) (1,224) 239 (985)
Net return after taxation 9,473 45,839 55,312 7,155 3,521 10,676
Return per share – basic 7 21.8p 105.7p 127.5p 16.5p 8.1p 24.6p
Return per share – diluted 7 21.4p 103.7p 125.1p 16.3p 8.1p 24.4p
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 disclosed in the Income Statement and Reconciliation of
Movements in Shareholders’ Funds. Accordingly no separate Statement of Total Recognised Gains and Losses has been presented.
No operations were acquired or discontinued in the year.
The accompanying notes are an integral part of this statement.
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 38
38
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Reconciliation of Movements
in Shareholders’ Funds
For the year ended 31 March 2012
Ordinary Subscription Share Capital
share share premium Capital redemption Revenue
capital capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2011 10,875 82 181,395 135,319 6,978 10,132 344,781
Net return from ordinary activities
after taxation – – – 45,839 – 9,473 55,312
Dividend paid in respect of year
ended 31 March 2011 – – – – – (6,474) (6,474)
Subscription shares exercised for
ordinary shares 212 (9) 5,199 9 – – 5,411
Shares purchased to be held in treasury
and treasury shares cancelled (90) – – (6,939) 90 – (6,939)
Subscription shares repurchased for cancellation – (2) (294) 2 – – (294)
At 31 March 2012 10,997 71 186,300 174,230 7,068 13,131 391,797
For the year ended 31 March 2011
Ordinary Subscription Share Capital
share share premium Capital redemption Revenue
capital capital account reserve reserve reserve Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000
At 31 March 2010 12,644 90 176,648 145,160 5,009 6,630 346,181
Net return from ordinary activities
after taxation – – – 3,521 – 7,155 10,676
Dividend paid in respect of year
ended 31 March 2010 – – – – – (3,653) (3,653)
Subscription shares exercised for
ordinary shares 200 (8) 4,747 8 – – 4,947
Shares purchased to be held in treasury
and treasury shares cancelled (1,969) – – (13,370) 1,969 – (13,370)
At 31 March 2011 10,875 82 181,395 135,319 6,978 10,132 344,781
The accompanying notes are an integral part of this statement.
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 39
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
39
Balance Sheet
as at 31 March 2012
2012 2011
Notes £’000 £’000
Fixed assets
Investments held at fair value through profit or loss 9 454,301 385,869
Derivative – OTC swaps 9 & 12 13,691 –
467,992 385,869
Current assets
Debtors 10 2,512 6,138
Derivative – financial instruments 9 & 12 940 2,223
3,452 8,361
Current liabilities
Creditors: amounts falling due within one year 11 (79,647) (49,449)
(79,647) (49,449)
Net current liabilities (76,195) (41,088)
Total net assets 391,797 344,781
Capital and reserves
Ordinary share capital 13 10,997 10,875
Subscription share capital 13 71 82
Share premium account 186,300 181,395
Capital reserve 19 174,230 135,319
Capital redemption reserve 7,068 6,978
Revenue reserve 13,131 10,132
Total shareholders’ funds 391,797 344,781
Net asset value per share – basic 14 909.4p 799.2p
Net asset value per share – diluted for subscription shares 14 871.0p 773.5p
Net asset value per share – fully diluted for subscription shares
and treasury shares 14 869.7p 772.8p
The financial statements on pages 37 to 56 were approved by the Board of Directors and authorised for issue on 1 June 2012 and
were signed on its behalf by:
Martin Smith
Chairman
The accompanying notes are an integral part of this statement.
Worldwide Healthcare Trust PLC – Company Registration Number 3023689 (Registered in England)
224634 Finsbury WWP pp33-pp40 07/06/2012 07:41 Page 40
40
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Cash Flow Statement
for the year ended 31 March 2012
2012 2011
Notes £’000 £’000
Net cash inflow from operating activities 15 4,112 3,268
Servicing of finance
Interest paid (286) (260)
Taxation
Taxation suffered (422) (202)
Financial investments
Purchases of investments and derivatives (301,803) (274,348)
Sales of investments and derivatives 288,756 273,089
Net cash outflow from financial investment (13,047) (1,259)
Equity dividends paid 8 (6,474) (3,653)
Net cash outflow before financing (16,117) (2,106)
Financing
Repurchase of own shares (7,233) (13,374)
Subscription shares exercised for ordinary shares 13 5,411 4,947
Net cash outflow from financing (1,822) (8,427)
Decrease in cash 16 (17,939) (10,533)
The accompanying notes are an integral part of this statement.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 41
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements
41
1 . ACCO U N T I N G P O L I C I E S
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
The financial statements have been prepared in accordance with United Kingdom generally accepted accounting standards (UK
GAAP) and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital
Trusts’ dated January 2009 (the ‘SORP’).
The Company’s financial statements are presented in sterling. All values are rounded to the nearest thousand pounds (£’000) except
where otherwise indicated.
(b) Investments Held at Fair Value Through Profit or Loss
Listed investments have been designated by the Board as held at fair value through profit or loss and accordingly are valued at fair
value, deemed to be bid market prices.
Unquoted investments are also been designated by the Board as held at fair value through profit or loss, and are valued by the
Directors using primary valuation techniques such as earnings multiples, option pricing models, discounted cash flow analysis and
recent transactions.
Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in
the Income Statement as ‘gains or losses on investments held at fair value through profit or loss’. Also included within this caption
are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an
investment and its bid price at the date of purchase. All purchases and sales are accounted for on a trade date basis.
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:
(cid:129)
(cid:129)
(cid:129)
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).
(c) Investment Income
Dividends receivable on equity shares 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. UK dividends are shown net of tax credits and foreign
dividends are grossed up at the appropriate rate of withholding tax.
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.
(d) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except
as follows:
(i) expenses which are incidental to the acquisition or disposal of an investment, categorised as fixed assets held at fair value
through profit or loss are charged to the capital column of the Income Statement; and
(ii) 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 investment management and
management 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 investment management and
management 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 accrued or paid is charged in full to the capital column of the Income Statement.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 42
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
42
Notes to the Financial Statements (continued)
1 . ACCO U N T I N G P O L I C I E S (CO N T I N U E D)
(e) 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, if applicable, including interest payable and premiums on settlement or redemption, 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.
(f) 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 Balance Sheet date other
than those differences regarded as permanent. This is subject to deferred tax assets only being recognised if it is considered more
likely than not 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 average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to
reflect the time value of money.
(g) Foreign Currency
The results and financial position of the Company are expressed in sterling, which is the functional and presentational currency of
the Company. Sterling is the functional currency because it is the currency of the primary economic environment in which the
Company operates.
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 Balance Sheet date are translated into sterling at the exchange rates
ruling at that date.
Any gains or losses on the translation of foreign currency balances, 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.
(h) Functional and Presentational Currency
The financial information is shown in sterling, being the Company’s presentational currency. In arriving at the functional currency
the Directors have considered the following:
(i)
the primary economic environment of the Company;
(ii) the currency in which the original capital was raised;
(iii) the currency in which distributions are made;
(iv) the currency in which performance is evaluated; and
(v) the currency in which the capital would be returned to Shareholders on a break up basis.
The Directors are of the opinion that sterling best represents the Company’s functional currency.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 43
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
43
1 . ACCO U N T I N G P O L I C I E S (CO N T I N U E D)
(i) Derivative Financial Instruments
The Company uses derivative financial instruments (namely put and call options and equity swaps). The merits and rationale behind
such strategies are to enhance the capital return of the portfolio, facilitate management of portfolio volatility and improve the risk-
return profile of the Company relative to its benchmark.
All derivative instruments are valued at fair value in the Balance Sheet in accordance with FRS 26: ‘Financial instruments:
measurement’.
Each investment in options is reviewed on a case-by-case basis and are all deemed to be capital in nature. As such, all gains and
losses on the above strategies have been debited or credited to the capital column of the Income Statement.
All gains and losses on over-the-counter (OTC) equity swaps, during the swap term, are accounted for as investment holding 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.
(j) Capital Reserves
The following are transferred to this reserve:
– gains and losses on the realisation of investments;
–
–
–
–
realised and unrealised exchange differences of a capital nature;
expenses, together with the related taxation effect, in accordance with the above policies;
increases and decreases in the valuation of investments held at the year end; and
unrealised exchange differences of a capital nature.
2 .
I N CO M E F R O M I N V E S T M E N TS H E L D AT FA I R VA LU E T H R O U G H P R O F I T O R LO S S
Income from investments
UK listed dividends
Overseas dividends
Fixed interest income
Other income
Deposit interest
Total income from investments held at fair value through profit or loss
Total income comprises:
Dividends
Interest
2012
£’000
505
8,863
2,283
11,651
2
11,653
9,368
2,285
11,653
2011
£’000
343
7,226
1,549
9,118
7
9,125
7,569
1,556
9,125
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 44
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
44
Notes to the Financial Statements (continued)
3 .
I N V E S T M E N T MA N AG E M E N T, MA N AG E M E N T A N D P E R F O R MA N C E F E E S
Investment Management fee
Management fee
Performance fee accrual/(write back)
2012
Revenue
£’000
119
43
–
162
2012
Capital
£’000
2,251
817
2,885
5,953
2012
Total
£’000
2,370
860
2,885
6,115
2011
Revenue
£’000
107
40
–
147
2011
Capital
£’000
2,030
763
(135)
2,658
2011
Total
£’000
2,137
803
(135)
2,805
During the year, a performance fee of £909,000 crystallised (year ended 31 March 2011: £2,624,000).
Further details of the performance fee basis can be found in the Report of the Directors on page 21 under the heading ‘Performance
Fee’.
4 . OT H E R E X P E N S E S
Directors’ remuneration
Auditors’ remuneration for the audit of the Company’s financial statements
Auditors’ remuneration for other services
Marketing costs
Registrar fees
Broker retainer
Legal and professional costs
Printing
Stock exchange listing fees
Custody fees
Other costs
2012
Revenue
£’000
2011
Revenue
£’000
163
26
11
44
54
30
13
35
17
3
152
548
170
24
4
38
51
27
16
43
41
6
166
586
Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on page 34.
5 . F I N A N C E C H A R G E S
Finance charges
2012
Revenue
£’000
14
2012
Capital
£’000
272
2012
Total
£’000
286
2011
Revenue
£’000
13
2011
Capital
£’000
247
2011
Total
£’000
260
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 45
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
45
6 . TAXAT I O N O N O R D I N A RY AC T I V I T I E S
(a) Analysis of charge in year:
UK corporation tax at 26% (2011: 28%)
Tax relief to capital
Overseas taxation
2012
Revenue
£’000
2012
Capital
£’000
406
1,050
1,456
(406)
–
(406)
2012
Total
£’000
–
1,050
1,050
2011
Revenue
£’000
2011
Capital
£’000
239
985
1,224
(239)
–
(239)
2011
Total
£’000
–
985
985
(b) Factors affecting current tax charge for the year
The tax charged for the year is lower than the standard rate of corporation tax in the UK for a large company 26% (2011: 28%).
The difference is explained below.
Total return before taxation
Corporation tax at 26% (2011: 28%)
Non-taxable gains on investments held at fair value
through profit or loss
Overseas withholding tax not recoverable
Non taxable overseas dividends
Non taxable UK dividend
Expenses charged to capital available to be utilised
Timing differences on overseas dividends
Disallowed expenses
Current tax charge
(c) Provision for deferred tax
2012
Revenue
£’000
2012
Capital
£’000
2012
Total
£’000
2011
Revenue
£’000
10,929
45,433
56,362
2,842
11,813
14,655
–
1,050
(2,535)
(131)
(6)
231
5
1,456
(13,431)
–
–
–
1,212
–
–
(13,431)
1,050
(2,535)
(131)
1,206
231
5
(406)
1,050
8,379
2,346
–
985
(1,725)
(96)
–
(291)
5
1,224
2011
Capital
£’000
3,282
919
(1,620)
–
–
–
462
–
–
(239)
2011
Total
£’000
11,661
3,265
(1,620)
985
(1,725)
(96)
462
(291)
5
985
As at 31 March 2012 the Company has not recognised a deferred tax asset of £8,805,000 (24% tax rate) (2011: £9,830,000 (26% tax rate)
as a result of unutilised management expenses and non-trade loan relationship. It is not anticipated that this asset will be utilised in
the foreseeable future.
Deferred tax has not been provided for in these financial statements, because the Company meets and intends to continue meeting
the conditions for approval as an investment trust.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 46
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
46
Notes to the Financial Statements (continued)
7 . R E T U R N P E R S H A R E
The return per share is based on the following figures:
Revenue return
Capital return
Total return
2012
£’000
9,473
45,839
55,312
2011
£’000
7,155
3,521
10,676
Weighted average number of ordinary shares in issue during the year – basic
43,362,962
43,342,727
Revenue return per share
Capital return per share
Total return per share – basic
21.8p
105.7p
127.5p
16.5p
8.1p
24.6p
Weighted average number of shares in issue during the year – diluted
44,223,263
43,776,264
Revenue return per share
Capital return per share
Total return per share – diluted
8 .
I N T E R I M D I V I D E N D
21.4p
103.7p
125.1p
16.3p
8.1p
24.4p
Under UK GAAP, 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 to ordinary
shareholders for the year ended 31 March 2012 were as follows:
Interim dividend in respect of the year ended 31 March 2011
Interim dividend in respect of the year ended 31 March 2010
2012
£’000
6,474
–
6,474
2011
£’000
–
3,653
3,653
In respect of the year ended 31 March 2012, an interim dividend of 17.5p per share (2011: 15.0p per share) has been declared. The
aggregate cost of this dividend based on the number of shares in issue at 31 May 2012 is estimated to be £7,740,000. In accordance
with FRS 21 this dividend will be reflected in the interim accounts for the period ending 30 September 2012. 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:
Revenue available for distribution by way of dividend for the year
Dividends for the year ended 31 March
based on 44,231,026 shares in issue as at 31 May 2012.
2012
£’000
9,473
(7,740)
1,733
2011
£’000
7,155
(6,474)
681
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 47
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
47
9 .
I N V E S T M E N TS
Cost at 1 April 2011
Investment holdings gains at 1 April 2011
Valuation at 1 April 2011
Movement in the year:
Purchases at cost
Sales – proceeds
– realised gains on sales
Net movement in investment holding gains
Valuation at 31 March 2012
Cost at 31 March 2012
Investment holding gains at 31 March 2012
Valuation at 31 March 2012
Listed
investments
£’000
Unlisted
investments
£’000
Derivative
financial
instruments
£’000
346,920
32,309
379,229
276,768
(254,048)
32,293
20,059
454,301
401,933
52,368
454,301
5,107
1,533
6,640
–
(6,209)
1,102
(1,533)
–
–
–
–
1,486
737
2,223
37,292
(25,156)
338
(66)
14,631
13,960
671
14,631
2012
£’000
33,733
(13,237)
20,496
31,697
52,193
Total
£’000
353,513
34,579
388,092
314,060
(285,413)
33,733
18,460
468,932
415,893
53,039
468,932
2011
£’000
41,414
(30,857)
10,557
(5,080)
5,477
Gains on investment
Realised gains based on historical cost – sales
Less: amounts recognised as investment holding gains in previous years
Realised gains based on carrying value at previous Balance Sheet date
Movement in investment holding gains in the year
Gains on investments
Purchase transaction costs for the year to 31 March 2012 were £575,000 (year ended 31 March 2011: £507,000). These comprise
mainly stamp duty and commission.
Sales transaction costs for the year to 31 March 2012 were £504,000 (year ended 31 March 2011: £467,000). These comprise mainly
commission and stamp duty.
1 0 . D E BTO R S
Amounts due from brokers
Withholding taxation recoverable
VAT recoverable
Prepayments and accrued income
2012
£’000
254
947
47
1,264
2,512
2011
£’000
3,597
525
49
1,967
6,138
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 48
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
48
Notes to the Financial Statements (continued)
1 1 . C R E D I TO R S
Amounts falling due within one year
Amounts due to brokers
Stamp duty due on repurchase of own shares
Bank loan facility*
Performance fee accrued
Other creditors and accruals
2012
£’000
12,448
5
64,359
1,976
859
79,647
2011
£’000
191
–
45,885
2,624
749
49,449
*The Company’s borrowing requirements are met through the utilisation of a loan facility, repayable on demand, provided by
Goldman Sachs & Co. New York (“Goldman Sachs”). Interest on the facility is charged at the Federal Funds effective rate plus 1 week
LIBOR-OIS Spread† plus 35 basis points. As at 31 March 2012, assets to the value of approximately 140% of the Company’s debt were
held by Goldman Sachs as collateral.
†See glossary on page 64
1 2 . D E R I VAT I V E F I N A N C I A L I N S T R U M E N TS
Fair value of OTC equity swaps
Fair value of call and put options
See note 9 on page 47 for movements during the year.
1 3 . S H A R E C A P I TA L
Issued and fully paid:
At 1 April 2011
Ordinary shares bought back and held in treasury
Treasury shares cancelled following 2011 AGM
Subscription shares converted to Ordinary shares
Subscription shares repurchased for cancellation
At 31 March 2012
Ordinary
shares
number
43,141,611
(908,586)
–
848,139
–
43,081,164
Treasury
shares
number
358,607
908,586
(358,607)
–
–
908,586
Issued and fully paid:
43,989,750 Ordinary shares of 25p (including 908,586 ordinary shares held in treasury)
7,104,848 Subscription shares of 1p
2012
£’000
13,691
940
14,631
Total
Ordinary
shares
in issue
number
43,500,218
–
(358,607)
848,139
–
43,989,750
2011
£’000
–
2,223
2,223
Total
Subscription
shares
in issue
number
8,191,112
–
–
(848,139)
(238,125)
7,104,848
£’000
10,997
71
During the year ended 31 March 2012 a total of 908,586 shares were bought back by the Company (2011: 1,996,340) at a cost of
£6,908,000 and expenses of £31,000 (2011: 13,305,000 and £65,000). 908,586 shares were held in treasury at 31 March 2012
(2011: 358,607). 848,139 new shares were issued during the year as a result of holders of subscription shares exercising their
subscription rights, raising £5,411,000. 238,125 Subscription shares were bought back for cancellation (2011: nil) at a cost of
£292,000 and expenses of £2,000 (2011: nil and nil).
At the year end there were 7,104,848 subscription shares in issue (2011: 8,191,112).
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 49
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
49
1 4 . N E T A S S E T VA LU E P E R S H A R E
Net asset value per share – basic
Net asset value per share – diluted for subscription shares
Net asset value per share – fully diluted for subscription shares and treasury shares
2012
909.4p
871.0p
869.7p
2011
799.2p
773.5p
772.8p
The net asset value per share is based on the assets attributable to equity shareholders of £391,797,000 (2011: £344,781,000) and on
the number of shares in issue at the year end of 43,081,164 (excluding shares held in treasury) (2011: 43,141,611). As at 31 March
2012, there were 7,104,848 subscription shares in issue (2011: 8,191,112).
The net asset value per share diluted assumes all outstanding subscription shares were exercised at 638p resulting in assets
attributable to equity shareholders of £ 437,126,000 and on 50,186,012 shares (2011: assumed all outstanding subscription shares
were exercised at 638p resulting in assets attributable to shareholders of £397,040,000 and on 51,332,723 shares).
The net asset value per share fully diluted for subscription shares and treasury shares assumes that all outstanding subscription
shares were exercised at 638p and the treasury shares were sold back to the market at 795p resulting in assets attributable to equity
shareholders of £444,349,000 (2011: £399,482,000) and on 51,094,598 shares (2011: 51,691,330).
1 5 . R E CO N C I L I AT I O N O F O P E R AT I N G R E T U R N TO N E T C A S H I N F LO W F R O M
O P E R AT I N G AC T I V I T I E S
Gains before finance costs and taxation
Less: capital gain before finance costs and taxation
Revenue return before finance costs and taxation
Expenses charged to capital
Decrease/(increase) in accrued income
Decrease/(increase) in other debtors
Decrease in creditors and accruals
Net taxation suffered on investment income
Net cash inflow from operating activities
2012
£’000
56,648
(45,705)
10,943
(5,953)
703
2
(533)
(1,050)
4,112
1 6 . R E CO N C I L I AT I O N O F N E T C A S H F LO W M O V E M E N T TO M O V E M E N T I N N E T D E BT
2011
£’000
11,921
(3,529)
8,392
(2,658)
(1,105)
(12)
(364)
(985)
3,268
2011
£’000
(10,533)
710
(9,823)
(36,062)
(45,885)
2012
£’000
(17,939)
(535)
(18,474)
(45,885)
(64,359)
Increase in net debt resulting from cashflows
Exchange movements
Movement in net debt in the year
Net debt at start of year
Net debt at end of year
Represented by:
Net bank overdraft
At 1 April
2011
£’000
(45,885)
Cash flows
£’000
(17,939)
Exchange
movements
£’000
At 31 March
2012
£’000
(535)
(64,359)
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 50
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
50
Notes to the Financial Statements (continued)
1 7 . R E L AT E D PA R T I E S
Details of the relationship between the Company and OrbiMed Capital LLC are disclosed in the Report of the Directors on page 20.
Samuel D. Isaly is a Director of the Company, as well as Managing Partner of the Company’s Investment Manager, OrbiMed Capital
LLC. During the year ended 31 March 2012, OrbiMed Capital LLC earned £2,370,00 in respect of Investment Management fees, of
which £639,000 was outstanding at the year end. In addition performance fees of £827,000 were earned and paid during the year
and £nil was payable at 31 March 2012.
1 8 . F I N A N C I A L I N S T R U M E N TS’ E X P O S U R E TO R I S K A N D R I S K MA N AG E M E N T P O L I C I E S
The Company’s financial instruments comprise securities and other investments, derivative instruments, cash balances, loans,
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 as stated on pages 17 and 18. 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 and the Directors’ approach to the management of them, are set out in the Report of Directors on pages 18 to 20
and have not changed from the previous accounting period. The Investment Manager, in close co-operation with the Board of
Directors, co-ordinates the Company’s risk management.
(i) Market risk:
The Company’s portfolio is exposed to market price fluctuations which are monitored by the Investment Manager in pursuance of
the investment objective. Further information on the portfolio is set out on pages 12 to 15.
Management of risk:
Derivative instruments are used to mitigate market price risk, the following option strategies or a combination of such have been
used during the financial year:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Buy calls: provides leveraged long exposure, facilitates exposure while minimising capital at risk.
Buy puts: provides leveraged protection, facilitates exposure while minimising capital at risk.
Sell calls: against an existing position, provides partial protection from a decline in stock price; facilitates commitment to an exit
strategy and exit price that is consistent with fundamental analysis.
Sell puts: provides an effective entry price at which to add to an existing position, or provides an effective entry price at which
to initiate a new position.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 51
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
51
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
(a) Foreign currency risk
A significant proportion of the Company’s portfolio is 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.
Rate of exchange against sterling at 31 March
U.S. dollar
Japanese yen
Swiss franc
Euro
2012
1.598
131.487
1.444
1.120
2011
1.603
132.853
1.467
1.130
Foreign currency exposure and sensitivity
The fair values of the Company’s monetary items that are denominated in foreign currency as at 31 March 2012 are shown below:
U.S. dollar
Swiss franc
Japanese yen
Euro
Hong Kong dollar
Singapore dollar
2012
Current
assets
£’000
2012
Current
liabilities
£’000
2012
Investments
£’000
2011
Current
assets
£’000
2011
Current
liabilities
£’000
2011
Investments
£’000
575
–
351
–
23
–
949
(74,797)
(596)
–
–
(128)
(647)
(76,168)
345,222
45,774
36,508
17,712
11,215
2,901
459,332
1,490
–
319
–
–
–
1,809
(45,992)
–
–
–
(191)
–
(46,183)
271,695
41,064
41,472
10,249
12,396
–
376,876
Management of risk:
The Investment Manager and Manager monitor the Company’s exposure to foreign currencies on a daily basis and report to the
Board on a regular basis. The Investment Manager does not hedge against foreign currency movements, but takes account of the
risk when making investment decisions.
Foreign currency borrowing facilities are available and are currently being utilised, to limit the Company’s exposure to anticipated
future changes in exchange rates, which might otherwise adversely affect the value of portfolio investments.
Income denominated in foreign currencies is converted into sterling on receipt. The Company does not use financial instruments
to mitigate the currency exposure in the period between the time that the income is included in the financial statements and its
receipt.
Foreign currency sensitivity
The following table details the sensitivity of the Company’s profit or loss after taxation for the year and shareholders’ funds to a 10%
increase and decrease in sterling against the U.S. dollar (2011: 10% increase and decrease), a 10% increase and decrease in sterling
against the Japanese yen (2011: 10% increase and decrease), and a 10% increase and decrease in sterling against the Swiss franc
(2011: 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 foreign currency financial instruments held at each Balance Sheet date.
Sterling depreciates
Sterling appreciates
2012
USD
£’000
31,662
(25,906)
2012
YEN
£’000
4,102
(3,356)
2012
CHF
£’000
5,213
(4,265)
2011
USD
£’000
25,107
(20,786)
2011
YEN
£’000
4,609
(3,771)
2011
CHF
£’000
4,692
(3,839)
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 52
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
52
Notes to the Financial Statements (continued)
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
(b) Interest rate risk
Interest rate movement may affect:
–
–
–
the interest payable on the Company’s variable rate borrowings;
the level of income receivable from floating rate securities and cash at bank and on deposit;
the fair value of investments of fixed interest securities.
Management of the risk
The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when
making investment decisions and borrowing under the multicurrency loan facility.
The Company, generally, does not hold significant cash balances (except when required for collateral against the Company’s
derivative positions), with short term borrowing being used when required.
Interest rate exposure
The Company has a loan facility with Goldman Sachs which is repayable on demand. £64,359,000 was drawn down under this
facility at 31 March 2012. The exposure of financial assets and liabilities to floating interest rates, giving cash flow interest rate risk
when rates are re-set, is shown below.
Floating rate
The floating interest rate exposure of the financial assets and financial liabilities to interest rate risk at 31 March 2012 in respect of
cash was nil (2011: nil). At 31 March 2012 there was an overdraft position at Goldman Sachs of £64,359,000 (2011: £45,885,000).
Fixed rate
In the year to 31 March 2012, the Company held 3.3% of the portfolio in fixed interest securities. This percentage is deemed not to
be material and accordingly no sensitivity analysis has been presented.
(c) Other price risk
Other price risk may affect the value of the Company’s investments. If market prices at the Balance Sheet date had been 25% higher
or lower (2011: 25% higher or lower) while all other variables remained constant, the revenue return would have
decreased/increased by £49,000 (2011: £43,000), and the capital return would have increased/decreased by £116,168,000
(2011: £96,144,000) and the return on equity would have increased/decreased by £116,119,000. The calculations are based on the
portfolio valuations as at the respective Balance Sheet dates and are not representative of the year as a whole.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 53
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
53
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
(ii) 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 significant as the majority of the Company’s assets are investments in quoted equities and other quoted
securities that are readily realisable. The Company has a loan facility repayable on demand with Goldman Sachs.
Interest on the facility is charged at the Federal Funds effective rate plus 1 week LIBOR-OIS Spread† plus 35 basis points.
† See glossary on page 64.
In order to ensure diversification within the portfolio, the Board gives guidance to the Investment Manager concerning exposure
limits to individual companies. Geographical and sectoral exposure are also reviewed regularly by the Directors.
Liquidity exposure
Contractual maturities of the financial liabilities as at 31 March 2012, based on the earliest date on which payment can be required
are as follows:
31 March 2012
Current liabilities:
Borrowings under the loan facility
Amounts due to brokers and accruals
31 March 2011
Current liabilities:
Borrowings under the loan facility
Amounts due to brokers and accruals
3 months
or less
£’000
64,359
15,288
79,647
3 months
or less
£’000
45,885
3,564
49,449
2012
Not more than
one year
£’000
–
–
–
2011
Not more
than one year
£’000
–
–
–
Total
£’000
64,359
15,288
79,647
Total
£’000
45,885
3,564
49,449
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 54
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
54
Notes to the Financial Statements (continued)
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
Company’s hierarchy as quoted in note 1b on page 41.
(iii) Credit risk
The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company
suffering a loss.
The carrying amounts of financial assets best represent the maximum credit risk at the Balance Sheet date. The Company’s listed
investments are held on its behalf by Goldman Sachs acting as the Company’s custodian.
Bankruptcy or insolvency of a custodian may cause the Company’s rights with respect to securities held by that custodian to be
delayed, however, the Board monitors the Company’s risk to its custodians by reviewing continuously their internal control reports
and their credit ratings.
Certain of the Company’s assets are held by Goldman Sachs as collateral for the loan provided by them to the Company. Such assets
held by Goldman Sachs are available for rehypothecation†. As at 31 March 2012, assets with a total market value of £93.9m
(31 March 2011: £64.4m) were held as collateral.
Management of the risk
The risk is not significant, and is managed as follows:
(cid:129)
(cid:129)
(cid:129)
by only dealing with brokers which have been approved by OrbiMed Capital LLC and banks with high credit ratings;
by setting limits to the maximum exposure to any one counterparty at any time; and
by monitoring the assets subject to rehypothecation†.
† See glossary on page 64.
Credit risk exposure
Fixed interest securities and convertibles
Derivative – OTC equity swaps
Current assets:
Other receivables (amounts due from brokers, dividends
and interest receivable and derivative financial instruments)
2012
Balance
Sheet
£’000
31,574
13,691
2011
Balance
Sheet
£’000
29,968
–
3,452
8,361
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 55
W o r l d w i d e H e a l t h c a r e T r u s t P L C > A n n u a l R e p o r t 2 0 1 2
Notes to the Financial Statements (continued)
55
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
As of 31 March 2012
Assets
Financial investments designated at
fair value through profit or loss
Fair value of derivative financial instruments
Assets measured at fair value
Level 1
£’000
454,301
–
454,301
Level 2
£’000
–
14,631
14,631
Level 3
£’000
Total
£’000
–
–
–
454,301
14,631
468,932
As at 31 March 2012, the put and call options have been classified as level two. All of the remaining investments have been classified
as level one. The position in the unquoted convertible preferred equity certificates (CPEC) was sold during the year. It was previously
classified as level three (see below reconciliation).
As of 31 March 2011
Assets
Financial investments designated at
fair value through profit or loss
Fair value of derivative financial instruments
Assets measured at fair value
Level 1
£’000
379,229
–
379,229
Level 2
£’000
Level 3
£’000
Total
£’000
–
2,223
2,223
6,640
–
6,640
385,869
2,223
388,092
Level 3 Reconciliation
At 31 March 2012
Opening fair value at 1 April 2011
Total losses included in gains on investments in the income statement:
Repayment of principal
Closing balance at 31 March 2012
2012
Equity
investments
£’000
6,640
(431)
(6,209)
–
Level 3 valuation techniques used by the Company are explained in the accounting policies in note 1b.
Fair value of financial assets and financial liabilities
The fair value of the financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments and
derivatives) or the Balance Sheet amount is a reasonable approximation of fair value (due from brokers, dividends and interest
receivable, due to brokers, accrual, cash at bank, bank overdraft and amounts due under the loan facility).
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.
The Board’s policy is to limit gearing to the lower of £90m or 20% of the Company’s net assets.
The capital structure of the Company consists of the equity share capital, retained earnings and other reserves as disclosed on the
Balance Sheet on page 39.
224634 Finsbury WWP pp41-pp56 07/06/2012 07:44 Page 56
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
56
Notes to the Financial Statements (continued)
18. FINANCIAL INSTRUMENTS’ EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES (CONTINUED)
Gearing for this purpose is defined as net debt as a percentage of shareholders’ funds. As at 31 March 2012 the gearing percentage
of the Company was 16.4% (2011: 13.3%).
The Board with the assistance of the Investment 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 Investment 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 buyback 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 period.
The Company is also subject to several externally imposed capital requirements and are as follows:
–
–
as a public company, the Company has a minimum share capital of £50,000; and
in order to be able to pay dividends out of profits available for distribution, the Company has to be able to meet one of the two
capital restriction tests imposed on investment companies by company law.
These requirements are unchanged since last year and the Company has complied with them.
1 9 . C A P I TA L R E S E R V E
At 31 March 2011
Transfer on disposal of investments
Net gains on investments
Expenses charged to capital less tax relief thereon
Subscription shares exercised & cancelled
Shares purchased including expenses
Exchange loss on currency balances
At 31 March 2012
Capital Reserve –
Other
£’000
Capital Reserve* –
Investment
Holding Gains
£’000
100,740
13,237
20,496
(5,819)
11
(6,939)
(535)
121,191
34,579
(13,237)
31,697
–
–
–
–
53,039
Total
£’000
135,319
–
52,193
(5,819)
11
(6,939)
(535)
174,230
* Investment holding gains relate to the revaluation of investments held at the reporting date. (See note 9 on page 47 for further
details).
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 57
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Notice of Annual General Meeting
57
Notice is hereby given that the Annual General Meeting of Worldwide Healthcare Trust PLC will be held at the Barber-Surgeons’ Hall,
Monkwell Square, Wood Street, London, EC2Y 5BL on Tuesday, 17 July 2012 from 12 noon for the following purposes:
O R D I N A RY B U S I N E S S
1.
To receive and, if thought fit, to accept the Audited Accounts and the Report of the Directors for the year ended 31 March 2012
2.
3.
4.
5.
6.
7.
8.
To re-elect Ms Jo Dixon as a Director of the Company
To re-elect Dr David Holbrook as a Director of the Company
To re-elect Mr Samuel D. Isaly as a Director of the Company
To re-elect Mr Martin Smith as a Director of the Company
To re-elect Mr Anthony Townsend as a Director of the Company
To re-appoint Ernst & Young LLP as the Company’s Auditors and to authorise the Directors to determine their remuneration
To approve the Directors’ Remuneration Report for the year ended 31 March 2012
S P E C I A L B U S I N E S S
To consider, and if thought fit, pass the following resolutions of which resolutions 10, 11, 12, 13 and 14 will be proposed as special
resolutions:
Authority to Allot Shares
9.
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 of £1,105,775 (being 10%
of the issued share capital of the Company at 31 May 2012) and representing 4,423,102 shares of 25 pence each (or, if less, 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 2013 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.
Disapplication of Pre-emption Rights
10. THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 11 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 9 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 of 25p each in 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; and
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 58
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
58
Notice of Annual General Meeting (continued)
(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 of £1,105,775, being 10% of the issued share capital of the Company as at
31 May 2012 and representing 4,423,102 Shares or, if changed, the number representing 10% of the issued share capital
of the Company at the date of the meeting 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 11 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.
11. THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 10 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) where any treasury shares are sold pursuant to this power at a discount to the then prevailing net asset value of ordinary
shares of 25p each in the Company (“Shares”), such discount must be (i) lower than the discount to the net asset value per
Share at which the Company acquired the Shares which it then holds in treasury and (ii) not greater than 5% to the
prevailing net asset value per Share at the latest practicable time before such sale (and for this purpose the Directors shall
be entitled to determine in their reasonable discretion the discount to their net asset value at which such Shares were
acquired by the Company and the net asset value per Share at the latest practicable time before such Shares are sold
pursuant to this power); and
(b)
this power shall be limited to the sale of relevant shares having an aggregate nominal value of £1,105,775 being 10% of
the issued share capital of the Company as at 31 May 2012 and representing 4,423,102 Shares or, if changed, the number
representing 10% of the issued share capital of the Company at the date of the meeting 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 10 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.
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 59
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Notice of Annual General Meeting (continued)
59
Authority to Repurchase Ordinary Shares
12. 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(4) of the Act) of
ordinary shares of 25 pence each 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 is 6,630,230 (representing approximately 14.99% of
the issued share capital of the Company at the date of the notice convening the meeting at which this resolution is proposed);
(b)
the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;
(c)
(d)
(e)
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 Article 5(1) of Regulation No. 2233/2003 of the European Commission (Commission Regulation of 22
December 2003 implementing the Market Abuse Directive as regards exemptions for buyback programmes and
stabilisation of financial instruments);
the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held
in 2013 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
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.
Authority to Repurchase Subscription Shares
13. 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(4) of the Act) of
subscription shares of 1p each in the capital of the Company (“Subscription Shares”) for cancellation provided that:
(a)
the maximum aggregate number of Subscription Shares authorised to be purchased is 733,200 (representing approximately
14.99% of the issued Subscription Share capital of the Company at the date of the notice convening the meeting at which
this resolution is proposed;
(b)
the minimum price (exclusive of expenses) which may be paid for a Subscription Share is 1p;
(c)
(d)
(e)
the maximum price (exclusive of expenses) which may be paid for a Subscription Share is an amount equal to the greater
of (i) 105% of the average of the middle market quotations for a Subscription 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 Subscription 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 Article 5(1) of Regulation No. 2233/2003 of the European Commission
(Commission Regulation of 22 December 2003 implementing the Market Abuse Directive as regards exemptions for
buyback programmes and stabilisation of financial instruments);
the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held
in 2013 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
the Company may make a contract to purchase Subscription 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 Subscription Shares in pursuance of any such contract.
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 60
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
60
Notice of Annual General Meeting (continued)
General Meetings
14. THAT as permitted by the EU Shareholders’ Rights Directive (2007/36/EC) any General Meeting of the Company (other than the
Annual General Meeting of the Company) shall be called by notice of at least 14 clear days in accordance with the provisions
of the Articles of Association of the Company provided that the authority shall 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
Frostrow Capital LLP
Company Secretary
1 June 2012
Registered Office:
One Wood Street
London EC2V 7WS
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. A proxy form which may be used
to make such appointment and give proxy instructions accompanies this notice.
2.
3.
4.
5.
6.
7.
8.
9.
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.
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 Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 12 noon Friday, 13 July 2012.
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.
The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described below) will not prevent a
shareholder attending the meeting and voting in person if he/she wishes to do so.
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.
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.
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 5.30 p.m. on Friday, 13 July 2012 (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.
As at 31 May 2012 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of
44,231,026 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 31 May 2012 are 44,231,026.
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.
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 61
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
Notice of Annual General Meeting (continued)
61
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 Ireland Limited (“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.
14.
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.
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).
15. 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.
16. 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 Capita Registrars on 0871 664 0300 (calls cost 10p per minute plus network extras). Lines are open 8.30 a.m. to 5.30 p.m.
Monday to Friday.
17.
18.
19.
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.
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 Capita Registrars, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
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 page 61) then, subject to paragraph 4,
the proxy appointment will remain valid.
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,
the proxy appointment will remain valid.
224634 Finsbury WWP pp57-pp62 07/06/2012 07:45 Page 62
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
62
Notice of Annual General Meeting (continued)
LO C AT I O N O F T H E A N N UA L G E N E R A L M E E T I N G
Barbican
Barber-Surgeons’ Hall
Monkwell Square
P
P
T
E
E
R
T
S
E
T
A
G
S
R
E
D
L
A
Moorgate
Moorgate
FORE STREET
T
E
E
R
T
D S
O
O
W
LONDON WALL
T
S
L
L
A
H
G
N
GRESHAM STREET
I
S
A
B
ROPEMAKER ST
S
D
L
FIE
R
O
O
M
E
T
A
G
R
O
O
M
LONDON WAL
LOTHBURY
P
R
I
N
C
E
S
S
S
T
St. Pauls
CHEAPSIDE
POULTRY
Bank
224634 Finsbury WWP pp63-pp66 07/06/2012 07:48 Page 63
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
63
How to Invest
Alliance Trust Savings Limited
The Company’s shares are available through savings plans (including Investment Dealing Accounts, ISAs and SIPPs) operated by
Alliance Trust Savings Limited, which facilitates both regular monthly investments and lump sum investments in the Company’s
shares. Shareholders who would like information on the savings plans should call Alliance Trust Savings Limited on 01382 573737
or log on to www.alliancetrustsavings.co.uk or email contact@alliancetrust.co.uk. Calls to this number may be recorded for
monitoring purposes.
An Individual Savings Account (‘ISA’) and Junior ISA are tax efficient methods of investment for an individual which gives the
opportunity to invest in the Company up to £11,280 in the year 2012/2013 for an ISA and £3,600 for a Junior ISA and in subsequent
tax years when they subscribe to a Stocks and Shares ISA.
The preceding two paragraphs have been issued and approved by Alliance Trust Savings Limited. Alliance Trust Savings Limited of PO Box 164,
8 West Marketgait, Dundee DD1 9YP is registered in Scotland with number SC98767. Alliance Trust Savings Limited provides investment
products and services and is authorised and regulated by the Finance Services Authority. It does not provide investment advice.
Capita Registrars – Share Dealing Service
A quick and easy share dealing service is available to existing shareholders through the Company’s Registrar, Capita Registrars, to
either buy or sell shares. An online and telephone dealing facility provides an easy to access and simple to use service.
Type of trade
Share certificates
Online
1% of the value of the deal
(Minimum £20.00, max £75.00)
Telephone
1.5% of the value of the deal
(Minimum £25.00, max £102.50)
There is no need to pre-register and there are no complicated forms to fill in. The online and telephone dealing service allows you
to trade ‘real time’ at a known price which will be given to you at the time you give your instruction.
To deal online or by telephone all you need is your surname, shareholder reference number, full postcode and your date of birth.
Your shareholder reference number can be found on your latest statement or certificate where it will appear as either a ‘folio
number’ or ‘investor code’. Please have the appropriate documents to hand when you log on or call, as this information will be
needed before you can buy or sell shares.
For further information on this service please contact:
www.capitadeal.com (online dealing) or 0871 664 0364† (telephone dealing)
If calling from outside the UK please dial +44 (0) 203 367 2686
†Calls cost 10p per minute plus network extras and may be recorded for training purposes. Lines are open from 8.00 a.m. to 4.30 p.m. Monday to Friday.
The Share Dealing Service is provided by Capita IRG Trustees Limited which has issued and approved the preceding paragraphs. Capita IRG
Trustees Limited, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU is registered in England and Wales with number 2729260.
Capita IRG Trustees Limited is authorised and regulated by the Financial Services Authority.
R I S K WA R N I N G S
–
–
Past performance is no guarantee of future performance.
The value of your investment and any income from it may go down as well as up and you may not get back the amount
invested. This is because the share price is determined by the changing conditions in the relevant stockmarkets in which the
Company invests and by the supply and demand for the Company’s shares.
– As the shares in an investment trust are traded on a stockmarket, the share price will fluctuate in accordance with supply and
demand and may not reflect the underlying net asset value of the shares; where the share price is less than the underlying value
of the assets, the difference is known as the ‘discount’. For these reasons, investors may not get back the original amount
invested.
– Although the Company’s financial statements are denominated in sterling, it may invest in stocks and shares that are
denominated in currencies other than sterling and to the extent they do so, they may be affected by movements in exchange
rates. As a result, the value of your investment may rise or fall with movements in exchange rates.
–
–
Investors should note that tax rates and reliefs may change at any time in the future.
The value of ISA tax advantages will depend on personal circumstances. The favourable tax treatment of ISAs may not be
maintained.
224634 Finsbury WWP pp63-pp66 07/06/2012 07:48 Page 64
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
64
Glossary
Diluted Net Asset Value
This is a method of calculating the net asset value (“NAV”) of a
company that has issued, and has outstanding, convertible loan
stocks, warrants, subscription shares or options. The calculation
assumes that the holders have exercised their right to convert or
subscribe, thus increasing the number of shares among which
the assets are divided.
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.
Gearing
The term used to describe the process of borrowing money for
investment purposes. The expectation is that the returns on the
investments purchased will exceed the finance costs associated
with those borrowings.
There are several methods of calculating the level of gearing
and the following has been selected:
The amount drawn down from the Company’s loan facility
divided by shareholders’ funds expressed as a percentage.
Hypothecation
The pledging of securities or other assets as collateral to secure
a loan such as a debit balance in a margin account.
LIBOR-OIS Spread
This is the difference between LIBOR and the Overnight Indexed
Swap (OIS) rates. The spread between the two rates is considered
to be a measurement of health of the banking system.
London Interbank Offered Rate (LIBOR)
The interest rate at which banks can borrow unsecured funds
from other banks in London wholesale money markets, as
measured by daily surveys of the British Bankers’ Association.
The published rate is a trimmed average of the rates obtained in
the survey.
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.
NAV Total Return
The theoretical total return on shareholders’ funds per share,
including the assumed £100 original investment at the
beginning of the period specified, 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.
Overnight Indexed Swap (OIS)
An interest rate swap that serves as a measure of investor
expectations of an average effective overnight rate over the
term of the swap.
Rehypothecation
The pledging to banks by securities brokers of the assets in a
customer’s margin account used as collateral for a loan.
Total Assets
Total assets less current liabilities before deducting prior
charges. Prior charges include all loans for investment purposes.
Ongoing Charges
Ongoing charges are calculated by taking the Company’s
annualised ongoing charges, excluding performance fees and
exceptional items, and dividing by the average month end net
asset value of the Company over the year.
The publishing of ongoing charges information rather than a
total expense ratio (TER) is advocated by the Association of
Investment Companies who believe that using a single
methodology to calculate ongoing charges will help reduce
inconsistencies and allow investors and advisers to compare
investment companies more easily with open-ended funds.
Treasury Shares
Shares previously issued by a company that have been bought
back from shareholders to be held by the company for
potential sale or cancellation at a later date. Such shares are not
capable of being voted and carry no rights to dividends.
224634 Finsbury WWP pp63-pp66 07/06/2012 07:48 Page 65
Company Information
D I R E C TO R S
Martin Smith (Chairman)
Jo Dixon
Professor Duncan Geddes
Dr David Holbrook
Samuel D. Isaly
Anthony Townsend
CO M PA NY R E G I S T R AT I O N N U M B E R
3023689 (Registered in England)
The Company is an investment company as defined under
Section 833 of the Companies Act 2006
The Company was incorporated in England and Wales on
14 February 1995. The Company was
incorporated as
Finsbury Worldwide Pharmaceutical Trust PLC.
W E B S I T E
Website: www.worldwidewh.com
R E G I S T E R E D O F F I C E
One Wood Street
London EC2V 7WS
I N V E S T M E N T MA N AG E R
OrbiMed Capital LLC
601 Lexington Avenue, 54th Floor
New York NY 10022
Website: www.orbimed.com
Registered under the U.S. Securities & Exchange Commission
MA N AG E R , A D M I N I S T R ATO R A N D CO M PA NY
S E C R E TA RY
Frostrow Capital LLP
25 Southampton Buildings, London WC2A 1AL
Telephone: 0203 008 4910
E-mail: info@frostrow.com
Website: www.frostrow.com
Authorised and regulated by the Financial Services Authority
If you have an enquiry about the Company or if you would like to
receive a copy of the Company’s monthly fact sheet by e-mail,
please contact Frostrow Capital using the above e-mail address.
C U S TO D I A N A N D B A N K E R
Goldman Sachs & Co.
200 West Street, Third Floor
New York, NY10282
Wo r l d w i d e H e a l t h c a re Tr u s t P LC > A n n u a l R e p o r t 2 0 1 2
65
AU D I TO R S
Ernst & Young LLP
1 More London Place
London SE1 2AF
R E G I S T R A R S
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone (in UK): 0871 664 0300†
Telephone (from overseas): + 44 208 639 3399
Facsimile: + 44 (0) 1484 600911
E-mail: ssd@capitaregistrars.com
Website: www.capitaregistrars.com
Please contact the Registrars if you have a query about a
certificated holding in the Company’s shares.
†calls cost 10p per minute plus network charges and may be recorded for
training purposes. Lines are open from 8.30 a.m. to 5.30 p.m. Monday to
Friday.
S TO C K B R O K E R
Winterflood Securities Limited
The Atrium Building
Cannon Bridge, 25 Dowgate Hill
London EC4R 2GA
S H A R E A N D S U B S C R I P T I O N S H A R E P R I C E
L I S T I N G S
The price of your shares and subscription shares can be found in
various publications including the Financial Times, The Daily
Telegraph, The Times and The Scotsman.
The Company’s net asset value per share is announced daily and
is available, together with the share price, on the TrustNet
website at www.trustnet.com.
I D E N T I F I C AT I O N CO D E S
Shares:
0338530
GB0003385308
:
:
SEDOL
ISIN
BLOOMBERG : WWH LN
: WWH
EPIC
:
SEDOL
ISIN
:
BLOOMBERG : WWHS LN
B3VMCB0
GB00B3VMCB07
Subscription Shares:
L I S T E D
P R E M I U M
D I S A B I L I T Y AC T
Copies of this annual report and other documents issued by the Company are available from the Company Secretary. If needed,
copies can be made available in a variety of formats, including Braille, audio tape or larger type as appropriate. You can contact the
Registrar to the Company, Capita Registrars, which has installed telephones to allow speech and hearing impaired people who have
their own telephone to contact them directly, without the need for an intermediate operator, for this service please call 0800 731
1888. Specially trained operators are available during normal business hours to answer queries via this service. Alternatively, if you
prefer to go through a ‘typetalk’ operator (provided by the RNID) you should dial 18001 followed by the number you wish to dial.
This report is printed on Revive 75 Silk. The paper consists of 50% de-inked post consumer waste, 25% pre-consumer waste and 25% virgin wood fibre.
The pulp used is a combination of Elemental Chlorine Free (ECF) and Totally Chlorine Free (TCF). The mill is certified to environmental management
standard ISO 14001. This product has been awarded the NAPM 75% Recycled Mark. This report has been printed using vegetable
based inks.
Perivan Financial Print 224634
The Company is a member of the Association of Investment Companies.
Worldwide Healthcare Trust PLC
25 Southampton Buildings, London WC2A 1AL
www.worldwidewh.com