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Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Worldwide Healthcare Trust PLC
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. Performance is measured against
the MSCI World Health Care Index on a net total return,
sterling adjusted basis.
Further details of the Company’s investment policy are set
out in the Strategic Report on page 6.
Company Summary
The Company
The Company is an investment trust and its shares are listed
on the Official List and traded on the main market of the
London Stock Exchange. The Company is a member of the
Association of Investment Companies.
Total assets less current liabilities as at 31 March 2014 were
£636.2 million and the market capitalisation was £602.3 million.
Management
The Company employs OrbiMed Capital LLC (“OrbiMed”) as
Investment Manager and Frostrow Capital LLP (‘Frostrow’) to
provide company management, company secretarial,
administrative and marketing services. Further details of the
terms of these appointments are provided on pages 26 and 27.
Performance is measured against the MSCI World Health
Care Index on a net total return, sterling adjusted basis (see
glossary beginning on page 68 for further information).
Capital Structure
The Company’s capital structure is composed of both
Ordinary and Subscription Shares. Details are given on
page 26 and in note 13 to the accounts on page 57.
ISA Status
The Company’s shares are eligible for Individual Savings
Accounts (‘ISAs’) and for Junior ISAs.
Winner: Best Sector Specialist Investment Trust –
What Investment Trust Awards 2014
Keep up to date with Worldwide Healthcare Trust PLC
For more information about
Worldwide Healthcare Trust PLC
visit the website at
www.worldwidewh.com
Follow us on Twitter
@worldwidewh
231544 Finsbury WWH pp01-pp24 11/06/2014 13:19 Page 01
● Pages 1-3
Financial Highlights,
Company Performance.
● Pages 4-5
Chairman’s Statement
Strategy and Outlook
● Pages 11-13
Investment Portfolio
● Pages 14-22
Investment Manager’s
Review
Contents
About Worldwide Healthcare Trust PLC
Inside Front Cover Company Summary
1
Financial Highlights
Strategic Report
Company Performance
2-3
4-5
Chairman’s Statement
6-10 Overview of Strategy
11-13 Investment Portfolio
14-22 Investment Manager’s Review
Governance
23-24 Board of Directors
25-28 Report of the Directors
Statement of Directors’
29
Responsibilities
30-37 Corporate Governance
38-39 Audit Committee Report
40-41 Directors’ Remuneration Report
Directors’ Remuneration
42
Policy Report
Financial Statements
43-44 Independent Auditor’s Report
45
46
Income Statement
Reconciliation of Movements in
Shareholders’ Funds
Balance Sheet
Cash Flow Statement
47
48
49-66 Notes to the Accounts
Shareholder Information
Further Information
67
68-69 Glossary of Terms
70-71 How to Invest
72-76 Notice of Annual General Meeting
77-78 Explanatory Notes
to the Resolutions
79
Explanatory Notes of the Principal
Changes to the Company’s
Articles of Association
80
Company Information
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 01
Company Summary / Financial Highlights
Financial Highlights – Total Return
Net asset value per share – diluted (total return)
Ordinary share price (total return)
+25.9%
2013: +30.3%
+30.8%
2013: +30.9%
Total net assets
Benchmark over the year to 31 March 2014
£636.2 million
2013: £504.4 million
+26.1%
See glossary, beginning on page 68, for further information.
Performance since launch to 31 March 2014
MSCI World Health Care Index
(total return, sterling adjusted)
+14.9%
2013: +31.4%
%
1800
1600
1400
1200
1000
800
600
400
200
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
Mar
13
Mar
14
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 & Bloomberg
With effect from 1 October 2010, the performance of the Company is measured against the MSCI World Health Care Index on a
total return, sterling adjusted basis. Prior to this date, performance was measured against the Datastream World Pharmaceutical &
Biotechnology Index (total return, sterling adjusted).
01 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 02
Strategic Report / Company Performance
As at As at
31 March 31 March %
2014 2013 Change
Ordinary share price 1301.0p 1009.0p +28.9
Net asset value per share – basic 1374.3p 1110.2p +23.8
Net asset value per share – diluted† 1348.2p 1089.6p +23.7
Discount of ordinary share price to the diluted
net asset value per share 3.5% 7.4% n/a
Year ended Year ended
31 March 31 March
2014 2013
Ordinary share price (total return)* +30.8% +30.9%
Net asset value per share – diluted (total return)*† +25.9% +30.3%
Benchmark index (total return)* +14.9% +31.4%
Dividends per ordinary share 15.0p 16.5p
†The net asset value per share has been diluted for both Subscription Shares and Treasury Shares. See page 25 for further information about
the Company’s Subscription Shares.
*Source – Morningstar.
Details of the Company’s historic performance can be found on page 3.
Total Return Performance for the year to 31 March 2014
%
150
140
130
120
110
100
Mar
13
Apr
13
May
13
Jun
13
Jul
13
Aug
13
Sep
13
Oct
13
Nov
13
Dec
13
Jan
14
Feb
14
Mar
14
WWH Share Price (total return)
WWH Net Asset Value (total return)
Benchmark Index (total return)
Rebased to 100 as at 31 March 2013
Source: Morningstar, Thomson Reuters & Bloomberg
02 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 03
Strategic Report / Company Performance
Historic Performance for the years ended 31 March
2009 2010 2011 2012 2013 2014
Net asset value per share – basic 635.9p 780.8p 799.2p 909.4p 1110.2p 1374.3p
Net asset value per share – diluted (dilution
for warrants/subscription shares) 600.5p 752.7p 773.5p 871.0p 1089.6p 1348.2p
Ordinary share price 550.5p 701.5p 686.0p 795.0p 1009.0p 1301.0p
Warrant price* 62.0p – – – – –
Subscription share price* – 98.0p 84.5p 133.5p 307.5p 595.5p
Discount of share price to diluted net
asset value per share 8.3% 6.8% 11.3% 8.7% 7.4% 3.5%
Dividend per ordinary share 5.0p 8.5p 15.0p 17.5p 16.5p 15.0p
Gearing † 15.3% 10.4% 13.3% 16.4% 9.8% 12.0%
Ongoing charges † 1.2% 1.0% 1.0% 1.1% 1.0% 1.0%
Ongoing charges (including performance fees
crystallised during the period)† 1.2% 1.0% 1.8% 1.3% 1.2% 1.1%
*The Company’s Warrants were issued on 17 December 2004 and expired on 31 July 2009. The Company’s Subscription Shares were allotted on 4 September 2009
and will expire on 31 July 2014. See pages 25 and 26 for further information.
†See pages 26 and 27 and also the glossary beginning on page 68.
Five Year Performance to 31 March 2014
%
280
260
240
220
200
180
160
140
120
100
80
Mar
09
Mar
10
Mar
11
Mar
12
Mar
13
Mar
14
WWH Share Price (total return)
WWH Net Asset Value (total return)
Benchmark Index (total return)**
**
Rebased to 100 as at 31 March 2009
Source: Morningstar, Thomson Reuters & Bloomberg
With effect from 1 October 2010, the performance of the Company is measured against the MSCI World Health Care Index on a
total return, sterling adjusted basis. Prior to this date, performance was measured against the Datastream World Pharmaceutical &
Biotechnology Index (total return, sterling adjusted).
03 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 04
Strategic Report / Chairman’s Statement
“I am delighted to report that following last year’s strong
performance the Company has again achieved excellent
returns for shareholders.”
Review of the Year and Performance
I am delighted to report that following last year’s strong
performance the Company has again achieved excellent
returns for shareholders. The Company’s net asset value
per share total return was 25.9% and the share price
total return was 30.8%, both significantly outperforming
the Company’s benchmark, the MSCI World Health Care
Index on a total return, sterling adjusted basis, which
rose by 14.9%. Continued strong performance,
particularly from the Company’s share price, has caused
the discount at which it trades compared to the
Company’s net asset value per share to narrow. At 31
March 2014 the discount of share price to the
Company’s diluted net asset value per share stood at
3.5% compared to 7.4% a year ago.
The Company’s continued strong performance has
enabled it to be voted the Best Sector Specialist
Investment Trust at the 2014 What Investment Trust
Awards.
The Company benefitted in particular from strong
performance from U.S. based biotechnology companies
such as Incyte, Intermmune and Gilead Sciences, from
the advances being made in the area of genomic research
(Illumina) and also from continued mergers and acquisition
activity in the healthcare sector (MAKO Surgical). The
principal detractor from performance was Infinity, following
concern about the safety profile of their lead compound
for the treatment of haematological cancers.
The Company was, on average, 14.0% geared during
the year which proved to be a good decision. This
strategy enabled the Company to take advantage of
strong market performance and contributed c.2.5% to
the Company’s returns. In addition, the Company’s
derivative strategy also contributed c.2.0% to returns.
04 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Further information on the Company’s investments can
be found in the Investment Manager’s Review beginning
on page 14 of this Annual Report.
Since the Company’s inception in April 1995 to 31 March
2014, the total return of the Company’s net asset value
per share is 1,474.2%, equivalent to a compound annual
return of 15.7%. This compares to a cumulative
“blended” benchmark* return of 697.4%, equivalent to a
compound annual return of 11.6% over the same period.
Capital
The Company’s continued strong performance, and the
resulting demand for the Company’s shares, has meant
that no shares were repurchased by the Company
during the year and also that the remaining 328,408
shares held in treasury at the beginning of the year were
reissued at prices representing no more than a 4.9%
discount to the prevailing fully diluted cum income net
asset value per share, raising £3.5m of additional funds
for the Company. There are currently no shares held in
treasury. Shareholder approval to renew the authority to
buy-back both Ordinary Shares and Subscription 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.
The next and final exercise date for the Company’s
Subscription Shares is 31 July 2014 and the exercise price
is 699p. During the year and to the date of this report a
total of 898,727 new shares were issued, raising £6.3m of
additional funds for the Company, as a result of holders of
Subscription Shares exercising their subscription rights.
Revenue and Dividend
I reported last year that it remained the Company’s
policy to pursue capital growth for shareholders and to
pay dividends to the extent required to maintain
investment trust status. An unchanged first interim
* See page 3 for further information
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 05
Strategic Report / Chairman’s Statement
“
dividend of 7.0p per share, for the year ended 31 March
2014, was paid on 10 January 2014 to Ordinary
Shareholders on the register on 6 December 2013. The
Company’s net revenue return for the year as a whole
has fallen slightly to £7.2 million (2012: £7.6 million). In
order to maintain investment trust status, the Board has
declared a second interim dividend of 8.0p per share
which, together with the first interim dividend already
paid, makes a total dividend for the year of 15.0p (2013:
16.5p per share). Based on the current mid-market share
price of 1297.0p as at 3 June 2014, the total dividend
payment for the year represents a current yield of 1.2%.
The second interim dividend will be payable on 4 July
2014 to Ordinary Shareholders on the register of
members on 6 June 2014. The associated ex-dividend
date was 4 June 2014.
The Alternative Investment Fund Managers
Directive (AIFMD)
AIFMD came into force on 22 July 2011 and was
implemented in the UK by The Alternative Investment
Fund Managers Regulations 2013 (SI 2013/1773) with
effect from 22 July 2013, subject to a transitional period
running for a further year until 22 July 2014. The Board,
together with its advisers, has been monitoring the
progress and likely implications of AIFMD. In accordance
with the requirements of AIFMD, it is intended that
J.P. Morgan will be appointed as the Company’s
Depositary and that the Company’s Manager, Frostrow
Capital, will be appointed as the Company’s Alternative
Investment Fund Manager. OrbiMed will continue to act
as the Company’s Investment Manager.
Outlook
Despite recent profit taking in the biotechnology sector
and also some well-publicised concerns raised by a U.S.
congressman over drug pricing and the predictable
debate that this ignited about high drug prices, and also
05 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
high share prices, our Investment Manager continues to
believe in the fundamentals of the sector. In particular, it
believes that the portfolio is well positioned to benefit
from such factors as low valuations, the continued rise in
the prospects for emerging markets and also continued
mergers and acquisitions activity, as we have seen
recently following Pfizer’s high profile, but unsuccessful,
bid for AstraZeneca.
Our Investment Manager’s focus continues to be on the
selection of stocks with strong prospects and your
Board reiterates its belief that the long-term investor in
the sector will be well rewarded.
Continuation Vote
The Board has undertaken that every five years there will
be a continuation vote resolution tabled at the Annual
General Meeting falling in that year. Accordingly, such a
resolution is included in the notice of Annual General
Meeting contained within this report. In light of the
Company’s track record and the prospects for the
healthcare sector and the Company, the Board
unanimously recommends that shareholders vote in
favour of the resolution allowing the Company to
continue as an investment trust for a further five years.
Annual General Meeting
This year, the Annual General Meeting of the Company
will be held at Barber-Surgeons’ Hall, Monkwell
Square, Wood Street, London EC2Y 5BL on Monday,
14 July 2014 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.
Sir Martin Smith
Chairman
6 June 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 06
Strategic Report / Overview of Strategy
Investment objective
Aim
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. Performance is measured against
the MSCI World Health Care Index on a net total return, sterling adjusted basis.
Investment Approach and Policy
The Company‘s Investment Manager is OrbiMed.
The OrbiMed team works constantly to identify sources of
outperformance with a focus on fundamental research. In
healthcare, there are many primary sources of outperformance,
especially in therapeutics. Clinical events such as the
publication of new clinical trial data is a good example and
historically has been the largest source of share price volatility.
Regulatory events, such as new drug approvals by U.S.,
European and Japanese regulatory authorities are also stock
moving events. Subsequent new product launches are carefully
tracked and forecasted. Other sources include legal events
and, of course, mergers and acquisitions activity.
Investment Limitations and Guidelines
The Board seeks to manage the Company’s risk by imposing
various investment limits and restrictions:
• The Company will not invest more than 10% of its gross
assets in other closed ended investment companies
(including investment trusts) listed on the London Stock
Exchange, except where the investment companies
themselves have stated investment policies to invest no
more than 15% of their gross assets in other closed ended
investment companies (including investment trusts) listed
on the London Stock Exchange;
• 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
U.S.$5bn);
• At least 20% of the portfolio will normally be invested in
smaller companies (i.e. with a market capitalisation of less
than U.S.$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 royalty bonds issued by pharmaceutical
and biotechnology companies;
06 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
• 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.
• The Company’s gearing policy is to borrow up to the lower
of £120 million or 20% of the Company’s net asset value;
• Derivative transactions can be used to mitigate risk and/or
enhance capital returns and will be restricted to a net
exposure of 5% of the portfolio; and
• Equity Swaps may be used in order to meet the Company’s
investment objective of achieving a high level of capital
growth and are restricted to 8% of the gross assets of the
Company at the time of acquisition.
Compliance with the Board’s investment limitations and
guidelines is monitored continuously by Frostrow and
OrbiMed and is reported to the Board on a monthly basis.
Total Return Performance
Year to 31 March 2014
%
40
30
20
10
0
N et asset
value
Share price
B ench m ark
Since launch (28 April 1995) to 31 March 2014
%
1800
1600
1400
1200
1000
800
600
400
200
0
N et asset
value
Share price
B ench m ark
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 07
Strategic Report / Overview of Strategy
Investment Strategy and Business Model
Key Performance Indicators
The Company’s Board of Directors meets regularly and at each
meeting reviews performance against a number of key
measures, as follows:
• Net asset value total return against the MSCI World Health
Care Index measured on a net total return, sterling
adjusted basis;
• Share price total return;
• Discount/premium of share price to net asset value per share;
• Ongoing charges ratio.
Net asset value total return against the benchmark
The Directors regard the Company’s net asset value total
return as being the overall measure of value delivered to
shareholders over the long term. Total return reflects both net
asset value growth of the Company and also any dividends
paid to shareholders. OrbiMed’s investment style is such that
performance is likely to deviate from that of the benchmark
index. The Board considers the most important comparator to
be the MSCI World Health Care Index measured on a net total
return, sterling adjusted basis.
During the year under review the Company’s diluted net asset
value per share total return was 25.9%, outperforming the
benchmark by 11.0%.
A full description of performance during the year under review
and the investment portfolio is contained in the Investment
Manager’s Review commencing on page 14 of this annual report.
Share price total return
The Directors also regard the Company’s share price total
return to be a key indicator of performance. This is monitored
closely by the Board.
During the year under review the Company’s share price total
return was 30.8%, outperforming the benchmark by 15.9%.
Discount/premium of share price to net asset value per share
The Board undertakes a regular review of the level of
discount/premium and consideration is given to ways in which
share price performance may be enhanced, including the
effectiveness of marketing 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 the diluted net asset
07 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
value per share to be greater than 6% on any one day. This 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 making and timing of any
share buy-backs is at the absolute discretion of the Board.
During the year under review, no shares were bought back by
the Company. In addition, all of the remaining 328,400 shares
held in treasury at the beginning of the year were reissued. As
at 31 March 2014 the discount of the Company’s share price to
the diluted net asset value per share was 3.5%.
Ongoing charges ratio
The Board continues to be conscious of expenses and works
hard to maintain a sensible balance between good quality
service and costs.
As at 31 March 2014 the ongoing charges ratio (excluding
performance fees) was 1.0% which was unchanged from the
percentage for the previous year.
Ongoing charges ratio
1.0%*
*excluding performance fees disclosed in note 3 on
page 52. Ongoing charges ratio including performance fees
crystallised 1.1%.
Discount of the Company’s share price to the diluted net
asset value per share on 31 March 2014
3.5%
Number of Ordinary Shares in issue
31 March 2014: 46,292,111
31 March 2013: 45,434,746
Number of Subscription Shares in issue
31 March 2014: 1,860,969
31 March 2013: 2,389,926
Number of Ordinary Shares held in treasury
31 March 2014: nil
31 March 2013: 328,408
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 08
Strategic Report / Overview of Strategy
Risk Management
The Board is responsible for the management of the risks faced by the Company and the Board regularly reviews
these risks and how each risk is mitigated. The Board has categorised the risks faced by the Company under five
headings as follows:
• Investment activity and strategy
• Financial
• Shareholder relations and corporate governance
• Operational
• Accounting, legal and regulatory.
A summary of these risks and their mitigation is described below:
Principal Risks and Uncertainties
Mitigation
Investment Activity and Strategy
An unsuccessful investment strategy,
including asset allocation, may lead to
underperformance against the Company’s
benchmark index and peer companies, and
may result in a widening of the Company’s
share price discount to net asset value per
share.
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. OrbiMed provides an
explanation of stock selection decisions and an overall rationale for the make-
up of the portfolio. OrbiMed discusses current and potential investment
holdings with the Board on a regular basis in addition to new initiatives, which
may enhance shareholder returns. The Board sets appropriate investment
restrictions and guidelines which are monitored and reported on by Frostrow.
Each month the Board receives a monthly review report which monitors the
Company’s investment performance (both on an absolute basis and against
the benchmark) and its compliance with the investment guidelines. Additional
reports and presentations are made regularly to investors by Frostrow,
OrbiMed and also by Winterflood Securities Limited, the Company’s
Corporate Stockbroker.
In consultation with its advisers, including the Company’s Corporate
Stockbroker, the Board also undertakes a regular review of the level of
discount/premium and consideration is given to ways in which share price
performance may be enhanced, including the effectiveness of marketing,
share issuance and share 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. (See page 7 for further information).
In addition, the Board has undertaken that every five years there will be a
continuation vote taken at the Annual General Meeting falling in that year.
Shareholders will have an opportunity to vote on the continuation of the
Company at the Annual General Meeting to be held on 14 July 2014.
08 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 09
Strategic Report / Overview of Strategy
Principal Risks and Uncertainties
Mitigation
Financial
The financial risks associated with the
Company include market risk (including
counter-party risk), liquidity risk, foreign
exchange risk and credit risk.
The Company’s assets comprise mainly of 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
(“Goldman Sachs”) 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, although the Company
maintains the economic benefits from ownership of those assets. Goldman
Sachs may take up to 140% of the value of the outstanding loan as collateral.
The Company is afforded protection under both the SEC rules and U.S.
legislation equal to the value of the net assets held by Goldman Sachs (also
see page 25, note 11 on page 56 and the glossary beginning on page 68).
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 59.
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 the Investment Manager’s approved list of
counterparties.
A significant proportion of the Company’s assets is 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 fluctuations which is that it does not currently
hedge against currency exposure.
Shareholder Relations and
Corporate Governance
Shareholder unrest could arise if there is poor
adherence to best practice in corporate
governance and which could result in
reputational damage to the Company.
The Board receives regular reports on shareholder activity and is kept
informed of shareholder sentiment. Regular contact is maintained with major
shareholders. Details of the Company’s compliance with corporate
governance best practice, including information on relations with
shareholders, are set out in the Corporate Governance Statement beginning
on page 30.
The Board reviews both the internal controls and the disaster recovery
procedures put in place by its principal service providers on a regular basis.
Operational
Disruption to, or failure of, accounting, dealing
or payments systems in place at the Company’s
service providers, including custodian and
appointed sub-custodians could prevent
accurate reporting and monitoring of the
Company’s financial position.
09 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:01 Page 10
Strategic Report / Overview of Strategy
Principal Risks and Uncertainties
Mitigation
Accounting, Legal and Regulatory
Failure to comply with appropriate law and
regulations could expose the Company to
serious financial loss and reputational
damage.
The Board relies on the services of Frostrow and also external advisers to
ensure compliance with applicable law and regulations including the
Companies Act, the Corporation Tax Act and the UKLA Listing Rules. The
Board is aware of changes to the regulatory environment in the year ahead. In
particular the Company continues to prepare itself for implementation of the
Alternative Investment Fund Managers Directive (AIFMD) and the Foreign
Account Tax Compliance Act (FATCA).
Director, Social, Economic and Environmental Matters and Looking to the Future
Directors
The Directors of the Company, who served during the year, are
shown below. Further information on the Directors can be
found on pages 23 and 24.
relevant human rights issues and the Company does not have
a human rights policy.
The Company recognises that social and environmental issues
can have an effect on some of its investee companies.
The Company is an investment trust and so its own direct
environmental impact is minimal. The Board of Directors
consists of six Directors, four of whom are resident in the UK,
one is resident in the U.S. and one in Canada. The Board holds
one of its regular meetings in the U.S. each year but has a
policy that travel as far as possible is limited, thereby
minimising the Company’s carbon footprint.
Looking to the Future
The Board concentrates its attention on the Company’s
investment performance and OrbiMed’s investment approach
and on factors that may have an effect on this approach.
Marketing reports are given to the Board at each Board
meeting by both OrbiMed and Frostrow, which include how
the Company will be promoted and details of planned
communications with existing and potential shareholders. The
Board is regularly updated by Frostrow on wider investment
trust industry issues and discussions are held at each Board
meeting concerning the Company’s future development and
strategy.
The Company’s overall strategy remains unchanged.
Sir Martin Smith (Chairman)
Sarah Bates (appointed 22 May 2013)
Jo Dixon
Dr David Holbrook
Samuel D. Isaly
Doug McCutcheon
Anthony Townsend (retired 17 July 2013)
All Directors seek re-election by shareholders at each Annual
General Meeting.
Board Diversity
The Company is supportive of the recommendations of Lord
Davies’ Report that the performance of corporate boards can
be improved 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 process
actively seeks persons with the right qualifications so that
appointments can be 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.
Social, Economic and Environmental Matters
The Directors, through the Company’s Investment Manager,
encourage companies in which investments are made to
adhere to best practice with regard to Corporate Governance.
In light of the nature of the Company’s business there are no
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Investments held as at 31 March 2014
Fair
Value % of
Investment Country/region £’000 Investments
Roche Holdings Switzerland 48,664 6.8
Gilead Sciences USA 28,044 3.9
HCA USA 26,668 3.7
Merck & Co. USA 26,229 3.7
Mylan USA 25,594 3.6
Regeneron Pharmaceuticals USA 25,216 3.5
Bristol-Myers Squibb USA 23,678 3.3
Amgen USA 23,528 3.3
Biogen Idec USA 21,085 2.9
AbbVie USA 19,960 2.8
Top 10 Investments 268,666 37.5
Allergan USA 19,345 2.7
Incyte + USA 19,325 2.7
Medivation USA 18,341 2.6
Fluidigm ^ USA 17,625 2.5
Ono Pharmaceutical Japan 17,600 2.5
Pfizer USA 16,762 2.3
Thermo Fisher Scientific USA 16,588 2.3
Illumina USA 16,495 2.3
Actelion Switzerland 15,621 2.2
Sanofi France 13,764 1.9
Top 20 Investments 440,132 61.5
Perrigo Ireland 13,522 1.9
Intuitive Surgical USA 13,396 1.9
Express Scripts USA 12,972 1.8
Insulet USA 12,002 1.7
Celgene USA 11,756 1.6
Agilent Technologies USA 11,740 1.6
InterMune USA 11,099 1.6
Astellas Pharma Japan 10,373 1.4
Shandong Weigao Group China 8,907 1.2
Sawai Pharmaceutical Japan 7,730 1.1
Top 30 Investments 553,629 77.3
Ikaria Second Lien Loan
8.75% 04/02/22 (unquoted) USA 6,566 0.9
St Jude Medical USA 6,307 0.9
Carefusion USA 6,006 0.8
Impax Laboratories USA 5,828 0.8
Nichi-Iko Pharmaceutical Japan 5,758 0.8
Sino Biopharmaceuticals China 5,706 0.8
BioMarin Pharmaceutical USA 5,482 0.8
Health Net USA 5,404 0.8
McKesson USA 4,978 0.7
Molina Healthcare USA 4,954 0.7
Top 40 Investments 610,618 85.3
+ includes Incyte 4.75% 01/10/15 (Conv) equating to 2.2%% of investments
^ includes Fluidigm 2.75% 01/02/34 (Conv) equating to 0.5% of investments
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Investments held as at 31 March 2014 – continued
Fair
Value % of
Investment Country/region £’000 Investments
Neurocrine Biosciences USA 4,748 0.7
Towa Pharmaceutical Japan 4,660 0.7
Infinity Pharmaceuticals USA 3,866 0.5
Tornier Netherlands 3,574 0.5
Orasure Technologies USA 3,390 0.5
Curis USA 3,299 0.5
Shire Ireland 3,295 0.5
Biosensors International Singapore 3,288 0.5
Stryker USA 3,279 0.5
Nuvasive USA 3,201 0.4
Top 50 Investments 647,218 90.6
Supernus Pharmaceuticals USA 3,107 0.4
Zimmer USA 3,092 0.4
Portola Pharmaceuticals USA 2,973 0.4
Volcano Corp 1.75% 01/12/17 USA 2,612 0.4
Exact Sciences USA 2,548 0.4
Vocera Communications USA 2,519 0.4
Sinopharm China 2,517 0.4
Celldex Therapeutics USA 2,192 0.3
Orexigen Therapeutics
2.75% 01/12/20 USA 1,520 0.2
Sheridan Second Lien Term
Loan 18/12/21 (unquoted) USA 1,438 0.2
Top 60 Investments 671,736 94.1
Endologix 2.25% 15/12/18 USA 571 0.1
QLT Canada 478 0.1
Everyday Health USA 353 –
Total equities and fixed interest investments 673,138 94.3
OrbiMed Emerging Markets Basket (unfunded, Bullet Swap)† 18,114 2.5
Jiangsu Hengrui* 8,612 1.2
Aurobindo* 4,663 0.7
China Resources^ 4,252 0.6
Lupin* 2,888 0.4
Strides Acrolab* 1,796 0.3
Total investments including OTC Swaps 713,463 100.0
Put options (long) 420 –
Put options (short) (979) –
Call options (long) 647 –
Call options (short) (72) –
Total investments including OTC Swaps and Options 713,479 100.0
See note 18 beginning on page 59 for further details in relation to the risks and maturity of the OTC Swaps and Options.
* Fully funded.
^ Partially funded.
† See glossary beginning on page 68.
SUMMARY
Fair value % of
Investment £’000 investments
Equities (including options & swaps) 681,269 95.5
Convertible Securities and Fixed Interest 24,206 3.4
Second Lien Loans 8,004 1.1
Total of all investments 713,479 100.0
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Portfolio Distribution
as at 31 March 2014
By Sector
2014
2013
Managed Healthcare
1.6%
Fixed Income 4.5%
Managed Healthcare
4.2%
Fixed Income 1.1%
Healthcare Distributors/
Services/ Facilities
7.3%
Healthcare Equipment/
Supplies/ Technology
9.4%
Life Sciences
Tools and Services
9.1%
Biotechnology
25.9%
By Geography
2014
Europe 13.8%
Emerging
Markets
8.6%
Asia
6.5%
Healthcare Distributors/
Services/ Facilities
6.7%
Healthcare Equipment/
Supplies/ Technology
10.1%
Life Sciences
Tools and Services
5.9%
Pharmaceutical
42.2%
Biotechnology
22.1%
Pharmaceutical
49.9%
2013
Europe 19.3%
Emerging
Markets
9.7%
Asia
7.7%
North America
71.1%
North America
63.3%
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OrbiMed emphasises investments in companies with
underappreciated products in the pipeline, high quality
management teams, and adequate financial resources. A
disciplined portfolio construction process is utilised to ensure
the portfolio is focused on high conviction positions. Finally,
the portfolio is subject to rigorous risk management process to
moderate portfolio volatility.
OrbiMed was founded in 1989 and has evolved over time to
be the largest dedicated healthcare investment firm in the
world. OrbiMed has managed the Company’s portfolio since
its launch in 1995. Strong returns and many investment awards
signify the aggregate talents of this exceptional team.
OrbiMed had over U.S.$11 billion in assets under management
as of 31 March 2014, across a range of funds, including
investment trusts, hedge funds, mutual funds, and private
equity funds.
The Team
The OrbiMed Public Equity Investment Team continues to
expand. Led by founding partner, Samuel D. Isaly, now over 70
investment professionals cover all aspects of research, trading,
finance, and compliance. This includes over 20 degree holders
with MD and/or PhD credentials, healthcare industry veterans,
and finance professionals with over 20 years’ of experience.
The firm has a global investment horizon and the OrbiMed
footprint now spans three continents with offices in New York,
San Francisco, Tel Aviv, Shanghai, and Mumbai.
Investment Strategy and Process
The Team works constantly to identify sources of
outperformance, or alpha, with a focus on fundamental
research. In healthcare, there are many primary sources of
alpha generation, especially in therapeutics. Clinical events
such as the publication of new clinical trial data is a prominent
example and historically has been the largest source of share
price volatility. Regulatory events, such as new drug approvals
by U.S., European, or Japanese regulatory authorities are also
stock moving events. Subsequent new product launches are
carefully tracked and forecasted. Other sources include legal
events and, of course, merger and acquisition activity.
The Team has a global focus with a universe of coverage that
covers the entire spectrum of companies, from early stage
companies with pre-clinical assets to full integrated
biopharmaceutical companies. The universe of actively
covered companies is approaching 1,000.
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“Biotechnology, pharmaceutical, generic drug and
medical device stocks all proved to be significant
contributors to performance in the year.”
Review of Investments
Performance Review
The equity markets for the financial year ended 31 March 2014
were marked mostly by “higher highs” as global indices
reached record highs in each of the quarters. Fueling this
“risk-on” environment was primarily the growth of the global
economy, which grew at its fastest pace in nearly three years
(source: International Monetary Fund). A reduction in
sociopolitical unrest across the globe compared to previous
years was also a contributory factor. The total return of the
MSCI World Index was +9.1% in sterling terms and +19.8% in
U.S. dollar terms.
Despite the positive returns, global healthcare equities
outperformed the broader market in the year. Positive
fundamentals drove the sector higher and were the key to the
relative outperformance. The Company’s benchmark, the MSCI
World Healthcare Index measured on a net total return, sterling
adjusted basis, finished up14.9% (+27.0% in U.S. dollar terms).
The Company performed even better, with a diluted net asset
value per share total return of +25.9% and a share price total
return of +30.8% during the year.
Since the Company’s inception in 1995 to 31 March 2014, the
total return of the Company’s net asset value per share is
1,474.2%, equivalent to a compound annual return of 15.7%.
This compares to the “blended” benchmark* rise of 697.4%,
equivalent to a compound annual return of 11.6%.
*See page 3 for further information
Contribution to Performance
Sources of positive contribution in 2014 were rather diverse.
Biotechnology, pharmaceutical, generic drug and medical
device stocks all proved to be significant contributors to
performance in the year. Most notable was biotechnology,
regardless of capitalisation, with over 750 bps of added
performance. Allocation and stock picking added at least 250
bps each from pharmaceutical, generic drug, and medical
device sectors. Geographically speaking, investments in North
American-based stocks contributed the vast majority of
performance at over 2000 bps.
It follows then that three of the top five contributors in 2014
were US-based biotechnology stocks. The most significant of
those was Incyte Corporation. The Delaware-based company’s
key marketed product, Jakafi (ruxolitinib), launched in January
2012. Sales for the novel treatment for myelofibrosis reached
over U.S.$200 million in the U.S. alone in 2013. Meanwhile, the
company’s marketing partner in Europe, Swiss-based Novartis,
sold almost an additional U.S.$200 million in product sales
(known as “Jakavi” in Europe). Further, investor excitement over
additional indications for Jakafi helped buoy the stock. Finally,
Incyte has not rested on the laurels of one successful drug
launch. Rather, the company has been able to expand their
pipeline, most notably into the “hot” area of immuno-oncology
with INCB24360, an oral compound that targets “IDO”, an
immune regulatory enzyme that is normally expressed in tumour
cells and in activated immune cells. With the company firing on
all cylinders, the stock more than doubled during the year.
Illumina, Inc., located in the southern Californian city of San
Diego, is a pioneer, changing the current landscape of
genomic research. The company currently develops and
manufactures a suite of next-generation sequencing
instruments that enables scientists and clinicians to decode the
genome, the underlying map of our biological make-up. As
the current dominant player in the industry, Illumina has
enjoyed significant uptake in the demand for their technology
throughout this past year and thus was a top contributor to
performance. The stock outperformed due to continued
acceleration of demand for sequencing instruments as
demonstrated in the strength of their quarterly earnings
results. In addition to the company’s flawless execution in
maintaining their commercial dominance, Illumina also
launched its newest instrument, HiSeq Ten X, which was met
with exuberance from both the scientific and investment
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communities. The breadth of new product introductions and
the ensuing excitement, coupled with strong corporate
earnings results, propelled Illumina’s shares up over 150%
during the year.
Mergers and acquisitions (M&A) are common in the healthcare
sector and this theme was evident in the Company’s
performance this year. One acquisition of note was MAKO
Surgical Corp., a medical device company that specialises in
robotic devices for orthopaedic surgery. The company was in
the early stages of an exciting new product cycle when it was
acquired by Stryker Corporation for U.S.$1.65 billion,
representing nearly a 100% premium to the stock’s previous
close.
Emerging biotechnology stocks, emblematic of companies
with no recurring revenues and perhaps only a single product
in development, are inherently volatile and often binary in
nature. InterMune, Inc. is a perfect case study. The small,
California-based company with only 350 employees focuses on
the research, development and commercialisation of
innovative therapies in pulmonology and orphan fibrotic
diseases. The share price doubled in February 2014 after the
company reported positive results from a Phase III clinical trial
for pirfenidone, a treatment for idiopathic pulmonary fibrosis, a
chronic lung disease that can result in the need for a lung
transplant and in some cases can prove fatal. The stock held its
gains into year-end.
Gilead Sciences, Inc. is a global, large capitalisation
biotechnology company whose share price has been on a
multi-year re-rating. Celebrated by us previously as a
“Champion of Innovation”, the company’s fortunes are
anchored by an industry leading HIV franchise, with annual
sales in excess of U.S.$9 billion and growing. The company is
now also regarded as the industry leader in the treatment of
hepatitis C with the December 2013 approval of Solvaldi
(sofosbuvir), a novel oral treatment that is easy to take, well
tolerated, and literally a cure for the vast majority of patients
with this slow moving, but ultimately devastating disease.
Additionally, the past year has also given investors visibility into
Gilead’s next leg of growth, namely, oncology. In October
2013, the company released an earlier-than-expected positive
result from a clinical trial of their investigational cancer drug,
idelalasib, for the treatment of a form of leukemia. Finally,
Gilead continued to post stellar quarterly financial results,
propelling the stock to new all-time highs in the period.
In terms of top detractors to performance, no distinct theme is
evident. Rather, idiosyncratic disappointments populate the
key negative contributors in the period. Overall, major
detractors were few and isolated.
Infinity Pharmaceuticals, Inc. is a Massachusetts-based
emerging biotechnology company and another case study of
the binary nature of these stocks. The company’s lead
compound, in development for the treatment of a range of
blood-based cancers, was shown to possess some concerning
and unexpected side effects when data was disclosed at the
preeminent oncology meeting in May/June 2013. Further
exacerbating the shift in investor sentiment over Infinity’s stock,
competitors’ data at the same meeting, surprised to the
upside. Overall, Inifity lost over 80% of its value off its high
during the period.
Dynavax Technologies Corporation (sold from the portfolio in
late 2013) is a biotechnology that specialises in the
development of products to prevent and treat infectious and
inflammatory diseases and cancer. Their lead candidate is
Heplisav, a vaccine for hepatitis B that is more convenient and
efficacious than currently marketed vaccines. The company
filed Heplisav for approval with the U.S. Food and Drug
Administration (FDA). We were optimistic for approval, despite
an FDA Advisory Committee that had recommended an
additional safety study for the vaccine prior to approval, as it
appeared the FDA was considering approving the vaccine for
use in especially vulnerable subpopulations of patients without
the additional study. However, in June 2013, the FDA
ultimately decided that the company would, in fact, need to
conduct another safety trial prior to any approval, sending
Dynavax shares sharply downward. While we continue to
believe the vaccine is ultimately approvable, the FDA’s request
for another trial may delay the launch of the vaccine for years.
China Resources is a leading over-the-counter (OTC) and
traditional Chinese medicine (TCM) company headquartered
in Shenzhen, China. We invested in the company based on our
belief that the value of its market-leading OTC brand, “999”, is
under-appreciated and acceleration of sales in the future was
likely. However, at the beginning of the reported period,
significant expectations of a major acquisition were built into
the stock which were ultimately not delivered due to a
valuation disagreement. The share price fell when trading
resumed after a two-month trading suspension during the
negotiation period.
Vocera Communications Inc. provides voice communication
solutions for hospitals in the United States. Specifically, the
Vocera designed communication system allows “mobile”
hospital staff to instantly connect to the people and the
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information they need immediately through a software-based
solution that can run on any smart device or the Vocera
“badge”, inside and outside the facility. However, the stock
was hurt by weaker sales growth due to tighter hospital
budgets and capital expenditure as a result of caution ahead
of the rollout of the Affordable Care Act (ACA) in the United
States.
Biosensors International Group Ltd. is a Singapore-based
company that manufactures medical devices. The company’s
revenue base is derived from a mix of geographies,
predominantly China, Europe, and Japan. The stock declined
due to a muted drug eluting stent (DES) market worldwide.
During the fiscal year, robust sales growth in Europe was driven
by a new stent launch, BioMatrix Flex, but was largely offset by
a competitive new entrant in Japan which led to market share
erosion of its Nobori stents, sold by the company’s Japanese
partner, Terumo. DES products in China went through a round
of double-digit price cuts during the period despite continued
double-digit volume growth.
Finally, a comment on derivatives and impact on performance.
The Company employs, when appropriate, options strategies
in an effort to enhance returns and to improve the risk-return
profile of the portfolio. During the year, the derivative overlay
strategy was particularly successful, adding roughly 2% to
performance.
Sector Update
Overall, the fundamentals for therapeutic companies have not
been this strong in nearly 15 years. An inflection point we
identified last year continued into the year under review,
namely resurgence in Research and Development (R&D)
output. The lifeblood of pharmaceutical and biotechnology
companies is new products, and pipelines and new product
launches have not been this exciting since the late 1990’s.
Pharmaceuticals
Large capitalisation pharmaceutical companies are finally
through the worst part of their patent cliffs. Exciting new drugs
across many therapeutic categories are fueling investor
interest, in particular the generalist investor. M&A and
corporate activity has spiked and is unlocking shareholder
value. Finally, investors are seeing a return to growth for this
previously moribund sector.
However, the sector is not without its issues. First, not all
companies in this space are created equal. In fact, the group is
rather heterogeneous in its membership. Some pipelines are
clearly superior and others clearly inferior. Not all companies
are now devoid of present or near term patent expirations.
17 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Thus, while the growth outlook for the group is accelerating,
not all are enjoying the renaissance to the same degree.
Then there is valuation. Once a dominant argument to be long
the group, given depressed multiples on an absolute and
relative basis, average valuations have moved up in excess of
50% over the last two years. Thus, one must be much more
selective in large capitalisation pharmaceutical companies,
rather than simply “owning the whole group”. Pipelines,
catalysts, growth, new product launches, valuation,
management, business development, patent expirations,
potential M&A, and corporate activity all must be taken into
account when considering stock selection here. Macro factors
also must be considered, in particular the global yield curves
as a rising interest rate environment could facilitate some
rotation out of the high yielding large capitalisation
pharmaceutical stocks. Overall, we are excited by the
opportunities currently afforded by the pharmaceutical space,
but remain highly selective in consideration of the entire
portfolio.
Biotechnology
For the stated cautionary reasons above, we prefer large
capitalisation biotechnology stocks as our overweight strategy
in therapeutics. The main positive is the same: the best new
product flow in years. Moreover, the profitable biotechnology
companies possess better growth prospects and more
attractive valuations.
First, the latest new product introductions have been truly
innovative and have met with immediate commercial success.
This is a reversal of a trend from only a year ago, when it was in
vogue to “short the launch”. But recent launches like the oral
multiple sclerosis drug, Tecfidera (Biogen Idec, Inc.), and the
oral hepatitis C drug, Solvaldi (Gilead Sciences, Inc.) have
been blockbusters right out of the gate. Second, pipelines are
robust, providing plenty of clinical catalysts. History shows that
stocks re-rate higher with positive pipeline news flow. Third,
valuations, while higher, are more compelling than ever. March
of 2014 saw some profit taking in the biotechnology sector,
understandable given the multi-year run of outperformance.
However, this correction has created an opportunity.
Specifically, forward looking price-to-earnings ratios for the
group are now lower than their large capitalisation
pharmaceutical brethren. This is the first time this has
happened, and considering the differing average growth
profiles (+20% for biotechnology and +5% for pharmaceutical
companies), the investment opportunity here is literally
unprecedented.
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Emerging Biotechnology
Biotechnology companies, regardless of capitalisation,
continue to be a leading source of innovative new drugs.
Emerging biotechnology stocks performed strongly during the
year as the fundamentals of the sector remain strong. Clinical
and regulatory news will continue to be critical to catalyse
sector performance going forward.
Important Phase III results are expected from a number of
companies this year across a host of therapeutic categories,
including cystic fibrosis, pulmonary arterial hypertension, and
atherosclerosis. Additional areas of high interest to investors
include hematological malignancies, orphan diseases, and
immuno-oncology.
Investor enthusiasm for emerging biotechnology stocks led to
a large amount of recent Initial Public Offering (IPO) activity.
During the 2013 calendar year and the first three months of
2014, there were 62 new biotechnology IPOs, with many
performing strongly. This has broadened the investable
biotechnology universe, and allows the funding many of new
approaches to treat disease.
With a wide array of stocks and catalysts, many of which are
binary in nature, we continue to invest in only the highest
conviction ideas in the emerging biotechnology space.
Global Generics
Although the global generic market environment remains
healthy, the U.S. and Asian markets appear particularly
well-positioned in our view for several reasons. In the U.S.
market, the FDA has stepped up efforts to remove
non-compliant and India-based generic manufacturers from
the marketplace. Ensuing product shortages have enabled
favourable pricing trends that could persist for several
quarters. Throughout Asia, economic expansion, favourable
demographics, supportive governmental policies, and other
contributing factors continue to drive robust generic utilisation
in many regions. Conversely in Europe, although generic
utilisation continues to climb, some significant pricing erosion
has emerged in some major markets which is concerning.
We still favour the larger global generic players, especially
those with emerging branded franchises. Further consolidation
of the generic industry is likely and we believe some of the
small and mid-sized U.S.-based players are attractive targets.
We have reduced exposure to India-based manufacturers in
response to the FDA’s strong regulatory stance and
heightened scrutiny.
Our long-term view of the Japanese generic drug market is still
positive. Japan possesses the fastest growing generic drug
market in the world due to significant secular upside from
government efforts. While uncertainty plagues the non-familiar
investor, the looming fiscal year promises to be the most
dynamic in history.
Specialty Pharmaceuticals
Our strategy remains multi-pronged given the inherent
heterogeneity of this sub-sector. We find high-growth
companies with durable, U.S.-focused, branded franchises and
reasonable growth-adjusted valuations particularly attractive.
However, we also actively search for “contrarian” stocks with
underappreciated proprietary businesses trading at depressed
valuations. In Europe, we remain very selective, however,
improving economic trends, new launch cycles, and increased
M&A activity makes us a bit more constructive in the region.
We expect M&A to remain a dominant sector theme, as
players continue to pursue creative business combinations
driven by potential revenue, operating and tax synergies.
Medical Devices
Our investment stance on the Medical Devices sector is a
cautious one. While macroeconomic improvements over the
past 12 months have led to an increase in the number of
procedures carried out and also pricing pressure stabilisation,
we see headwinds going forward, such as the lack of a material
positive inflection point in unit growth, a dearth of innovation,
and continued pricing pressure. In addition, valuations across
the sector are no longer inexpensive on a historical basis
and/or relative to the broader market.
Against this backdrop, we remain focused on innovation and
business right-sizing. Our stock-picking framework is geared
toward companies with: (1) new product cycles, typically small
and mid-cap companies; (2) margin expansion from cost
rationalisation and improving sales profiles; and (3) strong balance
sheets/cash flows for potential M&A and share repurchases.
Importantly, M&A has been picking up across the industry, with
several deals in the past 12 months: Stryker’s acquisition of
MAKO Surgical; Microport’s acquisition of Wright Medical’s hip
and knee business; and Covidien’s acquisition of Given
Imaging. We expect this to continue.
Healthcare Services
“Obamacare” made headlines during the year mostly for all of
the wrong reasons. But despite its widely publicised startup
troubles, the ACA should benefit those companies levered to
health care coverage expansion.
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It is still early in the implementation of ACA; the expansion of
coverage should improve the profitability of hospitals, which
were previously uncompensated for care provided to
uninsured patients. Additionally, hospitals may also stand to
benefit from higher utilisation as individuals with new
subsidised insurance demand more services.
Within managed care, we prefer Medicaid plans like Molina
Healthcare, Inc., a healthcare services provider that facilitates
care to financially vulnerable families and individuals covered
by government programmes. We expect the company to
double its revenues over the next two years driven by
programme eligibility expansions and states transitioning from
existing Medicaid beneficiaries to managed care (from
unmanaged fee for service), in order to save money and
improve care quality. In addition, there are significant cost
savings for companies that invest ahead of new contract
launches.
Valuations remain attractive, and coupled with improving
demand from ACA, we are positive on the group.
Life Sciences Tools and Diagnostics
This fiscal year has been a banner year for our investments in
the Life Sciences Tools & Diagnostics space, despite pockets
of uncertainties, particularly in small capitalisation diagnostics.
The outperformance in the subsector was largely driven by
corporate actions in large capitalisation companies, coupled
with select innovations in genomic research. As a result, the
sector-wide multiple compressions observed in the years past
due to academic funding pressure, reversed this year, adding
fuel to the outperformance.
The decoupling of assets within the subsector continued this
year. Relative outperformance was attributed to those
companies with leverage to genomic research compared to
underperformance by companies with more cyclical industrial
end-market exposures. As we head towards 2015, our
sentiment remains positive, underpinned by visibility in
genomic research, innovation, and the subsequent commercial
uptake. Select corporate action items will likely catalyse further
outperformance in large capitalisation life sciences tools,
companies such as the pending split of Agilent Technologies.
We remain selective in diagnostics as we continue to be wary
of reimbursement risks.
While the sectors have re-rated higher and valuations have
approached recent historical highs, we remain optimistic in the
sector’s ability to generate strong returns.
Emerging Markets
We continue to believe that investing in healthcare in
emerging markets is a long-term, secular play. Aging
populations, rising income levels, and increasing healthcare
spending as a percentage of GDP are the three key drivers
underpinning the growth of healthcare markets in these
regions for the next few decades. Additionally, we believe
technology innovation could emerge as next growth driver in a
longer time horizon.
Our investment strategy here has always been to pick long-
term winners based on our fundamental analysis on the
attractiveness of respective industry sub-sectors, competitive
positioning of individual companies, and our assessment of
each management team. We carefully construct the
Company’s portfolio to manage volatility typically associated
with emerging market stocks as well as specific industry risks,
namely pricing pressure, affordability, and lack of talents.
As we move towards 2015, we expect Chinese private hospital
stocks to continue the momentum observed in the second half
of this year and continue to outperform next year, driven by
favorable government policy initiatives and early growth stage
of the industry. Established private hospital players in the
ASEAN region* could outperform again after taking a pause
during the year. Industry consolidation and M&A activities in
emerging markets should continue to play out for our picks in
both acquirers and acquisition targets.
For pharmaceutical stocks in emerging markets, we favour of
companies with established commercial channels as well as
product development capability. Moreover, we are avoiding
mass generic companies in China due to pricing pressure from
both competition and government tender policies.
*See glossary beginning on page 68.
Samuel D. Isaly
OrbiMed Capital LLC
Investment Manager
6 June 2014
19 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:02 Page 20
Strategic Report / Investment Manager’s Review
Contribution by Investment
Principal contributors to and detractors from net asset value performance over the year to 31 March 2014
Contribution Contribution
for the year to per Share
31 March 2014 (pence) *
Top Five contributors £'000
Incyte † 16,102 35.05
Illumina 11,890 25.88
MAKO 9,873 21.49
Intermune 9,179 19.98
Gilead Science 8,981 19.55
56,025 121.95
Top Five detractors
Infinity (12,059) (26.25)
Dynavax Technologies (2,744) (5.97)
Vocera (2,029) (4.42)
China Resources (1,718) (3.74)
Biosensors International (1,703) (3.71)
(20,253) (44.09)
†includes Incyte 4.75% 01/10/15 convertible bond.
*based on 45,940,093 being the undiluted weighted average number of shares in issue during the year ended 31 March 2014.
20 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:02 Page 21
Strategic Report / Investment Manager’s Review
Champions of Innovation – Industry leading investments in the Portfolio during the year
normally only live for weeks or months, can live for years after
nivolumab therapy.
Ono and BMS are collaborating on at least seven other solid
tumor types, such as liver, pancreatic, stomach, head & neck,
and breast cancers. Utility in blood cancers and virology (most
notably HIV) is also being explored. The commercial potential
of nivolumab across such a large array of neoplasms is truly
unprecedented.
Bristol-Myers Squibb
The average person is largely unaware, but we are in the midst
of a revolution in the treatment of cancer and Bristol-Myers
Squibb (BMS) is at the forefront of those efforts. This
metamorphosis is based on a simple idea: don’t use chemicals
to kill tumour cells and healthy cells alike, rather, stimulate the
body’s own immune system to fight the cancer. While the
concept has been around for decades, success of
“immuno-oncology” therapy has been fleeting. That has
begun to change.
BMS was the first company ever to bring an immuno-oncology
product to market in 2011. However, we are on the precipice of
the next wave of products that target “PD-1”, or Programmed
Death-1. PD-1 is a protein found on the surface of T-cells
(immune system cells) in the human body. This protein binds
with a ligand, or “PD-L1”, that is expressed only on tumour
cells, and together they protect the cancer cell from attack by
the body’s own immune system. BMS’s partner, Japan-based
Ono Pharmaceutical Co., discovered that antibodies directed
to PD-1 (aka “anti-PD-1”), could block this interaction, thereby
allowing the immune system to resume the attack on the
cancer.
The lead compound in this partnership is a monoclonal
antibody called nivolumab. To date, BMS has demonstrated the
efficacy of nivolumab in a host of different cancers and across
histologies, from skin to kidney to lung cancers. However, what
is most impressive is the potential for cure. A hallmark of
anti-PD-1 therapy compared to current cancer regimens such as
chemotherapy or targeted therapy is the incredible durability of
response in patients who do respond. Or, put another way,
survival in patients who respond to nivolumab therapy may be
in fact “cured” of their cancer. While data continues to mature,
BMS has shown that some patients with advanced disease, who
21 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Illumina, Inc.
Illumina, through organic growth and its acquisition of Solexa
Technology in November 2006, has transformed itself as one of
the most innovative companies not only in life sciences tools,
but in all of healthcare. The company’s core business of
providing innovative tools in research with its menu of next
generation sequencing platforms is currently changing how
clinicians and scientists are viewing the biology of organisms.
The first human genome was decoded in 2000 at a cost north
of U.S. $3 billion. Illumina has revolutionised this work by
enabling current science to unlock the value of a whole human
genome for less than U.S. $1,000. Being able to understand the
human genome in its totality will allow clinicians to better
comprehend the underlying biology of their patients. This
custom understanding will ultimately lead to personalised
healthcare; medical care that will be catered to our own body.
Due to its fast paced innovation, Illumina is often regarded as
being in the vanguard of technology breakthroughs. It is in this
regard that Illumina is not only attracting the attention of
healthcare investors, but also garnering interest in the
high-growth and high-profiled technology community as well.
It’s not often we see investment opportunities that can
successfully straddle the boundaries of both healthcare and
technology. Illumina is doing just that.
231544 Finsbury WWH pp01-pp24 11/06/2014 12:02 Page 22
Strategic Report / Investment Manager’s Review
Champions of Innovation – continued
InterMune, Inc.
InterMune is an emerging biopharmaceutical company focused
on pulmonary disease. Its lead drug is Esbriet (pirfenidone) for
the treatment of idiopathic pulmonary fibrosis (IPF). IPF is a
progressive scarring of the lungs which causes loss of lung
function and ultimately leads to death, typically within 3-5 years
of diagnosis. Pirfenidone is a novel anti-fibrotic. The drug was
tested in two nearly identical phase III trials which were
reported in 2009. One trial met its primary endpoint in terms of
reducing the rate of loss of lung function, but the second trial
was not successful (although there were some encouraging
trends). Because of these conflicting results, the FDA initially
rejected the drug, requesting an additional confirmatory
phase III trial to support approval. Esbriet did receive E.U.
approval in 2011. The drug has now been launched in the
majority of European countries, and sales have beaten
expectations over the last several quarters.
Based on the totality of the data across trials, and the fact that
the statistical strength of the successful phase III trial argued
that it was unlikely to be a fluke, we believed that the ongoing
confirmatory phase III was likely to be successful. In February
2014, InterMune announced that the trial was indeed a success,
leading to a significant jump in the company’s share price. In
fact, the treatment effect was larger than expected from the
previous trials. We are confident that this trial will be sufficient
for U.S. approval, expected in 2015.
InterMune is now one of the few biotechnology companies with
worldwide rights to a drug with blockbuster potential. As such
we believe that the company would be an attractive acquisition
target. In particular, Actelion and Gilead have complementary
franchises and would be potential acquirers.
22 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Intuitive Surgical, Inc.
While robotic surgery traces its roots back some 30 years,
usage today is common place thanks to Intuitive Surgical, one
of the pioneers of commercial robots for the surgical suite. The
FDA first cleared the company’s signature “da Vinci Surgical
System” in 2000 for general laparoscopic surgeries such as gall
bladder removal and for treatment of severe heartburn. Today,
Intuitive Surgical’s Da Vinci robotic systems have gained wide
spread adoption in urological and gynecological surgery by
providing more minimally invasive surgery, better anatomical
navigation, and improved visualisation for surgeons.
In order to expand the use of robotics into broader general
surgery markets, the company has recently announced the FDA
approval of two new robotic systems; the next generation Da
Vinci “Xi” and Da Vinci “SP” (Single Port). The improved range
of motion and faster setup time of the Xi allows for complex
procedures that require operating on multiple areas of the
anatomy. This new robotic platform will have applications in
complicated colorectal, thoracic and abdominal oncology
surgeries.
Soon after the announcement of Xi, Intuitive unveiled their new
SP technology which features three fully articulating
instruments and a 3D high-definition camera through a single
25 mm cannula. The SP will be commercialised in mid-2015 and
will allow surgeons to perform a broad range of procedures
through a single incision. We believe that robotics will improve
surgical outcomes over time and that Intuitive Surgical is the
clear technological and commercial leader in the field.
On behalf of the Board
Sir Martin Smith
Chairman
6 June 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:02 Page 23
Governance / Board of Directors
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.
Sir Martin Smith*+
Chairman
Sir Martin Smith joined the Board in 2007. After acting as Head of Corporate Finance for Citibank in
Europe, and Chairman of Bankers Trust International, he became 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 became a
founder and Vice Chairman of New Star Asset Management Group PLC. He is a Director of a number of
private companies. He attended Oxford University and has an MBA from Stanford University.
Sarah Bates*+
Sarah Bates joined the Board in 2013. She is currently Chairman of JPMorgan American Investment
Trust plc and St James’s Place plc and Chairman elect of Witan Pacific Investment Trust plc. She is
also a non-executive Director of Polar Capital Technology Trust plc and Development Securities plc.
She is a former Chairman of the Association of Investment Companies. She is a member of the
Universities Superannuation Fund Investment Committee and an adviser to the East Riding Pension
Fund and has a number of voluntary appointments on charity or pension fund investment
committees. She attended Cambridge University and has an MBA from London Business School.
Jo Dixon*+
Jo Dixon joined the Board in 2004. She is Chairman of the Audit Committee and also the Senior
Independent Director. She is currently a non-executive Director and Chairman of the Audit Committee
of Standard Life Equity Income Trust PLC and Baring Emerging Europe PLC and also a non-executive
Director of JPMorgan European Investment Trust plc. Jo is a graduate Chartered Accountant having
trained with Touche Ross in London. Her career has spanned strategic development, finance and
commercial management at a number of companies including The Eden Project, Serco Group plc and
Newcastle United PLC and also within the Investment Bank and main group of NatWest.
*Member of the Audit Committee
+Member of the Nominations and Management Engagement & Remuneration Committees
Meeting Attendance
The number of meetings held during the year of the Board and its Committees, and each Director’s attendance level, is shown below:
Type and number of meetings
held in 2013/14
Sir Martin Smith
Sarah Bates (appointed on 22 May 2013)
Jo Dixon
Dr David Holbrook
Samuel D. Isaly*
Doug McCutcheon
Anthony Townsend (retired on 17 July 2013)
Board
(4)
Audit Committee
(2)
Nominations
Committee
(1)
4
4
4
4
4
4
3
2
2
2
2
–
2
1
1
–
1
1
–
1
1
Management
Engagement &
Remuneration
Committee
(1)
1
–
1
1
–
1
1
All of the serving Directors attended the Annual General Meeting held on 17 July 2013.
In addition to the above, a number of adhoc special purpose Board and committee meetings were held during the year for the approval of
documents, the allotment of new shares and the approval of regulatory announcements.
*Mr Isaly is not a member of any of the Company’s committees.
23 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp01-pp24 11/06/2014 12:02 Page 24
Governance / Board of Directors
Dr David Holbrook*+
Dr David Holbrook 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 blue chip biopharmaceutical organisations including GlaxoSmithKline and Roche.
Samuel D. Isaly
Sam Isaly joined the Board at launch in 1995. Sam is Managing Partner of OrbiMed Capital LLC, the
Company’s Investment Manager, and has been a worldwide healthcare investment specialist for
more than 30 years having worked in New York and Europe with Chase Manhattan, Société
Générale, Crédit Suisse and UBS Warburg.
Doug McCutcheon*+
Doug McCutcheon joined the Board in 2012. Based in Toronto, Canada, Doug is both a Canadian
and UK citizen. Doug is the President of Longview Asset Management Ltd. and Gormley Limited,
independent investment firms. Doug is involved in several philanthropic organisations with a focus
on healthcare and education. Until 2012, Doug was an investment banker at S.G. Warburg and then
UBS for 25 years, most recently as the head of Healthcare Investment Banking for Europe, the
Middle East, Africa and Asia-Pacific.
*Member of the Audit Committee
+Member of the Nominations and Management Engagement & Remuneration Committees
DIRECTORS’ INTERESTS
The beneficial interests of the Directors and their families in the Company were as set out below:
Shares of 25p each Subscription Shares of 1p each
Sir Martin Smith
Sarah Bates
Jo Dixon
Dr David Holbrook
Samuel D. Isaly
Doug McCutcheon
31 March 2014
1 April 2013
31 March 2014
1 April 2013
5,859
7,200
3,000
1,094
353,600
15,000
5,859
–
3,000
–
353,600
15,000
400
–
600
–
720
–
400
–
600
–
100,720
–
On 24 April 2014, Mr Samuel D. Isaly sold 350,000 Ordinary Shares. Save for this there had been no changes in the above Directors’ interests as at
6 June 2014.
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 26 and 27. A number of the partners at OrbiMed Capital LLC have a minority financial
interest totalling 20% in Frostrow Capital LLP, the Company’s Manager.
24 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 13:30 Page 25
Governance / Report of the Directors
review date. The Company’s assets can be held by Goldman
Sachs 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, although
the Company maintains the economic benefits from ownership
of those assets. Goldman Sachs may take up to 140% of the
value of the outstanding loan as collateral. The Company is
afforded protection under both the SEC rules and U.S. legislation
equal to the value of the net assets held by Goldman Sachs.
Interest on the amount borrowed is charged at the Federal
Funds effective rate plus one week LIBOR – OIS Spread plus 35
basis points. At the year-end total borrowings amounted to the
equivalent of £62.7 million (2013: £31.4 million). The Company
was 12% geared at the year-end. (For further information see
note 11 on page 56, and note 18 on pages 59 to 64).
Subscription Shares
The Company’s Subscription Shares were allotted on
4 September 2009 to Ordinary Shareholders on the register at
5.00 p.m. on 3 September 2009, by way of a bonus issue on the
basis of one Subscription Share for every five Ordinary Shares
held at that date. This resulted in the issue of 9,730,960
Subscription Shares.
As each Subscription Share confers the right, but not the
obligation, to subscribe for one Ordinary Share, the Directors
consider that this meets the criteria for the Subscription Shares
to be classified as equity in accordance with FRS 25.
The subscription right conferred by each Subscription Share
may be exercised on each of 31 October, 31 January, 30 April
and 31 July (or if such date is not a business day, on the next
following business day) between (and including) 31 October
2009 and 31 July 2014.
Over the life of the Subscription Shares the subscription price
has stepped up from 614 pence per share from 31 October
2009 to 31 July 2010, to 638 pence per share from 1 August
2010 to 31 July 2012 and finally to the current price of 699
pence per share that will apply until 31 July 2014, the date of
expiry of the Subscription Shares.
These subscription prices represent premia of 1%, 5% and 15%
respectively to the published unaudited net asset value per
Ordinary Share as at 5.00 p.m. on 3 September 2009 (including
current period revenue) of 607.44 pence per share.
A full description of the Subscription Shares and their terms
was publicised via a prospectus issued to existing Ordinary
Shareholders on 11 August 2009.
The Directors present their annual report on the affairs of the
Company together with the audited financial statements and
the Independent Auditor’s Report for the year ended
31 March 2014.
Business and Status of the Company
The Company is registered as a public limited company in
England (Registered Number 3023689) 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 commencing 1 April 2012. 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.
Continuation of the Company
A resolution was passed at the Annual General Meeting held
in 2009 that the Company continues as an investment trust for
a further five year period. In accordance with the Company’s
Articles of Association, shareholders will have an opportunity
to vote on the continuation of the Company at this years’
Annual General Meeting and every five years thereafter.
(Please see the Notice of the Annual General Meeting
beginning on page 72 for further information).
Investment Policy
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.
Further details concerning the Company’s investment policy can
be found in the Strategic Report on page 6.
Results and Dividends
The results attributable to shareholders for the year and the
transfer to reserves are shown on page 45. Details of the
Company’s dividend record can be found on page 3.
Gearing and Loan Facility
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”). Under the
terms of the loan facility Goldman Sachs have been granted a
first priority security interest or lien over the Company’s assets.
The loan does not have a fixed term and there is no formal
25 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 13:30 Page 26
Governance / Report of the Directors
Share Capital
The following shares were allotted by the Company as a result
of holders of the Subscription Shares exercising their
subscription rights during the year:
49,760 shares were allotted on 2 May 2013 raising £348,000.
75,471 shares were allotted on 1 August 2013 raising £527,000.
211,349 shares were allotted on 1 November 2013 raising
£1,477,000. 192,377 shares were allotted on 1 February 2014
raising £1,345,000.
Subsequent to the year-end 369,770 shares were allotted on
1 May 2014 raising £2,585,000.
During the year 328,408 Ordinary Shares held in treasury were
reissued at prices representing no more than a 4.9% discount
to the prevailing fully diluted cum income net asset value per
share, raising £3,530,000 of additional funds for the Company.
As at 31 March 2014 there were 46,292,111 Ordinary Shares
and 1,860,969 Subscription Shares in issue (2013: 45,434,746
Ordinary Shares and 2,389,926 Subscription Shares).
During the year and to 6 June 2014 no Ordinary Shares or
Subscription Shares were re-purchased by the Company.
Warrants
The Company made a bonus issue of Warrants on
17 December 2004 on the basis of one Warrant for every five
Ordinary Shares held. Each Warrant conferred the right, but
not the obligation, to subscribe for one Ordinary Share on
31 July in each of the years 2005 to 2009 inclusive at an
exercise price of 464 pence per Ordinary Share.
A full description of the Warrants and their terms was
publicised via a prospectus issued to existing Ordinary
Shareholders on 19 November 2004.
Investment Management
Investment Management Agreement:
OrbiMed 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. OrbiMed under the terms of the
agreement provides, inter alia, the following services:
• seeking out and evaluating investment opportunities;
• recommending the manner by which monies should be
invested, disinvested, retained or realised;
• advising on how rights conferred by the investments should
be exercised;
• analysing the performance of investments made; and
• advising the Company in relation to trends, market
movements and other matters which may affect the
investment policy of the Company.
26 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Management
Company Management, Company Secretarial and
Administrative Services Agreement:
Frostrow receives a periodic fee equal to 0.30% per annum
of the Company’s market capitalisation up to £150 million,
0.20% per annum of the market capitalisation in excess of
£150 million and up to £500 million, and 0.125% per annum of
the market capitalisation in excess of £500 million, 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:
• marketing and shareholder services;
• administrative services;
• advice and guidance in respect of corporate governance
requirements;
• 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;
• preparation and dispatch 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 7 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.
231544 Finsbury WWH pp25-pp48 11/06/2014 13:30 Page 27
Governance / Report of the Directors
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 outperformance of the investment portfolio
over the benchmark as at the quarter end date; and
ii) The cumulative outperformance 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.
In accordance with the above provisions, during the year a
performance fee of £1,189,000 became payable as at
30 September 2013, one of the quarterly calculation dates at
which a fee could have become payable during the year. This
fee became payable with respect to outperformance that had
been achieved as at 30 September 2012 and which had been
maintained as at 30 September 2013. No fee became payable
at any of the other three quarterly calculation dates during the
year, being 30 June 2013, 31 December 2013 and 31 March
2014. (Year ended 31 March 2013: total fees crystallised
£643,000).
In addition, as described above, during the year a provision is
made within the reported daily net asset value per share for
potential performance fees that might become payable at
future calculation dates, the crystallisation of such potential fees
being dependant on outperformance being maintained for the
required twelve month period. As at 31 March 2014 incremental
outperformance had been achieved by reference to the
benchmark index which gave rise to potential performance fees
of £8,829,000 payable by 31 March 2015. The payment of this
total performance fee amount is contingent on the total
outperformance achieved as at 31 March 2014 being
maintained as at 31 March 2015 and therefore as at 31 March
2014 the amount provided of £8,829,000 is not an actual liability
of the Company, rather a contingent one. In accordance with
the Company’s accounting policies provision is made for this
amount within the Company’s accounting records. In the event
that this outperformance is lost in full through
underperformance during the period to 31 March 2015 then no
fee will become payable during the period to 31 March 2015. In
the event that some but not all of the outperformance achieved
is lost through underperformance during the period to
31 March 2015 then a proportional performance fee amount
will crystallise by 31 March 2015.
The sum of the performance fee of £1,189,000 that crystallised
as at 30 September 2013 and the provision made as at
31 March 2014 of £8,829,000 is £10,018,000 and this is the
amount charged to the capital column of the Company’s
Income Statement during the year. (Year ended 31 March 2013:
27 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
a credit of £1,333,000). See note 3 and note 11 to the accounts
on pages 52 and 56 of this annual report.
Continuing Appointment of the Manager and
Investment Manager
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 the Company Management,
Company Secretarial and Administration Agreements, in
particular the length of notice period and the fee structures.
Retail Investors advised by Independent Financial
Advisers (“IFAs”)
The Company currently conducts its affairs so that its shares can
be recommended by IFAs in the UK to ordinary retail investors in
accordance with the Financial Conduct Authority (“FCA”) rules
in relation to non-mainstream investment products and intends
to continue to do so. The shares are excluded from the FCA’s
restrictions which apply to non-mainstream investment products
because they are shares in an authorised investment trust.
Directors’ & Officers’ Liability Insurance Cover
Directors’ & officers’ liability insurance cover was maintained
by the Company during the year ended 31 March 2014. It is
intended that this policy will continue for the year ending
31 March 2015 and subsequent years.
Directors’ Indemnities
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.
231544 Finsbury WWH pp25-pp48 11/06/2014 13:30 Page 28
Governance / Report of the Directors
Substantial Shares Interest
The Company was aware of the following substantial interests
in the voting rights of the Company:
6 June 2014*
31 March 2014
Number of % of issued
Number of % of issued
Shareholder
shares share capital
shares share capital
Investec Wealth
& Investment
Alliance Trust
Savings
Brewin Dolphin,
Stockbrokers
Charles Stanley,
Stockbrokers
Smith &
Williamson
Spiers & Jeffrey,
Stockbrokers
Deutsche Bank
Private Wealth
Management
Hargreaves
Lansdown
5,112,164
10.96
4,929,850
10.65
2,354,764
5.05
2,437,574
5.27
1,995,504
4.28
1,987,451
4.29
1,929,851
4.14
1,903,695
4.11
1,709,113
3.66
1,727,905
3.73
1,696,775
3.64
1,686,694
3.64
1,464,304
3.14
1,453,423
3.14
1,452,395
3.11
1,392,284
3.01
Standard Life
1,442,437
3.09
1,434,634
3.10
Wealth
As at 31 March 2014 the Company had 46,292,111 shares in issue. As
at 6 June 2014 the Company had 46,661,881 shares in issue.
*6 June being the latest practicable date before publication of the
Annual Report.
Beneficial Owners of Shares – Information Rights
Beneficial owners of shares who have been nominated by the
registered holder of those shares to receive information rights
under section 146 of the Companies Act 2006 are required to
direct all communications to the registered holder of their
shares rather than to the Company’s registrar, Capita Asset
Services, or to the Company directly.
Individual Savings Accounts
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 (£11,880 for an ISA and
£3,840 for a Junior ISA for the 2014/2015 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
28 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
ISA or Junior ISA will not count towards the shareholder’s
annual limit.
The government has announced that with effect from 1 July 2014
ISAs will be replaced with a new simplified product, the New ISA
(“NISA”) with equal limits for cash and stocks and shares.
The overall NISA limits for 2014/2015 will be £15,000 which
offers the option to save in cash, stocks and shares or any
combination of the two.
Audit Tender
As reported in the Company’s 2013 annual report, the Board,
after consideration, agreed that a tender process for the post of
Auditor to the Company should take place as Ernst & Young
LLP have been in post for over 19 years. The process was held
in April 2014 following which a recommendation was made by
the Audit Committee that PricewaterhouseCoopers LLP be
appointed as Auditor to the Company with effect from the
conclusion of the Company’s Annual General Meeting to be
held on 14 July 2014. A resolution proposing their appointment
will therefore be put before shareholders at that meeting.
Further details of the audit tender process can be found in the
Audit Committee Report on pages 38 and 39 of the annual
report.
S.I. 2007/1093 C.49 Commencement No.2 Order
2007
The following disclosures are made in accordance with
S.I. 2007/1093 C.49 Commencement No.2 Order 2007.
Capital Structure
The Company’s capital structure is summarised on pages 25
and 26 and in note 13 on page 57.
Voting Rights in the Company’s shares
Details of the voting rights in the Company’s shares at the date
of this Annual Report are given in note 9 to the Notice of
Annual General Meeting on page 75.
Political Donations
The Company has not in the past and does not intend in future
to make any political donations.
Global Greenhouse Gas Emissions
The Company has no greenhouse gas emissions to report from
its operations, nor does it have responsibility for any other
emissions producing sources under the Companies Act 2006
(Strategic Reports and Directors’ Reports) Regulations 2013,
including those within its underlying investment portfolio.
By order of the Board
Frostrow Capital LLP
Company Secretary
6 June 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 29
Governance / Statement of Directors’ Responsibilities
Company law in the United Kingdom requires the Directors to
prepare financial statements for each financial year. The
Directors are responsible for preparing the Financial
Statements in accordance with applicable law and regulations.
In preparing these financial statements, the Directors have:
• selected suitable accounting policies and applied them
consistently;
• made judgments and estimates that are reasonable and
Going Concern
In consideration of the appropriateness of adopting the going
concern basis in the preparation of the financial statements,
the Directors took into account the following significant issues:
• The views of the Company’s significant shareholders with
regard to the ordinary resolution to be proposed at the
forthcoming Annual General Meeting that the Company
continues as an investment trust for a further five years; and
prudent;
• The net assets of the Company comprises of liquid
• followed applicable UK accounting standards; and
securities.
• prepared the financial statements on a going concern basis.
The Directors are responsible for keeping adequate
accounting records 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.
The Directors are responsible for ensuring that the Report of
the Directors and other information included in the Annual
Report is prepared in accordance with company law in the
United Kingdom. They are also responsible for ensuring that
the Annual Report includes information required by the Listing
Rules of the FCA.
The financial statements are published on the Company’s
website (www.worldwidewh.com) and via Frostrow’s website
(www.frostrow.com). The maintenance and integrity of these
websites, so far as it relates to the Company, is the
responsibility of the Manager. The work carried out by the
Auditor does not involve consideration of the maintenance
and integrity of these websites and, accordingly, the Auditor
accepts no responsibility for any changes that have occurred to
the financial statements since they were initially presented on
these websites. Visitors to the websites need to be aware that
legislation in the United Kingdom governing the preparation
and dissemination of the financial statements may differ from
legislation in their jurisdiction.
Disclosure of Information to the Auditor
So far as the Directors are aware, there is no relevant
information of which the Auditor is unaware. The Directors
have taken all steps they ought to have taken to make
themselves aware of any relevant audit information and to
establish that the Auditor is aware of such information.
Responsibility Statement of the Directors in
respect of the annual financial report
The Directors, whose details can be found on pages 23 and 24,
confirm to the best of their knowledge that:
• the Financial Statements, within this 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 return for the year ended
31 March 2014;
• the Chairman’s Statement, Strategic Report and the Report
of the Directors include a fair review of the information
required by 4.1.8R to 4.1.11R of the FCA’s Disclosure and
Transparency Rules; and
• the annual report and financial statements taken as a whole
are fair, balanced and understandable and provide the
information necessary to assess the Company’s
performance, business model and strategy.
On behalf of the Board
Sir Martin Smith
Chairman
6 June 2014
29 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
This Statement forms part of the Report of the Directors.
The Board confirms that, with the exception of the below, it has in all respects met its obligations under the Listing Rules and the UK
Corporate Governance Code throughout the period of this report:
• Director Tenure (Provision B.1.1 of the UK Corporate Governance Code);
• The role of the Chief Executive (Provision A.2.1 of the UK Corporate Governance Code);
• Executive Directors Remuneration Provisions D.2.1, D.2.2, D.2.3 and D.2.4 of the UK Corporate Governance Code); and
• The need for an internal audit (Provision C.3.6 of the UK Corporate Governance Code).
For 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. Therefore, with the exception of Director tenure, which
is addressed further below and the need for an internal audit function which is addressed further on page 38, the Company has not
reported further in respect of these provisions.
The Principles of the AIC Code
The AIC Code is made up of twenty-one principles split into three
sections covering:
- The Board
- Board Meetings and relations with OrbiMed and Frostrow
- Shareholder Communications
The Board
AIC Code Principle
Compliance Statement
1. The Chairman should be
independent.
The Chairman, Sir Martin Smith, continues to be independent of OrbiMed. There is a clear division
of responsibility between the Chairman, the Directors, OrbiMed, Frostrow and the Company’s
other third party service providers. The Chairman is responsible for the leadership of the Board and
for ensuring its effectiveness in all aspects of its role.
2. A majority of the Board
should be independent of the
manager.
The Board consists of six non-executive Directors, each of whom (with the exception of
Samuel D. Isaly) is independent of OrbiMed. No other member of the Board is a Director of another
investment company managed by OrbiMed, nor has any Board member been an employee of the
Company, OrbiMed or any of its service providers.
3. Directors should be
submitted for re-election at
regular intervals. Nomination
for re-election should not be
assumed but be based on
disclosed procedures and
continued satisfactory
performance.
4. The Board should have a
policy on tenure, which is
disclosed in the annual report.
All Directors will submit themselves for annual re-election by shareholders.
The individual performance of each Director standing for re-election is evaluated annually by the
remaining members of the Board and, if considered appropriate, a recommendation is made that
shareholders vote in favour of their re-election at the Annual General Meeting.
The Nominations Committee considers the structure of the Board and recognises the need for
progressive refreshing of the Board.
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 ability to act independently and, following formal
performance evaluations, believes that each of those Directors is independent in character and
judgment and that there are no relationships or circumstances which are likely to affect their
30 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 31
Governance / Corporate Governance
The Board continued
AIC Code Principle
Compliance Statement
judgment. The Board’s policy on tenure is that continuity and experience are considered to add
significantly to the strength of the Board and, as such, no limit on the overall length of service of
any of the Company’s Directors, including the Chairman, has been imposed. 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, although new Directors are appointed with the expectation that they will serve
for a minimum period of three years subject to shareholder approval.
The terms and conditions of the Directors’ appointments are set out in letters of engagement
which are available for inspection on request at the office of Frostrow and at the Annual General
Meeting.
5. There should be full
disclosure of information
about the Board.
The Directors’ biographical details, set out on pages 23 and 24 demonstrate the wide range of
skills and experience that they bring to the Board.
Details of the Board’s Committees and their composition are set out on page 36.
6. The Board should aim to
have a balance of skills,
experience, length of service
and knowledge of the
company.
The Audit Committee membership comprises those Directors considered by the Board to be
independent. The Chairman of the Company is a member of the Audit Committee, but does not
chair it. His membership of the Audit Committee is considered appropriate given the Chairman’s
extensive knowledge of the financial services industry.
Both the Management Engagement & Remuneration and Nominations Committees are comprised
of those Directors considered by the Board to be independent. The Chairman of the Company acts
as Chairman of the former, in light of the remit of the Committee, and Jo Dixon, as the Senior
Independent Director, acts as Chairman of the latter.
The Nominations Committee considers annually the skills possessed by the Board and identifies
any skill shortages to be filled by new Directors.
When considering new appointments, the Board reviews the skills of the Directors and seeks to
add persons with complementary skills or who possess the skills and experience which fill any gaps
in the Board’s knowledge or experience and who can devote sufficient time to the Company to
carry out their duties effectively.
The experience of the current Directors is detailed in their biographies set out on pages 23 and 24.
The Company is committed to ensuring that any vacancies arising are filled by the most qualified
candidates and recognises the value of diversity in the composition of the Board. When Board
positions become available as a result of retirement or resignation, the Company will ensure that a
diverse group of candidates is considered.
7. The Board should
undertake a formal and
rigorous annual evaluation of
its own performance and that
of its committees and
individual directors.
During the year the performance of the Board, its committees and individual Directors (including
each Director’s independence) was evaluated through a formal assessment process led by the
Senior Independent Director. This involved the circulation of a Board effectiveness checklist, tailored
to suit the nature of the Company, followed by discussions between the Senior Independent
Director and each of the Directors. The performance of the Chairman was also evaluated by the
Senior Independent Director. The review concluded that the Board was working well.
During 2012 an independent review of the Board was undertaken, the results of which were
considered by the Board. The Board has agreed that an independent review of the Board will be
commissioned regularly and a further review will be commissioned in 2015.
The Board is satisfied that the structure, mix of skills and operation of the Board continue to be
effective and relevant for the Company.
31 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
The Board continued
AIC Code Principle
Compliance Statement
8. Director remuneration
should reflect their duties,
responsibilities and the value
of their time spent.
9. The Independent Directors
should take the lead in the
appointment of new Directors
and the process should be
disclosed in the annual report.
10. Directors should be
offered relevant training and
induction.
11. The Chairman (and the
Board) should be brought into
the process of structuring a
new launch at an early stage.
The Management Engagement & Remuneration Committee periodically reviews the fees paid to
the Directors and compares these with the fees paid by the Company’s peer group and the
investment trust industry generally, taking into account the level of commitment and responsibility
of each Board member. Details on the remuneration arrangements for the Directors of the
Company can be found in the Directors’ Remuneration Policy Report and Directors’ Remuneration
Implementation Report on pages 40 to 42 and in note 4 on page 52.
As all of the Directors are non-executive, the Board considers that it is acceptable for the Chairman
of the Company to chair meetings when discussing Directors’ fees. The Chairman takes no part in
discussions regarding his own remuneration. The Board periodically takes advice from external
independent advisers on Directors’ remuneration.
The Nominations Committee comprises those Directors considered by the Board to be independent.
Subject to there being no conflicts of interest, all members of the Committee are entitled to vote on
candidates for the appointment of new Directors and on the recommendation for shareholders’
approval the Directors seeking re-election at the Annual General Meeting.
New appointees to the Board are provided with a full induction programme. The programme covers
the Company’s investment strategy, policies and practices. The Directors are also given key information
on the Company’s regulatory and statutory requirements as they arise including information on the role
of the Board, matters reserved for its decision, the terms of reference for the Board Committees, the
Company’s corporate governance practices and procedures and the latest financial information. It is the
Chairman’s responsibility to ensure that the Directors have sufficient knowledge to fulfil their role and
Directors are encouraged to participate in training courses where appropriate.
The Directors have access to the advice and services of a Company Secretary through its
appointed representative which is responsible to the Board for ensuring that Board procedures are
followed and that applicable rules and regulations are complied with. The Company Secretary is
also responsible for ensuring good information flows between all parties.
Principle 11 applies to the launch of new investment companies and is therefore not applicable to
the Company.
Board Meetings and relations with OrbiMed and Frostrow
12. Boards and managers
should operate in a
supportive,
co-operative and open
environment.
The Board meets regularly throughout the year and a representative of OrbiMed and Frostrow is in
attendance at each Board meeting. The Chairman encourages open debate to foster a supportive
and co-operative approach for all participants.
32 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
Board Meetings and relations with OrbiMed and Frostrow continued
AIC Code Principle
Compliance Statement
13. The primary focus at
regular board meetings should
be a review of investment
performance and associated
matters, such as gearing, asset
allocation, marketing/investor
relations, peer group
information and industry
issues.
The Board has agreed a schedule of matters specifically reserved for decision by the Board. This
includes establishing the investment objectives, strategy and benchmarks, the permitted types or
categories of investments, the markets in which transactions may be undertaken, the amount or
proportion of the assets that may be invested in any category of investment or in any one
investment, and the Company’s share issuance and share buy back policies.
The Board, at its regular meetings, undertakes reviews of key investment and financial data,
revenue projections and expenses, analyses of asset allocation, transactions and performance
comparisons, share price and net asset value performance, marketing and shareholder
communication strategies, the risks associated with pursuing the investment strategy, peer group
information and industry issues.
14. Boards should give
sufficient attention to overall
strategy.
15. The Board should
regularly review both the
performance of, and
contractual arrangements with,
the investment manager and
the manager (or executives of
a self-managed company).
16. The Board should agree
policies with the investment
manager and the manager
covering key operational
issues.
The Audit and Management Engagement & Remuneration Committees respectively, review the
Company’s risk matrix and the performance and cost of the Company’s third party service
providers.
The Board is responsible for strategy and has established an annual programme of agenda items
under which it reviews the objectives and strategy for the Company at each meeting.
The Management Engagement & Remuneration Committee meets at least once a year. It reviews
annually the performance of OrbiMed and Frostrow. The Committee considers the quality, cost
and remuneration method (including the performance fee) of the service provided by OrbiMed
and Frostrow against their contractual obligations and the Board receives regular reports on
compliance with the Investment Restrictions which it has set. It also considers the performance
analysis provided by OrbiMed and Frostrow.
The Audit Committee reviews the compliance and control systems of both OrbiMed and Frostrow
in operation insofar as they relate to the affairs of the Company and the Board undertakes periodic
reviews of the arrangements with and the services provided by the Custodian, to ensure that the
safeguarding of the Company’s assets and security of the shareholders’ investment is being
maintained.
The Investment Management Agreement between the Company and OrbiMed sets out the limits
of OrbiMed’s authority, beyond which Board approval is required. The Board has also agreed
detailed investment guidelines with OrbiMed, which are considered at each Board meeting.
A representative from OrbiMed and Frostrow attends each meeting of the Board to address
questions on specific matters and to seek approval for specific transactions which OrbiMed is
required to refer to the Board.
The Board has delegated discretion to OrbiMed to exercise voting powers on its behalf, other than
for contentious or sensitive matters which are to be referred to the Board for consideration.
The Board has reviewed OrbiMed’s Stewardship Policy, which includes its Corporate Governance
and Voting Guidelines, and which is published on OrbiMed’s website: www.orbimed.co.uk
Reports on commissions paid by OrbiMed are submitted to the Board regularly.
33 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
Board Meetings and relations with OrbiMed and Frostrow continued
AIC Code Principle
Compliance Statement
17. Boards should monitor the
level of the share price
discount or premium (if any)
and, if desirable, take action to
reduce it.
The Board considers any imbalances in the supply of and the demand for the Company’s shares
in the market and takes appropriate action when considered necessary.
The Board considers the discount or premium to net asset value of the Company’s share price
at each Board meeting. 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. (See page 7 for further information).
At each meeting the Board reviews reports from both OrbiMed and Frostrow on marketing and
shareholder communication strategies. It also considers their effectiveness as well as measures
of investor sentiment and any recommendations on share buybacks.
18. The Board should monitor
and evaluate other service
providers.
The Management Engagement & Remuneration Committee reviews, at least annually, the
performance of all the Company’s third party service providers, including the level and structure
of fees payable and the length of the notice period, to ensure that they remain competitive and
in the best interests of shareholders.
The Audit Committee reviews reports from the principal service providers on compliance and
the internal and financial control systems in operation and relevant independent audit reports
thereon, as well as reviewing service providers’ anti-bribery and corruption policies to address
the provisions of the Bribery Act 2010.
Shareholder Communications
AIC Code Principle
Compliance Statement
19. The Board should
regularly monitor the
shareholder profile of the
company and put in place a
system for canvassing
shareholder views and for
communicating the Board’s
views to shareholders.
A detailed analysis of the substantial shareholders of the Company is provided to the Directors
at each Board meeting. Representatives of OrbiMed and Frostrow regularly meet with
institutional shareholders and private client asset managers to discuss strategy and to
understand their issues and concerns and, if applicable, to discuss corporate governance
issues. The results of such meetings are reported at the following Board meeting.
Regular reports from the Company’s broker are submitted to the Board on investor sentiment
and industry issues.
Shareholders wishing to communicate with the Chairman, or any other member of the Board,
may do so by writing to the Company, for the attention of the Company Secretary at the Offices
of Frostrow. All shareholders are encouraged to attend the Annual General Meeting, where
they are given the opportunity to question the Chairman, the Board and representatives of
OrbiMed. OrbiMed will make a presentation to shareholders covering the investment
performance and strategy of the Company at the forthcoming Annual General Meeting. The
Directors welcome the views of all shareholders and place considerable importance on
communications with them.
34 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
Shareholder Communications continued
AIC Code Principle
Compliance Statement
20. The Board should normally
take responsibility for, and
have a direct involvement in,
the content of
communications regarding
major corporate issues even if
the manager is asked to act as
spokesman.
21. The Board should ensure
that shareholders are provided
with sufficient information for
them to understand the
risk/reward balance to which
they are exposed by holding
the shares.
All substantive communications regarding any major corporate issues are discussed by the
Board taking into account representations from OrbiMed, Frostrow, the Auditor, legal advisers
and the Corporate Stockbroker.
The Company places great importance on communication with shareholders and aims to
provide them with a full understanding of the Company’s investment objective, policy and
activities, its performance and the principal investment risks by means of informative Annual
and Half Year reports and Interim Management Statements. This is supplemented by the daily
publication, through the London Stock Exchange, of the net asset value of the Company’s
shares.
The annual report provides information on OrbiMed’s investment performance, portfolio risk
and operational and compliance issues. Further details on the risk/reward balance are set out in
the Strategic Report under Risk Management on pages 8 to 10 and in note 18 beginning on
page 59.
The Investment Portfolio is listed on pages 11 and 12.
The Company’s website, www.worldwidewh.com, is regularly updated with monthly factsheets
and provides useful information about the Company including the Company’s financial reports
and announcements.
35 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Governance / Corporate Governance
Committees of the Board
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. The
membership of the Company’s committees comprises those
Directors considered independent by the Board. The
Nominations and Audit Committees are chaired by Jo Dixon,
the Management Engagement & Remuneration Committee by
the Chairman of the Company, Sir Martin Smith.
The table on page 24 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 &
Remuneration Committee.
Nominations Committee
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.
Management Engagement & Remuneration
Committee
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 in discussions involving
personal remuneration. Details of the fees paid to the
Directors in the year under review are detailed in the Directors’
Remuneration Report and the Directors’ Remuneration Policy
Report on pages 40 to 42.
This committee also reviews the terms of engagement of the
Investment Manager, the Manager and the Company’s other
service providers.
Audit Committee
The Audit Committee meets at least twice a year and is
responsible for the review of the half-year and annual financial
statements, the nature and scope of the external audit and the
findings therefrom and the terms of appointment of the
Auditor, 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
Auditor 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 Auditor. Non-audit fees of £9,000 were paid
to Ernst & Young LLP during the year for agreed upon
procedures in relation to the Company’s performance fee
review and other audit related assurances services. In addition,
during the year, fees totalling £19,000 were earned in relation
to withholding tax reclaim services. The Board has concluded,
on the recommendation of the Audit Committee, that the
Auditor continued to be independent.
Anti-Bribery and Corruption Policy
The Board has adopted a zero tolerance approach to instances
of bribery and corruption. Accordingly it expressly prohibits
any Director or associated persons when acting on behalf of
the Company, from accepting, soliciting, paying, offering or
promising to pay or authorise any payment, public or private in
the UK or abroad to secure any improper benefit for
themselves or for the Company.
The Board 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
policy is reviewed regularly by the Audit Committee.
Relations with Shareholders
The Board reviews the shareholder register at each Board
meeting. The Company has regular contact with its
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 are also published on the
Company’s website at www.worldwidewh.com. Representatives
from the Investment Manager attend the Annual General
36 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 37
Governance / Corporate Governance
Meeting and give a presentation on investment matters to
those present. The Company has adopted a nominee share
code which is set out below.
Nominee Share Code
Where shares are held in a nominee company name, the
Company undertakes:
The Board receives marketing and public relations reports
from the Frostrow 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 half-year 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 half-year financial reports so as to ensure
they are useful to all shareholders and others taking an interest
in the Company. In accordance with best practice, the annual
report, including the Notice of the Annual General Meeting, is
sent to shareholders at least 20 working days before the
meeting. Separate resolutions are proposed for substantive
issues.
Exercise of Voting Powers
The Board has delegated authority to OrbiMed to vote the
shares owned by the Company that are held on its behalf by its
custodian, Goldman Sachs. The Board has instructed that
OrbiMed submit votes for such shares wherever possible. This
accords with current best practice whilst maintaining a primary
focus on financial returns. OrbiMed may refer to the Board on
any matters of a contentious nature. The Company does not
retain voting rights on any shares that are subject to
rehypothecation in connection with the loan facility provided
by Goldman Sachs.
• to provide the nominee company with multiple copies of
shareholder communications, so long as an indication of
quantities has been provided in advance;
• 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.
By order of the Board
Frostrow Capital LLP
Company Secretary
6 June 2014
37 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 38
Governance / Audit Committee Report
for the year ended 31 March 2014
The Committee, which comprises those Directors considered
to be independent by the Board, met twice during the year.
Attendance by each Director is shown in the table on page 23.
Responsibilities
The Committee’s main responsibilities during the year were:
1. To review the Company’s half-year and annual financial
statements. In particular, the Committee considered
whether the annual financial statements are fair, balanced
and understandable, allowing shareholders to more easily
assess the Company’s strategy, investment policy, business
model and financial performance.
2. To review the risk management and internal control
processes of the Company and its key service providers. As
part of this review the Committee again reviewed the
appropriateness of the Company’s anti-bribery and
corruption policy.
3. To recommend the appointment of an external auditor
and agreeing the scope of its work and its remuneration,
reviewing its independence and the effectiveness of the
audit process.
4. To consider any non-audit work to be carried out by the
auditors. The Audit Committee has considered the extent
and nature of non-audit work performed by the auditor and
is satisfied that this did not impinge on their independence
and is a cost effective way for the Company to operate.
5. To consider the need for an internal audit function. Since
the Company delegates its day-to-day operations to third
parties and has no employees, the Committee has
determined there is no requirement for such a function.
The Committee’s terms of reference are available for review on
the Company’s website at www.worldwidewh.com.
Meetings and Business
The following matters were dealt with at its meetings:
May 2013
– Review of the Committee’s terms of reference
– Review of the Company’s results
– Approval of the annual report and financial statements
– Review of risk management, internal controls and compliance
– Review of a report on Frostrow’s internal control framework
38 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
November 2013
– Review of the Committee’s terms of reference
– Review of the auditor’s plan for the 2013/2014 audit
– Review of risks, internal control and compliance
– Review of the Company’s anti bribery and corruption policy
and the measures put in place by the Company’s service
providers
– Review of the Company’s half-year results
– Approval of the half-year report
– Consideration of the implications of the 2012 UK Corporate
Governance Code and the required changes to the
Company’s annual report and financial statements
Financial Statements
The financial statements, and the annual report as a whole, are
the responsibility of the Board. The Directors’ Responsibility
Statement is contained on page 29. The Board looks to the
Audit Committee to advise them in relation to the financial
statements both as regards their form and content, issues
which might arise and on any specific areas requiring
judgment.
Significant Reporting Matters
During the year the Committee considered key accounting
issues, matters and judgments in relation to the Company’s
financial statements and disclosures relating to:
Investments
The Committee approached and dealt with this area of risk by:
– Ensuring that all investment holdings and cash/deposit
balances have been agreed to an independent confirmation
from the custodian or relevant bank;
– reviewing and amending, where necessary, the Company’s
register of key risks in light of changes to the investment
portfolio and the investment environment; and
– gaining an overall understanding of the performance of the
investment portfolio both in capital and revenue terms
through comparison to the benchmark.
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 39
Governance / Audit Committee Report
for the year ended 31 March 2014
Taxation
The Committee approached and dealt with the area of risk,
surrounding compliance with section 1158 of the Corporation
Tax Act 2010, by:
– seeking confirmation from the Manager that the Company
meets the eligibility conditions as outlined in section 1158;
– by obtaining written confirmation from HMRC, evidencing
the approval of the Company as an investment trust under
the regime;
– understanding the risks and consequences if the Company
breaches this approval in future years; and
– reviewing the Company’s register of key risks relating to tax
matters.
External auditor
Meetings:
This year the nature and scope of the audit together with
Ernst & Young LLP’s audit plan were considered by the
Committee on 6 November 2013 without the Auditor being
present.
As Chairman of the Committee, I met with Ernst & Young LLP
and Frostrow on 22 May 2014 to discuss the outcome of the
audit and the draft 2014 annual report and accounts. The
Committee then met Ernst & Young LLP on 28 May 2014 to
review the outcome of the audit and to discuss the limited
issues that arose.
Given the changes to narrative reporting which are
incorporated in the annual report for the first time, we have
also discussed the presentation of the annual report with the
auditor and sought their perspective.
Independence and Effectiveness:
In order to fulfil the Committee’s responsibility regarding the
independence of the Auditor, we reviewed:
– the senior audit personnel in the audit plan for the year,
– the auditor’s arrangements concerning any conflicts of interest,
– the extent of any non-audit services, and
– the statement by the Auditor that they remain independent
within the meaning of the regulations and their professional
standards.
– auditor independence
In order to consider the effectiveness of the audit process, we
reviewed:
– the Auditor’s fulfilment of the agreed audit plan,
– the report arising from the audit itself, and
– feedback from Frostrow on the conduct of the audit.
39 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
The Committee is satisfied with the auditor’s independence and
the effectiveness of the audit process, together with the degree
of diligence and professional scepticism brought to bear.
Appointment of New Auditor
The Company’s current Auditor, Ernst & Young LLP have been
in office since the Company’s inception, during which time no
audit tender has taken place. Whilst the audit partner has
changed periodically in accordance with professional and
regulatory standards to protect independence and objectivity,
in accordance with best practice the Board felt it was
appropriate to undertake a formal audit tender.
The tender process was held in April 2014, following which, the
Directors are proposing to appoint PricewaterhouseCoopers
as Auditor to the Company commencing with the 2014/15
financial year. As resigning Auditor Ernst & Young LLP will
provide the Company with a ‘Statement of Circumstances’
confirming that it will resign as Auditor to the Company. A
copy of the Statement of Circumstances will be available upon
request from the Company Secretary.
Ernst & Young LLP will resign with effect from the conclusion of
the Annual General Meeting to be held on 14 July 2014.
Having satisfied themselves of the appropriateness of the
appointment of PricewaterhouseCoopers LLP following the
tender process and in accordance with the Companies Act
2006, shareholder approval concerning the appointment of a
new Auditor and the authority to fix their remuneration will be
sought at the forthcoming Annual General Meeting.
Ernst & Young LLP carried out the audit for the year ended
31 March 2014 and were considered to be independent by the
Board. The Directors wish to record their thanks for the audit
services provided by Ernst & Young LLP to the Company since
its inception, in particular their professionalism and the quality
of their work was appreciated.
Full details of the resolution appointing
PricewaterhouseCoopers LLP as Auditor can be found within
the Notice of Meeting on page 72 and also in the Explanatory
Notes to the Resolutions to be proposed at the Annual
General Meeting on page 77.
Jo Dixon
Chairman of the Audit Committee
6 June 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 40
Governance / Directors’ Remuneration Report
Statement from the Chairman
I am pleased to present the Directors’ Remuneration Report to
shareholders. This report has been prepared in accordance
with the requirements of Section 421 of the Companies Act
2006 and the Enterprise and Regulatory Reform Act 2013. An
Ordinary Resolution for the approval of this report will be put
to shareholders at the Company’s forthcoming Annual General
Meeting. The law requires the Company’s auditors to audit
certain of the disclosures provided in this report. Where
disclosures have been audited, they are indicated as such and
the Auditor’s audit opinion is included in its report to
shareholders on pages 43 and 44. The Remuneration Policy
Report on page 42 forms part of this report.
The Engagement & Remuneration Committee considers the
framework for the remuneration of the Directors on an annual
basis. It reviews the ongoing appropriateness of the
Company’s remuneration policy and the individual
remuneration of Directors by reference to the activities of the
Company and comparison with other companies of a similar
structure and size. This is in-line with the AIC Code.
At the most recent review held on 13 March 2014, it was
agreed that there was to be an increase in fees paid to the
Directors during the next financial year. Details of the new fee
levels can be found on page 42. Myself, as Chairman of the
Company, and Jo Dixon, as Chairman of the Audit Committee
and Senior Independent Director, currently receive an annual
fee of £39,150 and £27,850, respectively. Sarah Bates, Dr
David Holbrook, Samuel D. Isaly and Doug McCutcheon each
receive an annual fee of £24,750. The last increase in
Directors’ fees took effect on 1 April 2013.
Directors’ Fees
The Directors, as at the date of this report, all served
throughout the year and received the fees listed in the table
above. These exclude any employers’ national insurance
contributions, if applicable. No other forms of remuneration
were received by the Directors and so fees represent the total
remuneration of each Director.
40 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Directors’ Emoluments for the Year (audited information)
Date of Appointment
Fees
Fees
to the Board
2014 (£)
2013 (£)
8 November 2007
22 May 2013
25 February 2004
14 February 1995
Sir Martin Smith
(Chairman)
Sarah Bates
Jo Dixon
Professor Duncan
Geddes†
8 November 2007
Dr David Holbrook
14 February 1995
Samuel D. Isaly
Doug McCutcheon
7 November 2012
Anthony Townsend* 14 February 1995
39,150
38,000
21,275
27,850
–
27,000
–
24,750
24,750
24,750
7,489
7,000
24,000
24,000
10,000
24,000
170,014
154,000
† retired from the Board on 17 July 2012.
* retired from the Board on 17 July 2013.
A non-binding Ordinary Resolution proposing adoption of the
Remuneration Report was put to shareholders at the Annual
General Meeting of the Company held on 17 July 2013, and was
passed by 98.0% of shareholders voting on the Resolution.
Sums paid to Third Parties (audited information)
Fees due to Dr Holbrook were paid to MTI Partners Limited, his
employer, otherwise none of the fees referred to in the above
table were paid to any third party in respect of the services
provided by any of the Directors.
Other Benefits
Taxable Benefits – Article 112 of the Company’s Articles of
Association provides that Directors are entitled to be reimbursed
for reasonable expenses incurred by them in connection with the
performance of their duties and attendance at Board and General
Meetings.
Pensions related benefits – Article 125 permits the Company to
provide pension or similar benefits for Directors and employees
of the Company. However, no pension schemes or other similar
arrangements have been established and no Director is entitled
to any pension or similar benefits.
Loss of office
Directors do not have service contracts with the Company but are
engaged under Letters of Appointment. These specifically
exclude any entitlement to compensation upon leaving office for
whatever reason.
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 41
Governance / Directors’ Remuneration Report
Directors’ Interestsinthe Company’s Shares(audited information)
Ordinary
Subscription Shares
Shares of 25p each
of 1p each
31 March
2014
1 April
2013
31 March
2014
1 April
2013
Sir Martin Smith
(Chairman)
Sarah Bates
Jo Dixon
Dr David
Holbrook
Samuel D. Isaly
Doug
McCutcheon
Anthony
Townsend*
5,859
7,200
3,000
5,859
–
3,000
1,094
353,600
–
353,600
15,000
15,000
400
–
600
–
720
–
400
–
600
–
100,720
–
n/a
21,619
n/a
25,793
Total
385,753
399,078
1,720
127,513
* retired from the Board on 17 July 2013.
On 24 April 2014, Mr Samuel D. Isaly sold 350,000 ordinary
shares. Save for this, there had been no changes in the above
Directors’ interests as at 6 June 2014.
Annual Statement
On behalf of the Board and in accordance with Part 2 of
Schedule 8 of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations
2013, I confirm that the Remuneration Policy, set out on
page 42 of this annual report, and Remuneration Report
summarise, as applicable, for the year to 31 March 2014:
(a) the major decisions on Directors’ remuneration;
(b) any substantial changes relating to Directors’ remuneration
made during the year; and
(c) the context in which the changes occurred and decisions
have been taken.
Sir Martin Smith
Chairman
6 June 2014
Share Price Total Return
The chart below illustrates the total shareholder return for a
holding in the Company’s shares as compared to the MSCI World
Health Care Index on a net total return, sterling adjusted basis,
which the Board has adopted as the measure for both the
Company’s performance and that of the Investment Manager for
the year.
Total Shareholder Return for the Five Years to
31 March 2014
%
280
260
240
220
200
180
160
140
120
100
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Worldwide Healthcare Share price (total return)
Benchmark Index
The bar chart below shows the comparative cost of Directors’
fees compared with the level of dividend distribution for 2013
and 2014.
Relative Cost of Directors’ Remuneration
£m
12
10
8
6
4
2
0
Directors’ Fees
2014
Dividend
2014
Directors’ Fees
2013
Dividend
2013
As noted in the Strategic Report, all of the Directors are non-
executive and therefore there is no Chief Executive Officer.
The Company does not have any employees. There is
therefore no Chief Executive Officer or employee information
to disclose.
41 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 42
Governance / Directors’ Remuneration Policy Report
The remuneration for the non-executive Directors is
determined within the limits set out in the Company’s Articles
of Association. The present limit is £200,000 in aggregate per
annum. However, in order that the Company can continue to
attract high calibre candidates to join the Board, it is proposed
that the aggregate limit be increased to £250,000 per annum.
Further details of this proposal can be found within the
Explanatory Notes of the Principal Changes to the Company’s
Articles of Association on page 79. Non-executive Directors
are not eligible for bonuses, pension benefits, share options,
long-term incentive schemes or other benefits including
performance related benefits.
It is the Board’s intention that the Remuneration Policy will be
considered by shareholders at the Annual General Meeting at
least once every three years.
An Ordinary Resolution for the approval of this policy will be
considered by shareholders at the forthcoming Annual
General Meeting.
The Company’s Remuneration Policy provides that fees
payable to the Directors should reflect the time spent by the
Board on the Company’s affairs and the responsibilities borne
by the Directors and should be sufficient to enable candidates
of high calibre to be recruited. Directors are remunerated in
the form of fees payable monthly in arrears, paid to the
Director personally or to a specified third party. There are no
long-term incentive schemes, share option schemes or
pension arrangements and the fees are not specifically related
to the Directors’ performance, either individually or
collectively. Directors’ remuneration comprises solely Directors’
fees. The current and projected Directors’ fees for 2014 and
2015 are shown in the table below. The Company does not
have any employees.
Directors’ Fees Current and Projected
Sir Martin Smith
Sarah Bates*
Jo Dixon
Dr David Holbrook
Samuel D. Isaly
Doug McCutcheon
Anthony Townsend†
Fees
Fees
2015 (£)
2014 (£)
41,100
26,000
29,800
26,000
26,000
26,000
n/a
39,150
21,275
27,850
24,750
24,750
24,750
7,489
174,900
170,014
* appointed 22 May 2013.
† retired from the Board on 17 July 2013.
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 to re-election annually thereafter. The terms
also provide that a Director may be removed without notice
and that compensation will not be due on leaving office.
No communications have been received from shareholders
regarding Directors’ remuneration.
42 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 43
Financial Statements / Independent Auditor’s Report to the
Members of Worldwide Healthcare Trust PLC
We have audited the financial statements of Worldwide
Healthcare Trust PLC for the year ended 31 March 2014 which
comprise the Income Statement, the Reconciliation of
Movement 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.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities
Statement set out on page 29, 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.
Scope of the audit of the financial statements
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
statements. In addition, we read all the financial and non-
financial information in the annual report to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge
acquired by us in the course of performing the audit. If we
become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the company’s affairs
as at 31 March 2014 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.
Our assessment of risks of material misstatement
We identified the following risks of material misstatement that
had the greatest effect on the overall audit strategy, the
allocation of resources in the audit, and directing the efforts of
the engagement team:
• Valuation of the investment portfolio.
• Valuation of derivative assets and liabilities.
• Maintenance of investment trust status.
• Calculation of management and performance fees.
Our application of materiality
We apply the concept of materiality both in planning and
performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements,
if any, on the financial statements and in forming our audit
opinion in the Auditor’s Report. When establishing our overall
audit strategy, we determined materiality for the Company to
be £6.4 million, which is 1% of total equity. This provided a
basis for determining the nature, timing and extent of risk
assessment procedures, identifying and assessing the risk of
material misstatement and determining the nature, timing and
extent of further audit procedures.
On the basis of our risk assessment, together with our
assessment of the Company’s overall control environment, our
judgment was that overall performance materiality (i.e. our
tolerance for misstatement in an individual account or balance)
for the Company should be 75% of materiality, namely
£4.8 million. Our objective in adopting this approach was to
ensure that total uncorrected and undetected audit differences
in the financial statements did not exceed our materiality level.
We have reported to the Audit Committee all audit differences
in excess of £0.3 million, as well as differences below that
threshold that, in our view, warranted reporting on qualitative
grounds.
43 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 44
Financial Statements / Independent Auditor’s Report to the
Members of Worldwide Healthcare Trust PLC
An overview of the scope of our audit
Following our assessment of the risk of material misstatement
to the Company’s financial statements, our response was as
follows:
discloses those matters that we communicated to the audit
committee which we consider should have been disclosed.
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we agreed year end prices for quoted and unquoted
investments to an independent source;
• we independently revalued the derivative instruments and
compared to the Company’s valuation, confirming there
were no material differences individually or in aggregate;
• we reviewed the Company’s compliance with sections 1158
of the corporation Tax Act; and
• 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
• certain disclosures of Directors’ remuneration specified by
• we re-performed the calculation of management and
law are not made; or
performance fees and agreed the inputs to audited source
data and service agreements.
• we have not received all the information and explanations
we require for our audit.
Opinion on other matter prescribed by the
Companies Act 2006
In our opinion:
Under the Listing Rules we are required to review:
• the Directors’ statement, set out on page 29, in relation to
going concern; and
• the part of the Directors’ Remuneration Report to be
audited has been properly prepared in accordance with the
Companies Act 2006; and
• the part of the Corporate Governance Statement relating to
the Company’s compliance with the nine provisions of the
UK Corporate Governance Code specified for our review.
• the information given in the Strategic Report and the
Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to
you if, in our opinion, information in the annual report is:
• materially inconsistent with the information in the audited
financial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the company acquired
in the course of performing our audit; or
• otherwise misleading.
In particular, we are required to consider whether we have
identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that
they consider the annual report is fair, balanced and
understandable and whether the annual report appropriately
44 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Amarjit Singh (Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
6 June 2014
Notes:
1. The maintenance and integrity of the Worldwide Healthcare
Trust PLC web site is the responsibility of the Directors; the
work carried out by the auditors does not involve
consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may
have occurred to the financial statements since they were
initially presented on the web site.
2. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 45
Financial Statements / Income Statement
for the year ended 31 March 2014
2014 2013
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 – 130,246 130,246 – 109,322 109,322
Exchange gains/(losses) on currency
balances – 10,039 10,039 – (2,322) (2,322)
Income from investments held at fair
value through profit or loss 2 9,048 – 9,048 9,614 – 9,614
Investment management, management
and performance fees 3 (249) (14,758) (15,007) (190) (2,284) (2,474)
Other expenses 4 (753) – (753) (595) – (595)
Net return before finance
charges and taxation 8,046 125,527 133,573 8,829 104,716 113,545
Finance costs 5 (20) (376) (396) (9) (177) (186)
Net return before taxation 8,026 125,151 133,177 8,820 104,539 113,359
Taxation on net return on ordinary
activities 6 (821) (233) (1,054) (1,171) 18 (1,153)
Net return after taxation 7,205 124,918 132,123 7,649 104,557 112,206
Return per share – basic 7 15.7p 271.9p 287.6p 17.1p 233.3p 250.4p
Return per share – diluted 7 15.4p 267.5p 282.9p 16.9p 231.1p 248.0p
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 these statements.
45 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp25-pp48 11/06/2014 12:15 Page 46
Financial Statements / Reconciliation of Movements in
Shareholders’ Funds
For the year ended 31 March 2014
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 2013 11,441 24 215,237 260,010 7,803 9,900 504,415
Net return from ordinary activities
after taxation – – – 124,918 – 7,205 132,123
Dividend paid in respect of
year ended 31 March 2013 – – – – – (4,352) (4,352)
First interim dividend paid in respect
of year ended 31 March 2014 – – – – – (3,227) (3,227)
Subscription shares exercised for
ordinary shares 132 (5) 3,565 5 – – 3,697
Shares issued from treasury – – 802 2,728 – – 3,530
At 31 March 2014 11,573 19 219,604 387,661 7,803 9,526 636,186
For the year ended 31 March 2013
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 2012 10,997 71 186,300 174,230 7,068 13,131 391,797
Net return from ordinary activities
after taxation – – – 104,557 – 7,649 112,206
Dividend paid in respect of
year ended 31 March 2012 – – – – – (7,705) (7,705)
First interim dividend paid in respect
of year ended 31 March 2013 – – – – – (3,175) (3,175)
Subscription shares exercised for
ordinary shares 1,179 (47) 28,929 47 – – 30,108
Shares purchased to be held in
treasury and treasury shares
cancelled (735) – – (19,239) 735 – (19,239)
Shares issued from treasury – – 8 415 – – 423
At 31 March 2013 11,441 24 215,237 260,010 7,803 9,900 504,415
The accompanying notes are an integral part of these statements.
46 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Financial Statements / Balance Sheet
as at 31 March 2014
Notes
2014 2013
£’000 £’000
Fixed assets
Investments held at fair value through profit or loss 9 673,138 515,329
Derivative – OTC swaps 9 & 12 40,325 35,988
713,463 551,317
Current assets
Debtors 10 24,243 9,010
Derivative – put and call options 9 & 12 1,067 4,006
25,310 13,016
Current liabilities
Creditors: amounts falling due within one year 11 (101,536) (58,354)
Derivative – put and call options 9 & 12 (1,051) (1,564)
(102,587) (59,918)
Net current liabilities (77,277) (46,902)
Total net assets 636,186 504,415
Capital and reserves
Ordinary share capital 13 11,573 11,441
Subscription share capital 13 19 24
Share premium account 219,604 215,237
Capital reserve 19 387,661 260,010
Capital redemption reserve 7,803 7,803
Revenue reserve 9,526 9,900
Total shareholders’ funds 636,186 504,415
Net asset value per share – basic 14 1374.3p 1110.2p
Net asset value per share – diluted for subscription shares 14 1348.2p 1089.6p
Net asset value per share – fully diluted for
subscription shares and treasury shares 14 1348.2p 1089.1p
The financial statements on pages 45 to 66 were approved by the Board of Directors and authorised for issue on 6 June 2014 and
were signed on its behalf by:
Sir Martin Smith
Chairman
The accompanying notes are an integral part of this statement.
Worldwide Healthcare Trust PLC – Company Registration Number 3023689 (Registered in England)
47 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Financial Statements / Cash Flow Statement
for the year ended 31 March 2014
Notes
2014 2013
£’000 £’000
Net cash inflow from operating activities 15 1,163 4,202
Servicing of finance
Interest paid (396) (186)
Taxation
Taxation suffered (288) (431)
Financial investments
Purchases of investments and derivatives (501,915) (349,759)
Sales of investments and derivatives 460,445 381,024
Net cash (outflow)/inflow from financial investment (41,470) 31,265
Equity dividends paid 8 (7,579) (10,880)
Net cash (outflow)/inflow before financing (48,570) 23,970
Financing
Repurchase of own shares 13 – (19,239)
Issue of shares from treasury 13 3,530 423
Subscription Shares exercised for Ordinary Shares 13 3,697 30,108
Net cash inflow from financing 7,227 11,292
(Increase)/decrease in net debt 16 (41,343) 35,262
The accompanying notes are an integral part of this statement.
48 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Financial Statements / Notes to the Accounts
Notes to the Accounts
1. Accounting Policies
The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these
financial statements, are set out below:
(a) Basis of Preparation
The financial statements have been prepared in accordance with United Kingdom company law and 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 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, recent
transactions and in accordance with IPEVC valuation guidelines.
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.
(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.
49 Worldwide Healthcare Trust PLC
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
(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
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 results and financial position of the Company are expressed in sterling, being the Company’s functional and 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.
(i) Cash and cash equivalents
Cash in hand and in banks and short-term deposits which are held to maturity are carried at cost. Cash and cash equivalents are
defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash
and subject to insignificant risk of changes in value. Bank overdrafts that are repayable on demand, which form an integral part of
the Company’s cash management, are included as a component of cash and cash equivalents for the purpose of the statement of
cash flows.
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Financial Statements / Notes to the Accounts
Notes to the Accounts
(j) 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:
Recognition and Measurement’.
The equity swaps are accounted for as Fixed Assets in the Balance Sheet and Options are accounted for as Current Assets and/or
Current Liabilities in the Balance Sheet.
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 of the put and
call options bought and sold during the year have been capital in nature.
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.
(k) 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; and
– increases and decreases in the valuation of investments held at the year end.
2. Income from Investments held at fair value through profit or loss
2014 2013
£’000 £’000
Income from investments
UK listed dividends 247 507
Overseas dividends 7,645 8,124
Fixed interest income 1,151 977
9,043 9,608
Other income
Deposit interest 5 6
Total income from investments held at fair value through profit or loss 9,048 9,614
Total income comprises:
Dividends 7,892 8,631
Interest 1,156 983
9,048 9,614
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
3. Investment Management, Management and Performance Fees
2014 2013
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment Management fee 185 3,529 3,714 141 2,674 2,815
Management fee 64 1,211 1,275 49 943 992
Performance fee (write back) – 10,018 10,018 – (1,333) (1,333)
249 14,758 15,007 190 2,284 2,474
During the year, performance fees totalling £1,189,000 crystallised and became payable (year ended 31 March 2013: £643,000). In
addition as at 31 March 2014 a provision for potential future fees of £8,829,000 was made (31 March 2013: a provision reversal of
£1,333,000). The sum of the fee that crystallised of £1,189,000 and the possible future fee of £8,829,000 is £10,018,000, this amount
being the total charge for the year.
The fees crystallised at each of the following quarterly calculation dates:
Year ended Year ended
31 March 31 March
2014 2013
£’000 £’000
30 June – 375
30 September 1,189 –
31 December – –
31 March – 268
Fees crystallised during the year ended 31 March 1,189 643
Further details of the performance fee basis can be found in the Report of the Directors on pages 26 and 27 under the heading
‘Performance Fee’ and in note 11 on page 56.
4. Other Expenses
2014 2013
Revenue Revenue
£’000 £’000
Directors’ remuneration 170 154
Auditor’s remuneration for the audit of the Company’s financial statements 27 26
Auditor’s remuneration for audit related assurance services 9 8
Auditor’s remuneration for taxation services 19 –
Marketing costs 46 42
Registrar fees 74 63
Broker retainer 30 30
Legal and professional costs* 109 36
Printing 53 41
Stock Exchange listing fees 23 35
Custody fees 4 2
Other costs 189 158
753 595
*Includes legal fees of £60,000 in connection with advice sought relating to the Alternative Investment Fund Managers Directive.
Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on page 40 and in the Directors’
Remuneration Policy Report on page 42.
52 Worldwide Healthcare Trust PLC
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Financial Statements / Notes to the Accounts
Notes to the Accounts
5. Finance Charges
2014 2013
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Finance charges 20 376 396 9 177 186
6. Taxation on Ordinary Activities
(a) Analysis of charge in year
2014 2013
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax at 23% (2013: 24%)
Tax relief to capital – – – 18 (18) –
Tax on capital dividend – 233 233 – – –
Overseas taxation 821 – 821 1,153 – 1,153
821 233 1,054 1,171 (18) 1,153
(b) Factors affecting current tax charge for the year
Approved investment trusts are exempt from tax on capital gains made within the Company.
The tax charged for the year is lower than the standard rate of corporation tax in the UK for a large company 23% (2013: 24%).
The difference is explained below.
2014 2013
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return before taxation 8,026 125,151 133,177 8,820 104,539 113,359
Corporation tax at 23% (2013: 24%) 1,846 28,785 30,631 2,117 25,089 27,206
Non-taxable gains on investments held
at fair value through profit or loss – (32,266) (32,266) – (25,680) (25,680)
Overseas withholding taxation 821 – 821 1,153 – 1,153
Non taxable overseas dividends (1,792) – (1,792) (1,977) – (1,977)
Non taxable UK dividends (57) – (57) (122) – (122)
Expenses charged to capital available
to be utilised – 3,481 3,481 – 573 573
Excess management expenses 3 – 3 – – –
Overseas tax suffered on dividend
charged to capital – 233 233 – – –
Current tax charge 821 233 1,054 1,171 (18) 1,153
(c) Provision for deferred tax
No provision for deferred taxation has been made in the current or prior year. The Company has not provided for deferred tax on
capital profits and losses arising on the revaluation or disposal of investments, as it is exempt from tax on these items because of
its status as an investment trust company.
The Company has not recognised a deferred tax asset of £10,982,000 (20% tax rate) (2013: £9,146,000 (23% tax rate)) as a result of
excess management expenses and loan expenses. It is not anticipated that these excess expenses 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.
53 Worldwide Healthcare Trust PLC
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
7. Return per Share
2014 2013
£’000 £’000
Basic
The return per share is based on the following figures:
Revenue return 7,205 7,649
Capital return 124,918 104,557
132,123 112,206
Weighted average number of Ordinary Shares in issue during the year 45,940,093 44,819,199
Revenue return per Ordinary Share 15.7p 17.1p
Capital return per Ordinary Share 271.9p 233.3p
287.6p 250.4p
Diluted
Revenue return 7,205 7,649
Capital return 124,918 104,557
132,123 112,206
Revenue return per Ordinary Share 15.4p 16.9p
Capital return per Ordinary Share 267.5p 231.1p
282.9p 248.0p
Basic weighted average number of shares in issue during the year ended 31 March 2014 45,940,093 44,819,199
Number of dilutive shares* 753,640 424,586
Diluted shares in issue for the year 46,693,733 45,243,785
The calculation of the diluted total, revenue and capital returns per Ordinary Shares are carried out in accordance with FRS No 22,
“Earning per Share”. For the purposes of calculating diluted total return, the diluted shares in issue for the year is the weighted
average used in the basic calculation plus the number of shares deemed to be issued for no consideration on the exercise of all
Subscription Shares calculated by reference to the average share price of the Ordinary Shares during the year.
* Subscription Shares outstanding as at 31 March 2014 1,860,969A
Exercise price 699p
Total consideration on exercise £13.0m
Average share price during the year £11.75
Theoretical number of shares on exercise 1,107,329B
––––––––––
Dilutive shares A-B 753,640
––––––––––
––––––––––
8. Interim Dividend
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 2014 were as follows:
2014 2013
£’000 £’000
Interim dividend in respect of the year ended 31 March 2012 – 7,705
First interim dividend in respect of the year ended 31 March 2013 – 3,175
Second interim dividend in respect of the year ended 31 March 2013 4,352 –
First interim dividend in respect of the year ended 31 March 2014 3,227 –
7,579 10,880
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Financial Statements / Notes to the Accounts
Notes to the Accounts
In respect of the year ended 31 March 2014, the first interim dividend of 7.0p per share was paid on 10 January 2014, with a second
interim dividend of 8.0p payable on 4 July 2014. The associated ex dividend date was 4 June 2014. The total dividends payable in
respect of the year ended 31 March 2014 amount to 15.0p per share (2013: 16.5p per share). The aggregate cost of the second interim
dividend based on the number of shares in issue at 6 June 2014 will be £3,733,000. In accordance with FRS 21 the second interim
dividend will be reflected in the interim accounts for the period ending 30 September 2014. 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:
2014 2013
£’000 £’000
Revenue available for distribution by way of dividend for the year 7,205 7,649
First interim dividend in respect of the year ended 31 March 2013 – (3,175)
Second interim dividend in respect of the year ended 31 March 2013 – (4,352)
First interim dividend in respect of the year ended 31 March 2014 (3,227) –
Second interim dividend in respect of the year ended 31 March 2014* (3,733) –
245 122
*based on 46,661,881 shares in issue as at 6 June 2014.
9. Investments
Securitised
Debt Derivative
Listed Investments Financial
Investments (unquoted) Instruments Total
£’000 £’000 £’000 £’000
Cost at 1 April 2013 392,183 – 32,096 424,279
Investment holdings gains at 1 April 2013 123,146 – 6,334 129,480
Valuation at 1 April 2013 515,329 – 38,430 553,759
Movement in the year:
Purchases at cost 393,377 15,877 95,690 504,944
Sales – proceeds (364,718) (7,306) (103,446) (475,470)
– realised gains on sales 88,191 (636) 16,948 104,503
Net movement in investment holding gains 32,955 69 (7,281) 25,743
Valuation at 31 March 2014 665,134 8,004 40,341 713,479
Cost at 31 March 2014 509,033 7,935 41,288 558,256
Investment holding gains at 31 March 2014 156,101 69 (947) 155,223
Valuation at 31 March 2014 665,134 8,004 40,341 713,479
2014 2013
£’000 £’000
Gains on investment
Realised gains based on historical cost – sales 104,503 32,881
Less: amounts recognised as investment holding gains in previous years (61,164) (27,881)
Realised gains based on carrying value at previous Balance Sheet date 43,339 5,000
Movement in investment holding gains in the year 86,907 104,322
Gains on investments 130,246 109,322
Purchase transaction costs for the year to 31 March 2014 were £718,000 (year ended 31 March 2013: £819,000). These comprise
mainly commission and stamp duty.
Sales transaction costs for the year to 31 March 2014 were £643,000 (year ended 31 March 2013: £733,000). These comprise mainly
commission.
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
10. Debtors
2014 2013
£’000 £’000
Amounts due from brokers 21,666 6,641
Withholding taxation recoverable 1,666 1,378
VAT recoverable 82 66
Prepayments and accrued income 829 925
24,243 9,010
11. Creditors
2014 2013
£’000 £’000
Amounts falling due within one year
Amounts due to brokers 28,634 25,605
Loan facility* 62,723 31,419
Performance fee accrued^ 8,829 268
Other creditors and accruals 1,350 1,062
101,536 58,354
*The Company’s borrowing requirements are met through the utilisation of a loan facility provided by Goldman Sachs.
As at 31 March 2014, the loan facility of £62.7 million is net of cash held as collateral against certain swap positions. The amount of
cash held as collateral amounted to £4.8 million (see page 59 under the heading ‘OTC swaps and collateral requirements’ for
further details). The overdrawn balance at Goldman Sachs at the year end amounted to £67.5 million. Goldman Sachs may take
up to 140% of the value of the overdrawn balance as collateral. Under the terms of the loan facility Goldman Sachs have been
granted a first priority security interest or lien over the Company’s assets. At 31 March 2014, 138% of the loan was taken as
collateral (see note 18 on page 63 under credit risk for further details).
^This amount represents the maximum amount which could become payable if outperformance is maintained for twelve months
from 31 March 2014. (See pages 26 and 27 of the Report of Directors and note 3 on page 52 for further details).
12. Derivative Financial Instruments
2014 2013
£’000 £’000
Fair value of OTC equity swaps 40,325 35,988
Fair value of put and call options (long) 1,067 4,006
Fair value of put and call options (short) (1,051) (1,564)
40,341 38,430
See note 9 on page 55 for movements during the year.
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Financial Statements / Notes to the Accounts
Notes to the Accounts
13. Share Capital
Total Total
ordinary subscription
Ordinary Treasury shares shares
shares shares in issue in issue
number number number number
Issued and fully paid 45,434,746 328,408 45,763,154 2,389,926
Ordinary Shares re-issued from treasury 328,408 (328,408) – –
Subscription Shares converted to Ordinary Shares 528,957 – 528,957 (528,957)
At 31 March 2014 46,292,111 – 46,292,111 1,860,969
£’000
Issued and fully paid:
46,292,111 Ordinary Shares of 25p 11,573
1,860,969 Subscription Shares of 1p 19
During the year ended 31 March 2014 no Ordinary Shares were bought back by the Company (2013: 2,411,340 Ordinary Shares were
bought back by the Company at a cost of £19,239,000). No Ordinary Shares were held in treasury at 31 March 2014 (2013: 328,408).
There were 328,408 Ordinary Shares issued from treasury raising proceeds of £3,530,000 (2013: £423,000). 528,957 new Ordinary
Shares were issued during the year as a result of holders of Subscription Shares exercising their subscription rights, raising £3,697,000
(2013: 4,714,922, raising £30,108,000). There were no Subscription Shares bought back for cancellation during the year (2013: nil). The
Subscription Shares are treated as equity as described on page 25.
At the year-end there were 1,860,969 Subscription Shares in issue (2013: 2,389,926).
14. Net asset value per share
2014 2013
Net asset value per share – basic 1,374.3p 1,110.2p
Net asset value per share – diluted for Subscription Shares 1,348.2p 1,089.6p
Net asset value per share – fully diluted for Subscription Shares and Treasury Shares 1,348.2p 1,089.1p
Net asset value per share – basic
The net asset value per share is based on the assets attributable to equity shareholders of £636,186,000 (2013: £504,415,000) and
on the number of Ordinary Shares in issue at the year end of 46,292,111 (2013: 45,434,746). As at 31 March 2014, there were
1,860,969 Subscription Shares in issue (2013: 2,389,926).
Net asset value per share – diluted for Subscription Shares
The net asset value per share diluted assumes all outstanding Subscription Shares were exercised at 699p resulting in assets
attributable to equity shareholders of £649,194,000 and on 48,153,080 Ordinary Shares (2013: assumed all outstanding
Subscription Shares were exercised at 699p resulting in assets attributable to shareholders of £521,121,000 and on 47,824,672
Shares).
Net asset value per share – fully diluted for Subscription Shares and Treasury Shares
At the year end there were no Ordinary Shares held in treasury and so there was no dilution arising as a result of Treasury Shares.
At the previous year end the net asset value per share fully diluted for Subscription Shares and Treasury Shares assumed that all
outstanding Subscription Shares were exercised at 699p and the Treasury Shares were sold back to the market at 1,009p resulting
in assets attributable to equity shareholders of £524,435,000 and on 48,153,080 Ordinary Shares.
57 Worldwide Healthcare Trust PLC
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
15. Reconciliation of operating return to net cash inflow from operating activities
2014 2013
£’000 £’000
Gains before finance costs and taxation 133,573 113,545
Less: capital gain before finance costs and taxation (125,527) (104,716)
Revenue return before finance costs and taxation 8,046 8,829
Expenses charged to capital (14,758) (2,284)
Decrease in prepayments and accrued income 96 339
Increase in other debtors (16) (19)
Increase/(decrease) in creditors and accruals 8,849 (1,510)
Net taxation suffered on investment income (1,054) (1,153)
Net cash inflow from operating activities 1,163 4,202
16. Reconciliation of net cash flow movement to movement in net debt
2014 2013
£’000 £’000
(Increase)/decrease in net debt resulting from cashflows (41,343) 35,262
Exchange movements 10,039 (2,322)
Movement in net debt in the year (31,304) 32,940
Net debt at start of year (31,419) (64,359)
Net debt at end of year (62,723) (31,419)
Represented by:
At 1 April Exchange At 31 March
2013 Cash flows movements 2014
£’000 £’000 £’000 £’000
Net debt (31,419) (41,343) 10,039 (62,723)
17. Related parties
The following are considered to be related parties:
• OrbiMed Capital LLC
• The Directors of the Company
Details of the relationship between the Company and OrbiMed Capital LLC, the Company’s Investment Manager, is disclosed in the
Report of the Directors on page 26. Samuel D. Isaly is a Director of the Company, and also the Managing Partner at OrbiMed Capital
LLC. During the year ended 31 March 2014, OrbiMed Capital LLC earned £3,714,000 in respect of Investment Management fees, of
which £1,019,000 was outstanding at the year-end. In addition, a performance fee of £1,081,000 crystallised and became payable at
30 September 2013, being one of the calculation dates (see pages 26 and 27 for further details). All material related party
transactions have been disclosed in notes 3 and 4 on page 52. Details of the remuneration of all Directors can be found on pages 40
and 42. Details of the Directors’ interests in the capital of the Company can be found on pages 24 and 41.
A number of the partners at OrbiMed Capital LLC have a minority financial interest totalling 20% in Frostrow Capital LLP, the
Company’s Manager. Details of the fees paid to Frostrow Capital LLP by the Company can be found in the note 3 on page 52.
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Financial Statements / Notes to the Accounts
Notes to the Accounts
18. Financial instruments
Risk management policies and procedures
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 page 6. 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 8 to 10 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 11 to 13.
Management of the risks:
Derivative instruments are used to mitigate market price risk, enhance the capital returns, facilitate management of portfolio
volatility and to improve the risk-return profile of the portfolio.
Use of derivatives
The following strategies have been used during the financial year.
Put and Call Options
• 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.
• Sells 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.
OTC Swaps and collateral requirements
The Company uses OTC swap positions to gain access to single stock exposure in India and China because the Company is not locally
registered to trade in either market. All of the single stock swaps are fully funded with the exception of 250,000 shares held in China
Resources. This position is not fully funded. As a consequence collateral cash to the value of £0.3 million was held against this position.
In addition, at the year end the Company held one basket swap, OrbiMed Emerging Market Basket, which represents exposure to
a basket of healthcare single stocks in the emerging markets. This position is not fully funded and as a result collateral cash to the
value of approximately £4.5 million was held against this position. Subsequent to the year-end, the basket swap has been sold and
the associated collateral cash has been returned to the Company.
During the year under review, dividend income was received from the following swap positions:-
Sun Pharmaceutical (position now sold), Aurobindo, Lupin and OrbiMed Emerging Markets Basket.
Offsetting disclosure
Swap basket trades and OTC derivatives are traded under an ISDA† Master Agreements. The Company currently has agreements
in place with Goldman Sachs and JP Morgan.
These agreements create a right of set-off that becomes enforceable only following a specified event of default, or in other
circumstances not expected to arise in the normal course of business. As a result, as the right of set-off is not unconditional, for
financial reporting purposes, the Company does not offset derivative assets and derivative liabilities.
†International Swap Dealers Association Inc.
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
The Company’s gross exposure to market risk is represented by the fair value of the derivative instruments at the year end as
shown in the table below.
Fair Value of Derivative instruments and gross exposure to market risk
2014 2013
2014 2014 Notional 2013 2013 Notional
Assets Liabilities exposure Assets Liabilities exposure
£’000 £’000 £’000 £’000 £’000 £’000
Put options 420 (979) 71,171 280 (734) 66,479
Call options 647 (72) 62,629 3,726 (830) 63,929
OTC Swaps 40,325 (17,979) 17,979 35,988 (17,690) 17,690
41,392 (19,030) 151,779 39,994 (19,254) 148,098
(a) Foreign currency risk
A significant proportion of the Company’s portfolio including the put and call options and the OTC swaps are denominated in
currencies other than sterling (the Company’s functional currency, and the currency in which it reports its results). As a result,
movements in exchange rates can significantly affect the sterling value of those items.
Year end spot rates 2014 2013
U.S. dollar 1.667 1.518
Japanese yen 171.691 142.765
Swiss franc 1.473 1.438
Euro 1.210 1.183
Foreign currency exposure and sensitivity
The fair values of the Company’s monetary assets and liabilities that are denominated in foreign currency as at 31 March 2014 are
shown below:
2014 2014 2014 2013 2013 2013
Current Current Investments Current Current Investments
assets liabilities assets liabilities
£’000 £’000 £’000 £’000 £’000 £’000
U.S. dollar 19,019 (91,501) 568,891 6,980 (56,689) 396,264
Swiss franc 3,380 – 64,285 1,238 – 67,045
Japanese yen 396 – 46,120 441 (545) 42,793
Euro 123 – 13,765 117 – 23,457
Hong Kong dollar 1,226 – 17,130 – – 8,573
Singapore dollar – – 3,288 – – 5,088
24,144 (91,501) 713,479 8,776 (57,234) 543,220
Management of the risks
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.
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Financial Statements / Notes to the Accounts
Notes to the Accounts
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 (2013: 10% increase and decrease), a 10% increase and decrease in
sterling against the Japanese yen (2013: 10% increase and decrease), and a 10% increase and decrease in sterling against the
Swiss franc (2013: 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.
2014 2014 2014 2013 2013 2013
USD YEN CHF USD YEN CHF
£’000 £’000 £’000 £’000 £’000 £’000
Sterling depreciates 61,835 5,185 7,234 41,788 4,831 7,857
Sterling appreciates (46,859) (4,243) (5,919) (32,259) (3,953) (6,207)
(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 and fixed 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.
Derivative contracts are not used to hedge against the exposure to interest rate risk.
Interest rate exposure
The Company has a loan facility with Goldman Sachs which is repayable on demand. At 31 March 2014 £62.7 million (net of cash
collateral) was drawn down under this facility (see page 25 and note 11 on page 56) (2013: £31.4 million). 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 2014 in respect of
cash was nil (2013: nil). At 31 March 2014 there was an overdraft position at Goldman Sachs of £62,723,000 (2013: £31,419,000).
Interest rate sensitivity
If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s profit before tax for the
year ended 31 March 2014 and the net assets would increase/decrease by £627,000 (2013: increase/decrease by £314,000). This is
mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances.
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Financial Statements / Notes to the Accounts
Notes to the Accounts – continued
Fixed rate
At 31 March 2014, the Company held 4.4% of the portfolio in convertible bonds and securitised debt (2013: 2.7% of the portfolio).
The exposure is shown in the table below:
Weighted
average Weighted
period average
for which interest Fixed Floating
rate is fixed rate rate rate
31 March 2014 Years % £’000 £’000
Assets
Convertible bonds – US Dollars 3.62 0.95 23,635 –
Second lien loans – US Dollars 1.98 2.16 8,004 –
31,639
Liabilities
Bank loan facility – US Dollars – – – (62,723)
(62,723)
Weighted
average Weighted
period average
for which interest Fixed Floating
rate is fixed rate rate rate
31 March 2013 Years % £’000 £’000
Convertible bonds – US Dollars 3.28 2.58 15,015 –
15,015
Liabilities
Bank loan facility – US Dollars – – – (31,419)
(31,419)
(c) Other price risk
Other price risk may affect the value of the Company’s investments. If market prices of all of the Company’s financial instruments
including the derivatives at the Balance Sheet date had been 25% higher or lower (2013: 25% higher or lower) while all other
variables remained constant, the revenue return would have decreased/increased by £85,000 (2013: £66,000), and the capital
return would have increased/decreased by £176,760,000 (2013: £137,191,000) and the return on equity would have
increased/decreased by £176,675,000 (2013: 137,125,000). 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.
(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 within one week. 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
page 25 and also glossary beginning on page 68).
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.
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Financial Statements / Notes to the Accounts
Notes to the Accounts
Liquidity exposure and maturity
Contractual maturities of the financial liabilities as at 31 March 2014, based on the earliest date on which payment can be required
are as follows:
2014
3 months Not more than
or less one year Total
£’000 £’000 £’000
Current liabilities:
Borrowings under the loan facility 62,723 – 62,723
OTC Swap (unfunded bullet swap†) 17,979 – 17,979
Amounts due to brokers and accruals 20,834 – 20,834
Derivatives – Put options (short) 979 – 979
Derivatives – Call options (short) 72 – 72
102,587 – 102,587
2013
3 months Not more than
or less one year Total
£’000 £’000 £’000
Current liabilities:
Borrowings under the loan facility 31,419 – 31,419
OTC Swap (unfunded bullet swap†) 17,690 – 17,690
Amounts due to brokers and accruals 9,245 – 9,245
Derivatives – Put options (short) 734 – 734
Derivatives – Call options (short) 830 – 830
59,918 – 59,918
(iii) Credit risk
Credit risk is 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 against the loan provided by them to the Company.
Such assets held by Goldman Sachs are available for rehypothecation†. As at 31 March 2014, assets with a total market value of
£93.1 million (31 March 2013: £50.1 million) were held as collateral against the loan facility which equates to 138% of the
overdrawn position at Goldman Sachs of £67.5 million (see note 11 on page 56 for further details).
Management of the risk
The risk is not significant, and is managed as follows:
• 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;
• by investing in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates the risk of
losing the principal of a trade during the settlement process; and
• by monitoring the assets subject to rehypothecation†.
†See glossary beginning on page 68.
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Financial Statements / Notes to the Accounts
Credit risk exposure
2014 2013
Balance Balance
Sheet Sheet
£’000 £’000
Fixed interest and convertible securities 31,638 15,015
Derivative – OTC equity swaps 40,325 35,988
Current assets:
Other receivables (amounts due from brokers, dividends
and interest receivable 24,243 9,010
Derivative – Put options (long) 420 280
Derivative – Call options (long) 647 3,726
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).
Hierarchy of investments
The Company has classified its financial assets designated at fair value through profit or loss and the fair value of derivative
financial instruments using a fair value hierarchy that reflects the significance of the inputs used in making the fair value
measurements. The hierarchy has the following levels:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1 Level 2 Level 3 Total
As of March 2014 £’000 £’000 £’000 £’000
Assets
Financial investments designated at
fair value through profit or loss 649,096 16,038 8,004 673,138
Fair value (long and short) put options – (560) – (560)
Fair value of (long and short) call options – 576 – 576
Fair value of OTC equity swaps – 40,325 – 40,325
Assets measured at fair value 649,096 56,379 8,004 713,479
As at 31 March 2014, the put and call options, the equity swaps, and Incyte Corporation 4.75% 01/10/15 convertible bond and
Endologix 2.5% 15/12/18, have been classified as level 2. Ikaria Second Lien Loan 8.75% 04/02/22 and Sheridan Second Lien Term
Loan 18/12/21 have been classified as level 3. All of the remaining investments have been classified as level 1.
Level 1 Level 2 Level 3 Total
As of March 2013 £’000 £’000 £’000 £’000
Assets
Financial investments designated at
fair value through profit or loss 506,475 8,854 – 515,329
Fair value of (long and short) put options – (454) – (454)
Fair value of (long and short) call options – 2,896 – 2,896
Fair value of OTC equity swaps – 35,988 – 35,988
Assets measured at fair value 506,475 47,284 – 553,759
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Financial Statements / Notes to the Accounts
As at 31 March 2013, the put and call options, the equity swaps and the Incyte Corporation 4.75% 01/10/5 convertible bond were
classified as level 2. All the remaining investments were classified as level 1.
Level 3 Reconciliation
Please see below a reconciliation disclosing the changes during the year for the financial assets and liabilities designated as fair
through profit or loss classified as being Level 3.
2014
£’000
Assets as at 1 April 0
Purchases 15,877
Sales (7,306)
Realised losses (636)
Investment holding gains 69
Assets as at 31 March 8,004
As at 31 March 2014, the two securitised debt instruments, Ikaria Second Lien Loan 8.75% 04/02/22 (Ikaria) and Sheridan Second
Lien Term Loan 18/12/21 (Sheridan) have been classified as level 3. Both positions have been valued using the estimated fair
values as provided by the counterparties.
If the value of Ikaria and Sheridan were to increase or decrease by 10%, while all other variables had remained constant, the return
and net assets attributable to shareholders for the year ended 31 March 2014 would have increased/decreased by £800,000.
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 £120 million 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 47.
Gearing for this purpose is defined as total assets less current liabilities (before deducting any prior charges), minus cash and cash
equivalents divided by Shareholders’ funds, expressed as a percentage. As at 31 March 2014, the Company had a gearing
percentage of 12.0% (2013: 9.8%).
The Board with the assistance of the Investment Manager and the 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 buy-back policy;
– the need for new issues of equity shares, including issues from treasury; and
– the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
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Financial Statements / Notes to the Accounts
19. Capital reserve
Capital Reserve*–
Capital Investment
Reserve – Holding
Other Gains Total
£’000 £’000 £’000
At 31 March 2013 130,530 129,480 260,010
Transfer on disposal of investments 61,164 (61,164) –
Net gains on investments 43,339 86,907 130,246
Expenses charged to capital less tax relief thereon (15,367) – (15,367)
Subscription shares exercised 5 – 5
Shares issued from treasury 2,728 – 2,728
Exchange gain on currency balances 10,039 – 10,039
At 31 March 2014 232,438 155,223 387,661
*Investment holding gains relate to the revaluation of investments held at the reporting date. (See note 9 on page 55 for further
details).
Under the terms of the revisions made to the Company’s Articles of Association in 2013, sums within “capital reserves – other” are
also available for distribution.
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Further Information / Shareholder Information
Financial Calendar
31 March
June
July
31 September
November
January/July
February/August
Financial Year End
Final Results Announced
Annual General Meeting
Half Year End
Half Year Results Announced
Dividends Payable
Interim Management
Statement Announced
Annual General Meeting
The Annual General Meeting of Worldwide Healthcare Trust PLC will be held at Barber-Surgeons’ Hall, Monkwell Square, Wood
Street, London EC2Y 5BL on Monday, 14 July 2014 at 12 noon.
Dividends
The Company pays two interim dividends in January and July each year. Shareholders who wish to have dividends paid directly
into a bank account, rather than by cheque to their registered address, can complete a mandate form for the purpose. Mandates
may be obtained from the Company’s Registrars, Capita Asset Services, on request.
Share Prices
The Company’s Ordinary Shares are listed on the London Stock Exchange under ‘Investment Companies’. The price is given daily
in the Financial Times and other newspapers.
Change of Address
Communications with shareholders are mailed to the address held on the share register. In the event of a change of address or
other amendment this should be notified to the Company’s Registrars, Capita Asset Services, under the signature of the
registered holder.
Daily Net Asset Value
The daily net asset value of the Company’s shares can be obtained on the Company’s website at www.worldwidewh.com and is
published daily via the London Stock Exchange.
Profile of the Company’s Ownership
% of Ordinary Shares held at 31 March
2013
2014
■ Retail
■ Mutual Funds
■ Insurance
■ Pensions
■ Charities
■ Corporate
■ Fund of Funds
■ Directors
■ Inv Trusts
73.6
11.4
5.3
3.2
1.9
1.6
1.4
1.0
0.6
■ Retail
■ Mutual Funds
■ Insurance
■ Pensions
■ Charities
■ Corporate
■ Fund of Funds
■ Directors
■ Inv Trusts
64.7
13.4
7.1
4.3
1.7
0.9
5.5
1.0
1.4
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Further Information / Glossary
Alternative Investment Fund Managers Directive
The Alternative Investment Fund Managers Directive (the “Directive”) is a European Union Directive that entered into force on
22 July 2013. The Directive regulates EU fund managers that manage alternative investment funds (this includes investment
trusts). There is a one-year transition period within which alternative funds must comply with the provisions of the Directive.
Association of Southeast Asian Nations (ASEAN)
A political and economic organisation of ten countries located in Southeast Asia which was formed in 1967. Membership
comprises: Indonesia, Malaysia, the Phillippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar and Vietnam.
Bullet swap
A Swap with a single payment at maturity.
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
Calculated using the Association of Investment Companies definition.
Total assets, less current liabilities (before deducting any prior charges (such as borrowings)) minus cash/cash equivalents divided
by Shareholders’ funds, expressed as a percentage.
For years prior to 2013, the calculation was based on prior charges as a percentage of average net assets.
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.
MSCI World Health Care Index
The MSCI World Health Care Index is comprised of large and mid capitalisation companies across the following 23 developed
markets countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy,
Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, the UK and the U.S. The total return of the Index
is used which assumes the reinvestment of any dividends paid by its constituents. The performance of the Index is calculated in
U.S.$ terms. Because the Company’s reporting currency is £ the prevailing U.S.$/£ exchange rate is applied to obtain a £ based
return.
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Further Information / Glossary
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.
Ongoing Charges
Ongoing charges are calculated by taking the Company’s annualised ongoing charges, excluding performance fees and
exceptional items, and expressing them as a percentage of the average month end net asset value of the Company over the
year.
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 of securities in customer margin accounts as collateral for a loan.
Share Price Total Return
Return to the investor on mid-market prices assuming that all dividends paid were reinvested.
Total Assets
Total assets less current liabilities before deducting prior charges. Prior charges include all loans for investment purposes.
Total Net Assets
The value of the Company’s assets, principally investments made in other companies and cash being held, minus any liabilities.
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.
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Further Information / How to Invest
Investment Platforms
The Company’s shares are traded openly on the London Stock Exchange and can be purchased through a stock broker or other
financial intermediary. The shares are available through savings plans (including Investment Dealing Accounts, ISAs, Junior ISAs
and SIPPs) which facilitate both regular monthly investments and lump sum investments in the Company’s shares. There are a
number of investment platforms that offer these facilities. A list of some of them, that is not comprehensive nor constitutes any
form of recommendation, can be found below:
AJ Bell Youinvest
Alliance Trust Savings
Barclays Stockbrokers
Charles Stanley Direct
Club Finance
Fast Trade
FundsDirect
Halifax Share Dealing
Hargreaves Lansdown
HSBC
iDealing
IG Index
Interactive Investor
IWEB
James Brearley
Natwest Stockbrokers
Saga Share Direct
Selftrade
The Share Centre
Saxo Capital Markets
TD Direct Investing
http://www.youinvest.co.uk/
http://www.alliancetrustsavings.co.uk/
https://www.barclaysstockbrokers.co.uk/Pages/index.aspx
https://www.charles-stanley-direct.co.uk/
http://www.clubfinance.co.uk/
http://www.fastrade.co.uk/wps/portal
http://www.fundsdirect.co.uk/Default.asp?
http://www.halifax.co.uk/Sharedealing/
http://www.hl.co.uk/
https://investments.hsbc.co.uk/
http://www.idealing.com/
http://www.igindex.co.uk/
http://www.iii.co.uk/
http://www.iweb-sharedealing.co.uk/share-dealing-home.asp
http://www.jbrearley.co.uk/Marketing/index.aspx
http://www.natweststockbrokers.com/nw/products-and-services/share-dealing.ashx
https://www.sagasharedirect.co.uk/
http://www.selftrade.co.uk/
https://www.share.com/
http://uk.saxomarkets.com/
http://www.tddirectinvesting.co.uk/
Capita Asset Services – Share Dealing Service
A quick and easy share dealing service is available to existing shareholders through the Company’s Registrar, Capita Asset Services,
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
Costs
Online
1% of the value of the deal
(Minimum £21.00, max £125.00)
Telephone
1.5% of the value of the deal
(Minimum £28.50, max £175.00)
The above charges are correct at the time of printing and may be subject to change. Please visit www.capitadeal.com for up-to-date
changes.
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. The Maximum deal size for online trades is £25,000. Deals in excess of this amount can
be transacted by telephone. Charges will be confirmed at the time of dealing.
For further information on this service please contact: www.capitadeal.com (online dealing) or 0871 664 0364† (telephone dealing).
If calling from outside of 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.
70 Worldwide Healthcare Trust PLC
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Further Information / How to Invest
Risk warnings
– 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 and Junior ISA tax advantages will depend on personal circumstances. The favourable tax treatment of ISAs
and Junior ISAs may not be maintained.
71 Worldwide Healthcare Trust PLC
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Further Information / Notice of the Annual General Meeting
Notice is hereby given that the Annual General Meeting of Worldwide Healthcare Trust PLC will be held at Barber-Surgeons’ Hall,
Monkwell Square, Wood Street, London EC2Y 5BL on Monday, 14 July 2014 from 12 noon for the following purposes:
Ordinary Business
To consider and, if thought fit, pass the following as ordinary resolutions:
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive and, if thought fit, to accept the Audited Accounts and the Report of the Directors for the year ended 31 March 2014
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 Sir Martin Smith as a Director of the Company
To re-elect Mrs Sarah Bates as a Director of the Company
To re-elect Mr Doug McCutcheon as a Director of the Company
To appoint PricewaterhouseCoopers LLP as the Company’s Auditor and to authorise the Directors to determine
their remuneration
To receive and approve the Directors’ Remuneration Report for the year ended 31 March 2014
10.
To receive and approve the Company’s Remuneration Policy
Auditors have to be appointed at each general meeting at which the annual report and accounts are presented to shareholders.
On the recommendation of the Audit Committee, the Board is proposing to appoint PricewaterhouseCoopers LLP as Auditor to
the Company following a formal tender process and the subsequent resignation of Ernst & Young LLP with effect from the
conclusion of the Annual General Meeting to be held on 14 July 2014.
Accordingly, shareholder approval is now sought to appoint PricewaterhouseCoopers LLP as Auditor of the Company and to
authorise the Directors to determine their remuneration. As resigning Auditor, Ernst & Young LLP will provide the Company with a
‘Statement of Circumstances’ confirming that it resigned as Auditor of the Company following the tender process. A copy of the
‘Statement of Circumstances’ will be available from the Company Secretary upon request.
Special Business
To consider and, if thought fit, pass the following resolutions of which resolutions 12, 13, 14, 15, 16 and 17 will be proposed as
special resolutions:
Authority to Allot Shares
11.
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 £1,166,547 (being
10% of the issued share capital of the Company at 6 June 2014) and representing 4,666,188 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 2015 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
12.
THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 13 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 11
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 capital of the Company
(“Shares”) are proportionate (as nearly as may be) to the respective numbers of Shares held by them but subject to
such exclusions or other arrangements in connection with the issue as the Directors may consider necessary,
appropriate or expedient to deal with equity securities representing fractional entitlements or to deal with legal or
72 Worldwide Healthcare Trust PLC
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Further Information / Notice of the Annual General Meeting
practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange, or any
other matter whatsoever; and
(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 £1,166,547, being 10% of the issued share capital of the Company
as at 6 June 2014 and representing 4,666,188 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 13 set out in the Notice of Annual
General Meeting and (ii) no allotment of equity securities shall be made under this power which would result in Shares
being issued at a price which is less than the net asset value per Share as at the latest practicable date before such
allotment of equity securities as determined by the Directors in their reasonable discretion,
and such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of
this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied
or renewed by the Company in general meeting and provided that the Company shall be entitled to make, prior to the
expiry of such authority, an offer or agreement which would or might otherwise require equity securities to be allotted after
such expiry and the Directors may allot equity securities pursuant to such offer or agreement as if the power conferred
hereby had not expired.
13.
THAT in substitution of all existing powers (but in addition to any power conferred on them by resolution 12 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)
(b)
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 capital of 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 fully diluted cum income 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
this power shall be limited to the sale of relevant shares having an aggregate nominal value of £1,166,547 being 10%
of the issued share capital of the Company as at 6 June 2014 and representing 4,666,188 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 12 set out in the Notice of Annual General Meeting,
and such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this
resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or
renewed by the Company in General Meeting and provided that the Company shall be entitled to make, prior to the expiry of
such authority, an offer or agreement which would or might otherwise require treasury shares to be sold after such expiry and
the Directors may sell treasury shares pursuant to such offer or agreement as if the power conferred hereby had not expired.
Authority to Repurchase Ordinary Shares
14.
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)
(b)
(c)
the maximum aggregate number of Shares authorised to be purchased is 6,994,615 (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);
the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;
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
73 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
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Further Information / Notice of the Annual General Meeting
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);
(d)
(e)
the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be
held in 2015 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
15.
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)
(b)
(c)
(d)
(e)
the maximum aggregate number of Subscription Shares authorised to be purchased is 223,530 (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;
the minimum price (exclusive of expenses) which may be paid for a Subscription Share is 1p;
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 2015 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.
Adoption of New Articles of Association
16.
THAT the Articles of Association set out in the document produced to the meeting and signed by the Chairman of the
meeting for the purposes of identification be and are hereby approved and adopted as the Articles of Association of the
Company in substitution for and to the exclusion of the Articles of Association of the Company.
Full explanatory notes of the principal changes to the Articles of Association are set out on page 79 of this annual report.
General Meetings
17.
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.
Continuance of the Company
18.
To approve the continuance of the Company as an investment trust for a further period of five years.
By order of the Board
Frostrow Capital LLP
Company Secretary
6 June 2014
74 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
Registered Office:
One Wood Street
London EC2V 7WS
231544 Finsbury WWH pp67-pp80 11/06/2014 12:12 Page 75
Further Information / Notice of the Annual General Meeting
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.
10.
11.
12.
13.
14.
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 Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 12 noon
Thursday, 10 July 2014.
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 Thursday, 10 July 2014 (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 6 June 2014 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of
46,661,881 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 6 June 2014 are 46,661,881.
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.
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.
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.
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.
75 Worldwide Healthcare Trust PLC
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Further Information / Notice of the Annual General Meeting
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 Asset Services 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 Asset Services, 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 65) 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.
LOCATION OF THE ANNUAL GENERAL MEETING
Barber-Surgeons’ Hall, Monkwell Square, Wood Street, London EC2Y 5BL
Barbican
Barber-Surgeons’ Hall
Monkwell Square
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Moorgate
Moorgate
FORE STREET
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D S
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LONDON WALL
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GRESHAM STREET
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LONDON WAL
LOTHBURY
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POULTRY
Bank
St. Pauls
CHEAPSIDE
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Further Information / Explanatory Notes to the Resolutions
Resolution 1 – To receive the Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March
2014 will be presented to the Annual General Meeting (AGM).
These accounts accompany this Notice of Meeting and
shareholders will be given an opportunity at the meeting to ask
questions.
Resolutions 2 to 7 – Re-election of Directors
Resolutions 2 to 7 deal with the re-election of each Director.
Biographies of each of the Directors can be found on pages 23
to 24 of the annual report.
The Board has confirmed, following a performance review, that
the Directors standing for re-election continue to perform
effectively.
Resolution 8 – Appointment of Auditor and the
determination of their remuneration
Resolution 8 relates to the appointment of PricewaterhouseCoopers
LLP as the Company’s independent Auditor to hold office until the
next AGM of the Company and also authorises the Directors to set
their remuneration.
Resolutions 9 to 10 – Remuneration Policy and
Remuneration Report
It is now mandatory for all listed companies to put both their
Report on Directors’ Remuneration and their Remuneration
Policy to a shareholder vote. The Report on Directors’
Remuneration and the Remuneration Policy are set out in full in
the annual report on pages 40 to 42.
Resolutions 11, 12 and 13
Ordinary Resolution No. 11 in the Notice of AGM will renew the
authority to allot the unissued share capital up to an aggregate
nominal amount of £1,166,547 (equivalent to 4,666,188 shares, or
10% of the Company’s existing issued share capital on 6 June
2014, being the nearest practicable date prior to the signing of
this Report). Such authority will expire on the date of the next
AGM or after a period of 15 months from the date of the passing
of the resolution, whichever is earlier. This means that the authority
will have to be renewed at the next AGM.
When shares are to be allotted for cash, Section 551 of the
Companies Act 2006 (the “Act”) provides that existing
shareholders have pre-emption rights and that the new shares
must be offered first to such shareholders in proportion to their
existing holding of shares. However, shareholders can, by special
resolution, authorise the Directors to allot shares otherwise than
by a pro rata issue to existing shareholders. Special Resolution
No. 12 will, if passed, give the Directors power to allot for cash
equity securities up to 10% of the Company’s existing share
77 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
capital on 6 June 2014, 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 No. 11. 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 12, Resolution 13, 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 fully diluted cum income net asset value
per share, and this is reflected in the text of Resolution 13. It is also
the intention of the Board that sales from treasury would only take
place when the Board believes that to do so would assist in the
provision of liquidity to the market. The number of treasury shares
which may be sold pursuant to this authority is limited to 10% of
the Company’s existing share capital on 6 June 2014 (reduced by
any equity securities allotted for cash on a non-pro rata basis
pursuant to Resolution 12, as described above). This authority will
also expire on the date of the next Annual General Meeting or
after a period of 15 months, whichever is earlier.
The Directors intend to use the authority given by Resolutions
Nos. 11, 12 and 13 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.
231544 Finsbury WWH pp67-pp80 11/06/2014 12:12 Page 78
Further Information / Explanatory Notes to the Resolutions
passing of the resolution, whichever is earlier. This means in
effect that the authority will have to be renewed at the next AGM
or earlier if the authority has been exhausted.
Resolution 16
Special Resolution No. 16 seeks shareholder approval to make
certain changes to the Company’s Articles of Association inter
alia to reflect changes prompted by the introduction of the
Alternative Investment Fund Managers Directive. Full
explanatory notes of the principal changes to the Articles of
Association are set out on page 79 of this annual report.
Resolution 17
Special Resolution No. 17 seeks shareholder approval for the
Company to hold General Meetings (other than the AGM) at
14 clear days’ notice.
Resolution 18
Ordinary Resolution No. 18 seeks shareholder approval for the
Company to continue as an investment trust for a further period
of five years.
Recommendation
The Board considers that the resolutions relating to the above
items are in the best interests of shareholders as a whole.
Accordingly, the Board unanimously recommends to the
shareholders that they vote in favour of the above resolutions to
be proposed at the forthcoming AGM as the Directors intend to
do in respect of their own beneficial holdings totalling 35,753
shares.
Resolutions 14 and 15
The Directors wish to renew the authority given by shareholders
at the previous AGM. The principal aim of a share buy-back
facility is to enhance shareholder value by acquiring shares at a
discount to net asset value, as and when the Directors consider
this to be appropriate. The purchase of Ordinary Shares, when
they are trading at a discount to net asset value per share, and
also Subscription Shares, should result in an increase in the net
asset value per share for the remaining shareholders. This
authority, if conferred, will only be exercised if to do so would
result in an increase in the net asset value per share for the
remaining shareholders and if it is in the best interests of
shareholders generally. Any purchase of shares will be made
within guidelines established from time to time by the Board. It
is proposed to seek shareholder authority to renew this facility
for another year at the AGM.
Under the current Listing Rules, the maximum price that may be
paid on the exercise of this authority must not exceed the higher
of (i) 105% of the average of the middle market quotations for the
shares over the five business days immediately preceding the date
of purchase and (ii) the higher of the last independent trade and
the highest current independent bid on the trading venue where
the purchase is carried out. The minimum price which may be paid
is 25p per Ordinary Share and 1p per Subscription Share. Existing
shares which are purchased under this authority will either be
cancelled or held as Treasury Shares. Any Subscription Shares
purchased will be cancelled.
Special Resolution No. 14 in the Notice of AGM will renew the
authority to purchase in the market a maximum of 14.99% of
Ordinary Shares in issue on 6 June 2014, being the nearest
practicable date prior to the signing of this Report, (amounting
to 6,994,615 Ordinary Shares). Special Resolution 15 in the
Notice of Annual General Meeting will renew the authority to
purchase in the market a maximum of 14.99% of the Subscription
Shares in issue as 6 June 2014, being the nearest practicable
date prior to the signing of this Report, (amounting to 223,530
Subscription Shares). Such authority will expire on the date of
the next AGM or after a period of 15 months from the date of
78 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp67-pp80 11/06/2014 12:12 Page 79
Further Information / Explanatory Notes of the Principal
Changes to the Company’s Articles of Association
Revenue Service. The Articles of Association have been
amended in order to provide the Company with the ability to
require shareholders to co-operate with it in ensuring that the
Company is able to comply with its obligations under the
Regulations in order to avoid being deemed to be a
“Nonparticipating Financial Institution” for the purposes of
FATCA and consequently having to pay withholding tax to the
IRS. The Articles of Association have also been amended to
ensure that the Company will not be liable for any monies that
become subject to a deduction or withholding relating to
FATCA, as such liability would be to the detriment of the
Company’s shareholders as a whole. The amendments to the
Company’s Articles of Association will enable the Company to
require the Company’s shareholders to forfeit their shares in
the event that such shareholders may cause the Company to
make or become subject to FATCA or suffer any other
detriment under FATCA, or if such shareholders do not comply
with their obligations to co-operate with the Company’s efforts
to comply with FATCA as more particularly described above.
A copy of the current Articles and of the proposed new Articles
marked up to show the proposed amendments will be
available for inspection at the offices of Frostrow Capital LLP
during normal business hours and will be available for inspect
at the AGM, in each case until conclusion of the meeting.
Directors’ Fees
The new Articles have been updated to reflect the increase in
the maximum aggregate annual amount that can be paid to
the Directors’ fees from £200,000 to £250,000 (exclusive of any
applicable VAT).
Set out below is a summary of the principal differences
between the current and the proposed new Articles of
Association (the “Articles”). These changes to the new
Articles, to be adopted at the Annual General Meeting to be
held on Monday, 14 July 2014 relate to:
AIFM Directive
The AIFM Directive (AIFMD) is a European-wide directive
aimed at providing oversight and transparency of non-UCITS
funds managed, domiciled and/or distributed in the European
Economic Area and was to be transposed into the laws of
Member States on 22 July 2013. Since the Company
constitutes an alternative investment fund and therefore falls
within the scope of the AIFMD, the Articles have been
amended in order to provide the Board with the ability to
prescribe, vary or revoke the Company’s management and
governance rules that the Company must comply with, to
enable the Company and any alternative investment fund
manager that it may appoint, from time to time to conduct
portfolio management and risk management on its behalf, to
comply with or for the purposes of, the AIFMD and the “AIFM
Rules” being the AIFMD and all applicable rules and
requirements implementing the AIFMD, including without
prejudice to the generality of the foregoing, the Alternative
Investment Fund Managers’ Regulations (SI 2013/1773) and all
relevant provisions of The FCA Handbook. In particular, the
Articles have been amended, so that the Board may authorise
a depositary appointed by the Company on the terms and
conditions prescribed in the AIFM Rules, together with any
further requirements that may be prescribed by the Board, to
discharge itself of liability, where the Company holds assets in
a country other than the United Kingdom, and the law of that
country does not satisfy certain delegation requirements that
are specified in the AIFM Rules.
FATCA
Sections 1471 to 1474 of the US Internal Revenue Code 1986
(“FATCA”) imposes a system of information reporting and a
withholding tax on “withholdable” payments made by US
persons and others to certain entities including foreign
financial institutions such as the Company that do not meet
specific information reporting requirements. On 1 September
2013 the UK International Tax Compliance (United States of
America) Regulations 2013 (the “Regulations”) entered into
force. The Regulations were made to implement the
agreement between the US and the UK that enables UK
financial institutions to meet their FATCA obligations without
having to enter into an agreement directly with the US Internal
79 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
231544 Finsbury WWH pp67-pp80 11/06/2014 12:12 Page 80
Further Information / Company Information
Directors
Sir Martin Smith (Chairman)
Sarah Bates
Jo Dixon
Dr David Holbrook
Samuel D. Isaly
Doug McCutcheon
Company Registration Number
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.
Website
Website: www.worldwidewh.com
Registered Office
One Wood Street
London EC2V 7WS
Investment Manager
OrbiMed Capital LLC
601 Lexington Avenue, 54th Floor
New York NY 10022
Website: www.orbimed.com
Registered under the U.S. Securities & Exchange Commission
Manager, Administrator and Company Secretary
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 Conduct 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.
Custodian and Banker
Goldman Sachs & Co.
200 West Street, Third Floor
New York, NY10282
Auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
Registrars
Capita Asset Services
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: shareholderenquiries@capita.co.uk
Website: www.capitaassetservices.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.
Stockbroker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge, 25 Dowgate Hill
London EC4R 2GA
Share and Subscription Share Price Listings
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.
Identification Codes
Shares: SEDOL :
ISIN :
BLOOMBERG :
EPIC :
Subscription Shares: SEDOL :
ISIN :
BLOOMBERG :
0338530
GB0003385308
WWH LN
WWH
B3VMCB0
GB00B3VMCB07
WWHS LN
Disability Act
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.
80 Worldwide Healthcare Trust PLC
Annual Report for the year ended 31 March 2014
A member of the Association of Investment Companies
This report is printed on Revive Pure White Silk a totally recycled paper produced using 100% recycled
waste at a mill that has been awarded the ISO 14001 certificate for environmental management.
The pulp is bleached using a totally chlorine free (TCF) process.
This report has been produced using vegetable based inks.
Worldwide Healthcare Trust PLC
25 Southampton Buildings, London WC2A 1AL
www.worldwidewh.com
Perivan Financial Print 231544