WORLDWIDE HEALTHCARE TRUST PLC
A
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
STRATEGIC REPORT
C
C
25 SOUTHAMPTON BUILDINGS
LONDON
WC2A 1AL
WWW.WORLDWIDEWH.COM
Annual Report
for the year ended 31 March 2022
I
W
O
R
L
D
W
D
E
H
E
A
L
T
H
C
A
R
E
T
R
U
S
T
P
L
C
A
n
n
u
a
l
R
e
p
o
r
t
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
1
M
a
r
c
h
2
0
2
2
A member of the Association of Investment Companies
CBP008251
This report is printed on Revive 100% 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.
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,
Link Group, 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.
D
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
Financial Highlights
Key Information
Company Performance
Chairman’s Statement
Investment Objective and Policy
Portfolio
OrbiMed Capital LLC (‘OrbiMed’)
Portfolio Manager’s Review
Contribution by Investment
ESG and Climate Change
Business Review
GOVERNANCE
Board of Directors
Report of the Directors
Statement of Directors’
Responsibilities
Corporate Governance
Audit & Risk Committee Report
Directors’ Remuneration Report
Independent Auditors’ Report
FINANCIAL STATEMENTS
Income Statement
Statement of Changes in Equity
Statement of Financial Position
Statement of Cash Flows
1
2
3
4-7
8-9
10-12
13
14-23
24
25
26-40
41-42
43-46
47
48-54
55-59
60-62
63-71
72
73
74
75
Notes to the Financial Statements 76-92
FURTHER INFORMATION
Shareholder Information
93
Glossary of Terms and Alternative 94-96
Performance Measures
How to Invest
97
Notice of Annual General Meeting 98-102
Explanatory Notes to the
103-104
Resolutions
Regulatory Disclosures
105-106
(Unaudited)
Company Information
107
For more information about Worldwide
Healthcare Trust PLC visit the website at
www.worldwidewh.com
Follow us on Twitter @worldwidewh
Winner – Best Investment Trust in the
specialist sector – FT Adviser Investment
100 Club Awards 2021
WORLDWIDE HEALTHCARE TRUST PLC
Worldwide Healthcare Trust PLC (the
“Company”) is a specialist investment trust
which invests in the global healthcare sector
with the objective of achieving a high level of
capital growth.
In order to achieve its investment objective, the Company invests worldwide
in a diversified portfolio of shares in pharmaceutical and biotechnology
companies and related securities in the healthcare sector. It uses
gearing, and derivative transactions to enhance returns and mitigate risk.
Performance is measured against the MSCI World Health Care Index on a
net total return, sterling adjusted basis (“Benchmark”). Further details of the
Company’s investment policy, including how it can use gearing and employ
derivatives, are set out in the Strategic Report on pages 8 and 9.
ACCESSING THE GLOBAL MARKET
The healthcare sector is global and accessing this market as a UK investor
can be difficult. The Company offers an opportunity to gain exposure to
pharmaceutical, biotechnology and related companies in the healthcare sector
on a global scale. The Company invests in large companies with market
capitalisations of over U.S.$10bn, smaller companies below that size, as
well as unquoted companies. The portfolio ranges from large multi-national
pharmaceutical companies with multiple products to unquoted emerging
biotechnology companies.
Worldwide Healthcare Trust PLC is able to participate in all aspects
of healthcare, anywhere in the world because of its broad investment,
mandate. These may include patented speciality medicines for small patient
populations and unpatented generic drugs, in both developed countries
and emerging markets. In addition, the Company invests in medical
device technologies, life science tools and healthcare services. The overall
geographic spread of Worldwide Healthcare Trust PLC is also extensive with
investments in the U.S., Europe, Japan, China and India (see page 12 for
further information).
HOW TO INVEST
The Company’s shares are traded openly on the London Stock Exchange
and can be purchased through a stockbroker or other financial intermediary.
The shares are available through savings plans (including investment dealing
accounts, ISAs, Junior ISAs and SIPPs) which enable both regular monthly
investments and lump sum investments in the Company’s shares. There are
a number of investment platforms that offer these facilities. Further details
can be found on page 97.
For more information about Worldwide Healthcare Trust PLC visit the website
at www.worldwidewh.com. Follow us on Twitter @worldwidewh.
Perivan 263122
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
1
FINANCIAL HIGHLIGHTS
as at 31 March 2022
(5.8%)
Net asset value per share
(total return)*^
2021: +30.0%
(5.5%)
Discount of share price
to net asset value per share*^
2021: (0.2%)%
(10.8%)
Share price (total return)*^
2021: +27.4%
26.5p
Dividends per share
2021: 22.0p
20.4%
Benchmark*†^
2021: +16.0%
0.9%
Ongoing Charges^
2021: 0.9%
*Source: Morningstar
† MSCI World Health Care Index on a net total return, sterling adjusted basis. (See Glossary beginning on page 94).
^ Alternative Performance Measure (see Glossary beginning on page 94).
TOTAL RETURN PERFORMANCE
for the year to 31 March 2022
%
125
120
115
110
105
100
95
90
85
80
Mar 2021
Apr 2021
May 2021
Jun 2021
Jul 2021
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
Benchmark (total return) (+20.4%)
WWH NAV (total return) (-5.8%)
WWH Share Price (total return) (-10.8%)
Rebased to 100 as at 31 March 2021
Source: Morningstar
2
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
KEY INFORMATION
TOTAL RETURN PERFORMANCE
Since Launch to 31 March 2022
%
6000
5000
4000
3000
2000
1000
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
Mar
15
Mar
16
Mar
17
Mar
18
Mar
19
Mar
20
Mar
21
Mar
22
WWH NAV (total return) (4,237.6%)
WWH Share Price (total return) (3,866.7%)
Benchmark (total return) (2,133.6%)*
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 net total return, sterling
adjusted basis. Prior to this date, performance was measured against the Datastream World Pharmaceutical & Biotechnology Index (total return, sterling adjusted)
FIVE YEAR TOTAL RETURN PERFORMANCE
to 31 March 2022
%
200
180
160
140
120
100
80
Mar 17
Mar 18
Mar 19
Mar 20
Mar 21
Mar 22
Benchmark (total return) (75.1%)
WWH NAV (total return) (52.3%)
WWH Share Price (total return) (47.8%)
Rebased to 100 as at 31 March 2017. Source: Morningstar.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
3
COMPANY PERFORMANCE
HISTORIC PERFORMANCE
for the years ended 31 March
Net asset value per share (total return)*†
Benchmark (total return)*†
Net asset value per share
Share price
(Discount)/Premium of share price to
net asset value per share†
Dividends per share
Leverage†
Ongoing charges†
Ongoing charges (including performance
fees paid or crystallised during the year)†
2017
28.9%
24.5%
2,367.2p
2,304.0p
(2.7%)
22.5p
16.9%
0.9%
2018
2.8%
(2.5%)
2,411.1p
2,405.0p
(0.3%)
17.5p
16.4%
0.9%
2019
13.7%
21.1%
2,722.9p
2,730.0p
0.3%
26.5p
4.9%
0.9%
2020
6.5%
5.7%
2,868.9p
2,920.0p
1.8%
25.0p
12.0%
0.9%
2021
30.0%
16.0%
3,703.0p
3,695.0p
(0.2%)
22.0p
7.6%
0.9%
2022
(5.8%)
20.4%
3,465.2p
3,275.0p
(5.5%)
26.5p
10.9%
0.9%
1.0%
1.2%
1.1%
0.9%
0.9%
1.4%
*Source: Morningstar
† Alternative Performance Measure (see Glossary beginning on page 94).
PREMIUM/(DISCOUNT) OF THE COMPANY’S SHARE PRICE TO THE NET ASSET VALUE PER SHARE
year to 31 March 2022
(0.2%)
%
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
-5.0
-6.0
-7.0
(5.5%)
Mar 2021
Apr 2021
May 2021
Jun 2021
Jul 2021
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
*Source: Morningstar
4
4
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CHAIRMAN’S
STATEMENT
SIR MARTIN SMITH
INVESTMENT PERFORMANCE
Following last year’s strong returns, both on an absolute
and a relative basis, the year under review has proved to
be a challenging one for the Company. The Company’s net
asset value per share total return was -5.8% (2021:+30.0%)
and the share price total return was -10.8% (2021: +27.4%),
both significantly underperforming the Company’s
Benchmark, the MSCI World Health Care Index measured
on a net total return, sterling adjusted basis, which rose
by 20.4% during the year (2021: rose by 16.0%). The
disparity between the performance of the Company’s net
asset value per share and its share price is reflected in
the widening of the Company’s share price discount to
its net asset value per share from 0.2% at the start of the
Company’s financial year to (cid:24).(cid:24)(cid:8) at (cid:22)1 March 2022.
The majority of the Company’s assets are denominated in
U.S. dollars, and it should be noted that the Company’s net
asset value performance was helped by the weakness of
sterling over the year, particularly against the dollar, where
it depreciated by 4.6%.
The negative absolute return over the year to 31 March 2022
reflected a mildly positive first half, where the net asset value
per share total return was +0.4% (2021:+23.1%) compared to
a rise in the Benchmark of 13.0% (2021: a rise of 15.3%) and
a weaker second half where the net asset value total return
was -(cid:25).2(cid:8) (2021-(cid:814)(cid:24).(cid:25)(cid:8)) compared to a rise in the Benchmark
of 7.4% (2021: 0.7%).
During the year the Company’s Portfolio Manager
continued to pursue a strategy of being underweight in
large pharmaceutical companies and overweight in both
emerging markets and emerging biotechnology companies;
an approach which had served the Company well during the
previous year but was the principal reason for the Company’s
relative underperformance during the year under review.
While the healthcare sector as a whole performed
well during the year, macro considerations rather than
company fundamentals were deemed to be most
important by investors. In addition, the “growth-to-value”
rotation which has tended to favour well-established
companies despite their less-exciting growth prospects
also showed that investors have been less willing to take
on investment risk more generally. This risk aversion
has hurt those sectors where we have been strategically
overweight, including emerging biotechnology, China
healthcare, and innovative(cid:98)tools.
Risk aversion has also resulted in further pressure on
performance as the value of the smaller capitalisation
stocks we own has lagged while large capitalisation
pharmaceutical stocks have outperformed the rest of the
healthcare sector, particularly during the last quarter of
the financial year. It should be emphasised, however, that
this extraordinary fall in the valuation of the biotechnology
and other sectors reflects a change in investor
sentiment rather than any significant deterioration in the
performance of the underlying companies. It is for this
reason that we remain confident that these stocks will
recover in due course.
Our Portfolio Manager continues to adopt both a
pragmatic and tactical approach to the use of leverage.
Leverage levels varied over the course of the year, with the
net effect being a detraction of 1.0% from performance.
The long-term performance of the Company, however,
continues to be strong, and it should be noted that from
the Company’s inception in 1995 to 31 March 2022, the
total return of the Company’s net asset value per share
has been +3,866.7%, equivalent to a compound annual
return of +14.7%. This compares to a cumulative blended
Benchmark return of +2,133.6%, equivalent to a compound
annual return of +12.2% over the same period.
Further information on the healthcare sector, the
Company’s investments and performance during the year
can be found in the Portfolio Manager’s Review beginning
on page 14.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
5
5
CAPITAL
The Company’s share price traded close to the net asset
value per share for much of the year under review. In
accordance with the Company’s share price premium
management policy 1,227,500 new shares were issued
during the year at an average premium of 0.8% to the
Company’s cum income net asset value per share. This
issuance gave rise to the receipt of £45.5m of new funds
to the Company, which have been invested in line with
the investment policy. The Company’s ongoing share
issuance programme triggered the requirement for the
Company to publish a prospectus in July 2021 which
provided authority for the issuance of 20 million new
shares.
However, toward the end of the calendar year, the
Company’s share price fell to a discount to the net asset
value per share and 80,509 shares were repurchased during
the Company’s financial year for treasury, in accordance
with the Company’s share price discount management
policy, at a discount of 8.4% to the Company’s cum income
net asset value per share, at cost of £2.5m.
At the year-end there were 65,457,246 shares in issue
(excluding the 80,509 shares held in treasury (2021:
64,310,255 with no shares held in treasury)). Since the
year-end, to 25 May 2022, the latest practicable date prior
to the publication of this report, a further 223,842 shares
were repurchased for treasury at a discount of 7.0% to the
Company’s cum income net asset value per share, at cost
of £7.3m. At the time of writing the share price discount
stands at 4.6%.
REVENUE AND DIVIDEND
Shareholders will be aware that it remains the Company’s
policy to pursue capital growth for shareholders and
to pay dividends at least to the extent required to
maintain investment trust status. Therefore, the level
of dividends declared can go down as well as up. An
increased interim dividend of 7.0p per share for the year
ended (cid:22)1(cid:98)March(cid:98)2022, was paid on 11 January 2022
to shareholders on the register on 19 November 2021
(2021: 6.5p per share). Due in large part to an increase in
exposure to higher yielding stocks in the portfolio and also
to the weakness of sterling, the Company’s revenue return
per share for the year as a whole increased to 26.8 pence
(2021: 24.1 pence). Accordingly, the Board is proposing an
increased final dividend of 1(cid:28).(cid:24) p per share (2021(cid:29)1(cid:24).(cid:24)p
per share) which, together with the interim dividend
already paid, makes a total dividend for the year of 26.5p
(2021: 22.0p per share). Based on the closing mid-market
share price of 3040.0p on 25 May 2022, the total dividend
payment for the year represents a current yield of 0.9%.
The final dividend will be payable, subject to shareholder
approval, on 15 July 2022 to shareholders on the register
of members on 10 June 2022. The associated ex-dividend
date will be 9 June 2022.
The Company’s dividend policy will be proposed for
approval at the forthcoming Annual General Meeting.
THE BOARD
The process of Board refreshment continues and, as
indicated in my last year-end statement, following David
Holbrook’s retirement last year, I shall be stepping down
from the Board on 6 July 2022, the date of this year’s
Annual General Meeting. It has been agreed that in the
interests of maintaining an orderly succession process,
Doug McCutcheon will extend his term and assume
the Chairmanship following my retirement. I wish him
every success for the future. Bina Rawal will take over as
Chair of the Management Engagement & Remuneration
Committee at the same time.
I have served on the Board for 14 years, 13 of which
as Chairman, and have been fortunate to be supported
by a group of very loyal, professional and hard working
colleagues during that time. I would also like to pay
6
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CHAIRMAN’S STATEMENT CONTINUED
tribute to the unswerving dedication of both our Portfolio
Manager, OrbiMed and our AIFM, Company Secretary and
Administrator, Frostrow Capital. Although recent results
have been disappointing, I believe that it will be only a
matter of time before the skills and experience of our
Portfolio Manager will enable the Company to resume its
excellent long-term record.
The process of recruiting a new Director is ongoing.
Shareholders will be kept informed of developments as
they occur. As new members are recruited, the Board will
remain mindful of its commitment to a policy of diversity.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
(ESG) MATTERS
ESG matters are an important priority for the Board and
Bina Rawal and I have been working closely with our
Portfolio Manager to identify an appropriate set of policies
to address them.
Our Portfolio Manager continues to develop tools for
assessing the sustainability of the Company’s portfolio
including measuring the net impacts that individual
portfolio companies have on both the environment and
society, as much as is possible with the availability
and consistency of the reporting of non-(cid:814)financial data
pertaining to both ESG matters and also to climate
change. OrbiMed is committed to taking a leading role
in the development of meaningful ESG engagement
practices in the healthcare sector. As part of this they
facilitate dialogue and an exchange of leading practices
among investors, companies and other relevant experts
on ESG in the large capitalisation pharmaceutical sector.
They also engage with a broad range of companies on
a regular basis where areas of improvement can be
identified. Further information on both ESG matters and
climate change can be found in the Portfolio Manager’s
ESG report on page 25.
PERFORMANCE FEE
I mentioned last year that as a result of the continued
cumulative outperformance in the year, there was a
provision in our year-end accounts of £31.7 million for future
performance fee payments. However, only if outperformance
was maintained to the relevant quarterly calculation dates
would this provision become payable. During the year under
review, a performance fee of £12.9 million crystallised
and became payable on 30 June 2021. However, due to
underperformance against the Benchmark during the year,
the remainder of the performance fee accrual as at 31 March
2021 was reversed. No performance fees were accrued or
payable at the Company’s year-end as at 31 March 2022.
The performance fee arrangements are described in detail
on page 43 of this Annual Report.
OUTLOOK
Global markets are currently experiencing unusually high
levels of uncertainty. In addition to the appalling human
cost, Russia’s invasion of Ukraine has created near-term
risks for markets as high energy prices, rising food prices
and disrupted supply chains threaten a substantial increase
in global inflation. It(cid:98)has also cast a shadow over the
longer-term outlook with the prospect of continued raised
levels of geopolitical risk and an increase in investor risk
aversion, both of which may affect markets and economic
confidence for some time.
This comes in addition to existing market and economic
concerns that troubled investors before the invasion,
including the onset of U.S. Federal Reserve tightening,
the impact of COVID-19 lockdowns on supply chains
and inflation and also the outlook for China where there
are problems in the real estate sector, as well as around
its zero-tolerance COVID-19 policy and heavy-handed
regulation of technology firms.
Against this challenging background, however, our
Portfolio Manager OrbiMed remains positive on the
outlook for healthcare with certain of the perceived risks
associated with the sector such as an inefficient drug
approval process in the U.S. and also the spectre of drug
price reform having receded. Fundamentals, however,
remain strong, particularly given the amount of innovation
that is fuelling the industry’s growth. They further believe
that the sector’s defensive growth characteristics should
continue to prove attractive in times of global uncertainty.
Your Board continues to believe that long-term investors
in this sector will be rewarded.
ANNUAL GENERAL MEETING
After COVID restrictions prevented holding meetings in
person, the Board is pleased to welcome all shareholders
back to the Company’s Annual General Meeting which
offers an opportunity to meet the Directors and also to
hear the views of our Portfolio Manager. The meeting will
be held at etc. venues 1-3 Bonhill Street, London EC2A 4BX
on Wednesday, 6 July 2022 at 12.30pm. Of course, should
circumstances change and restrictions be reintroduced, we
will keep shareholders informed of the final arrangements
for the meeting via the Company’s website at
www.worldwidewh.com.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
7
CHAIRMAN’S STATEMENT CONTINUED
For those investors who are not able to attend the
meeting in person, a video recording of the Portfolio
Manager’s presentation will be uploaded to the website
after the meeting. Shareholders can submit questions in
advance by sending them to wwh@frostrow.com.
I encourage all shareholders to exercise their right to vote
at the Annual General Meeting and to register your votes
online in advance of the meeting (information on how to
vote can be found on page 102). Registering your vote in
advance will not restrict you from attending and voting at
the meeting in person should you wish to do so, subject
of course to any government guidance to the contrary.
The votes on the resolutions to be proposed at the Annual
General Meeting will be conducted on a poll. The results
of the proxy votes will be published immediately following
the conclusion of the AGM by way of a stock exchange
announcement and will also be able to be viewed on the
Company’s website at www.worldwidewh.com.
Sir Martin Smith
Chairman
26 May 2022
8
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INVESTMENT OBJECTIVE AND POLICY
INVESTMENT OBJECTIVE
INVESTMENT POLICY
The Company invests in the global
healthcare sector with the objective of
achieving a high level of capital growth.
In order to achieve its investment objective, the Company
invests worldwide in a diversified portfolio of shares in
pharmaceutical and biotechnology companies and related
securities in the healthcare sector. It uses gearing, and
derivative transactions to enhance returns and mitigate
risk. Performance is measured against the MSCI World
Health Care Index on a net total return, sterling adjusted
basis (“Benchmark”).
INVESTMENT STRATEGY
The implementation of the Company’s Investment
Objective has been delegated to OrbiMed by Frostrow
(as(cid:98)AIFM) under the Board’s and Frostrow’s supervision
and guidance.
Details of OrbiMed’s investment strategy and approach
are set out in the Portfolio Manager’s Review on
pages(cid:98)14(cid:98)to(cid:98)23.
While the Board’s strategy is to allow flexibility in
managing the investments, in order to manage investment
risk it has imposed various investment, gearing and
derivative guidelines and limits, within which Frostrow and
OrbiMed are required to manage the investments, as set
out below.
Any material changes to the Investment Objective, Policy
and Benchmark or the investment, gearing and derivative
guidelines and limits require approval from shareholders.
INVESTMENT LIMITS AND GUIDELINES
•
•
•
•
•
•
•
The Company will not invest more than 15% of the
portfolio in any one individual stock at the time of
acquisition;
At least 50% of the portfolio will normally be invested
in larger companies (i.e. with a market capitalisation of
at least U.S.$10bn);
At least 20% of the portfolio will normally be invested
in smaller companies (i.e. with a market capitalisation
of less than U.S.$10bn);
Investment in unquoted securities will not exceed 10%
of the portfolio at the time of acquisition;
A maximum of 5% of the portfolio, at the time
of acquisition, may be invested in each of debt
instruments, convertibles and royalty bonds issued by
pharmaceutical and biotechnology companies;
A maximum of 30% of the portfolio, at the time of
acquisition, may be invested in companies in each of
the following sectors:
– healthcare equipment and supplies
– healthcare providers and services;
The Company will not invest more than 10% of its
gross assets in other closed ended investment
companies (including investment trusts) listed on the
London Stock Exchange, except where the investment
companies themselves have stated investment
policies to invest no more than 15% of their gross
assets in other closed ended investment companies
(including investment trusts) listed on the London
Stock Exchange, where such investments shall be
limited to 15% of the Company’s gross assets at the
time of acquisition.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
9
INVESTMENT OBJECTIVE AND POLICY CONTINUED
DERIVATIVE STRATEGY AND LIMITS
In line with the Investment Objective, derivatives are
employed, when appropriate, in an effort to enhance
returns and to improve the risk-return profile of the
Company’s portfolio. Only Equity Swaps were employed
within the portfolio during the year.
The Board has set the following limits within which
derivative exposures are managed:
•
•
Derivative transactions (excluding equity swaps) can
be used to mitigate risk and/or enhance capital returns
and will be restricted to a net exposure of 5% of the
portfolio; and
Equity Swaps may be used in order to meet the
Company’s investment objective of achieving a high
level of capital growth, and counterparty exposure
through these is restricted to 12% of the gross assets
of the Company at the time of acquisition.
The Company does not currently hedge against foreign
currency exposure.
GEARING LIMIT
The Board has set a maximum gearing level, through
borrowing, of 20% of the net assets.
LEVERAGE LIMITS
Under the AIFMD the Company is required to set
maximum leverage limits. Leverage under the AIFMD is
defined as any method by which the total exposure of an
AIF is increased.
The Company has two current sources of leverage: the
overdraft facility, which is subject to the gearing limit; and,
derivatives, which are subject to the separate derivative
limits. The Board and Frostrow have set a maximum
leverage limit of 140% on both the commitment and
gross(cid:98)basis.
Further details on the gearing and leverage calculations,
and how total exposure through derivatives is calculated,
are included in the Glossary beginning on page 94. Further
details on how derivatives are employed can be found in
note 16 beginning on page 86.
10
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO
INVESTMENTS HELD AS AT 31 MARCH 2022
Investments
AstraZeneca
Pfizer
Roche Holding
Bristol-Myers Squibb
Horizon Therapeutics
AbbVie
Boston Scientific
Intuitive Surgical
Humana
UnitedHealth Group
Top 10 investments
Stryker
Edwards Lifesciences
BioMarin Pharmaceutical
Mirati Therapeutics
Vertex Pharmaceuticals
Shanghai Bio-Heart Biological Technology
DexCom
Neurocrine Biosciences
Thermo Fisher Scientific
Guardant Health
Top 20 investments
Caris Life Science (unquoted)
Daiichi Sankyo
Seagen
Tenet Healthcare
Natera
SI-BONE
Global Blood Therapeutics
Argenx
Evolent Health
Shionogi
Top 30 investments
API Holdings (unquoted)
Joinn Laboratories China
NanoString Technologies
Chugai Pharmaceutical
Arrail Group
Crossover Health (unquoted)
EDDA (unquoted)
Visen Pharmaceutical (unquoted)
MeiraGTx
Iovance Biotherapeutics
Top 40 investments
Shanghai Fosun Pharmaceutical
Beijing Yuanxin Technology (unquoted)
Arcutis Biotherapeutics
Ruipeng Pet Group (unquoted)
Dingdang Health Technology (unquoted)
RiMAG (unquoted)
Theravance Biopharma
Shanghai Kindly Medical Instruments
Country
UK
USA
Switzerland
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
China
USA
USA
USA
USA
USA
Japan
USA
USA
USA
USA
USA
Netherlands
USA
Japan
India
China
USA
Japan
China
USA
USA
China
USA
USA
China
China
USA
China
China
China
USA
China
Market value
£’000
135,292
117,923
113,899
112,460
105,462
101,256
100,010
91,924
88,067
86,845
% of
investments
5.7
4.9
4.8
4.7
4.4
4.3
4.2
3.9
3.7
3.7
1,053,138
77,630
71,813
61,893
58,981
58,174
46,558
42,742
39,067
38,886
37,457
1,586,339
36,986
36,600
34,969
34,847
31,523
31,479
29,984
27,097
25,873
25,202
1,900,899
22,251
21,669
21,594
21,422
18,581
17,499
16,128
15,731
15,603
14,869
2,086,246
14,838
14,705
13,224
13,101
12,491
12,208
11,394
11,301
44.3
3.3
3.0
2.6
2.5
2.5
2.0
1.8
1.6
1.6
1.6
66.8
1.6
1.5
1.5
1.5
1.3
1.3
1.3
1.1
1.1
1.1
80.1
0.9
0.9
0.9
0.9
0.8
0.7
0.7
0.7
0.7
0.6
87.9
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
11
PORTFOLIO CONTINUED
Investments
uniQure
CSPC Pharmaceutical
Top 50 investments
Erasca
Alphamab Oncology
RxSight
Danaher
Celldex Therapeutics
Apollo Hospitals Enterprise
Shanghai Junshi Biosciences
New Horizon Health
Ikena Oncology
Turning Point Therapeutics
Top 60 investments
Galapagos
Clover Biopharmaceuticals
Shenzhen Hepalink Pharmaceutical
Simcere Pharmaceutical
MabPlex International (unquoted)
China Medical System
Harpoon Therapeutics
United Laboratories International Holdings
Burning Rock Biotech
Yidu Tech
Top 70 investments
NanoString Technologies 2.63% 01/03/2025 (unquoted)
Vor BioPharma
Abbisko
Achilles Therapeutics
Passage Bio
MicroTech Medical Hangzhou
Peloton Interactive (DCC*-unquoted)
(cid:55)otal e(cid:84)(cid:88)itie(cid:86) an(cid:71) fi(cid:91)e(cid:71) intere(cid:86)t inve(cid:86)tment(cid:86)
OTC Equity Swaps – Financed^
Healthcare M&A Target Swap
Apollo Hospitals
Less(cid:29) (cid:42)ross exposure on financed swaps
Total OTC Swaps
Total investments including OTC Swaps
Country
Netherlands
China
USA
China
USA
USA
USA
India
Hong Kong
China
USA
USA
Belgium
China
China
China
China
China
USA
Hong Kong
China
China
USA
USA
China
USA
USA
China
USA
USA
India
* DCC = deferred contingent consideration.
^ See Glossary beginning on page 94 and note 16 beginning on page 86 for further details in relation to the OTC Swaps.
SUMMARY
Investments
Quoted equities
Unquoted equities
Unquoted debt securities
Equity swaps
Total of all investments
Market value
£’000
11,289
% of
investments
0.5
11,001
2,211,798
10,868
10,794
9,950
9,600
9,206
8,552
8,133
7,815
7,522
7,373
2,301,611
7,217
6,420
6,400
6,092
5,874
5,662
5,524
5,336
5,290
5,081
2,360,507
5,024
3,779
3,735
3,108
2,376
844
475
2,379,848
99,898
35,120
(140,147)
(5,129)
2,374,719
0.5
93.1
0.5
0.5
0.4
0.4
0.4
0.4
0.4
0.3
0.3
0.3
97.0
0.3
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.2
99.4
0.2
0.2
0.2
0.1
0.1
0.0
0.0
100.2
4.2
1.5
(5.9)
(0.2)
100.0
Market value
£’000
2,207,375
167,449
5,024
(5,129)
2,374,719
% of
investments
93.0
7.0
0.2
(0.2)
100.0
12
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO CONTINUED
PORTFOLIO DISTRIBUTION
BY SECTOR
(cid:39)(cid:78)(cid:84)(cid:89)(cid:74)(cid:72)(cid:77)(cid:83)(cid:84)(cid:81)(cid:84)(cid:76)(cid:94)
(cid:39)(cid:78)(cid:84)(cid:89)(cid:74)(cid:72)(cid:77)(cid:83)(cid:84)(cid:81)(cid:84)(cid:76)(cid:94)
(cid:53)(cid:77)(cid:70)(cid:87)(cid:82)(cid:70)(cid:72)(cid:74)(cid:90)(cid:89)(cid:78)(cid:72)(cid:70)(cid:81)
(cid:53)(cid:77)(cid:70)(cid:87)(cid:82)(cid:70)(cid:72)(cid:74)(cid:90)(cid:89)(cid:78)(cid:72)(cid:70)(cid:81)
(cid:45)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:72)(cid:70)(cid:87)(cid:74)(cid:5)(cid:53)(cid:87)(cid:84)(cid:91)(cid:78)(cid:73)(cid:74)(cid:87)(cid:88)(cid:5)(cid:11)(cid:5)(cid:56)(cid:74)(cid:87)(cid:91)(cid:78)(cid:72)(cid:74)(cid:88)
(cid:45)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:72)(cid:70)(cid:87)(cid:74)(cid:5)(cid:53)(cid:87)(cid:84)(cid:91)(cid:78)(cid:73)(cid:74)(cid:87)(cid:88)(cid:5)(cid:11)(cid:5)(cid:56)(cid:74)(cid:87)(cid:91)(cid:78)(cid:72)(cid:74)(cid:88)
(cid:45)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:72)(cid:70)(cid:87)(cid:74)(cid:5)(cid:42)(cid:86)(cid:90)(cid:78)(cid:85)(cid:82)(cid:74)(cid:83)(cid:89)(cid:20)(cid:56)(cid:90)(cid:85)(cid:85)(cid:81)(cid:78)(cid:74)(cid:88)(cid:20)(cid:57)(cid:74)(cid:72)(cid:77)(cid:83)(cid:84)(cid:81)(cid:84)(cid:76)(cid:94)
(cid:45)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:72)(cid:70)(cid:87)(cid:74)(cid:5)(cid:42)(cid:86)(cid:90)(cid:78)(cid:85)(cid:82)(cid:74)(cid:83)(cid:89)(cid:20)(cid:56)(cid:90)(cid:85)(cid:85)(cid:81)(cid:78)(cid:74)(cid:88)(cid:20)(cid:57)(cid:74)(cid:72)(cid:77)(cid:83)(cid:84)(cid:81)(cid:84)(cid:76)(cid:94)
(cid:49)(cid:78)(cid:75)(cid:74)(cid:5)(cid:56)(cid:72)(cid:78)(cid:74)(cid:83)(cid:72)(cid:74)(cid:88)(cid:5)(cid:57)(cid:84)(cid:84)(cid:81)(cid:88)(cid:5)(cid:11)(cid:5)(cid:56)(cid:74)(cid:87)(cid:91)(cid:78)(cid:72)(cid:74)(cid:88)
(cid:49)(cid:78)(cid:75)(cid:74)(cid:5)(cid:56)(cid:72)(cid:78)(cid:74)(cid:83)(cid:72)(cid:74)(cid:88)(cid:5)(cid:57)(cid:84)(cid:84)(cid:81)(cid:88)(cid:5)(cid:11)(cid:5)(cid:56)(cid:74)(cid:87)(cid:91)(cid:78)(cid:72)(cid:74)(cid:88)
(cid:41)(cid:74)(cid:71)(cid:89)(cid:5)(cid:46)(cid:83)(cid:88)(cid:89)(cid:87)(cid:90)(cid:82)(cid:74)(cid:83)(cid:89)(cid:88)
(cid:41)(cid:74)(cid:71)(cid:89)(cid:5)(cid:46)(cid:83)(cid:88)(cid:89)(cid:87)(cid:90)(cid:82)(cid:74)(cid:83)(cid:89)(cid:88)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:21)(cid:19)(cid:21)(cid:19)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:21)(cid:19)(cid:21)(cid:19)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:21)(cid:19)(cid:21)(cid:19)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:21)(cid:19)(cid:21)(cid:19)
Pharmaceutical
35.1%
Healthcare Equipment/Supplies/Technology
21.1%
Biotechnology
Pharmaceutical
Biotechnology
Healthcare Providers & Services
Life Sciences Tools & Services
Debt Instruments
20.7%
15.2%
7.7%
0.2%
BY GEOGRAPHY
30.1%
29.9%
16.2%
Healthcare Providers & Services
Healthcare Equipment/Supplies/Technology
16.1%
Life Sciences Tools & Services
Debt Instruments
7.3%
0.4%
(cid:51)(cid:84)(cid:87)(cid:89)(cid:77)(cid:5)(cid:38)(cid:82)(cid:74)(cid:87)(cid:78)(cid:72)(cid:70)
(cid:51)(cid:84)(cid:87)(cid:89)(cid:77)(cid:5)(cid:38)(cid:82)(cid:74)(cid:87)(cid:78)(cid:72)(cid:70)
(cid:42)(cid:82)(cid:74)(cid:87)(cid:76)(cid:78)(cid:83)(cid:76)(cid:5)(cid:50)(cid:70)(cid:87)(cid:80)(cid:74)(cid:89)(cid:88)
(cid:42)(cid:82)(cid:74)(cid:87)(cid:76)(cid:78)(cid:83)(cid:76)(cid:5)(cid:50)(cid:70)(cid:87)(cid:80)(cid:74)(cid:89)(cid:88)
(cid:42)(cid:90)(cid:87)(cid:84)(cid:85)(cid:74)
(cid:38)(cid:88)(cid:78)(cid:70)
(cid:46)(cid:83)(cid:73)(cid:78)(cid:70)
(cid:42)(cid:90)(cid:87)(cid:84)(cid:85)(cid:74)
(cid:38)(cid:88)(cid:78)(cid:70)
(cid:46)(cid:83)(cid:73)(cid:78)(cid:70)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:23)(cid:21)(cid:23)(cid:22)(cid:23)(cid:21)(cid:23)(cid:22)
(cid:23)(cid:21)(cid:23)(cid:22)(cid:23)(cid:21)(cid:23)(cid:22)
North America
Europe
China
Japan
India
70.8%
12.0%
12.5%
3.5%
1.1%
North America
China
Europe
Japan
India
66.7%
16.0%
13.5%
2.1%
1.7%
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
13
ORBIMED CAPITAL LLC
OrbiMed was founded in 1989 and
has evolved over time to be one of
the largest dedicated healthcare
in(cid:89)e(cid:86)t(cid:80)ent fir(cid:80)(cid:86) in the world(cid:17) (cid:50)r(cid:69)i(cid:48)ed
has managed the Company’s portfolio
since its launch in 1995.
OrbiMed had approximately U.S.$19 billion in assets under
management as of 31 March 2022, across a range of
funds, including investment trusts, hedge funds, and private
equity funds.
INVESTMENT STRATEGY AND PROCESS
Within the guidelines set by the Board, the OrbiMed team
works 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 fully integrated
biopharmaceutical companies. The universe of actively
covered companies is approaching 1,000.
OrbiMed emphasises investments in companies with
under-appreciated products in the pipeline, high quality
management teams, and adequate financial resources.
A disciplined portfolio construction process is utilised
to ensure the portfolio is focused on high conviction
positions. Finally, the portfolio is subject to a rigorous risk
management process.
THE TEAM
The OrbiMed Investment Team continues to expand and
now has over 100 professionals that cover all aspects of
research, trading, finance, and compliance. This includes
over 30 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 (cid:50)rbiMed
footprint now spans three continents with offices in (cid:49)ew
York, San Francisco, Herzliya (Israel), Hong Kong, Shanghai,
and Mumbai.
The lead managers with responsibility for the Company’s
portfolio are as follows:
Sven H. Borho, CFA, is a founder and Managing Partner of
OrbiMed. Sven heads the public equity team and he is the
portfolio manager for OrbiMed’s public equity and hedge
funds. He has been a portfolio manager for the firm’s funds
since 1993 and has played an integral role in the growth of
OrbiMed’s asset management activities.
He started his career in 1991 when he joined OrbiMed’s
predecessor firm as a Senior Analyst covering European
pharmaceutical firms and biotechnology companies
worldwide. Sven studied business administration at
Bayreuth University in Germany and received a M.Sc.
(Econs.), Accounting and Finance, from The London School
of Economics.
Trevor M. Polischuk, Ph.D., is a Partner at OrbiMed focused
on the global pharmaceutical industry. Trevor joined
OrbiMed in 2003 and became a Partner in 2011. Previously,
he worked at Lehman Brothers as a Senior Research
Analyst covering the U.S. pharmaceutical industry. Trevor
began his career at Warner Lambert as a member of the
Global Marketing Planning team within Parke-Davis. Trevor
holds a Doctorate in Neuropharmacology & Gross Human
Anatomy and an M.B.A. from Queen’s University, Canada.
14
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO MANAGER’S REVIEW
MARKETS
PERFORMANCE
2021 was another unprecedented year for the global
equity markets. After the COVID-induced volatility that
characterised 2020, markets climbed higher in 2021
despite various headwinds including inflationary fears
and supply chain disruptions. The market reached new
highs by the calendar year-end, only to sell-off in the face
of rising interest rates and Russia’s invasion of Ukraine
in early 2022. Of course, COVID-19 continued to cast
a shadow over the year under review, with Delta and
Omicron variants inducing new waves of infections across
the globe.
Nevertheless, global equity markets produced solid
double-digits returns in the financial year. The MSCI World
Index total return was +16.2% (in sterling terms). The total
return for the S&P 500 was +15.6% (in U.S. dollar terms),
notching 70 all-time highs throughout 2021 (source:
Forbes). Meanwhile, the FTSE All-Share Index total return
was +13.0% (in sterling terms).
For the most part, healthcare stocks traded in-line with
broader indices throughout the financial year. However,
with geopolitical tensions increasing as the financial
year drew to a close alongside a rising interest rate
environment, healthcare benefitted as investors became
decisively more defensive in the last five weeks of the
period. As such, the MSCI World Healthcare Index net total
return over the year was +20.4% (in sterling terms), with
over half of that move accruing in the last 27 trading days
of the financial year.
After one of the best performance years in the Company’s
history in the year ended 31 March 2021, generating
comparable returns over the benchmark in the current
financial year proved to be very difficult. Whilst healthcare
stocks mostly traded higher, trading dynamics for the
Company were broadly fuelled by macro factors, with
industry and company fundamentals firmly taking a
backseat and going largely unrecognised by investors. As
a result, sub-sector moves within healthcare were very
disparate given the “growth-to-value” rotation and the
risk-off environment that characterised the reported year.
This trading environment heavily favoured large
capitalisation companies over small capitalisation stocks,
thus, overall positioning within healthcare equities was far
more critical than stock selection. This was particularly
true for the Company’s portfolio, with our key long-term
strategic overweight positions in emerging biotechnology,
China healthcare, and innovative tools – typically all
small capitalisation stocks – materially underperforming.
This included historic drawdowns and record setting
underperformance in emerging biotechnology stocks
which severely impacted returns, despite an otherwise
healthy fundamental sector. This was exacerbated by our
long-term underweight positioning in pharmaceuticals
– typically all large capitalisation stocks – a sector that
outperformed the rest of healthcare, particularly during the
last quarter of the financial year.
WORLDWIDE HEALTHCARE TRUST (WWH) – 1 YEAR NAV TOTAL RETURN PERFORMANCE
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Mar 2021
Apr 2021
May 2021
Jun 2021
Jul 2021
Aug 2021
Sep 2021
Oct 2021
Nov 2021
Dec 2021
Jan 2022
Feb 2022
Mar 2022
MSCI World Healthcare Index
FTSE All Share Index
WWH NAV
Source: OrbiMed Advisors
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
15
PORTFOLIO MANAGER’S REVIEW CONTINUED
Overall, our performance was heavily impacted by this
relative positioning as the preponderance of fundamentals
across healthcare failed to influence trading dynamics;
a true mismatch to our investment philosophy. Rather,
this extraordinary market perturbation created not only
extreme volatility but also an historic compression of
valuations within certain components of healthcare, a
situation that inevitably damaged our relative portfolio
positioning. As a result, relative and absolute performance
suffered with a net asset value total return of -5.8%, and
a share price total return of -10.8%, compared to the
benchmark index total return of +20.4%.
Despite the volatility in the reported period, we are pleased
to note that since the Company’s inception in 1995, the
total return of the Company’s net asset value per share
is +3,866.7%, equivalent to a compound annual return of
+14.7%. This compares to the blended benchmark rise
of +2,133.6%, equivalent to a compound annual return
of +12.2%.
WORLDWIDE HEALTHCARE TRUST (WWH) – NAV TOTAL RETURN PERFORMANCE SINCE INCEPTION
5000%
4500%
4000%
3500%
3000%
2500%
2000%
1500%
1000%
500%
0%
ˈ95
ˈ96
ˈ97
ˈ98
ˈ99
ˈ00
ˈ01
ˈ02
ˈ03
ˈ04
ˈ05
ˈ06
ˈ07
ˈ08
ˈ09
ˈ10
ˈ11
ˈ12
ˈ13
ˈ14
ˈ15
ˈ16
ˈ17
ˈ18
ˈ19
ˈ20
ˈ21
ˈ22
WWH NAV
DS World Pharma / MSCI World HC Benchmark
FTSE All-Share
Source: OrbiMed Advisors
This 27-year track record demonstrates several important
points. First, it puts into context the recent drawdown.
Previous periods of underperformance by the Company
have all been quickly followed by a significant bounce back
and material outperformance. Second, the chart above
shows outperformance for healthcare (the benchmark)
versus the broader markets (in this case, the FTSE All-
Share Index), particularly over the past seven years which
coincides with the real explosion of innovation within
the industry. Finally, it shows what an active manager or
specialist investor can do in healthcare, especially in the
face of a highly idiosyncratic, global sector that possesses
many barriers to understanding the scientific, clinical,
regulatory, technological, and political environment that
envelops all of healthcare.
Finally, we would note that the fundamentals of healthcare
remain strong, especially in biotechnology, which we
regard as the cradle of innovation for clinical discovery.
The macro trading dynamics that impacted these stocks
in the reported period do not represent, in any way, a
deterioration of the elements that underpin the sector.
Rather, it is simply a product of extreme market conditions
that we have never experienced previously, culminating in
a profound collapse in valuations, a situation that should
reverse in due time. With fundamentals intact, we remain
positioned for a material rebound in biotechnology stocks.
CONTRIBUTION BY SUB-SECTOR
Looking at performance by sub-sector provides an
understanding of overall performance during the year.
First, four areas which contributed a significant absolute
positive contribution were Pharmaceuticals (benefitting
from a macro defensive rotation), Medical Devices/
Technology (a result of stock picking), Healthcare
Services (reflecting our sector positioning), and India
16
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO MANAGER’S REVIEW CONTINUED
Healthcare (again, as a result of stock picking). Second,
four sub-sectors that contributed a notable relative
positive contribution over the benchmark were Specialty
Pharmaceuticals, Medical Devices/Technology, India
Healthcare (all reflecting the results of stock-picking) and
Japan Pharmaceuticals (reflecting our sector positioning).
However, detractors from performance overwhelmed
the positive contributions. The following three sub-
sectors were notable in terms of both relative and
absolute negative contribution - emerging biotechnology
(reflecting macro sector rotation), China healthcare (a
result of fundamental investor concerns), and small/mid-
capitalisation life science tools/diagnostics (reflecting
our overweight sector positioning). Each of these sub-
sectors experienced significant drawdowns during the year
creating a headwind to the Company’s performance that
became insurmountable during the reported 12-month
period.
ABSOLUTE CONTRIBUTION – BY SUB-SECTOR
Pharma
Medtech Services
India
Japan
Tools
China
%
10
5
0
-5
-10
-15
The largest detractor by sub-sector was emerging
biotechnology stocks, which generated over 11% of
negative contribution (both in absolute and relative
terms). A “perfect storm” of macro factors led to this
disappointing performance. The financial year began
with a rotation by investors from growth to value stocks,
as generalist investors repositioned portfolios to gain
exposure to economically sensitive sectors that would
benefit most from a post-COVID reopening of the economy.
Biotechnology underperformed during this period, as
did many other growth sectors to which investors had
allocated capital during the COVID pandemic. Many of the
shorter-term investors who did not regularly invest in the
biotechnology sector, but who were temporarily attracted to
the industry’s defensive nature and COVID-related research,
appeared to exit the sector.
S&P BIOTECHNOLOGY ETF (XBI) VS. S&P 500 INDEX
20%
10%
0%
-10%
-20%
-30%
-40%
XBI
Peak
Underperformance
-65.4%
Mar
'21
Apr
'21
May
'21
Jun
'21
Jul
'21
Aug
'21
Sep
'21
Oct
'21
Nov
'21
Dec
'21
Jan
'22
Feb
'22
Mar
'22
S+P 500 Index (SPX)
S+P Biotechnology ETF (XBI)
Biotech
Source: Bloomberg, OrbiMed Advisors
Note: Chart updated through 31 March 2022
Source: Frostrow
RELATIVE CONTRIBUTION – BY SUB-SECTOR
10
5
0
-5
-10
-15
%
India Medtech
Japan
Pharma
Services
China
Tools
Biotech
Source: Frostrow
In the second half of the financial year, increasing
concerns about the U.S. Federal Reserve’s plans to
raise interest rates to combat inflation led to continued
weakness in technology stocks, especially those earlier-
stage enterprises which are not expected to realise
earnings for many years. This trend was especially
damaging to small capitalisation biotechnology
performance and those stocks sold off even further.
Overall, these macroeconomic and related factors created
the longest and largest drawdown in biotechnology
history, with the gap between the S&P Biotechnology ETF
(XBI) compared to the S&P 500 Index reaching over 65%
during the financial year.
Adding pressure to the Company’s performance was a
significant drawdown in the Chinese markets, including
Hong Kong, in the second half of the financial year. The
sell-off was precipitated by regulatory tightening by the
Chinese government across a variety of sectors, including
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
17
PORTFOLIO MANAGER’S REVIEW CONTINUED
the internet (and related technology industries) and the
for-profit education industry. Even though there were no
new significant regulations targeting Chinese healthcare
companies, investor fears were materially heightened
that healthcare may be the government’s next target. This
broad market downturn in China that began in June 2021
adversely and indiscriminately impacted many of our
China healthcare positions. Unfortunately, these macro
pressures persisted through to the end of the financial
year, generating nearly 4% of negative absolute and
relative contribution in the reported period. Importantly, we
continue to believe fundamental innovation in the China
healthcare sector remains strong.
HANG SENG HEALTHCARE INDEX (HSHCI) VS. MSCI
WORLD HEALTHCARE INDEX
20%
10%
-0%
-10%
-20%
-30%
-40%
-50%
-60%
-70%
HSHCI
Peak
Underperformance
-66.2%
Jun
'21
Jul
'21
Aug
'21
Sep
'21
Oct
'21
Nov
'21
Dec
'21
Jan
'22
Feb
'22
Mar
'22
Hang Seng Healthcare Index
MSCI World Healthcare
Source: Bloomberg, OrbiMed Advisors
Note: Chart updated through 31 March 2022
Drawdown as of 31 March 2022 is -60.7%
The life science tools sector was also challenging for
the Company in the year under review. Mirroring the
broader market, large capitalisation diversified companies
significantly outperformed those with a small and
mid-capitalisation innovative growth profile, and our
positioning in this regard was suboptimal, resulting in over
5% of negative contribution relative to the benchmark.
Additionally, there were fundamental factors that drove
this large capitalisation outperformance – chief among
which was the continued durability of COVID-related
revenues as well as a normalisation of non-COVID “base
business” performance which led to positive earnings
revisions throughout the 2021 calendar year. Our view that
the durability of COVID related earnings would come into
question amid record high valuations was clearly too early.
Whilst we did have modest exposure to Thermo Fisher
Scientific and Danaher Corporation, two companies which
benefited from these dynamics and offer best-in-class
execution, we had lower exposure than our benchmark
which damaged our relative performance.
Separately, our preferred small and mid-capitalisation
companies in the innovative tools space weighed on our
performance. Whilst we have a positive structural outlook
on liquid biopsy and the continued proliferation of clinically
successful oncology diagnostics, the sector fell out of
favour against the backdrop of demanding valuations
and fundamental results that were strong but were
insufficient to drive shares higher against lofty near-term
expectations.
Finally, a word on the performance of large capitalisation
pharmaceutical stocks in the financial year. As articulated
already in this report, pharmaceutical stocks traded mostly
in-line with the benchmark throughout the period.
However, as we approached the turn of the calendar
year, this performance began to diverge materially as
inflation, interest rates, and geopolitical risks all rose and
investors turned defensive. As a result, large capitalisation
pharmaceutical stocks moved much higher heading into
the financial year end, many of which ended on 52-week
highs on 31 March 2022. This created the single largest
source of absolute contribution for the Company at over
7%. However, as is our historical norm, we were materially
underweight in the pharmaceutical sector in the period,
thus creating over 5% of negative relative contribution to
the benchmark due to our positioning.
KEY CONTRIBUTORS TO PERFORMANCE
There were a number of factors that underlay the key
positive contributors to absolute performance. These
included the beneficiaries of the macro factors described
above, such as the outperformance of large capitalisation
stocks, alongside a mix of positive fundamentals that also
influenced share price moves. OrbiMed prides itself on its
expertise within clinical medicine and how that capability
helps shape good stock picking within the healthcare
sector.
A prototypical example of this combination of macro
tailwinds and good stock picking was AbbVie. Over the
past two years, the company has been in the midst of
a transformation. Facing the largest patent expiration
in industry history – Humira, with peak global sales
of U.S.$20 billion – the company has re-invented its
immunology franchise with newer, better, and safer drugs
in Skyrizi (injectable risankizumab) and Rinvoq (oral
upadacitinib), two drugs approved to treat a variety of
immunological disorders.
18
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO MANAGER’S REVIEW CONTINUED
RINVOQ APPROVED INDICATIONS (RINVOQ.COM)
RINVOQ DOSAGES
Investor optimism hit a nadir in September 2021 when the
U.S. Food and Drug Administration (FDA) communicated
their general concern over the safety of all oral JAK inhibitors
(Janus Kinase inhibitors, the class of medicines included
Rinvoq), certainly delaying and perhaps denying future
additional approvals for Rinvoq, largely considered the
“best-in-class” JAK inhibitor in the world. With the stock
on the low after falling further on the news, we added
meaningfully to our position. That risk paid off two-fold.
First, despite a modest delay, the FDA did ultimately approve
Rinvoq for Psoriatic Arthritis, Ulcerative Colitis, and Atopic
Dermatitis (in addition to the already approved Rheumatoid
Arthritis), pushing the stock higher. Second, the stock certainly
caught the macro trend towards the start of 2022 when large
capitalisation pharmaceutical stocks moved higher in the face
of rising interest rates, record inflation, and war in Europe.
Another pharmaceutical company that has re-invented itself
is AstraZeneca. After nearly a decade of declining revenues
and earnings, the company has turned itself around under
the guidance of CEO Pascal Soriot, creating one the largest
and fastest growing global, multinational pharmaceutical
companies in the world. With leadership in oncology,
cardiovascular, respiratory, and more recently, rare diseases,
the company is poised for sustainable, long-term growth.
However, these successes have not been without some
angst, as a messy but well-intended effort to develop a
COVID vaccine created some share price volatility as did the
close of the acquisition of Alexion Pharmaceuticals, which
sparked investor fears that the company’s stand-alone
financials were going to disappoint.
EVUSHELD FOR COVID-19 PROPHYLAXIS
However, after a robust fourth quarter report, better than
expected guidance for 2022, and a strong launch for the
company’s COVID-19 prophylaxis injection, Evusheld
(tixagevimab co-packaged with cilgavima), AstraZeneca’s
share price closed at an all-time high at the end of the
Company’s financial year.
UnitedHealth Group is the largest health insurer in the
United States as well as one of the largest healthcare
services providers through its subsidiary, Optum. This
stock represents another example of a mix of positive
fundamentals and a macroeconomic environment that
took the share price to new highs in 2022. Heading into
its third quarter 2021 earnings, investors faced significant
fears of whether increasing medical costs and lingering
COVID-related costs (testing, treatment, vaccines) would
impede the insurer’s ability to grow earnings. Additionally,
regulatory noise became louder with prospects of
Medicare Advantage, an insurer-run government
programme, would face reimbursement cuts or other
challenges to pay for other priorities in a large U.S. federal
spending bill.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
19
PORTFOLIO MANAGER’S REVIEW CONTINUED
UHS.COM
However, the company produced strong third and fourth
quarter results, along with better-than-expected earnings
guidance for 2022. Meanwhile, political negotiations over
a large spending bill broke down in the U.S., removing
another critical source of risk. Finally, the shifting
macroeconomic landscape, including higher interest
rates, rising inflation, and a shift out of growth stocks into
value stocks, all benefited UnitedHealth, which has since
become a “safe haven” in healthcare.
Shanghai Bio-heart Biological Technology is a
cardiovascular medical device startup in China. The
company sells two product lines: Renal Denervation
(RDN) and Bioresorbable Vascular Scaffold System
(BVS). Together, these technologies address the unmet
medical needs of Chinese patients for the treatment of
coronary and peripheral artery diseases and uncontrolled
hypertension.
IBERIS RDN CATHER SYSTEM
Bio-heart’s line of RDN products is a “best-in-class” product
in China, with a unique catheter design which is the only one
that can be inserted by both radial artery and femoral artery
(unlike the competition). The company’s RDN business is
also backed by Terumo, the Japan-based global leader in
medical technology, in a technology-validating deal. The
investment into Bio-heart was an unquoted investment. The
company listed on the Hong Kong Exchange in December
2021 and the share price more than doubled during the
remainder of the Company’s financial year.
Before the turn of the decade, Bristol-Myers Squibb became
one of the most, if not the most, dominant cancer companies
in the world. With pioneering work in revolutionary field of
immuno-oncology in the mid-2010s and the U.S.$74 billion
acquisition of Celgene in 2019, the company possessed
leadership in both the solid tumour and liquid tumour fields
of oncology. However, the company has also become
misunderstood. Investor anxiety over the company’s growth
strategy and increased concerns over imminent patent
expirations for key products saw the company’s valuation
collapse to an all-time low, with the shares trading with a
price-to-earnings ratio of 7.0x during the reported period.
BRISTOL-MYERS SQUIBB LONG TERM GROWTH
STRATEGY & GUIDANCE
However, an analyst meeting hosted by company
management in November 2021 in New York City proved
to be a seminal moment in the company’s recent history.
Using that platform, the company provided a deep dive
on their pipeline, discussed growth opportunities, and
provided long term growth targets. That event, combined
with the defensive rotation into pharmaceuticals at the
Company’s financial year-end, was a boon to investor
interest and the stock re-rated over 30% (in local currency)
over the last four months of the reported period.
KEY DETRACTORS FROM PERFORMANCE
Mirati Therapeutics is an emerging biotechnology company
focused on the development of therapeutics for the
treatment of cancer. The company’s main pipeline asset,
adagrasib, is highly selective and potent oral small molecule
inhibitor of KRAS G12C (a mutation that underlies the
formation of a number of tumours) that is being developed
for various cancers, including lung, colon, and other solid
tumours. Despite achieving many development milestones
for adagrasib in the year, including a successful new drug
application with the FDA, the share price was punished,
perhaps unduly, for a variety of reasons, including a stock
offering and multiple management changes. Most recently,
the stock was under pressure again after the FDA accepted
20
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO MANAGER’S REVIEW CONTINUED
the filing for adagrasib but granted a regular review rather
than the expected priority review, pushing the potential
approval and launch in 2023.
MIRATI THERAPEUTICS: KRAS INHIBITION
In the diagnostics space, Natera is an industry leader
with a host of innovative offerings including non-invasive
prenatal testing (NIPT) and other genetic testing. While
Natera’s commercial execution was strong in the reported
period, the company did not benefit from COVID-testing
tailwinds (unlike the large-capitalisation diagnostic
players) and share price declines were further exacerbated
by the growth-to-value rotation that characterised the year
under review. Additionally, the New York Times published
an article in January 2022 denouncing the low accuracy
of NIPT in identifying rare genetic diseases, and in March
2022, a short seller published a report on Natera alleging
illegal billing practices relating to its NIPT business, both of
which created significant controversy. Whilst we disagreed
with both of these reports, these collective issues
created a significant disconnect between the company’s
fundamentals and most recent valuation.
NATERA: NIPT
Another innovative player in the diagnostics space is
Guardant Health, an oncology diagnostics company that
has emerged as the pre-eminent liquid biopsy provider. The
company has many offerings in the cancer diagnostics
sector including therapy selection, disease assays, and
response monitoring. The company also plans to enter
the non-invasive screening market in 2022. Unfortunately,
the share price experienced a material pullback through
the course of the year despite generally strong financial
performance. Again, macro-market conditions were
largely to blame, but the stock was particularly weak
following rumours that it was considering a purchase
of another oncology diagnostics company, although the
deal never materialised. Again, these collective issues
created a significant disconnect between the company’s
fundamentals and its most recent valuation.
GUARDANT HEALTH: LIQUID BIOPSY IN ONCOLOGY
Deciphera Pharmaceuticals, is a clinical stage, emerging
biotechnology company that is developing small molecule
drugs to treat various types of cancer. The company’s
focus in recent years has been the continued development
of Qinlock (ripretinib), an orally administered inhibitor of
specific mutated kinases which otherwise contribute to
the development of certain cancers. In 2020, the FDA
approved Qinlock for use as a fourth line therapy for
gastrointestinal stromal tumours (GIST). More recently,
the company conducted a trial to explore the use of
Qinlock in earlier lines of therapy. However, in November
2021, that trial failed to show significantly superior results
versus the standard of care in second line GIST, Sutent
(sunitinib). The stock had traded down along with the
broader biotechnology drawdown into this update and
subsequently gapped even lower after the failed trial.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
21
PORTFOLIO MANAGER’S REVIEW CONTINUED
QINLOCK LAUNCH METRICS
The “XBI” is an exchange-traded fund - SPDR S&P Biotech
ETF - incorporated in the U.S. that seeks to replicate the
performance of the S&P Biotechnology Index. The Index is
equal-weighted, has approximately 150 constituents, and
tracks all biotechnology single stocks that are listed on the
NYSE, American Stock Exchange, and the NASDAQ National
Market and Small Capitalisation exchanges. The XBI offers
an opportunity to gain tactical exposure to the biotechnology
subsector quickly and efficiently while not exposing the
portfolio to unnecessary idiosyncratic single stock risks.
Given the extraordinary drawdown in the biotechnology
subsector since February 2021, the removal of key sector
overhangs, and anticipated mergers & acquisitions (M&A) by
large capitalisation pharmaceutical companies, we wanted
to gain exposure to a tactical rebound as we went through
the year. Unfortunately, our purchase was premature, and the
XBI continued to sell off right into the financial year-end. This
holding was bought and sold during the year.
CONTRIBUTION FROM UNQUOTEDS
During the financial year, the Company made four new
investments in unquoted companies. Another four portfolio
companies – including one of these new investments –
completed their Initial Public Offerings (IPOs) in the period.
As of 31 March 2022, investments in unquoted companies
(excluding debt) accounted for 7.0% of the Company’s net
assets versus 5.3% as of 31 March 2021.
LEVERAGE OVER TIME (MONTH END)
The four new investments this year were all healthcare
services companies in emerging markets (one in India and
three in China). In the U.S., a challenging public offering market
for small and mid-capitalisation therapeutics companies
made pre-IPO crossover investments unattractive in the year.
Of the four companies that completed an IPO, three listed
on the Hong Kong Stock Exchange in the second half of the
financial year and a biotechnology company listed on the
Nasdaq Stock Exchange in the U.S.
For the year ended 31 March 2022, the Company’s unquoted
holdings contributed gains of £21.8m, (including both
realised and unrealised gains) equivalent to a return of 15%
and those companies that went public contributed gains
of £20.7m, representing a return of 35%. While the gains in
unquoteds were spread among many companies, the gains
for companies that listed were dominated by Shanghai Bio-
heart Biological Technology. Overall, the unquoted strategy
(excluding debt) contributed £42.5m equivalent to 1.8% of the
Company’s net asset value return for the year.
GEARING STRATEGY
The Company employs gearing with a maximum level of 20%
of the Company’s net assets. Historically, the typical gearing
level employed by the Company is low-to-high teens but
can range from low single-digits to high teens. Considering
the level of market volatility during the past two financial
years, the use of gearing has evolved. First, the overall level
of gearing used – on average – has declined from 9% (5 year
average) to 6% (2 year average). Second, month-over-month
gearing levels have varied more than historical norms as we
have attempted to utilise gearing in a more tactical fashion
and in response to various market conditions.
5y Avg: 109%
2y Avg: 106%
120%
115%
110%
105%
100%
95%
90%
8
1
0
2
r
a
M
8
1
0
2
r
p
A
8
1
0
2
y
a
M
8
1
0
2
n
u
J
8
1
0
2
l
u
J
8
1
0
2
g
u
A
8
1
0
2
p
e
S
8
1
0
2
t
c
O
8
1
0
2
v
o
N
8
1
0
2
c
e
D
9
1
0
2
n
a
J
9
1
0
2
b
e
F
9
1
0
2
r
a
M
9
1
0
2
r
p
A
9
1
0
2
y
a
M
9
1
0
2
n
u
J
9
1
0
2
l
u
J
9
1
0
2
g
u
A
9
1
0
2
p
e
S
9
1
0
2
t
c
O
9
1
0
2
v
o
N
9
1
0
2
c
e
D
0
2
0
2
n
a
J
0
2
0
2
b
e
F
0
2
0
2
r
a
M
0
2
0
2
r
p
A
0
2
0
2
y
a
M
0
2
0
2
n
u
J
0
2
0
2
l
u
J
0
2
0
2
g
u
A
0
2
0
2
p
e
S
0
2
0
2
t
c
O
0
2
0
2
v
o
N
0
2
0
2
c
e
D
1
2
0
2
n
a
J
1
2
0
2
b
e
F
1
2
0
2
r
a
M
1
2
0
2
r
p
A
1
2
0
2
y
a
M
1
2
0
2
n
u
J
1
2
0
2
l
u
J
1
2
0
2
g
u
A
1
2
0
2
p
e
S
1
2
0
2
t
c
O
1
2
0
2
v
o
N
1
2
0
2
c
e
D
2
2
0
2
n
a
J
2
2
0
2
b
e
F
2
2
0
2
r
a
M
22
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
PORTFOLIO MANAGER’S REVIEW CONTINUED
DERIVATIVES STRATEGY
The Company has the ability to use equity swaps and
options, as set out in the Company’s Investment Objective
and Policy. During the current financial year, the Company
employed single stock equity swaps to gain exposure to
emerging market Chinese and Indian stocks. In addition,
the Company traded tactical security baskets created to
take advantage of depressed valuations in small and mid-
capitalisation companies that we felt were likely acquisition
targets for large capitalisation pharmaceutical companies.
The equity swaps detracted 0.9% from the Company’s return
during the year. An analysis of the Company’s investments in
emerging markets is included in the Strategic Report.
Further details on the use of swaps can be found in Note 16
on page 87 and in the Glossary beginning on page 94.
SECTOR DEVELOPMENTS & OUTLOOK
Overall, we remain positive on the outlook for the
healthcare industry. Despite the mixed trading dynamics
during the financial year, many immediate overhangs have
lifted and the tailwinds remain strong, in particular the
amount of innovation that is fuelling the industry’s growth,
both in therapeutic and non-therapeutic stocks.
On the regulatory front, there has been a growing concern
from generalist investors that things have slowed
significantly at the FDA and that there is a vacuum of
leadership at the Agency. This view began to develop in 2020
with the absence of a Commissioner (typically appointed
when there is a change in U.S. Presidents) and when agency
resources where stretched given the COVID-19 pandemic.
However, we have a very different view.
U.S. FDA – NEW DRUG APPROVALS 2000-2022
First, the FDA response to COVID-19 has been an
unprecedented success with multiple vaccines approved,
multiple antibody treatments approved, and more recently,
two oral anti-viral therapies approved as well. We would also
be remiss not to mention the hundreds of diagnostic tests
that have also been approved by the agency. Second, we
have not seen a material slowdown in new drug approvals. In
fact, the past five years have been the most productive in the
agency’s history, including this past year. This included an
Alzheimer’s drug that was approved in June 2021 – the first
new treatment approved for Alzheimer’s disease in over 20
years (albeit with some controversy).
Finally, and perhaps most importantly, there was a growing
concern that the FDA was “rudderless” since the Agency has
been without a commissioner over that past two years (since
President Biden took office). Whilst this belief was mostly
baseless, nevertheless, a new commissioner was just recently
confirmed. Dr. Robert Calif a world-renowned cardiologist
from Duke University, was the previous Commissioner under
President Obama, and most importantly, is viewed as “industry
friendly.” Going forward, we think investor perception of the
FDA is going to improve immensely in 2022 and beyond.
Another dark cloud over the sector is the ongoing (and
seemingly endless) threat of prescription drug price
reform in the U.S. This fear has been an overhang on the
Company since late 2020, when President Biden took
the White House and Democrats had total control of
Congress, setting off a new “wall-of-worry” for investors.
However, with war breaking out in Eastern Europe, the
Biden Administration’s attention has pivoted and is now
completely focused on other matters. Therefore, we
36
27
24
21
17
22
20
18
26
24
21
39
30
27
45
41
46
22
59
53
50
48
2000
2001 2002
2003 2004 2005
2006 2007 2008 2009 2010 2011
2012 2013
2014 2015 2016 2017 2018 2019
2020 2021
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
23
PORTFOLIO MANAGER’S REVIEW CONTINUED
believe that expectations for any drug price reform have
now appropriately faded, especially as we approach U.S.
midterm elections later in 2022.
Historically, the healthcare industry is one that sees a
significant amount of corporate activity, frequently in the
form of M&A and this M&A activity has been a notable
source of positive performance for the Company. Of
course, there are always ebbs and flows that impact the
pace of M&A at any one time, but the last two quarterly
reporting periods have been notable for the profound
messaging from the large capitalisation pharmaceutical
executives about business development, particularly
about M&A being a “top priority”, the need to “do more”,
and looking to add “first-in-class and best-in-class”
assets. Overall, this may be a harbinger of things to
come and could be a real rallying point, especially in the
biotechnology sector.
M&A: ACCELERATION EXPECTED
Ultimately, as with many modern industries, innovation
is the key value driver and healthcare is no different. We
continue to believe that the current pace of innovation is at
an all-time high and will continue to develop novel solutions
to solve health and ageing problems that are facing all of
humanity. There are new advances for small molecules,
gene and cell therapy, gene editing, monoclonal antibodies,
and of course vaccines and RNA therapeutics. Novel
diagnostics continue to progress and are shaping treatment
choices, dictating drugs of intervention, and follow-up care.
Medical devices continue to evolve across new robotic
platforms, orthopedics, pain, and structural heart. Even
managed care is seeing a revolution in vertical integration
that is unlocking value. Innovation continues to be the
number one growth driver for all of healthcare and remains
a key hallmark of the portfolio. As a result of this view, we
will continue to actively position the portfolio to benefit from
this incredible innovation, overweighting innovation through
small and mid-capitalisation stocks, which has been the
key pillar of our long-term and successful investment
strategy.
INNOVATION IN HEALTHCARE
Given the historic volatility within the sector in the reported
period, it is imperative to note that this extreme sell-off
was not emblematic of any notable concerns about the
fundamentals within the small and mid-capitalisation
universe of healthcare stocks. Yes, the number of investable
companies continues to increase. Yes, the complexity of the
clinical science and new technology continues to increase.
Yes, the political and regulatory landscape continue to
evolve. Collectively these factors should become a tailwind
for the sector as new products, drugs, and services
come to market, driving top line growth and margins,
respectively. The by-product of the broad market conditions
has culminated in a profound collapse in valuations, a
situation that should reverse in due time, a particularly
attractive opportunity for an active manager and specialist
healthcare investor, and one on which we will be in position
to capitalise.
Sven H. Borho and Trevor M. Polischuk
OrbiMed Capital LLC
Portfolio Manager
26 May 2022
24
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CONTRIBUTION BY INVESTMENT
ABSOLUTE CONTRIBUTION BY INVESTMENT FOR THE YEAR ENDED 31 MARCH 2022
Principal contributors to and detractors from net asset value performance
(cid:55)o(cid:83) five contri(cid:69)(cid:88)tor(cid:86)
Abbvie
AstraZeneca
UnitedHealth Group
Shanghai Bio-Heart Biological Technology
Bristol-Myers Squibb
(cid:38)o(cid:88)ntr(cid:92)
USA
UK
USA
China
USA
Sector
Pharmaceuticals
Pharmaceuticals
Healthcare Providers & Services
Healthcare Equipment & Supplies
Pharmaceuticals
(cid:38)ontri(cid:69)(cid:88)tion
£’000
43,658
39,516
29,254
24,934
24,633
(cid:38)ontri(cid:69)(cid:88)tion
(cid:83)er (cid:86)(cid:75)are(cid:13)
£
0.7
0.6
0.4
0.4
0.4
(cid:55)o(cid:83) five (cid:71)etractor(cid:86)
SPDR S&P Biotech ETF **
Deciphera Pharmaceuticals **
Guardant Health
Natera
Mirati Therapeutics
USA
USA
USA
USA
USA
Biotechnology
Biotechnology
Life Sciences Tools & Services
Life Sciences Tools & Services
Biotechnology
(26,637)
(32,923)
(34,062)
(35,122)
(45,742)
(0.4)
(0.5)
(0.5)
(0.5)
(0.7)
Calculation based on 65,307,132 shares being the weighted average number of shares in issue during the year ended 31 March 2022.
*
** Not held at 31 March 2022.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
25
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
AND CLIMATE CHANGE
EXTRACT FROM ORBIMED’S RESPONSIBLE
INVESTING POLICY
The Company’s Portfolio Manager, OrbiMed, believes
that there is a high congruence between companies
that seek to act responsibly and those that succeed in
building long-term shareholder value. OrbiMed seeks to
integrate its Responsible Investing Policy into its overall
investment process for the Company in order to maximise
investment(cid:98)returns.
OrbiMed negatively screens potential investments and
business sectors that may objectively lead to negative
impacts on public health or well-being. OrbiMed makes
investment decisions based on a variety of financial and
non-financial company factors, including environmental,
social and governance (ESG) information.
(cid:50)rbiMed considers sector-specific guidance from the
Sustainability Accounting Standards Board (SASB)
to determine material ESG factors. Depending on the
investment, all or a subset of the ESG factors that
are financially material and relevant are considered in
OrbiMed’s research. The evaluation of a company’s
performance on ESG issues provides guidance for
investment decisions and constitutes part of the investment
analysis. ESG factors, however, do not form the sole, or
primary, set of considerations for an investment(cid:98)decision.
ES(cid:42) is a rapidly evolving field. ES(cid:42) evaluation is not
standardised and faces limitations due to a lack of
availability of accurate, timely and uniform data. Presently,
no known universally accepted standards for ESG
incorporation in investment decisions exist. Therefore, ESG
evaluation carries a significant degree of subjectivity.
ESG MONITORING
OrbiMed has integrated ESG scores for public equity
holdings from third-party service providers onto its platform
via programming interface. ESG scores are assigned by
third-party service providers to each company based
on the company’s disclosure and practice on material
environmental, social and governance factors. Recognising
the need to supplement the scores with OrbiMed’s internal
ESG research, OrbiMed has enabled enhancements in
its monitoring capability with a custom-built protocol for
updating these scores.
OrbiMed is taking the initiative in leading meaningful ESG
engagement in the healthcare sector. As part of these
efforts, OrbiMed facilitates dialogues and an exchange
of leading practices among investors, companies and
other relevant experts on ESG in the large capitalisation
pharmaceutical sector.
CLIMATE CHANGE
As per the guidance from SASB, climate change in relation
to the Company’s own operations is not a material ESG
consideration for biotechnology and pharmaceutical,
medical equipment and supplies, and managed care
sectors. However, Energy management is noted as a
material ESG concern for the healthcare delivery sector.
To that end, OrbiMed includes the scores on energy
management for the relevant sectors in its overall
ES(cid:42)(cid:98)monitoring.
OrbiMed engages with a number of companies, including
one-on-one meetings with management on ESG, analyst
calls and other forums. For example, OrbiMed held a
meeting with Horizon Therapeutics on leading ESG
practices and provided feedback and recommendations
on specific ES(cid:42) topics such as talent management,
disclosure and governance benchmarks to the company.
Through these engagements, OrbiMed was made aware
of the ‘Energize’ programme – a collaborative programme
launched by 10 pharmaceutical companies – including
several OrbiMed portfolio companies – to increase access
to renewable electricity for global pharmaceutical supply
chains, and reduce greenhouse gas (GHG) emissions within
the healthcare supply chain.
OrbiMed generally follows the guidelines and
recommendations of Glass Lewis & Co LLC, a leading
proxy voting services provider, including on climate
change(cid:98)matters.
Sven H. Borho and Trevor M. Polischuk
OrbiMed Capital LLC
Portfolio Manager
26 May 2022
26
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW
(cid:55)he (cid:54)trategic (cid:53)e(cid:83)ort(cid:15) on (cid:83)age(cid:86)(cid:98)1(cid:98)to
40, contains a review of the
Company’s business model and
strategy, an analysis of its
(cid:83)er(cid:73)or(cid:80)ance during the financial
year and its future developments
and details of the principal risks and
challenges it faces.
Its purpose is to inform shareholders in the Company and
help them to assess how the Directors have performed
their duty to promote the success of the Company. Further
information on how the Directors have discharged their duty
under s172 of the Companies Act 2006 in promoting the
success of the Company for the benefit of the investors as a
whole, and how they have taken wider stakeholders’ needs
into account can be found on pages 35 to 39. The Strategic
Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on
the information available to them up to the date of this report.
Such statements should be treated with caution due to the
inherent uncertainties, including both economic and business
risk factors, underlying such forward-looking information.
BUSINESS MODEL
Worldwide Healthcare Trust PLC is an externally managed
investment trust and its shares are listed on the premium
segment of the (cid:50)fficial List and traded on the main market
of the London Stock Exchange. Its investment objective and
policy is set out on pages 8 and 9.
As an externally managed investment trust, all of the
Company’s day-to-day managements and administrative
functions are outsourced to service providers. As a result,
the Company has no executive directors, employees or
internal operations. The Company employs Frostrow
Capital LLP (Frostrow) as its Alternative Investment Fund
Manager (AIFM), OrbiMed Capital LLC (OrbiMed) as its
Portfolio Manager, J.P. Morgan Europe Limited as its
Depositary and J.P. Morgan Securities LLC as its Custodian
and Prime Broker. Further details about their appointments
can be found in the Business Review on pages 27 and 28.
The Company is an investment company within the
meaning of Section 833 of the Companies Act 2006 and
has been approved by HM Revenue & Customs as an
investment trust (for the purposes of Section 1158 of the
Corporation Tax Act 2010). As a result the Company is
not liable for taxation on capital gains. The Directors have
no reason to believe that approval will not continue to be
retained. The Company is not a close company for taxation
purposes.
The Board is responsible for all aspects of the Company’s
affairs, including the setting of parameters for and the
monitoring of the investment strategy a s well as the
review of investment performance and policy. It also has
responsibility for all strategic issues, the dividend policy,
the share issuance and buy-back policy, gearing, share
price and discount/premium monitoring and corporate
governance matters.
CONTINUATION OF THE COMPANY
A resolution was passed at the Annual General Meeting
held in 2019 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 the Annual General Meeting to be held in 2024 and every
five years thereafter.
THE BOARD
The Board of the Company comprises Sir Martin Smith
(Chairman), Sarah Bates, Sven Borho, Doug McCutcheon,
Dr Bina Rawal and Humphrey van der Klugt. All of these
Directors, served throughout the year. All are independent
non-executive Directors with the exception of Mr Borho
who is not considered to be independent by the Board.
Further information on the Directors can be found on
pages(cid:98)(cid:23)1 and 42.
All Directors, with the exception of Sir Martin Smith, are
seeking re-election by shareholders at this year’s Annual
General Meeting.
DIVIDEND POLICY
It is the Company’s policy to pay out dividends to
shareholders at least to the extent required to maintain
investment trust status for each financial year. Such
dividends will typically be paid twice a year by means of an
interim dividend and a final dividend.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
27
BUSINESS REVIEW CONTINUED
KEY PERFORMANCE INDICATORS (‘KPI’)
Ongoing charges ratio
The Board assesses the Company’s performance in
meeting its objectives against key performance indicators
as follows. The Key Performance Indicators have not
changed from the previous year:
•
Net asset value (‘NAV’) per share total return against the
Benchmark;*
• Discount/premium of share price to NAV per share;* and
• Ongoing charges ratio.*
Information on the Company’s performance is provided
in the Chairman’s Statement and the Portfolio Manager’s
Review and a record of these measures is shown on
pages(cid:98)1, 2 and (cid:22). Further information can be found in the
Glossary beginning on page 94.
*
Alternative Performance Measure (See Glossary beginning on page 94)
NAV per share total return against the benchmark
The Directors regard the Company’s NAV per share total
return as being the overall measure of value delivered to
shareholders over the long term. This reflects both net
asset value growth of the Company and dividends paid to
shareholders.
The Board considers the most important comparator,
against which to assess the NAV per share total return
performance, to be the MSCI World Health Care Index
measured on a net total return, sterling adjusted basis
(the(cid:98)(cid:820)Benchmark’). As noted on pages 8 and 9, OrbiMed has
flexibility in managing the investments and are not limited
by the make up of the Benchmark. As a result, investment
decisions are made that differentiate the Company from the
Benchmark and therefore the Company’s performance may
also be different to that of the(cid:98)Benchmark.
A full description of performance during the year under
review is contained in the Portfolio Manager’s Review
beginning on page 14 of this Annual Report.
Share price discount/premium to NAV per share
The share price discount/premium to the NAV per share
is considered a key indicator of performance as it impacts
the share price total return of shareholders and can
provide an indication of how investors view the Company’s
performance and its Investment Objective.
The Board continues to be conscious of expenses and
works hard to maintain a balance between good quality
service and costs.
PRINCIPAL SERVICE PROVIDERS
The principal service providers to the Company are
the(cid:98)AIFM, Frostrow Capital LLP (Frostrow), the Portfolio
Manager, OrbiMed Capital LLC (OrbiMed), the Custodian
and Prime Broker J.P. Morgan Securities LLC, and the
Depositary, J.P. Morgan Europe Limited. Details of their
key responsibilities follow and further information on their
contractual arrangements with the Company are included
in the Report of the Directors beginning on page 43.
Alternative investment fund manager (AIFM)
Frostrow under the terms of its AIFM agreement with
the(cid:98)Company provides, inter alia, the following services:
•
•
•
oversight of the portfolio management function
delegated to OrbiMed Capital LLC;
investment portfolio administration and valuation;
risk management services;
• marketing and shareholder services;
•
•
•
share price discount and premium management;
administrative and secretarial services;
advice and guidance in respect of corporate governance
requirements;
• maintenance of the Company’s accounting records;
• maintenance of the Company’s website;
•
•
preparation and dispatch of annual and half year reports
(as applicable) and monthly fact sheets; and
ensuring compliance with applicable legal and
regulatory requirements.
During the year, under the terms of the AIFM Agreement,
Frostrow received a fee as follows:
On market capitalisation up to £150 million: 0.3%; in the
range £150 million to £500 million: 0.2%; in the range
£500 million to £1 billion: 0.15%; in the range £1 billion to
£1.5 billion: 0.125%; over £1.5 billion: 0.075%. In addition,
Frostrow receives a fixed fee per annum of (cid:101)(cid:24)(cid:26),(cid:24)00.
28
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
Portfolio manager
OrbiMed under the terms of its portfolio management
agreement with the AIFM and the Company provides,
inter alia, the following services:
•
•
•
•
•
the seeking out and evaluating of investment
opportunities;
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 objective and policy of the Company.
OrbiMed receives a base fee of 0.65% of NAV and a
performance fee of 15% of outperformance against the
Benchmark as detailed on page 43.
Depositary, custodian and prime broker
J.P. Morgan Europe Limited acts as the Company’s
Depositary and J.P. Morgan Securities LLC as its Custodian
and Prime Broker.
J.P. Morgan Europe Limited, as Depositary, must take
reasonable care to ensure that the Company is managed in
accordance with the Financial Conduct Authority’s Investment
Funds Sourcebook, the AIFMD and the Company’s Articles of
Association. The Depositary must in the context of this role
act honestly, fairly, professionally, independently and in the
interests of the Company and its shareholders.
The Depositary receives a variable fee based on the size of
the Company as set out on pages 43 and 44.
J.P. Morgan Europe Limited has discharged certain of its
liabilities as Depositary to J.P. Morgan Securities LLC.
Further details of this arrangement are set out on pages 43
and 44. J.P. Morgan Securities LLC, as Custodian and Prime
Broker, provides the following services under its agreement
with the Company:
•
•
•
safekeeping and custody of the Company’s investments
and cash;
processing of transactions;
provision of an overdraft facility. Assets up to 140% of
the value of the outstanding overdraft can be taken as
collateral. See page 90 for further details; and
•
foreign exchange services.
AIFM AND PORTFOLIO MANAGER EVALUATION
AND RE-APPOINTMENT
The performance of the AIFM and the Portfolio Manager is
reviewed continuously by the Board and the Management
Engagement & Remuneration Committee (the “Committee”)
with a formal evaluation being undertaken each year.(cid:98)As
part of this process, the Committee monitors the(cid:98)services
provided by the AIFM and the Portfolio Manager(cid:98)and
receives regular reports and views from them.
The(cid:98)Committee also receives comprehensive performance
measurement reports to enable it to determine whether
or not the performance objectives set by the Board have
been met. The Committee reviewed the appropriateness of
the appointment of the AIFM and the Portfolio Manager in
February 2022 with a positive recommendation being made
to the Board.
The Board believes the continuing appointment of the AIFM
and the Portfolio Manager, under the terms described on
pages 27 and 28, is in the interests of shareholders as a
whole. In coming to this decision, it took into consideration,
inter alia, the following:
•
•
the quality of the service provided and the depth of
experience of the company management, company
secretarial, administrative and marketing team that the
AIFM allocates to the management of the Company; and
the quality of the service provided and the quality and
depth of experience allocated by the Portfolio Manager
to the management of the portfolio and the long-term
performance of the portfolio in absolute terms and by
reference to the Benchmark.
RISK MANAGEMENT
The Board is responsible for the management of risks
faced by the Company. Through delegation to the Audit
& Risk Committee, the Board has established procedures
to manage risk, to review the Company’s internal control
framework and establish the level and nature of the
principal risks the Company is prepared to accept in order
to achieve its long-term strategic objective. At least twice
a year the Audit & Risk Committee carries out a robust
assessment of the principal risks and uncertainties with the
assistance of Frostrow (the Company’s AIFM) identifying
the principal risks faced by the Company. These principal
risks and the ways they are managed or mitigated are
detailed on the following pages.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
29
BUSINESS REVIEW CONTINUED
(cid:51)rinci(cid:83)al ri(cid:86)(cid:78)(cid:86) an(cid:71) (cid:88)ncertaintie(cid:86)
(cid:48)itigation
Market risks
By the nature of its activities and Investment
Objective, the Company’s portfolio is exposed to
fluctuations in market prices (from both individual
security prices and foreign exchange rates) and
due to exposure to the global healthcare sector, it
is expected to have higher volatility than the wider
market. As such investors should be aware that
by investing in the Company they are exposing
themselves to market risks and those additional
risks specific to the sectors in which the
Company invests, such as political interference
in drug pricing. In addition, the Company uses
leverage (both through derivatives and gearing)
the effect of which is to amplify the gains or
losses the Company experiences.
Geo-political/regulatory and macro economic risk
Macro events may have an adverse impact
on the Company’s performance by causing
exchange rate volatility, changes in tax or
regulatory environments, and/or a fall in market
prices. Emerging markets, which a portion of the
portfolio is exposed to, can be subject to greater
political uncertainty and price volatility than
developed markets.
To manage these risks the Board and the AIFM have appointed OrbiMed to
manage the investment portfolio within the remit of the investment objective
and policy, and imposed various limits and guidelines, set out on pages
8 and 9. These limits ensure that the portfolio is diversified, reducing the
risks associated with individual stocks, and that the maximum exposure
(through derivatives and an overdraft facility) is limited. The compliance with
those limits and guidelines is monitored daily by Frostrow and OrbiMed and
reported to the Board monthly.
In addition, OrbiMed reports at each Board meeting on the performance of the
Company’s portfolio, which encompasses the rationale for stock selection
decisions, the make-up of the portfolio, potential new holdings and, derivative
activity and strategy (further details on derivatives can be found in note 16
beginning on page 86).
The Company does not currently hedge its currency exposure.
While such events are outside the control of the Company the Board reviews
regularly, and discusses with the Portfolio Manager, the wider economic and
political environment, along with the portfolio exposure and the execution of
the investment policy against the long-term objectives of the Company. The
Portfolio Manager’s risk team perform systematic risk analysis, including
country and industry specific risk monitoring.
The Board monitors regulatory developments but relies on the services of its
external advisers to ensure compliance with applicable law and regulations.
The Board has appointed a specialist investment trust AIFM and Company
Secretary who provides industry and regulatory updates at each Board meeting.
With regard to Brexit, the Board does not believe that it poses a unique risk to
the Company or that it will affect the Company’s share price or how its shares
are sold.
30
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
(cid:51)rinci(cid:83)al ri(cid:86)(cid:78)(cid:86) an(cid:71) (cid:88)ncertaintie(cid:86)
(cid:48)itigation
Unquoted investment risk
The Company’s risk could be increased by its
investment in unquoted companies. These
investments may be more difficult to buy, sell
or value, so changes in their valuations may be
greater than for listed assets. The valuation of
unquoted investments requires considerable
judgement as explained in Note1(a) beginning
on page 76 and as such realisations may be
materially lower than the value as estimated
by the Company. Particular events, outside
the control of the Company, may also have
a significant impact on the valuation and
considerable uncertainty may exist around the
potential future outcomes for each investment.
Investment management key person risk
There is a risk that the individuals responsible
for managing the Company’s portfolio may leave
their employment or may be prevented from
undertaking their duties.
To mitigate this risk the Board and AIFM have set a limit of 10% of the
portfolio, calculated at the time of investment, that can be held in unquoted
investments and have established a robust and consistent valuation policy
and process as set out in Note 1(b) on page 77, which is in line with UK GAAP
requirements and the International Private Equity and Venture Capital (IPEV)
(cid:42)uidelines. The(cid:98)Board also monitors the performance of these investments
compared to the additional risks involved.
The Board manage this risk by:
•
•
•
•
appointing OrbiMed, who operate a team environment such that the loss
of any individual should not impact on service levels;
receiving reports from OrbiMed at each Board meeting, such report
includes any significant changes in the make-up of the team supporting
the Company;
meeting the wider team, outside the designated lead managers, at
(cid:50)rbiMed’s offices and encouraging the participation of the wider (cid:50)rbiMed
team in investor updates; and
delegating to the Management Engagement & Remuneration Committee,
responsibility to perform an annual review of the service received from
OrbiMed, including, inter alia, the team supporting the lead managers and
succession planning.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
31
BUSINESS REVIEW CONTINUED
(cid:51)rinci(cid:83)al ri(cid:86)(cid:78)(cid:86) an(cid:71) (cid:88)ncertaintie(cid:86)
(cid:48)itigation
Counterparty risk
In addition to market and foreign currency risks,
discussed above, the Company is exposed to
risk arising from the use of counterparties. If a
counterparty were to fail, the Company could
be adversely affected through either delay in
settlement or loss of assets.
The most significant counterparty the Company is
exposed to is J.P. Morgan Securities LLC which is
responsible for the safekeeping of the Company’s
assets and provides the overdraft facility to the
Company. As part of the arrangements with J.P.
Morgan Securities LLC they may take assets, up
to 140% of the value of the drawn overdraft, as
collateral and have first priority security interest
or lien over all of the Company’s assets. Such
assets taken as collateral may be used, loaned,
sold, rehypothecated or transferred by J.P.
Morgan Securities LLC. Although the Company
maintains the economic benefit from the
ownership of those assets it does not hold any of
the rights associated with those assets. Any of
the Company’s assets taken as collateral are not
covered by the custody arrangements provided
by J.P. Morgan Securities LLC. The Company is,
however, afforded protection in accordance with
SEC rules and U.S. legislation equal to the value of
the assets that have been rehypothecated.
This risk is managed by the Board through:
•
•
•
•
•
•
reviews of the arrangements with, and services provided by, the
Depositary and the Custodian and Prime Broker to ensure that the
security of the Company’s assets is being maintained. Legal opinions are
sought, where appropriate, as part of this review. Also, the Board regularly
monitors the credit rating of the Company’s Custodian and Prime Broker;
monitoring of the assets taken as collateral (further details can be found
in note 16 beginning on page 86);
reviews of OrbiMed’s approved list of counterparties, the Company’s use
of those counterparties and OrbiMed’s process for monitoring, and adding
to, the approved counterparty list;
monitoring of counterparties, including reviews of internal control reports
and credit ratings, as appropriate;
by primarily investing in markets that operate DVP (Delivery Versus
Payment) settlement. The process of DVP mitigates the risk of losing the
principal of a trade during the settlement process; and
J.P. Morgan Securities LLC is subject to regular monitoring by J.P.(cid:98)Morgan
Europe Limited, the Company’s Depositary, and the Board receives regular
reports from J.P. Morgan Europe Limited.
32
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
(cid:51)rinci(cid:83)al ri(cid:86)(cid:78)(cid:86) an(cid:71) (cid:88)ncertaintie(cid:86)
(cid:48)itigation
Service provider risk
To manage these risks the Board:
•
•
•
•
•
receives a monthly compliance report from Frostrow, which includes,
inter alia, details of compliance with applicable laws and regulations;
reviews internal control reports, key policies, including measures taken to
combat cyber security issues, and also the disaster recovery procedures of
its service providers;
maintains a risk matrix with details of risks the Company is exposed to, the
controls relied on to manage those risks and the frequency of the controls
operation;
receives updates on pending changes to the regulatory and legal environment
and progress towards the Company’s compliance with these; and
the operational and regulatory risks arising from the COVID-19 pandemic,
and measures introduced to combat its spread, are discussed by the
Board, with updates on operational resilience received from the Portfolio
Manager, AIFM and other key service providers.
The Board ensures that the Portfolio Manager’s ESG approach is in line with
standards elsewhere and the Board’s expectations. A summary of the Portfolio
Manager’s approach to Responsible Investing can be found on page 25.
The Board is reliant on the systems of the
Company’s service providers and as such
disruption to, or a failure of, those systems
could lead to a failure to comply with law and
regulations leading to reputational damage and/
or financial loss to the Company.
The spread of an infectious disease, such as has
been seen as a result of the COVID-19 pandemic,
may again force governments to introduce rules
to restrict meetings and movements of people
and take other measures to prevent its spread,
which may cause disruption to the Company’s
operations.
ESG related risks
Both the Board and the Portfolio Manager
recognise the importance of having a coherent
ESG policy. There is a risk that investing in
companies that disregard ESG factors will have a
negative impact on investment returns and also
that the Company itself may become unattractive
to investors if ESG is not appropriately considered
in the Portfolio Manager’s decision making
process. In light of this, the Board has asked
OrbiMed to provide ESG reports at each Board
meeting, highlighting examples where ESG issues
influenced investment decisions and/or led to
engagement with an investee company.
Shareholder relations and share price performance risk
The Company is also exposed to the risk,
particularly if the investment strategy and
approach are unsuccessful, that the Company
may underperform resulting in the Company
becoming unattractive to investors and a
widening of the share price discount to NAV per
share. Also, falls in stock markets, such as those
experienced as a consequence of the COVID-19
pandemic, and the risk of a global recession, are
likely to adversely affect the performance of the
Company’s investments.
In managing this risk the Board:
•
•
•
•
•
reviews the Company’s Investment Objective in relation to market, and
economic, conditions and the operation of the Company’s peers;
discusses at each Board meeting the Company’s future development and
strategy;
reviews the shareholder register at each Board meeting;
actively seeks to promote the Company to current and potential investors; and
has implemented a discount/premium control mechanism.
The operation of the discount/premium control mechanism and Company
promotional activities have been delegated to Frostrow, who(cid:98)report to the
Board at each Board meeting on these activities.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
33
BUSINESS REVIEW CONTINUED
Emerging risks
The Company has carried out a robust assessment of
the Company’s emerging and principal risks and the
procedures in place to identify emerging risks are described
below. The International Risk (cid:42)overnance Council definition
of an ‘emerging’ risk is one that is new, or is a familiar
risk in a new or unfamiliar context or under new context
conditions (re-emerging). Failure to identify emerging risks
may cause reactive actions rather than being proactive
and, in worst case, could cause the Company to become
unviable or otherwise fail or force the Company to change
its structure, objective or strategy.
The Audit and Risk Committee reviews a risk map at its
half-yearly meetings. Emerging risks are discussed in
detail as part of this process and also throughout the year
to try to ensure that emerging (as well as known) risks are
identified and, so(cid:98)far as practicable, mitigated.
COVID-19
The Board recognises that the spread of new coronavirus
(COVID-19) strains represents an area of continuing
risk, both to the Company’s investments, investment
performance and to its operations. The Portfolio Manager
has continued its dialogue with investee companies and the
Board has stayed in close contact with both the AIFM and
the Portfolio Manager and has been regularly monitoring
portfolio and share price developments. The Board has
also received assurances from all of the Company’s service
providers in respect of:
•
•
•
their business continuity plans and the steps being
taken to guarantee the ongoing efficiency of their
operations while ensuring the safety and well-being of
their employees;
their cyber security measures including improved
user-access controls, safe remote working and evading
malicious attacks; and
any increased risks of fraud resulting from weaknesses
in systems user access controls.
As the rate of vaccinations increases across the world, the
outlook is cautiously positive, but the Board will continue to
monitor developments as they occur.
COMPANY PROMOTION
The Company has appointed Frostrow to provide marketing
and investor relations services, in the belief that a
well-marketed investment company is more likely to grow
over time, have a more diverse and stable shareholder
register and will trade at a superior rating to its peers.
Frostrow actively promotes the Company in the following
ways:
(cid:40)ngaging reg(cid:88)larl(cid:92) (cid:90)it(cid:75) in(cid:86)tit(cid:88)tional inve(cid:86)tor(cid:86)(cid:15)
(cid:71)i(cid:86)cretionar(cid:92) (cid:90)ealt(cid:75) manager(cid:86) an(cid:71) a range of
e(cid:91)ec(cid:88)tion(cid:16)onl(cid:92) (cid:83)latform(cid:86)(cid:29) Frostrow regularly talks and
meets with institutional investors, discretionary wealth
managers and execution-only platform providers to discuss
the Company’s strategy and to understand any issues
and concerns, covering both investment and corporate
governance matters. Such meetings have been conducted
on a virtual basis during the COVID-19 pandemic;
(cid:48)a(cid:78)ing (cid:38)om(cid:83)an(cid:92) information more acce(cid:86)(cid:86)i(cid:69)le(cid:29) Frostrow
works to raise the profile of the Company by targeting key
groups within the investment community, holding annual
investment seminars, overseeing PR output and managing
the Company’s website and wider digital offering, including
Portfolio Manager videos and social media;
(cid:39)i(cid:86)(cid:86)eminating (cid:78)e(cid:92) (cid:38)om(cid:83)an(cid:92) information(cid:29) Frostrow
performs the Investor Relations function on behalf of the
Company and manages the investor database. Frostrow
produces all key corporate documents, distributes monthly
Fact Sheets, Annual Reports and updates from OrbiMed on
portfolio and market developments; and
(cid:48)onitoring mar(cid:78)et activit(cid:92)(cid:15) acting a(cid:86) a lin(cid:78) (cid:69)et(cid:90)een t(cid:75)e
(cid:38)om(cid:83)an(cid:92)(cid:15) (cid:86)(cid:75)are(cid:75)ol(cid:71)er(cid:86) an(cid:71) ot(cid:75)er (cid:86)ta(cid:78)e(cid:75)ol(cid:71)er(cid:86)(cid:29) Frostrow
maintains regular contact with sector broker analysts and
other research and data providers, and conducts periodic
investor perception surveys, liaising with the Board to
provide up-to-date and accurate information on the latest
shareholder and market developments.
DISCOUNT CONTROL MECHANISM (DCM)
The Board undertakes a regular review of the level of
discount/premium and consideration is given to ways in
which share price performance may be enhanced, including
the effectiveness of marketing, share issuance and share
buy-backs, where appropriate.
34
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
The Board implemented the DCM in 2004. This established
a target level of no more than a 6% share price discount to
the NAV per share.
Under the DCM, when the discount reaches a level of 6% or
more, the Company’s shares may be bought back and held
as treasury shares (See Glossary beginning on page 94).
Treasury shares can be sold back to the market at a later
date at a premium to the cum-income net asset value per
share.
Shareholders should note, however, that it remains possible
for the share price discount to the NAV 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 NAV per share in an asset class
such as healthcare is another factor over which the Board
has no control.
In recent years the Company’s successful performance has
generated substantial investor interest. Whenever there are
unsatisfied buying orders for the Company’s shares in the
market, the Company has the ability to issue new shares at
a small premium to the cum income NAV per share. This is
an effective share price premium management tool.
Details of share issuance and share buy-backs are set out
on page 45.
SOCIAL, ECONOMIC AND ENVIRONMENTAL
MATTERS
The Directors, through the Company’s Portfolio Manager,
encourage companies in which investments are made
to adhere to best practice with regard to corporate
governance. In light of the nature of the Company’s
business there are no relevant human rights issues and the
Company does not have a human rights policy.
The Company recognises that social and environmental
issues can have an effect on some of its investee
companies.
The Company is an investment trust and so its
own direct environmental impact is minimal. As an
externally- managed investment trust, the Company does
not have any employees or maintain any premises, nor does
it undertake any manufacturing or other physical operations
itself. All its operational functions are outsourced to third
party service providers. Therefore, the Company has no
material, direct impact on the environment or any particular
community and the Company itself has no environmental,
human rights, social or community policies. The Board
of Directors consists of six Directors, four of whom are
resident in the UK, one in Canada and one in the(cid:98)U.S.
The(cid:98)Board holds the majority of its regular meetings in the
U.K., with usually one meeting held each year in (cid:49)ew(cid:98)(cid:60)ork,
and has a policy that travel, as far as possible, is minimal,
thereby minimising the Company’s greenhouse gas
emissions. Further details concerning greenhouse gas
emissions can be found within the Report of the Directors
on pages 45 and 46. During the Pandemic all of the Board
and Committee meetings were held via video conference.
Video conferencing has proved to be a very effective way of
holding meetings, and this medium will continue to be used
alongside in person meetings.
The Portfolio Manager engages with the Company’s
underlying investee companies in relation to their corporate
governance practices and the development of their policies
on social, community and environmental matters.
TASKFORCE FOR CLIMATE-RELATED
FINANCIAL DISCLOSURES (“TCFD”)
The Company notes the TCFD recommendations on
climate-related financial disclosures. The Company is an
investment trust with no employees, internal operations or
property and, as such, it is exempt from the Listing Rules
requirement to report against the TCFD framework.
LONG TERM VIABILITY
The Board has carried out a robust assessment of the
principal risks facing the Company including those that would
threaten its business model, future performance, solvency or
liquidity. The Board has drawn up a matrix of risks facing the
Company and has put in place a schedule of investment limits
and restrictions, appropriate to the Company’s investment
objective and policy, in order to mitigate these risks as far as
practicable. The principal risks and uncertainties which have
been identified, and the steps taken by the Board to mitigate
these as far as possible, are shown on pages 28 to 33.
The Board believes it is appropriate to assess the
Company’s viability over a five year period. This period is
also deemed appropriate due to our Portfolio Manager’s
long-term investment horizon and also what it believes to
be investors’ horizons, taking account of the Company’s
current position and the potential impact of the principal
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
35
BUSINESS REVIEW CONTINUED
risks and uncertainties as shown on pages 28 to 33. The
Directors also took into account the liquidity of the portfolio
and the expectation that the Company will pass the next
continuation vote in 2024 when considering the viability of
the Company over the next five years and its ability to meet
liabilities as they fall due.
The (cid:39)irectors do not expect there to be any significant
change in the principal risks that have been identified or
the adequacy of the mitigating controls in place, and do
not envisage any change in strategy or objectives or any
events that would prevent the Company from continuing to
operate over that period as the Company’s assets are liquid,
its commitments are limited and the Company intends to
continue to operate as an investment trust.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the
next five-year period.
STAKEHOLDER INTERESTS AND BOARD
DECISION-MAKING (SECTION 172 OF THE
COMPANIES ACT 2006)
The Directors are required to explain more fully how they
have discharged their duty under s172 of the Companies
Act 2006 in promoting the success of the Company for the
benefit of the members as a whole. This includes the likely
consequences of the Directors’ decisions in the long-term
and how they have taken wider stakeholders’ needs into
account.
The Directors aim to act fairly between the Company’s
stakeholders. The Board’s approach to shareholder
relations is summarised in the Corporate Governance
Report beginning on page 48. The Chairman’s Statement
beginning on page 4 provides an explanation of actions
taken by the Directors during the year to achieve the
Board’s long-term aim of ensuring that the Company’s
shares trade at a price close to the NAV per share.
As an externally managed investment trust, the Company
has no employees, customers, operations or premises.
Therefore, the Company’s key stakeholders (other
than its shareholders) are considered to be its service
providers. The need to foster business relationships with
the service providers and maintain a reputation for high
standards of business conduct are central to the Directors’
decision-making as the Board of an externally managed
investment trust. The Directors believe that fostering
constructive and collaborative relationships with the
Company’s service providers will assist in their promotion
of the success of the Company for the benefit of all
shareholders.
The Board engages with representatives from its
service providers throughout the year. Representatives
from OrbiMed and Frostrow are in attendance at each
Board meeting. As the Portfolio Manager and the AIFM
respectively, the services they provide are fundamental
to the long-term success and smooth running of the
Company. The Chairman’s Statement and the Business
Review on pages 4 to 7 and also on page 28, describe
relevant decisions taken during the year relating to OrbiMed
and Frostrow. Further details about the matters discussed
in Board meetings and the relationship between OrbiMed
and the Board are set out in the Corporate Governance
Report.
Representatives from other service providers are asked to
attend Board meetings when deemed appropriate.
Further details are set out overleaf.
36
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
Who?
Stakeholder
group
Investors
Why?
How?
The (cid:69)enefits of engagement with the
company's stakeholders
How the board, the portfolio manager and the AIFM
have engaged with the company’s stakeholders
Clear communication of the Company’s strategy
and the performance against the Company’s
objective can help the share price trade at a
narrower discount or a premium to its net asset
value per share which benefits shareholders.
New shares can be issued to meet demand
without net asset value per share dilution to
existing shareholders. Increasing the size of the
Company can benefit liquidity as well as spread
costs.
Share buy backs are undertaken at the discretion
of the Directors.
The Portfolio Manager and Frostrow, on behalf
of the Board, complete a programme of investor
relations throughout the year. While such meetings
were conducted on a virtual basis during the
COVID-19 pandemic, meetings in person are now
being held again. In addition, the Chairman has
been available to engage with the Company’s
larger shareholders where required.
An analysis of the Company’s shareholder
register is provided to the Directors at each Board
meeting along with marketing reports from
Frostrow. The Board reviews and considers the
marketing plans on a regular basis. Reports from
the Company’s broker are submitted to the Board
on investor sentiment and industry issues.
Key mechanisms of engagement include:
•
•
•
•
•
•
The Annual General Meeting. While
shareholder attendance was not possible
during the COVID-19 pandemic, shareholders
will be able to attend the 2022 Annual
General Meeting in person (subject to
any government restrictions). In 2021,
shareholders were not able to attend the
Annual General Meeting in person. The
Portfolio Manager produced an online
shareholder presentation which was followed
by an interactive question and answer
session.
The Company’s website which hosts reports,
articles and insights, and monthly factsheets
One-on-one and group investor meetings
Should any significant votes be cast against
a resolution, proposed at the Annual
General Meeting the Board will engage with
shareholders.
The Board will explain in its announcement of
the results of the AGM any actions it intends
to take to consult shareholders in order to
understand the reasons behind significant
votes against.
Following any consultation, an update would
be published no later than six months after
the AGM and the Annual Report will detail
the impact shareholder feedback has had on
any decisions the Board has taken and any
actions or resolutions proposed.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
37
BUSINESS REVIEW CONTINUED
What?
Outcomes and actions
What were the key areas of engagement?
What actions were taken, including main decisions?
Key areas of engagement with investors
•
Ongoing dialogue with shareholders concerning the strategy
of the Company, performance and the portfolio.
•
The Portfolio Manager and Frostrow meet regularly
with shareholders and potential investors to discuss
the Company’s strategy, performance and portfolio.
The(cid:98)Chairman meets with key shareholders from time
to time and as required. He engaged with a number of
investors on ESG issues.
Frostrow and the Portfolio Manager engage with retail investors
through a number of different channels:
(i)
The Company’s website, which is maintained by Frostrow,
contains articles, webinars and quarterly updates;
(ii) A distribution list of shareholders (retail and professional)
which is maintained by Frostrow and is used to
communicate with investors on a regular basis;
(iii) The Portfolio Manager provides annual presentations online
– (webcasts) and offline (AGM), which shareholders are
able to attend and participate in; and
(iv) Frostrow ensures that the Company is available through a
wide range of leading execution only platforms.
38
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
Who?
Why?
How?
Stakeholder group
The (cid:69)enefits of engagement with the
company's stakeholders
How the board, the portfolio manager and the AIFM
have engaged with the company’s stakeholders
Portfolio Manager
Service Providers
Engagement with the Company’s Portfolio
Manager is necessary to evaluate their
performance against the Company’s stated
strategy and to understand any risks or
opportunities this may present. The Board
ensures that the Portfolio Manager’s
environmental, social and governance (“ESG”)
approach is in line with standards elsewhere and
the Board’s expectations.
Engagement also helps ensure that the Portfolio
Manager’s fees are closely monitored and remain
competitive.
Gaining a deeper understanding of the portfolio
companies and their strategies as well as
incorporating consideration of ESG factors into
the investment process assists in understanding
and mitigating risks of an investment as well as
identifying future potential opportunities.
The Company contracts with third parties for
other services including: custody, company
secretarial, accounting & administration and
registrar. The Company ensures that the
third parties to whom the services have been
outsourced complete their roles in line with their
service level agreements thereby supporting the
Company in its success and ensuring compliance
with its obligations.
The COVID-19 pandemic meant that it was vital
to make certain there were adequate procedures
in place at the Company’s principal service
providers to ensure safety of their employees
and the continued high quality service to the
Company.
The Board met regularly with the Company’s
Portfolio Manager throughout the year. The
Board also receives monthly performance and
compliance reporting.
The Portfolio Manager’s attendance at each Board
meeting provides the opportunity for the Portfolio
Manager and Board to further reinforce their
mutual understanding of what is expected from
both parties.
The Board encourages the Company’s Portfolio
Manager to engage with companies and in
doing so expects ESG issues to be an important
consideration.
The Board receives an update on Frostrow’s
engagement activities by way of a dedicated
report at Board meetings and at other times during
the year as required.
The Board and Frostrow, acting in its capacity as
AIFM, engage regularly with other service providers
both in one-to-one meetings and via regular written
reporting. This regular interaction provides an
environment where topics, issues and business
development needs can be dealt with efficiently
and collegiately.
The Board together with Frostrow have maintained
regular contact with the Company’s principal
service providers during the pandemic, as well
as carrying out a review of the service providers’
business continuity plans and additional cyber
security provisions.
The review of the performance of the Portfolio
Manager and Frostrow is a continuous process
carried out by the Board and the Management
Engagement & Remuneration Committee with a
formal evaluation being undertaken annually.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
39
BUSINESS REVIEW CONTINUED
What?
Outcomes and actions
What were the key areas of engagement?
What actions were taken, including main decisions?
Key areas of engagement with the Portfolio Manager on an ongoing basis are portfolio composition, performance, outlook
and business updates.
•
•
•
The ongoing impact of the pandemic upon their business
and how components in the portfolio dealt with the
pandemic.
Regular review of the make up of the investment portfolio.
The integration of ESG factors into the Portfolio Manager’s
investment processes.
Key areas of engagement with Service Providers
•
•
The Directors have frequent engagement with the
Company’s other service providers through the annual cycle
of reporting. This engagement is completed with the aim of
maintaining an effective working relationship and oversight
of the services provided.
The Board sought and received assurances from all of the
Company’s service providers that steps had been taken to
maintain the ongoing efficiency of their operations while
ensuring the safety and well-being of their employees.
Key areas of engagement with the broker
•
The Board is cognisant that the trading of the Company‘s
shares at a persistent and significant discount or premium
to the prevailing NAV per share is not in the interests of
shareholders.
•
•
•
•
•
The Board has received regular updates from the Portfolio
Manager throughout the pandemic and its impact on
investment decision making. In addition, the impact of new
working practices adopted by the Portfolio Manager as a
consequence of the pandemic have been reviewed by the
Board.
The Portfolio Manager reports on ESG issues at each Board
meeting.
(cid:49)o specific action required as the reviews of the Company’s
service providers, have been positive and the Directors
believe their continued appointment is in the best interests
of the Company.
The Board agreed to continue to monitor the position
closely.
Throughout the year the Board closely monitored the
Company’s discount/premium to NAV per share and
received regular updates from the broker. 80,509 shares
were bought back during the year, and a further 223,842
shares were bought back since the year-end to 25 May
2022. 1,227,500 new shares were issued during the year,
no shares issued following the year-end to 25 May 2022.
(Please see the Chairman’s Statement on page 5 for further
information.)
40
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BUSINESS REVIEW CONTINUED
INTEGRITY AND BUSINESS ETHICS
ALTERNATIVE PERFORMANCE MEASURES
The Company is committed to carrying out business in an
honest and fair manner with a zero-tolerance approach to
bribery, tax evasion and corruption. As such, policies and
procedures are in place to prevent this. In carrying out its
activities, the Company aims to conduct itself responsibly,
ethically and fairly, including in relation to social and human
rights issues.
The Financial Statements (on pages 72 to 92) set out the
required statutory reporting measures of the Company’s
financial performance. In addition, the Board assesses the
Company’s performance against a range of criteria which
are viewed as particularly relevant for investment trusts,
which are explained in greater detail in the Strategic Report,
under the heading ‘Key Performance Indicators’ on page 27.
By order of the Board
Frostrow Capital LLP
Company Secretary
26 May 2022
The Company believes that high standards of ESG make
good business sense and have the potential to protect
and enhance investment returns. The Portfolio Manager’s
investment criteria provide that ESG and ethical issues
are taken into account and best practice is encouraged by
the Board. The Board’s expectations are that its principal
service providers have appropriate governance policies in
place.
PERFORMANCE AND FUTURE DEVELOPMENTS
A review of the Company’s year, its performance and the
outlook for the Company can be found in the Chairman’s
Statement on pages 4 to 7 and in the Portfolio Manager’s
Review on pages 14 to 23.
The Company’s overall strategy remains unchanged.
LOOKING TO THE FUTURE
The Board concentrates its attention on the Company’s
investment performance and OrbiMed’s investment
approach and on factors that may have an effect on
this approach. Marketing reports are given to the Board
at each board meeting by the AIFM which include how
the Company will be promoted and details of planned
communications with existing and potential shareholders.
The Board is regularly updated by the AIFM on wider
investment trust industry issues and discussions are held
at each Board meeting concerning the Company’s future
development and strategy.
A review of the Company’s year, its performance since
the year-end and the outlook for the Company can be
found in the Chairman’s Statement on pages 4 to 7 and
in the Portfolio Manager’s Review on pages 14 to 23.
It is expected that the Company’s Strategy will remain
unchanged in the coming year.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
41
BOARD OF DIRECTORS
SIR MARTIN SMITH
SARAH BATES
SVEN BORHO
Independent Non-Executive Chairman
Independent Non-Executive Director
Non-Executive Director
Joined the Board in 2013
Joined the Board in 2018
Annual remuneration year-end 2022: Nil
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
Sven is not a member of any of the
Company’s Committees.
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
10,000
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Sven H. Borho, CFA, is a founder and
Managing Partner of OrbiMed. Sven heads
the public equity team and he is the portfolio
manager for OrbiMed’s public equity and
hedge funds. He has been a portfolio
manager for the firm’s funds since 1(cid:28)(cid:28)(cid:22) and
has played an integral role in the growth of
OrbiMed’s asset management activities.
He started his career in 1991 when he
joined (cid:50)rbiMed’s predecessor firm as
a Senior Analyst covering European
pharmaceutical firms and biotechnology
companies worldwide. Sven studied
business administration at Bayreuth
University in Germany and received a M.Sc.
(Econs.), Accounting and Finance, from The
London School of Economics.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Sven is a Managing Partner of OrbiMed and
does not have any other appointments.
Stan(cid:71)ing for re(cid:16)election(cid:29)
(cid:60)es
Joined the Board in 2007 and became
Chairman in 2008
Annual remuneration year-end 2022:
£53,150pa
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
Sir Martin attends the Audit & Risk
Committee by invitation and is a member
of the Nominations and Management
Engagement & Remuneration Committees.
Annual remuneration year-end 2022:
£36,007pa
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
Sarah is Chair of the Nominations
Committee and is the Senior Independent
Director. Sarah is also a member of the
Audit & Risk and Management Engagement
& Remuneration Committees.
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
11,(cid:27)(cid:26)1 (Beneficial) 2,(cid:26)2(cid:24) (Trustee)
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
7,200
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Sarah is a past Chair of the Association
of Investment Companies and has been
involved in the UK savings and investment
industry in different roles for over 35 years.
Sarah is a fellow of CFA UK.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Sarah is non-executive Chair of Polar
Capital Technology Trust plc and a
non-executive Director of Alliance Trust
PLC. Sarah is also Chair of The John Lewis
Partnership Pensions Trust of BBC Pension
Investments Limited and of the Universities
Superannuation Fund Investment
Management Limited. Sarah is a member
of the BBC Pension Scheme Investment
Committee and is an Ambassador for
Chapter Zero and a mentor for Chairmen
Mentors International.
Stan(cid:71)ing for re(cid:16)election(cid:29)
(cid:60)es
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Sir Martin Smith has been involved in
the financial services sector for almost
50 years. He was a founder and senior
partner of Phoenix Securities, becoming
Chairman of European Investment Banking
for Donaldson, Lufkin & Jenrette (DLJ)
following the acquisition of Phoenix by DLJ.
He was subsequently a founder of New Star
Asset Management Ltd.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Sir Martin has a number of other directorships
and business interests, including acting as
Chairman Emeritus of GP Bullhound, the
technology investment banking firm. He is
also a member of the Advisory Board of Cerno
Capital Partners LLP.
Sir Martin’s pro-bono interests include
being a founder of the Orchestra of the
Age of Enlightenment of which he is Life
President, and he has served on the boards
of a number of other arts organisations
including English National Opera, the
Glyndebourne Arts Trust and the Royal
Academy of Music and the Ashmolean
Museum. He is a Trustee of ClientEarth.
In 2008 Sir Martin with his family were
founding benefactors of the Smith School
of Enterprise and the Environment at Oxford
University.
Stan(cid:71)ing for re(cid:16)election(cid:29)
No
42
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
BOARD OF DIRECTORS CONTINUED
HUMPHREY VAN DER KLUGT, FCA
DOUG MCCUTCHEON
DR BINA RAWAL
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Joined the Board in 2016
Joined the Board in 2012
Joined the Board in 2019
Annual remuneration year-end 2022:
£41,133pa
Annual remuneration year-end 2022:
£33,573pa
Annual remuneration year-end 2021:
£33,573pa
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
A Chartered Accountant, Humphrey is
Chairman of the Audit & Risk Committee.
Humphrey is also a member of the
Management Engagement & Remuneration
and the Nominations Committees.
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
3,000
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Humphrey was formerly Chairman of
Fidelity European Values PLC and a Director
of Murray Income Trust PLC, BlackRock
Commodities Income Investment Trust plc
and J P Morgan Claverhouse Investment
Trust plc. Prior to this Humphrey was a
fund manager and Director of Schroder
Investment Management Limited and in
a 22 year career was a member of their
Group Investment and Asset Allocation
Committees. Prior to joining Schroders, he
was with Peat Marwick Mitchell & Co (now
KPM(cid:42)) where he qualified as a Chartered
Accountant in 1979.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Humphrey is a non-executive Director of
Allianz Technology Trust PLC.
Stan(cid:71)ing for re(cid:16)election(cid:29)
(cid:60)es
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
Doug is Chairman of the Management
Engagement & Remuneration Committee.
Doug is also a member of the Audit & Risk
and Nominations Committees.
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
20,000
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Doug is the President of Longview Asset
Management Ltd., an independent
investment firm that manages the capital of
families, charities and endowments. Prior
to this, Doug was an investment banker
for 25 years at UBS and its predecessor
firm, S.(cid:42). Warburg, where, most recently,
he was the head of Healthcare Investment
Banking for Europe, the Middle East, Africa
and Asia- Pacific. (cid:39)oug is involved in
philanthropic organisations with a focus
on healthcare and education. He attended
Queen’s University, Canada.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Doug is a non-executive Director of
Labrador Iron Ore Royalty Corporation listed
on the Toronto Stock Exchange.
Stan(cid:71)ing for re(cid:16)election(cid:29)
(cid:60)es
(cid:38)ommittee (cid:48)em(cid:69)er(cid:86)(cid:75)i(cid:83)
Dr Rawal is a member of the Audit & Risk,
Management Engagement & Remuneration
and Nominations Committees.
S(cid:75)are(cid:75)ol(cid:71)ing in t(cid:75)e (cid:38)om(cid:83)an(cid:92)
1,810
S(cid:78)ill(cid:86) an(cid:71) (cid:40)(cid:91)(cid:83)erience
Dr Rawal, a physician scientist with
25 years’ experience in Research and
Development, has held senior executive
roles in drug development and scientific
evaluation in four global pharmaceutical
companies. She has also worked in senior
roles with two medical research funding
organisations: Wellcome Trust and Cancer
Research UK.
Ot(cid:75)er (cid:36)(cid:83)(cid:83)ointment(cid:86)
Dr Rawal is a non-executive Director of the
Central London Community Healthcare NHS
Trust and of Vann Limited. Dr Rawal is also
a Trustee on the Board of the Social Mobility
Foundation.
Stan(cid:71)ing for re(cid:16)election(cid:29)
(cid:60)es
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
43
REPORT OF THE DIRECTORS
The Directors present their Annual
Report on the affairs of the Company
together with the audited financial
statements and the Independent
Auditors’ Report for the year ended
31 March 2022.
SIGNIFICANT AGREEMENTS
Details of the services provided under these agreements are
included in the Strategic Report on pages 27 and 28.
Alternative investment fund management
agreement
Frostrow is the designated AIFM for the Company on
the terms and subject to the conditions of the alternative
investment fund management agreement between the
Company and Frostrow (the “AIFM Agreement”).
The notice period on the AIFM Agreement with Frostrow is
12 months, termination can be initiated by either party.
Details of the fee payable to Frostrow can be found on
page(cid:98)29.
Portfolio management agreement
Under the AIFM Agreement Frostrow has delegated the
portfolio management function to OrbiMed, under a
portfolio management agreement between it, the Company
and Frostrow (the “Portfolio Management Agreement”).
OrbiMed receives a periodic fee equal to 0.65% p.a. of the
Company’s NAV and a performance fee as set out in the
Performance Fee section below. Its agreement with the
Company may be terminated by either party giving notice of
not less than 12 months.
Performance fee
Dependent on the level of long-term outperformance of
the Company, OrbiMed is entitled to a performance fee.
The performance fee is calculated by reference to the
amount by which the Company’s NAV performance has
outperformed the Benchmark (see inside front cover for
details of the Benchmark).
The fee is calculated quarterly by comparing the cumulative
performance of the Company’s NAV with the cumulative
performance of the Benchmark since the launch of the
Company in 1995. The performance fee amounts to 15.0% of
any outperformance over the Benchmark. Provision is made
within the daily NAV per share calculation as required and in
accordance with generally accepted accounting standards.
In order to ensure that only sustained outperformance
is rewarded, at each quarterly calculation date any
performance fee payable is based on the lower of:
(i)
The cumulative outperformance of the portfolio over the
Benchmark as at the quarter end date; and
(ii) The cumulative outperformance of the portfolio over the
Benchmark as at the corresponding quarter end date in
the previous year
less any cumulative outperformance on which a
performance fee has already been paid.
The effect of this is that outperformance has to be
maintained for a twelve month period before it is paid.
Due to underperformance against the Benchmark during
the year, a reversal of prior period performance fee
provisions totalling £18.9 million occurred (2021: charge of
£31.7 million).
As at 31 March 2022 no performance fees were accrued
or payable (31 March 2021: £31.7 million). Of the 31 March
2021 accrual £12.9 million was paid and became payable
as at 30 June 2021 and £18.9 million was reversed due to
underperformance, as noted above. The performance fee
paid related to outperformance generated as at 30 June
2020 that was maintained to 30 June 2021.
Depositary agreement
The Company appointed J.P. Morgan Europe Limited
(the(cid:98)“(cid:39)epositary”) as its (cid:39)epositary in accordance with the
AIFMD on the terms and subject to the conditions of the
Depositary agreement between the Company, Frostrow and
the Depositary (the “Depositary Agreement”).
Under the terms of the Depositary Agreement the Company
has agreed to pay the Depositary a fee calculated at 1.75bp
on net assets up to £150 million, 1.50 bps on net assets
between £150 million and £300 million, 1.00bps on net
assets between £300 million and £500 million and 0.50bps
on net assets above £500 million.
44
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
REPORT OF THE DIRECTORS CONTINUED
The Depositary has delegated the custody and safekeeping
of the Company’s assets to J.P. Morgan Securities LLC (the
“Custodian and Prime Broker”) pursuant to a delegation
agreement between the Company, Frostrow, the Depositary and
the Custodian and Prime Broker (the “Delegation Agreement”).
The Delegation Agreement transfers the Depositary’s
liability for the loss of the Company’s financial instruments
held in custody by the Custodian and Prime Broker to the
Custodian and Prime Broker in accordance with the AIFMD.
The Company has consented to the transfer and reuse
of its assets by the Custodian and Prime Broker (known
as “rehypothecation”) in accordance with the terms of an
institutional account agreement between the Company, the
Custodian and Prime Broker and certain other J.P. Morgan
entities (as defined therein). See page 28 for further details.
Prime brokerage agreement
The Company appointed J.P. Morgan Securities LLC on
the terms and subject to the conditions of the prime
brokerage agreement between the Company, Frostrow
and the Depositary (the “Prime Brokerage Agreement”).
The(cid:98)Custodian and Prime Broker receives interest on the
drawn overdraft as detailed in note 12 on page 85.
The Custodian and Prime Broker is a registered
broker-dealer and is regulated by the United States
Securities and Exchange Commission.
RESULTS AND DIVIDENDS
The results attributable to shareholders for the year and the
transfer to reserves are shown on pages 72 and 73. Details
of the Company’s dividend record can be found on page 3.
Substantial interests in share capital
The Company was aware of the following substantial interests in the voting rights of the Company as at 30 April 2022, the
latest practicable date before publication of the Annual Report:
Shareholder
Rathbone Brothers plc
Investec Wealth & Investment Limited
Interactive Investor
Hargreaves Lansdown plc
Forsyth Barr
Charles Stanley & Co Limited
Brewin Dolphin
Quilter Cheviot Investment Management
Craigs Investment Partners
Embark Investment Services
BlackRock
30 April 2022
31 March 2022
Number of
shares
% of issued
share
capital
Number of
shares
% of issued
share
capital
5,962,688
4,784,176
4,066,312
3,865,715
3,370,420
2,900,353
2,421,278
2,396,904
2,083,678
2,008,353
2,003,967
9.1
7.3
6.2
5.9
5.2
4.5
3.7
3.7
3.2
3.1
3.1
5,956,447
4,763,731
4,043,547
3,812,568
3,303,660
2,889,422
2,430,556
2,346,563
2,067,121
2,031,031
2,003,967
9.1
7.3
6.2
5.8
5.1
4.4
3.7
3.6
3.2
3.1
3.1
As at 31 March 2022 the Company had 65,457,246 shares in issue (excluding 80,509 shares held in treasury). As at 30 April
2022 there were 65,233,404 shares in issue (excluding 304,351 shares held in treasury).
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
45
REPORT OF THE DIRECTORS CONTINUED
DIRECTORS’ & OFFICERS’ LIABILITY
INSURANCE COVER
(cid:39)irectors’ (cid:9) officers’ liability insurance cover was
maintained by the Company during the year ended
(cid:22)1(cid:98)March 2022 and to the date of this report. It is intended
that this policy will continue for the year ending 31 March
2023 and subsequent years.
DIRECTORS’ INDEMNITIES
During the year under review and to the date of this report,
indemnities were in force between the Company and each
of its Directors under which the Company has agreed to
indemnify each Director, to the extent permitted by law, in
respect of certain liabilities incurred as a result of carrying
out his or her role as a Director of the Company. The
(cid:39)irectors are also indemnified against the costs of defending
any criminal or civil proceedings or any claim by the
Company or a regulator as they are incurred provided that
where the defence is unsuccessful the Director must repay
those defence costs to the Company. The indemnities are
qualifying third party indemnity provisions for the purposes
of the Companies Act 2006.
A copy of each deed of indemnity is available for inspection
at the Company’s registered office during normal business
hours and will be available for inspection at the Annual
General Meeting. Please refer to the Chairman’s Statement
on pages 4 to 7 for details of this year’s Annual General
Meeting arrangements.
CAPITAL STRUCTURE
The Company’s capital structure is composed solely of
ordinary shares.
During the year, a total of 1,227,500 new shares were issued
at an average premium of 0.8% to the prevailing cum income
NAV per share. Also, 80,509 shares were repurchased during
the year at a discount of 8.4% to the prevailing cum income
NAV per share. These shares are held in treasury. Following
the year-end, to 25 May 2022, the latest practicable date
prior to the publication of this Annual Report, a further
223,842 shares were repurchased at a discount of 7.0% to
the cum income NAV per share. These shares are also held
in treasury. As of 25 May 2022 304,351 shares were held in
treasury (2021: Nil).
Since the year end, to 25 May 2022, no new shares have
been issued.
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 101.
POLITICAL AND CHARITABLE DONATIONS
The Company has not in the past and does not intend in the
future to make political or charitable donations.
MODERN SLAVERY ACT 2015
The Company does not provide goods or services in the
normal course of business, and as a financial investment
vehicle does not have customers. The Directors do not
therefore consider that the Company is required to make a
statement under the Modern Slavery Act 2015 in relation to
slavery or human trafficking.
ANTI-BRIBERY AND CORRUPTION POLICY
The Board has adopted a zero tolerance approach to
instances of bribery and corruption. Accordingly it expressly
prohibits any Director or associated persons when acting
on behalf of the Company, from accepting, soliciting, paying,
offering or promising to pay or authorise any payment, public
or private in the UK or abroad to secure any improper benefit
for themselves or for the Company.
The Board ensures that its service providers apply the same
standards in their activities for the Company.
A copy of the Company’s Anti Bribery and Corruption Policy
can be found on its website at www.worldwidewh.com. The
policy is reviewed regularly by the Audit & Risk Committee.
CRIMINAL FINANCES ACT 2017
The Company has a commitment to zero tolerance towards
the criminal facilitation of tax evasion.
GLOBAL GREENHOUSE GAS EMISSIONS
The Company has no greenhouse gas emissions to report
from its operations, nor does it have responsibility for any
other emissions producing sources under the Companies
Act 2006 (Strategic Reports and Directors’ Reports)
Regulations 2013 or the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018, including those within the Company’s
underlying investment portfolio. Consequently, the Company
consumed less than 40,000 kWh of energy during the year in
respect of which the Report of the Directors is prepared and
therefore is exempt from the disclosures required under the
Streamlined Energy and Carbon Reporting criteria.
46
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
REPORT OF THE DIRECTORS CONTINUED
Based on the information available to the Directors at the
date of this report, including the results of these stress
tests, the conclusions drawn in the Viability Statement on
pages 34 and 35, the Company’s cash balances, and the
liquidity of the Company’s listed investments, the Directors
are satisfied that the Company has adequate financial
resources to continue in operation for at least the next 12
months and that, accordingly, it is appropriate to continue
to adopt the going concern basis in preparing the financial
statements.
ARTICLES OF ASSOCIATION
Amendments of the Company’s Articles of Association
requires a special resolution to be passed by shareholders.
REQUIREMENTS OF THE LISTING RULES
Listing Rule 9.8.4 requires the Company to include certain
information in a single identifiable section of the Annual
Report or a cross reference table indicating where the
information is set out. The (cid:39)irectors confirm that there are
no disclosures to be made under Listing Rule 9.8.4.
By order of the Board
Frostrow Capital LLP
Company Secretary
26 May 2022
COMMON REPORTING STANDARD (‘CRS’)
CRS is a global standard for the automatic exchange of
information commissioned by the Organisation for Economic
Cooperation and Development and incorporated into UK law
by the International Tax Compliance Regulations 2015. CRS
requires the Company to provide certain additional details
to HMRC in relation to certain shareholders. The reporting
obligation began in 2016 and is an annual requirement. The
Registrars, Link Group, have been engaged to collate such
information and file the reports with HMRC on behalf of the
Company.
CORPORATE GOVERNANCE
The Corporate Governance Report is set out on
pages(cid:98)48 to 54.
GOING CONCERN
The financial statements have been prepared on a going
concern basis. The Directors consider this is the appropriate
basis as the Company has adequate resources to continue
in operational existence for the foreseeable future,
being taken as 12 months after approval of the financial
statements. The Company’s shareholders are asked every
five years to vote for the continuation of the Company,
this will next be put to shareholders at the Annual General
Meeting to be held in 2024. The content of the Company’s
portfolio, trading activity, the Company’s cash balances and
revenue forecasts, and the trends and factors likely to affect
the Company’s performance are reviewed and discussed at
each Board meeting. The Board has considered a detailed
assessment of the Company’s ability to meet its liabilities
as they fall due, including stress and liquidity tests which
modelled the effects of substantial falls in markets and
significant reductions in market liquidity, on the Company’s
net asset value, its cash flows and its expenses. Further
information is provided in the Audit & Risk Committee report
beginning on page 55.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
47
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Kingdom governing the preparation and dissemination of
the financial statements may differ from legislation in their
jurisdiction.
DISCLOSURE OF INFORMATION TO THE
AUDITORS
So far as the Directors are aware, there is no relevant
information of which the Auditors are unaware. The
Directors have taken all steps they ought to have taken to
make themselves aware of any relevant audit information
and to establish that the Auditors are aware of such
information.
RESPONSIBILITY STATEMENT OF THE
DIRECTORS IN RESPECT OF THE ANNUAL
FINANCIAL REPORT
The (cid:39)irectors confirm to the best of their knowledge that(cid:29)
•
•
•
the Annual Report and the Financial Statements
have been prepared in accordance with applicable
accounting standards, give a true and fair view of the
assets, liabilities, financial position and the return for the
year ended 31 March 2022;
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 Guidance and Transparency Rules; and
the Annual Report and the 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
26 May 2022
The Directors are responsible for preparing the Annual
Report and the Financial Statements in accordance with
applicable law and regulations. In preparing these financial
statements, the Directors are required to:
•
select suitable accounting policies and apply them
consistently;
• make judgements and estimates that are reasonable
and prudent;
•
•
follow applicable UK accounting standards comprising
FRS 102; and
prepare the financial statements on a going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements
and the Directors’ Remuneration Report comply with
the Companies Act 2006. They are 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 Directors are also responsible for ensuring that the
Annual Report and the Financial Statements are made
available on a website. The Annual Report and the Financial
Statements are published on the Company’s website at
www.worldwidewh.com and via Frostrow’s website at
www.frostrow.com. The maintenance and integrity of
these websites, so far as it relates to the Company, is the
responsibility of Frostrow. The work carried out by the
Auditors does not involve consideration of the maintenance
and integrity of these websites and, accordingly, the
Auditors accept no responsibility for any changes that
have occurred to the financial statements since they
were initially presented on these websites. Visitors to the
websites need to be aware that legislation in the United
48
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CORPORATE GOVERNANCE
THE BOARD AND COMMITTEES
Responsibility for effective governance lies with the Board. The governance framework of the Company reflects the fact that
as an investment company it has no employees and outsources portfolio management to OrbiMed and risk management,
company management, company secretarial, administrative and marketing services to Frostrow Capital LLP.
Chairman – Sir Martin Smith
Senior Independent Director – Sarah Bates
THE BOARD
Four additional non-executive Directors, all considered independent, except for Sven Borho (see page 41 for further
information).
Key responsibilities:
•
to provide leadership and set strategy, values and standards within a framework of prudent effective controls which
enable risk to be assessed and managed;
•
•
to ensure that a robust corporate governance framework is implemented; and
to challenge constructively and scrutinise performance of all outsourced activities.
Management Engagement &
Remuneration Committee
Chairman
Doug McCutcheon
All Independent Directors
Key responsibilities:
•
to review regularly the
contracts, the performance and
remuneration of the Company’s
principal service providers; and
•
to set the Directors’
Remuneration Policy of the
Company.
Audit & Risk Committee
Nominations Committee
Chair
Sarah Bates
All Independent Directors
Key responsibilities:
•
to review regularly the Board’s
structure and composition; and
•
to make recommendations
for any changes or new
appointments.
Chairman
Humphrey van der Klugt, FCA*
All Independent Directors
(excluding the Chairman,
Sir Martin Smith)
Key responsibilities:
•
to review the Company’s financial
reports;
•
•
to oversee the risk and control
environment and financial
reporting; and
to review the performance of the
Company’s external Auditors.
(cid:13) The (cid:39)irectors believe that Humphrey van der Klugt has the necessary recent and relevant financial experience to Chair the Company’s Audit (cid:9) Risk Committee.
Copies of the full terms of reference, which clearly define the responsibilities of each Committee, can be obtained from the
Company Secretary and can be found at the Company’s website at www.worldwidewh.com. Copies will also be available for
inspection on the day of the Annual General Meeting.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
49
CORPORATE GOVERNANCE CONTINUED
CORPORATE GOVERNANCE STATEMENT
The Board is committed to maintaining and demonstrating
high standards of corporate governance. The Board has
considered the principles and recommendations of the AIC
Code of Corporate Governance published in February 2019
(‘AIC Code’). The AIC Code addresses all the principles set
out in the UK Corporate Governance Code (the ‘UK Code’),
as well as setting out additional provisions on issues that
are of specific relevance to the Company.
The Financial Reporting Council has confirmed that by
following the AIC Code boards of investment companies
will meet their obligations in relation to the UK Code and
paragraph 9.8.6 of the UK Listing Rules.
The Board considers that reporting in accordance with the
principles and recommendations of the AIC Code (which
has been endorsed by the Financial Reporting Council)
provides more relevant and comprehensive information
to shareholders. By reporting against the AIC Code, the
Company meets its obligations under the UK Code (and
associated disclosure requirements under paragraph
9.8.6 of the Listing Rules) and as such does not need to
report further on issues contained in the UK Code which
are irrelevant to the Company as an externally-managed
investment company, including the provisions relating
to the role of the chief executive, executive directors’
remuneration and the internal audit function.
The Company has complied with the principles and
recommendations of the AIC Code.
The AIC Code can be viewed at www.theaic.co.uk and the
UK Code can be viewed on the Financial Reporting Council
website at www.frc.org.uk. The Corporate Governance
Report on pages 48 to 54, forms part of the Report of the
Directors on pages 43 to 46.
BOARD LEADERSHIP AND PURPOSE
Purpose and strategy
The purpose and strategy of the Company are described in
the Strategic Report.
THE BOARD
The Board is responsible for the effective Stewardship of
the Company’s affairs. Strategy issues and all operational
matters of a material nature are considered at its meetings.
The Board consists of six non-executive Directors, each of
whom, with the exception of Sven Borho, is independent
of OrbiMed and the Company’s other service providers. No
member of the Board is a Director of another investment
company managed by OrbiMed, nor has any Board
member (with the exception of Sven Borho) been an
employee of OrbiMed or any of the Company’s service
providers. Further details regarding the Directors can be
found on pages 41 and 42.
The Board carefully considers the various guidelines for
determining the independence of non-executive Directors,
placing particular weight on the view that independence
is evidenced by an individual being independent of mind,
character and judgement. All Directors retire at the AGM
each year and, if appropriate, seek election or re-election.
Each Director has signed a letter of appointment to
formalise the terms of their engagement as a non-executive
Director, copies of which are available on request at the
office of Frostrow Capital LLP.
BOARD CULTURE
The Board aims to consider and discuss differences of
opinion, unique vantage points and to exploit fully areas
of expertise. The Chairman encourages open debate to
foster a supportive and co-operative approach for all
participants. Strategic decisions are discussed openly and
constructively. The Board aims to be open and transparent
with shareholders and other stakeholders and for the
Company to conduct itself responsibly, ethically and fairly
in its relationships with service providers.
The Board has gained assurance on whistleblowing
procedures at the Company’s principal service providers
to ensure employees at those companies are supported in
speaking up and raising concerns. No concerns relating to
the Company were raised during the year.
Shareholder relations
The Company has appointed Frostrow to provide marketing
and investor relations services, in the belief that a well
marketed investment company is more likely to grow over
time, have a more diverse, stable list of shareholders and
its shares will trade at close to net asset value per share
over the long run. Frostrow actively promotes the Company
as set out on page 33.
50
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CORPORATE GOVERNANCE CONTINUED
Shareholder communications
The Board, the AIFM and the Portfolio Manager consider
maintaining good communications with shareholders
and engaging with larger shareholders through meetings
and presentations a key priority. Shareholders are being
informed by the publication of annual and half-year
reports which include financial statements. These reports
are supplemented by the daily release of the net asset
value per share to the London Stock Exchange and the
publication of monthly fact sheets. All this information,
including interviews with the Portfolio Manager, is available
on the Company’s website at www.worldwidewh.com.
The Board supports the principle that the Annual General
Meeting be used to communicate with private investors,
in particular. While the COVID-19 pandemic necessitated
different arrangements, shareholders are usually
encouraged to attend the Annual General Meeting, where
they are given the opportunity to question the Chairman,
the Board and representatives of the Portfolio Manager. In
addition, the Portfolio Manager makes a presentation to
shareholders covering the investment performance and
strategy of the Company at the Annual General Meeting.
Voting at the Annual General Meeting is conducted on a
poll and details of the proxy votes received in respect of
each resolution will be made available on the Company’s
website.
The Board monitors the share register of the Company;
it also reviews correspondence from shareholders at
each meeting and maintains regular contact with major
shareholders. Shareholders who wish to raise matters with
a Director may do so by writing to them at the registered
office of the Company.
Significant holdings and voting rights
Details of the shareholders with substantial interests in the
Company’s shares, the Directors’ authorities to issue and
repurchase the Company’s shares, and the voting rights of
the shares are set out in the Directors’ Report.
BOARD MEETINGS
The Board meets formally at least four times each
year. A representative of OrbiMed attends all meetings;
representatives from Frostrow Capital LLP are also
in attendance at each Board meeting. The Chairman
encourages open debate to foster a supportive and
co-operative approach for all participants.
The Board has agreed a schedule of matters specifically
reserved for decision by the Board. This includes
establishing the investment objectives, strategy and
the Benchmark, the permitted types or categories of
investments, the markets in which transactions may
be undertaken, the amount or proportion of the assets
that may be invested in any geography or category of
investment or in any one investment, and the Company’s
share issuance and share buyback policies.
The Board, at its regular meetings, undertakes reviews of
key investment and financial data, revenue projections and
expenses, analyses of asset allocation, transactions and
performance comparisons, share price and net asset value
performance, marketing and shareholder communication
strategies, the risks associated with pursuing the
investment strategy, peer group information and industry
issues.
The Chairman is responsible for ensuring that the
Board receives accurate, timely and clear information.
Representatives of OrbiMed and Frostrow Capital LLP
report regularly to the Board on issues affecting the
Company.
The Board is responsible for strategy and has established
an annual programme of agenda items under which it
reviews the objectives and strategy for the Company at
each meeting.
CONFLICTS OF INTEREST
Company Directors have a statutory obligation to avoid a
situation in which they (and connected persons) have, or
can have, a direct or indirect interest that conflicts, or may
possibly conflict, with the interests of the Company. The
Board has in place procedures for managing any actual or
potential conflicts of interest. No conflicts of interest arose
during the year under review.
BOARD FOCUS AND RESPONSIBILITIES
With the day to day management of the Company
outsourced to service providers the Board’s primary
focus at each Board meeting is reviewing the investment
performance and associated matters, such as, inter alia,
future outlook and strategy, gearing, asset allocation,
investor relations, marketing, and industry issues.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
51
CORPORATE GOVERNANCE CONTINUED
In line with its primary focus, the Board retains
responsibility for all the key elements of the Company’s
strategy and business model, including:
•
•
•
•
•
the Investment Objective, Policy and Benchmark,
incorporating the investment and derivative guidelines
and limits, and changes to these;
the maximum level of gearing and leverage the
Company may employ;
a review of performance against the Company’s KPIs;
a review of the performance and continuing
appointment of service providers; and
the maintenance of an effective system of oversight,
risk management and corporate governance.
The Investment Objective, Policy, and Benchmark, including
the related limits and guidelines, are set out on pages 8
and 9, along with details of the gearing and leverage levels
allowed.
Details of the principal KPIs and further information on the
principal service providers, their performance and continuing
appointment, along with details of the principal risks, and
how they are managed, are set out in the Strategic Report.
The Corporate Governance Report, on pages 48 to 54,
includes a statement of compliance with corporate
governance codes and best practice, and the Business
Review (pages 26 to 40) includes details of the internal
control and risk management framework within which the
Board operates.
BOARD COMPOSITION AND SUCCESSION
Succession planning
The Board regularly considers its structure and recognises
the need for progressive refreshment. (Please see the
Chairman’s Statement on page 5 for further information).
The Board has an approved succession planning policy to
ensure that (i) there is a formal, rigorous and transparent
procedure for the appointment of new Directors; and (ii) the
Board is comprised of members who collectively display
the necessary balance of professional skills, experience,
length of service and industry/Company knowledge.
During the year, the Board reviewed the policy on Directors’
tenure and considered the overall length of service of the
Board as a whole.
Policy on the tenure of the chairman and other
non-executive directors
The tenure of each non-executive Director, including
the Chairman, is not ordinarily expected to exceed nine
years. However, the Board has agreed that the tenure
of the Chairman may be extended for an agreed time
provided such an extension is conducive to the Board’s
overall orderly succession. The Board believes that this
more flexible approach to the tenure of the Chairman
is appropriate in the context of the regulatory rules that
apply to investment companies, which ensure that the
chair remains independent after appointment, while being
consistent with the need for regular refreshment and
diversity.
The Board is, however, continuing the process of refreshing
its membership which will mean that certain Directors will
serve for longer than nine years to ensure that the changes
to be implemented are made in an orderly and structured
manner. Further details of this process can be found in the
Chairman’s Statement on pages 5 and 6.
The Board subscribes to the view that long serving
Directors should not necessarily be prevented from forming
part of an independent majority. The Board considers that
a Director’s tenure does not necessarily reduce his or her
ability to act independently and will continue to assess
each Director’s independence annually, through a formal
performance evaluation. Please see page 52 for further
information.
Appointments to the board
The Nominations Committee considers annually the skills
possessed by the Board and identifies any skill shortages
to be filled by new (cid:39)irectors.
The rules governing the appointment and replacement
of Directors are set out in the Company’s articles
of association and the aforementioned succession
planning policy. Where the Board appoints a new Director
during the year, that Director will stand for election by
shareholders at the next AGM. Subject to there being no
conflict of interest, all Directors are entitled to vote on
candidates for the appointment of new Directors and on
the recommendation for shareholders’ approval for the
Directors seeking re-election at the AGM. When considering
new appointments, the Board endeavours to ensure that
it has the capabilities required to be effective and oversee
the Company’s strategic priorities. This will include an
52
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CORPORATE GOVERNANCE CONTINUED
appropriate range, balance and diversity of skills, experience
and knowledge. The Company is committed to ensuring
that any vacancies arising are filled by the most qualified
candidates.
women with the right qualifications so that appointments
can be made, on the basis of merit, against objective criteria
from a diverse selection of candidates. The Board actively
considers diversity during director searches.
Diversity policy
The Company supports the objectives of improving the
performance of corporate boards by encouraging the
appointment of the best people from a range of differing
perspectives and backgrounds. The Company recognises
the benefits of diversity (of which gender is one aspect)
on the Board and takes this into account in its Board
appointments. The Company is committed to ensuring
that its director search processes actively seek men and
The Board is continuing with the process of refreshing its
membership. Its intention is for there to continue to be not
less than one-third of its membership as women and for
there to be at least one Director from an ethnic minority
background.
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 2021/22
Sir Martin Smith^
Sarah Bates
Sven Borho*
Dr David Holbrook+
Humphrey van der Klugt
Doug McCutcheon
Dr Bina Rawal
^ Sir Martin Smith is not a member of the Audit & Risk Committee
* Sven Borho does not sit on any of the Company’s Committees
+ Dr. Holbrook retired from the Board on 8 July 2021
Board
(4)
Audit & Risk
Committee
(2)
Nominations
Committee
(1)
Management
Engagement &
Remuneration
Committee
(1)
4
4
4
1
4
4
4
–
2
–
1
2
2
2
1
1
–
–
1
1
1
1
1
–
–
1
1
1
All of the serving Directors attended the Annual General Meeting held on 8 July 2021.
BOARD EVALUATION
During the year the performance of the Board, its committees and individual Directors (including each Director’s
independence) was evaluated through a formal assessment led by the Senior Independent Director. The performance of the
Chairman was also evaluated by the Senior Independent
Director. The review concluded that the Board was working
well. The Board is satisfied that the structure, mix of skills
and operation of the Board continue to be effective and
relevant for the Company.
As an independent external review of the Board was
undertaken in 2021 the next such review will be held in 2024.
The Board pays close attention to the capacity of individual
Directors to carry out their work on behalf of the Company.
In recommending individual Directors to shareholders for
re-election, it considered their other Board positions and
their time commitments and is satisfied that each (cid:39)irector
has the capacity to be fully engaged with the Company’s
business. The Board has considered the position of all of
the Directors as part of the evaluation process, and believes
that it would be in the Company’s best interests to propose
them for re-election (with the exception of Sir Martin Smith
who will be retiring from the Board on the date of this year’s
AGM) at the forthcoming AGM for the following reasons:
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
53
CORPORATE GOVERNANCE CONTINUED
Sarah Bates has been a Director since May 2013. Sarah is a
past Chair of the Association of Investment Companies and
has a wealth of experience of the investment trust sector.
She has been involved in the UK savings and investment
industry in different roles for over 35 years. Sarah is the
Chair of the Nominations Committee and the Senior
Independent Director.
Sven Borho joined the Board in June 2018. Sven is a
founder and Managing Partner of OrbiMed and heads
their public Equity team and is the portfolio Manager for
OrbiMed’s public equity and hedge funds.
Humphrey van der Klugt joined the Board in February
2016. A former fund manager and Director of Schroder
Investment Management Limited, Humphrey has extensive
experience of the investment trust sector. He is a Chartered
Accountant, and Chairman of the Audit & Risk Committee.
Doug McCutcheon joined the Board in November 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. He is Chairman of the Management
Engagement & Remuneration Committee. Doug will
become Chairman of the Company following the retirement
of Sir Martin Smith.
Dr Bina Rawal joined the Board on November 2019.
A physician with 25 years’ experience in life sciences
research and development, she has held senior executive
roles in drug development and scientific evaluation in
four global pharmaceutical companies. Bina will become
chair of the Management Engagement & Remuneration
Committee when Doug McCutcheon becomes Chairman of
the Company.
The Chairman is pleased to report that following a formal
performance evaluation, the Directors’ performance
continues to be effective and they continue to demonstrate
commitment to the role.
TRAINING AND ADVICE
New appointees to the Board are provided with a full
induction programme. The programme covers the
Company’s investment strategy, policies and practices.
The Directors are also given key information on the
Company’s regulatory and statutory requirements as they
arise including information on the role of the Board, matters
reserved for its decision, the terms of reference of the
Board Committees, the Company’s corporate governance
practices and procedures and the latest financial
information. It is the Chairman’s responsibility to ensure
that the (cid:39)irectors have sufficient knowledge to fulfil their
role and Directors are encouraged to participate in training
courses where appropriate.
The Directors have access to the advice and services of a
Company Secretary through its appointed representative
which is responsible to the Board for ensuring that Board
procedures are followed and that applicable rules and
regulations are complied with. The Company Secretary
is also responsible for ensuring good information flows
between all parties.
There is an agreed procedure for Directors, in the
furtherance of their duties, to take independent professional
advice if necessary at the Company’s expense.
RISK MANAGEMENT AND INTERNAL
CONTROLS
The Board has overall responsibility for the Company’s
risk management and internal control systems and for
reviewing their effectiveness. The Company applies the
guidance published by the Financial Reporting Council on
internal controls. Internal control systems are designed to
manage, rather than eliminate, the risk of failure to achieve
the business objective and can provide only reasonable
and not absolute assurance against material misstatement
or loss. These controls aim to ensure that the assets of
the Company are safeguarded, that proper accounting
records are maintained and that the Company’s financial
information is reliable. The Directors have a robust process
for identifying, evaluating and managing the significant
risks faced by the Company, which are recorded in a risk
matrix. The Audit & Risk Committee, on behalf of the Board,
considers each risk as well as reviewing the mitigating
controls in place. Each risk is rated for its “likelihood” and
“impact” and the resultant numerical rating determines its
ranking into (cid:820)Principal(cid:18)Key’, (cid:820)Significant’ or ’Minor’. This
process was in operation during the year and continues
in place up to the date of this report. The process also
involves the Audit & Risk Committee receiving and
examining regular reports from the Company’s principal
service providers. The Board then receives a detailed
report from the Audit & Risk Committee on its findings.
The (cid:39)irectors have not identified any significant failures or
weaknesses in respect of the Company’s internal control
systems.
54
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
CORPORATE GOVERNANCE CONTINUED
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, Link Group, or to the Company directly.
The Company has adopted a nominee share code which is
set out on the following page.
The annual and half-year financial reports, and a monthly fact
sheet are available to all shareholders. The Board, with the
advice of Frostrow, reviews the format of the annual and half-
year financial reports so as to ensure they are useful to all
shareholders and others taking an interest in the Company.
In accordance with best practice, the annual report, including
the Notice of the Annual General Meeting, is sent to
shareholders at least 20 working days before the meeting.
Separate resolutions are proposed for substantive issues.
ANNUAL GENERAL MEETING
The following information to be considered at the
forthcoming annual general meeting is important
and requires your immediate attention.
If you are in any doubt about the action you should take,
you should seek advice from your stock broker, bank
manager(cid:15) (cid:86)olicitor(cid:15) acco(cid:88)ntant or ot(cid:75)er financial a(cid:71)vi(cid:86)er
authorised under the Financial Services and Markets
(cid:36)ct(cid:98)(cid:21)000 (cid:11)a(cid:86) amen(cid:71)e(cid:71)(cid:12). If (cid:92)o(cid:88) (cid:75)ave (cid:86)ol(cid:71) or tran(cid:86)ferre(cid:71) all
of your ordinary shares in the Company, you should pass
this document, together with any other accompanying
documents, including the form of proxy, at once to the
purchaser or transferee, or to the stock broker, bank or
other agent through whom the sale or transfer was effected,
for onward transmission to the purchaser or transferee
The Company’s Annual General Meeting will be held at
etc. venues, 1-3 Bonhill Street, London EC2A 4BX on
Wednesday, 6 July 2022 from 12.30 p.m. Please refer to the
Chairman’s Statement beginning on page 4 for details of
this year’s arrangements.
Resolutions relating to the following items of special
business will be proposed at the forthcoming Annual
General Meeting.
Resolution 11
Authority to allot shares
Resolution 12
Authority to disapply pre-emption rights
Resolution 13
Authority to sell shares held in Treasury
on a non pre-emptive basis
Resolution 14
Authority to buy-back shares
Resolution 15
Authority to hold General Meetings (other
than the Annual General Meeting) on at
least 14 clear days’ notice
The full text of the resolutions can be found in the Notice of
Annual General Meeting on pages 98 to 102. Explanatory
notes regarding the resolutions can be found on pages 103
and 104.
EXERCISE OF VOTING POWERS
The Board and the AIFM have delegated authority to
OrbiMed to vote the shares owned by the Company. The
Board has instructed that OrbiMed submit votes for such
shares wherever possible. This accords with current best
practice whilst maintaining a primary focus on financial
returns. OrbiMed may refer to the Board on any matters of
a contentious nature. The Board has reviewed OrbiMed’s
(cid:57)oting (cid:42)uidelines and is satisfied with their approach.
The Company does not retain voting rights on any shares
that are held as collateral in connection with the overdraft
facility provided by J.P. Morgan Securities LLC.
NOMINEE SHARE CODE
Where shares are held in a nominee company name, the
Company undertakes:
•
•
to provide the nominee company with multiple copies of
shareholder communications, so long as an indication
of quantities has been provided in advance; and
to allow investors holding shares through a nominee
company to attend general meetings, provided the
correct authority from the nominee company is
available.
Nominee companies are encouraged to provide the
necessary authority to underlying shareholders to attend
the Company’s general meetings.
By order of the Board
Frostrow Capital LLP
Company Secretary
26 May 2022
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
55
AUDIT & RISK COMMITTEE REPORT
INTRODUCTION FROM THE CHAIRMAN
I am pleased to present my formal report to shareholders
as Chairman of the Audit & Risk Committee, for the year
ended 31 March 2022. During the year under review, a
decision was made to rename the Audit Committee as the
Audit & Risk Committee. The change was made because
the Committee carries out a full and thorough review of the
risks associated with the Company and the Board agreed
that this should better be reflected in the name of the
Committee.
COMPOSITION AND MEETINGS
The Committee comprises those Directors considered to
be independent by the Board. The Chairman of the Board
is not a member of the Committee but attends meetings
by invitation. The Committee met twice during the year
and attendance by each Director is shown in the table on
page 52. The Board has taken note of the requirements
that the Committee as a whole should have competence
relevant to the sector in which the Company operates and
that at least one member of the Committee should have
recent and relevant financial experience. The Committee
is satisfied that it is properly constituted in both respects.
I was appointed Chairman of the Committee in 2016 and
am a Fellow of the Institute of Chartered Accountants
in England and Wales, I am also the Chairman of the
Audit & Risk Committee of one other public company;
the other Committee members have a combination of
financial, investment and other relevant experience gained
throughout their careers. The experience of the Committee
members can be assessed from the Directors’ biographies
set out on pages 41 and 42.
RESPONSIBILITIES
3.
(cid:23).
5.
6.
To develop and implement a policy for the engagement
of the external Auditors and agreeing the scope of its
work and its remuneration. Also, to be responsible for
the selection process of the external Auditors (including
the leadership of an audit tender process) and to have
primary responsibility for the Company’s relationship
with the external Auditors.
To review the effectiveness of the external audit and the
process.
To review the independence and objectivity of the
external Auditors.
To consider any non-audit work to be carried out by the
Auditors. The Committee reviews the need for non-audit
services to be provided by the Auditors and authorises
such on a case by case basis, having consideration
to the cost effectiveness of the services and the
independence and objectivity of the Auditors.
7.
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.
8.
To assess the going concern and viability of the
Company, including the assumptions used.
(cid:28). To report its findings to the Board.
A comprehensive description of the Committee’s role, its
duties and responsibilities, can be found in its terms of
reference which are available for review on the Company’s
website at www.worldwidewh.com.
SIGNIFICANT ISSUES CONSIDERED BY THE
AUDIT & RISK COMMITTEE DURING THE YEAR
The Committee’s main responsibilities during the year were:
Financial Statements
1.
To review the Company’s Half-Year and Annual Report.
In particular, the Committee considered and advised the
Board on whether the Annual Report and the Financial
Statements, taken as a whole, is 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.
Further details of the Committee’s review are included in
the Principal Risks section beginning on page 28.
The production of the Company’s Annual Report (including
the audit by the Company’s external Auditors) is a thorough
process involving input from a number of different areas.
In order to be able to confirm that the Annual Report is fair,
balanced and understandable, the Board has requested that
the Committee advise on whether it considers these criteria
have been satisfied. As part of this process the Committee
has considered the following:
•
the procedures followed in the production of the Annual
Report, including the processes in place to assure the
accuracy of the factual content;
56
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
AUDIT & RISK COMMITTEE REPORT CONTINUED
(cid:829)
•
the extensive levels of review that were undertaken in
the production process, by the Company’s AIFM and the
Committee; and
the internal control environment as operated by the
Portfolio Manager, AIFM and other service providers.
As a result of the work undertaken by the Committee, it
has confirmed to the Board that the Annual Report and the
Financial Statements for the year ended 31 March 2022,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Company’s financial position, performance,
business model and strategy.
Audit Regulation
While the Committee has not had to consider any new audit
regulations in the past year, there have been a number of
initiatives to consider including with regard to the roles,
responsibilities and accountability of Directors, Audit
Committees, Auditors and the Regulator itself, with reports
published by Kingman, Brydon and the CMA. The Business
Enterprise, Industry and Skills (BEIS) Select Committee has
also published a report containing its views on the future of
audit. The Committee will continue to keep a close review of
developments.
In addition to this, the Committee also reviews the
outcomes of the FRC’s annual Audit Quality Reviews and
discusses the findings with our Auditors.
SIGNIFICANT REPORTING MATTERS
from both the Custodian and Prime Broker and also
the (cid:39)epositary (whose role it is to ensure that the
Company’s assets are safeguarded and to verify their
valuation);
(cid:829)
•
•
•
reconfirming its understanding of the processes in place
to record investment transactions and income, and to
value both the quoted and unquoted holdings in the
portfolio;
reviewing and amending, where necessary, the
Company’s register of key risks in light of changes to the
portfolio and the investment environment;
gaining an overall understanding of the performance of
the portfolio both in capital and revenue terms through
comparison to the Benchmark; and
conducting a review of how the Company’s derivative
positions were monitored.
Valuation of unquoted investments
The Company has the ability to make unquoted investments
within its investment portfolio, up to a limit of 10% of the
portfolio at the time of acquisition. Both the Company’s
Directors and the AIFM need to ensure that an appropriate
value is placed on such investments within the Company’s
net asset value. The Committee has worked with the
Company’s Portfolio Manager and the AIFM to establish
clear guidelines for the valuation of unquoted investments,
including the use of valuations produced by independent
external valuers, where appropriate.
Overall accuracy of the annual report
OTHER REPORTING MATTERS
The Committee dealt with this matter by considering the
draft Annual Report, a letter from Frostrow in support of the
letter of representation made by the Board to the Auditors
and the Auditors’ Report to the Committee.
Valuation and ownership of the company’s
investments and derivatives
The Committee dealt with this matter by:
•
ensuring that all investment holdings and cash/
deposit balances had been agreed to an independent
confirmation from the Custodian and Prime Broker
or relevant counterparty. In addition, receiving and
reviewing details of the internal control procedures
in place at the Portfolio Manager, the AIFM and the
Custodian and Prime Broker and also regular reports
COVID-19
The Committee continued to pay particular attention to
the effects and potential effects on the Company of the
COVID-19 pandemic. The long-term effect of the pandemic
on the global economy is becoming clearer and the
Committee will continue to monitor the impact of COVID-19,
which is also captured in the Company’s risk register.
In order to mitigate the business risks caused by the
pandemic, the Committee continues to review the
operational resilience of its various service providers, who
have continued to demonstrate their ability to provide
services to the expected level, whilst doing so remotely.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
57
AUDIT & RISK COMMITTEE REPORT CONTINUED
Calculation of AIFM, portfolio management and
performance fees
The AIFM, Portfolio Management and Performance fees
are calculated in accordance with the AIFM and Portfolio
Management Agreements. The Auditors perform agreed
upon procedures over any performance fee prior to
payment. The Auditors also recalculate the AIFM and
Portfolio Management fee as part of the audit.
Investment trust status
The Committee approached and dealt with ensuring
compliance with Section 11(cid:24)(cid:27) of the Corporation Tax
Act(cid:98)2010, by seeking confirmation from Frostrow that the
Company continues to meet the eligibility conditions on a
monthly basis.
Investment performance
The Committee gained an overall understanding of the
performance of the investment portfolio both in capital
and revenue terms through ongoing discussions and
analysis with the Company’s Portfolio Manager and also
with comparison to suitable key performance indicators
(see(cid:98)page 27).
Accounting policies
During the year the Committee ensured that the accounting
policies, as set out on pages 76 to 79, were applied
consistently throughout the year. In light of there being
no unusual transactions during the year or other possible
reasons, the Committee agreed that there was no reason to
change the policies.
Going concern
Having reviewed the Company’s financial position and
liabilities, the Committee is satisfied that it is appropriate for
the Board to prepare the financial statements on the going
concern basis. Further detail is provided on page 46. The
Committee’s review of the Company’s financial position
included consideration of the cash and cash equivalent
position of the Company(cid:30) the diversification of the portfolio(cid:30)
and the analysis of portfolio liquidity, which estimated a
liquidation of c.92% of the portfolio within 10 trading days
(based on current market volumes).
Viability statement
The Committee also considered the longer-term viability of
the Company in connection with the Board’s statement in
the Strategic Report on pages 34 and 35. The Committee
reviewed the Company’s financial position (including its
cash flows and liquidity position), the principal risks and
uncertainties, the expectation that the Company will pass
the next continuation vote in 202(cid:23), and the results of stress
tests and scenarios which considered the impact of severe
stock market volatility on shareholders’ funds. This included
modelling substantial market falls, and significantly reduced
market liquidity. The scenarios assumed that there would
be no recovery in asset prices and that listed portfolio
companies which have cut or cancelled any dividends due
since the coronavirus outbreak would not reinstate them.
The results demonstrated the impact on the Company’s
(cid:49)A(cid:57), its expenses, its cash flows and its ability to meet
its liabilities. In even the most stressed scenario, the
Company was shown to have sufficient cash, or to be able
to liquidate a sufficient portion of its listed holdings, in order
to be able to meet its liabilities as they fall due. Based on
the information available to the Directors at the time, the
Committee therefore concluded it was reasonable for the
Board to expect that the Company will be able to continue
in operation and meet its liabilities as they fall due over the
next five financial years. The Committee expects that the
Company will continue to exist for the foreseeable future
and at least for the period of the assessment.
INTERNAL CONTROLS AND RISK
MANAGEMENT
As set out on page 28 the Board is responsible for the risk
assessment and review of internal controls of the Company,
undertaken in the context of the overall investment
objective.
The review covers the key business, operational, compliance
and financial risks facing the Company. In arriving at its
judgement of what risks the Company faces, the Board has
considered the Company’s operations in the light of the
following factors:
•
(cid:829)
•
•
the nature of the Company, with all management
functions outsourced to third party service providers;
the nature and extent of risks which it regards as
acceptable for the Company to bear within its overall
investment objective;
the threat of such risks becoming a reality; and
the Company’s ability to reduce the incidence and
impact of risk on its performance.
58
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
AUDIT & RISK COMMITTEE REPORT CONTINUED
Against this background, a risk matrix has been developed
which covers all key risks the Company faces, the likelihood
of their occurrence and their potential impact, how these
risks are monitored and mitigating controls in place. The
Board has delegated to the Committee the responsibility
for the review and maintenance of the risk matrix and it
reviews, in detail, the risk matrix each time it meets, bearing
in mind any changes to the Company, its environment
or service providers since the last review. Any significant
changes to the risk matrix are discussed with the whole
Board.
Principal service providers
In addition to reviewing the systems of internal control
in place at the Company’s principal service providers, the
Committee also reviewed the cyber security strategies
adopted by them.
Half year report and financial statements
The Committee reviewed the Half Year Report and Financial
Statements, which are not audited or reviewed by the
external Auditors, to ensure that the accounting policies
used in the Annual Financial Statements were also used at
the half-year stage and that they portrayed a fair balanced
and understandable picture of the period in question.
INTERNAL AUDIT
The Committee considered whether there was a need
for the Company to have an internal audit function. As
the Company delegates its day-to-day operations to third
parties and has no employees, the Committee concluded
that there was no such need.
EXTERNAL AUDITORS
Meetings
This year the nature and scope of the audit together with
PricewaterhouseCoopers LLP’s audit plan were considered
by the Committee on 3 November 2021. I, as Chairman
of the Committee, had a separate meeting with them
specifically to discuss the audit and any issues that arose.
The Committee then met PricewaterhouseCoopers LLP
on 23 May 2022 via video conference to review formally
the outcome of the audit and to discuss the limited issues
that arose. The Committee also discussed the presentation
of the Annual Report with the Auditors and sought their
perspective.
Independence and effectiveness
In order to fulfil the Committee’s responsibility regarding the
independence of the Auditors, the Committee reviewed:
•
•
(cid:829)
•
the senior audit personnel in the audit plan for the year,
the Auditors’ arrangements concerning any conflicts of
interest,
the extent of any non-audit services, and
the statement by the Auditors that they remain
independent within the meaning of the regulations and
their professional standards.
Remuneration
The Committee approved a fee of £46,725 for the audit
for the year ended (cid:22)1 March 2022 (2021(cid:29) (cid:101)(cid:23)(cid:23),(cid:24)00). While
this represents an increase on the previous year’s fee, the
Committee believes that the fee is in line with general audit
fees payable for the quoted investment trust sector and
is reflective of the level of work required to audit a listed
company.
Non-audit services policy
The Company operates on the basis whereby the provision
of all non-audit services by the Auditors has to be pre-
approved by the Committee. Such services are only
permissible where no conflicts of interest arise, the service
is not expressly prohibited by audit legislation, where the
independence of the Auditors is not likely to be impinged
by undertaking the work and the quality and the objectivity
of both the non-audit work and audit work will not be
compromised. The Committee will monitor the need for
non-audit work to be performed by the Auditors, if any, in
accordance with the Company’s non-audit services policy.
A copy of the Company’s non-audit services policy can be
found on the Company’s website at www.worldwidewh.com
(cid:49)on-audit fees of (cid:101)(cid:24),000 (2021: nil) were payable to the
Auditors during the year for agreed upon procedures in
relation to their review of the Company’s performance fee
payment.
The Committee has considered the extent and nature of
non-audit work performed by the Auditors and is satisfied
that this did not impinge on their independence and is a
cost effective way for the Company to operate.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
59
AUDIT & RISK COMMITTEE REPORT CONTINUED
This year, an internal evaluation was completed and I am
pleased to confirm that the evaluation result was positive
and no matters of concern or requirements for change were
highlighted.
AUDIT & RISK COMMITTEE CONFIRMATION
The Audit (cid:9) Risk Committee confirms that it has carried
out a review of the effectiveness of the system of internal
financial control and risk management during the year, as
set out above and that:
(a) An ongoing procedure for identifying, evaluating and
managing significant risks faced by the Company was in
place for the year under review and up to 27 May 2022.
This procedure is regularly reviewed by the Board; and
(b) It is responsible (on behalf of the Board) for the
Company’s system of internal controls and for reviewing
its effectiveness and that it is designed to manage the
risk of failure to achieve business objectives. This can
only provide reasonable not absolute assurance against
material misstatement or loss.
Humphrey van der Klugt, FCA
Chairman of the Audit & Risk Committee
26 May 2022
Appointment and tenure
PricewaterhouseCoopers LLP were appointed on
1(cid:23)(cid:98)July 201(cid:23) following a formal tender process and this
appointment has been renewed at each subsequent AGM.
As a public company listed on the London Stock Exchange,
the Company is subject to mandatory auditor rotation
requirements. The Company will put the external audit out
to tender at least every 10 years, and change auditor at least
every 20 years. The Committee will, however, continue to
consider annually the need to go to tender for audit quality,
remuneration or independence reasons. Unless any such
grounds for change arise in the interim, it is expected that
the next audit tender will take place in the autumn of 202(cid:22),
in order that the successful candidate’s appointment or
re-appointment can be approved by shareholders at the
A(cid:42)M to be held in 202(cid:23). A range of audit firms will be
considered not just those who are considered to be part
of the “Big Four” group of audit firms. The Committee will
be mindful of any potential conflicts of interest. Any firms
providing services to the Company within a two-year period
of the date of the audit tender will be unable to participate.
The Committee has adopted formal audit tender guidelines
to govern the audit tender process.
Auditors’ reappointment
PricewaterhouseCoopers LLP have indicated their
willingness to continue to act as Auditors to the Company
for the forthcoming year and a resolution for their
re-appointment will be proposed at the AGM.
The Committee reviews the scope and effectiveness of the
audit process, including agreeing the Auditors’ assessment
of materiality and monitors the Auditors’ independence and
objectivity. It conducted a review of the performance of the
Auditors during the year and concluded that performance
was satisfactory and there were no grounds for change.
PERFORMANCE EVALUATION
The Committee’s performance over the past year was
reviewed and discussed as part of the annual Board
evaluation. The evaluation considered the composition of
the Committee and the efficacy of Committee meetings,
as well as assessing the Committee’s role in monitoring
and overseeing the Company’s financial reporting and
accounting, risk management and internal controls,
compliance with corporate governance regulations and also
the assessment of the external audit.
60
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
DIRECTORS’ REMUNERATION REPORT
The remuneration for the non-executive (cid:39)irectors is
determined within the limits set out in the Company’s
Articles of Association. The present limit is £350,000 in
aggregate per annum. The amount paid in aggregate
to the Directors in 2022 is set out in the table on the
following page.
A binding resolution to approve the Directors’ Remuneration
Policy was put to shareholders at the Annual General
Meeting held in 2020, and was passed with 99.8% of
shareholders voting in favour of the Resolution. The
aforementioned Directors’ Remuneration Policy provisions
apply until the next time that they are put to shareholders
for the renewal of that approval, which must be at
intervals of not more than three years, or if the Directors’
Remuneration Policy is varied. As approval of this policy
was last granted by shareholders at the Annual General
Meeting held in July 2020, shareholder approval will again
be sought at the Annual General Meeting to be held in 2023.
Directors’ appointment
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 (cid:42)eneral 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.
Directors’ fees
Following a review by the Management Engagement &
Remuneration Committee it was agreed that the Directors’
fees would not be increased, with effect from 1 April 2022.
All of the Directors, as at the date of this report, served
throughout the year. The table overleaf excludes any
employer’s national insurance contributions, if applicable.
The Directors are entitled to be reimbursed for reasonable
expenses incurred by them in connection with the
performance of their duties and attendance at Board and
General Meetings.
INTRODUCTION FROM THE CHAIR
This report has been prepared in accordance with Schedule
8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulation 201(cid:22),
the requirements of Section 421 of the Companies Act
2006 and the Enterprise and Regulatory Reform Act 2013.
A non-binding Ordinary Resolution for the approval of
this report will be put to shareholders at the Company’s
forthcoming AGM. 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 Auditors’ audit opinion is
included in its report to shareholders on pages 63 to 71.
The Management Engagement & Remuneration Committee
considers the framework for the remuneration of the
Directors on an annual basis. It reviews the ongoing
appropriateness of the Directors’ Remuneration Policy and
the individual remuneration of Directors by reference to the
activities and particular complexities of the Company and
comparison with other companies of a similar structure
and size. This is in-line with the AIC Code.
A non-binding Ordinary Resolution proposing the
adoption of the Directors’ Remuneration Report was
put to shareholders at the Annual General Meeting of
the Company held on (cid:27) July 2021, and was passed with
(cid:28)(cid:28).(cid:28)(cid:8)(cid:98)of the votes cast by shareholders voting in favour of
the Resolution.
As noted in the Strategic Report, all of the Directors are
non-executive and therefore there is no Chief Executive
(cid:50)fficer. The Company does not have any employees.
There is therefore no Chief Executive (cid:50)fficer or employee
information to disclose.
Directors’ remuneration policy
The Directors’ 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 (cid:39)irectors 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 (cid:39)irector personally or to a specified third
party. There are no long-term incentive schemes, share
option schemes, pension arrangements, bonuses, or other
benefits in place and fees are not specifically related to the
Directors’ performance, either individually or collectively.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
61
DIRECTORS’ REMUNERATION REPORT CONTINUED
Director
Chairman
Audit & Risk Committee Chair
Senior Independent Director
Director
Sums paid to third parties
Year Ending
31 March 2023
Fee Level
(per annum)
Year Ended
31 March 2022
Fee Level
(per annum)
2023 %
Change
£53,150
£41,133
£36,007
£33,573
–
–
–
–
£53,150
£41,133
£36,007
£33,573
2022 %
Change
4.0
4.0
4.0
4.0
None of the fees referred to in the below table were paid to any third party in respect of the services provided by any of the
Directors.
Directors’ emoluments for the year (audited)
Sir Martin Smith
Humphrey Van Der Klugt
Sarah Bates#
Dr David Holbrook^
Doug McCutcheon
Sven Borho*
Dr Bina Rawal
Total
Date of
Appointment
to the Board
Fixed fees
(£)
2022
8 November 2007
15 February 2016
22 May 2013
8 November 2007
7 November 2012
(cid:26) June 201(cid:27)
53,150
41,133
35,389
9,833
33,573
–
1 November 2019
33,573
Taxable
Expenses
(£)†
2022
865
–
–
–
–
–
–
Total (£)
2022
Fixed fees
(£)
2021
Taxable
Expenses
(£)†
2021
54,015
41,133
35,389
9,833
33,573
–
51,106
39,551
32,282
34,622
32,282
–
33,573
32,282
206,651
865
207,516
222,125
Total (£)
2021
51,106
39,551
32,282
34,622
32,282
–
32,282
222,125
–
–
–
–
–
–
–
–
(cid:827) Taxable expenses primarily comprise travel and associated expenses incurred by the (cid:39)irectors in attending Board and Committee meetings in London. These are
reimbursed by the Company and, under HMRC Rules, are subject to tax and (cid:49)ational Insurance and therefore are treated as a benefit in kind within this table.
* Mr Borho has waived his Director’s fee.
(cid:65) (cid:39)r Holbrook retired from the Board on (cid:27) July 2021.
(cid:6) Sarah Bates was appointed as the Senior Independent (cid:39)irector with effect from (cid:27) July 2021.
In certain circumstances, under HMRC rules travel and other out of pocket expenses reimbursed to the (cid:39)irectors may be
considered as taxable benefits. Where expenses are classed as taxable under HMRC guidance, they are shown in the taxable
expenses column of the (cid:39)irectors’ remuneration table along with the associated tax liability.
No communications have been received from shareholders regarding Directors’ remuneration.
Directors’ interests in the company’s shares (audited)
Sir Martin Smith
(cid:806)(cid:806)– Trustee
Sarah Bates
Dr David Holbrook*
Sven Borho
Humphrey van der Klugt
Doug McCutcheon
Dr Bina Rawal
(cid:13) (cid:39)r Holbrook retired from the Board on (cid:27) July 2021.
Ordinary
Shares of 25p each
31 March
2022
31 March
2021
11,871
11,871
2,725
7,200
–
10,000
3,000
20,000
1,810
56,606
2,725
7,200
1,094
10,000
3,000
15,000
1,000
51,890
62
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
DIRECTORS’ REMUNERATION REPORT CONTINUED
Share price total return
Annual statement
The chart below illustrates the total shareholder return
for a holding in the Company’s shares as compared to
the Benchmark, which the Board has adopted as the key
measure of the Company’s performance.
TOTAL SHAREHOLDER RETURN FOR THE TEN
YEARS TO 31 MARCH 2022
%
(cid:50)n behalf of the Board, I confirm that the (cid:39)irectors’
Remuneration Policy, set out on page 60 of this Annual
Report, and Directors’ Remuneration Report set out on
page 60 to 62 summarise, as applicable, for the year to
(cid:22)1(cid:98)March(cid:98)2022(cid:29)
(a) the major decisions on (cid:39)irectors’ remuneration(cid:30)
(b) any substantial changes relating to (cid:39)irectors’
remuneration made during the year; and
(c) the context in which the changes occurred and
decisions have been taken.
Mar
13
Mar
14
Mar
15
Mar
16
Mar
17
Mar
18
Mar
19
Mar
20
Mar
21
Mar
22
WWH Share Price (total return) (359.7%)
Benchmark (total return) (322.9%)
Rebased to 100 as at 31 March 2012
Source: Morningstar
Doug McCutcheon
Chair of the Management Engagement & Remuneration
Committee
26 May 2022
700
600
500
400
300
200
100
0
Mar
12
Relative cost of directors’ remuneration
The bar chart below shows the comparative cost of
Directors’ fees compared with the level of dividend
distribution and ongoing charges for 2021 and 2022.
(cid:101)(cid:80)
(cid:21)(cid:21)(cid:19)(cid:19)(cid:19)
(cid:21)(cid:19)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:27)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:25)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:23)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:21)(cid:19)(cid:19)(cid:19)
(cid:20)(cid:19)(cid:19)(cid:19)(cid:19)
(cid:27)(cid:19)(cid:19)(cid:19)
(cid:25)(cid:19)(cid:19)(cid:19)
(cid:23)(cid:19)(cid:19)(cid:19)
(cid:21)(cid:19)(cid:19)(cid:19)
(cid:19)
(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:821)
(cid:41)(cid:72)(cid:72)(cid:86)
(cid:21)(cid:19)(cid:21)(cid:21)
(cid:39)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)
(cid:21)(cid:19)(cid:21)(cid:21)
(cid:50)(cid:81)(cid:74)(cid:82)(cid:76)(cid:81)(cid:74)
(cid:38)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:13)
(cid:21)(cid:19)(cid:21)(cid:21)
(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:821)
(cid:41)(cid:72)(cid:72)(cid:86)
(cid:21)(cid:19)(cid:21)(cid:20)
(cid:39)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)
(cid:21)(cid:19)(cid:21)(cid:20)
(cid:50)(cid:81)(cid:74)(cid:82)(cid:76)(cid:81)(cid:74)
(cid:38)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:86)(cid:13)
(cid:21)(cid:19)(cid:21)(cid:20)
(cid:13)(cid:3)(cid:36)(cid:79)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:11)(cid:86)(cid:72)(cid:72)(cid:3)(cid:42)(cid:79)(cid:82)(cid:86)(cid:86)(cid:68)(cid:85)(cid:92)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:3)(cid:28)(cid:23)(cid:12)(cid:17)
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
63
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF
WORLDWIDE HEALTHCARE TRUST PLC
REPORT ON THE AUDIT OF THE FINANCIAL
STATEMENTS
Opinion
In our opinion, Worldwide Healthcare Trust PLC’s financial
statements:
•
•
give a true and fair view of the state of the Company’s
affairs as at 31 March 2022 and of its loss and cash
flows for the year then ended;
have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising
FRS 102 “The Financial Reporting Standard applicable in
the UK and Republic of Ireland”, and applicable law); and
Independence
We remained independent of the Company in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which includes
the FRC’s Ethical Standard, as applicable to listed public
interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in the Audit & Risk Committee
Report, we have provided no non-audit services to the
Company in the period under audit.
•
have been prepared in accordance with the
requirements of the Companies Act 2006.
Our audit approach
Overview
We have audited the financial statements, included
within the Annual Report, which comprise: the Statement
of Financial Position as at 31 March 2022; the Income
Statement, the Statement of Changes in Equity and the
Statement of Cash Flows for the year then ended; and
the notes to the financial statements, which include a
description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit &
Risk Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
(cid:50)ur responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Audit scope
•
The Company is a standalone Investment Trust
Company and engages Frostrow Capital LLP (the
“AIFM”) to manage its assets.
(cid:829)
•
•
We conducted our audit of the financial statements
using information from the AIFM and J.P. Morgan
Europe Limited with whom the AIFM have engaged to
provide certain administrative functions.
We tailored the scope of our audit taking into account
the types of investments within the Company, the
involvement of the third parties referred to above, the
accounting processes and controls, and the industry in
which the Company operates.
We obtained an understanding of the control
environment in place at the AIFM and adopted a fully
substantive testing approach using reports obtained
from the AIFM and service providers.
64
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Key audit matters
•
(cid:829)
Income from Investments
(cid:57)aluation and existence of investments
Materiality
(cid:829)
(cid:829)
(cid:50)verall materiality(cid:29) (cid:101)22,(cid:25)(cid:27)2,000 (2021(cid:29) (cid:101)2(cid:22),(cid:25)00,000)
based on approximately 1(cid:8) of net assets.
Performance materiality(cid:29) (cid:101)1(cid:26),011,000 (2021(cid:29)
£17,700,000).
The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
In planning our audit, we made enquiries of management
to understand the extent of the potential impact of climate
change risk on the Company’s financial statements.
The Directors and the AIFM concluded that there was
no material impact on the financial statements. (cid:50)ur
evaluation of this included assessing how the Directors
had incorporated climate risk factors into the key area
of judgement and estimation in the financial statements,
being in relation to the process of valuation of unlisted
investments. We also considered the consistency of the
climate change disclosures included in the Strategic Report
with the financial statements and our knowledge from our
audit.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by
the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Consideration of the impacts of COVID-19 and calculation
of the performance fee accrual, which were key audit
matters last year, are no longer included because of
the reduced uncertainty of the impact of COVID-19 and
the absence of a performance fee in the current year.
Otherwise, the key audit matters below are consistent with
last year.
.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
65
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Key audit matter
How our audit addressed the key audit matter
Income from investments
Refer to page 56 (Audit (cid:9) Risk Committee Report),
page 78 (Principal Accounting Policies) and page 80
((cid:49)otes to the Financial Statements).
ISAs (UK) presume there is a risk of fraud in income
recognition because of the pressure management
may feel to achieve a certain objective. In this
instance, we consider that ‘income’ refers to all the
Company’s income streams, both revenue and capital
(including gains and losses on investments).
As the Company has a capital objective, there might
be an incentive to overstate income in that category
if capital is particularly underperforming. As such,
we focussed this risk on the existence(cid:18)occurrence of
gains/losses on investments and completeness of
dividend income recognition and its presentation in the
Income Statement as set out in the requirements of
The Association of Investment Companies’ Statement
of Recommended Practice (the “AIC S(cid:50)RP”).
We assessed the accounting policy for income recognition for
compliance with accounting standards and the AIC SORP and
performed testing to confirm that income had been accounted
for in accordance with this stated accounting policy.
We found that the accounting policies implemented were in
accordance with accounting standards and the AIC SORP, and
that income has been accounted for in accordance with the
stated accounting policy.
We understood and assessed the design and implementation of
key controls surrounding income recognition.
The gains/losses on investments held at fair value comprise
realised and unrealised gains/losses. For unrealised gains and
losses, we sample tested the valuation of the portfolio at the
year-end (see below), together with testing the reconciliation of
opening and closing investments. For realised gains/losses, we
tested a sample of disposal proceeds by agreeing the proceeds
to bank statements and we re-performed the calculation of a
sample of realised gains/losses.
In addition, we tested a sample of dividend receipts by agreeing
the dividend rates from all investments to independent third
party sources.
To test for completeness, we tested that the appropriate
dividends had been received in the year by reference to
independent data of dividends declared for all listed investments
during the year. Our testing did not identify any unrecorded
dividends.
We tested the allocation and presentation of dividend income
between the revenue and capital return columns of the Income
Statement in line with the requirements set out in the AIC SORP.
We did not find any special dividends that were not treated in
accordance with the AIC SORP.
(cid:49)o material misstatements were identified from this testing.
66
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Key audit matter
How our audit addressed the key audit matter
Valuation and existence of investments
Refer to pages 56 (Audit (cid:9) Risk Committee Report),
page 77 (Accounting Policies) and page 84 ((cid:49)otes to
the Financial Statements).
The investment portfolio at 31 March 2022 principally
comprised listed equity investments and unquoted
debt and equity investments totalled £2,379,848,000.
We focused on the valuation and existence of
investments because investments represent the
principal element of the net asset value as disclosed
in the Statement of Financial Position in the financial
statements.
We tested the valuation of all listed investments by agreeing the
prices used in the valuation to independent third party sources.
We tested the existence of all listed investments by agreeing
the holdings of each investment to an independent confirmation
from the Custodian and Prime Broker, J.P. Morgan Securities
LLC, as at 31 March 2022.
For unquoted investments we understood and evaluated the
valuation methodology applied, by reference to the International
Private Equity and (cid:57)enture Capital (cid:57)aluation guidelines (IPE(cid:57)),
and tested the techniques used by the Directors in determining
the fair value of unquoted investments. Our testing, performed
on a sample basis, included:
•
•
•
•
assessing the appropriateness of the valuation models used;
testing the inputs either through validation to appropriate
third party sources, or where relevant, assessing the
reasonableness of significant estimates and judgements
used;
assessing the potential impact of climate change on the
valuation of the unquoted investments; and
assessing the ongoing impact of COVID-19 and geopolitical
events on the valuation of investments.
We found that the Directors’ valuations of unquoted investments
were materially consistent with the IPEV guidelines and that
the assumptions used to derive the valuations within the
financial statements were reasonable based on the investee’s
circumstances or consistent with appropriate third party
sources. (cid:49)o material misstatements were identified from this
testing.
We tested the existence of the unquoted investment portfolio
by agreeing a sample of the holdings to independently obtained
third party confirmations as at (cid:22)1 March 2022. (cid:49)o variances
were identified from this testing.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
67
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the
industry in which it operates.
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the (cid:39)irectors made subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows(cid:29)
Overall Company materiality
(cid:101)22,(cid:25)(cid:27)2,000 (2021(cid:29) (cid:101)2(cid:22),(cid:25)00,000).
How we determined it
Approximately 1(cid:8) of net assets.
Rationale for benchmark applied We have applied this benchmark, a generally accepted auditing practice for investment
trust audits, in the absence of indicators that an alternative benchmark would be
appropriate and because we believe this provides an appropriate and consistent year-
on-year basis for our audit.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for
example in determining sample sizes. (cid:50)ur performance materiality was (cid:26)(cid:24)(cid:8) (2021(cid:29) (cid:26)(cid:24)(cid:8)) of overall materiality, amounting to
(cid:101)1(cid:26),011,000 (2021(cid:29) (cid:101)1(cid:26),(cid:26)00,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our
normal range was appropriate.
We agreed with the Audit (cid:9) Risk Committee that we would report to them misstatements identified during our audit above
(cid:101)1,1(cid:22)(cid:23),000 (2021(cid:29) (cid:101)1,1(cid:27)0,000) as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
68
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Conclusions relating to going concern
Reporting on other information
Our evaluation of the Directors’ assessment of the
Company’s ability to continue to adopt the going concern
basis of accounting included:
•
•
•
•
evaluating the Directors’ updated risk assessment and
considering whether it addressed relevant threats,
including the ongoing impact of Covid-19 and the
heightened economic uncertainty as a result of recent
global events;
evaluating the Directors’ assessment of potential
operational impacts, considering their consistency with
other available information and our understanding of
the business and assessed the potential impact on the
financial statements(cid:30)
reviewing the Directors’ assessment of the Company’s
financial position in the context of its ability to
meet future expected operating expenses and debt
repayments, their assessment of liquidity as well as
their review of the operational resilience of the Company
and oversight of key third-party service providers; and
assessing the implications of reductions in NAV as a
result of market performance on the ongoing ability of
the Company to operate.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Company’s ability to continue as a
going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can
be predicted, this conclusion is not a guarantee as to the
Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
The other information comprises all of the information in
the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible
for the other information. (cid:50)ur opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required
to perform procedures to conclude whether there is a
material misstatement of the financial statements or a
material misstatement of the other information. If, based
on the work we have performed, we conclude that there is
a material misstatement of this other information, we are
required to report that fact. We have nothing to report based
on these responsibilities.
With respect to the Strategic report and the Report of the
Directors, we also considered whether the disclosures
required by the UK Companies Act 2006 have been
included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and the Report of the Directors
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report
and the Report of the Directors for the year ended 31
March 2022 is consistent with the financial statements
and has been prepared in accordance with applicable legal
requirements.
In light of the knowledge and understanding of the
Company and its environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic report and the Report of the Directors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
69
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Corporate governance statement
The Listing Rules require us to review the directors’
statements in relation to going concern, longer-term viability
and that part of the corporate governance statement
relating to the Company’s compliance with the provisions of
the UK Corporate (cid:42)overnance Code specified for our review.
Our additional responsibilities with respect to the corporate
governance statement as other information are described in
the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
corporate governance statement is materially consistent
with the financial statements and our knowledge obtained
during the audit, and we have nothing material to add or
draw attention to in relation to:
(cid:829)
•
(cid:829)
(cid:829)
•
The (cid:39)irectors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
The disclosures in the Annual Report that describe
those principal risks, what procedures are in place to
identify emerging risks and an explanation of how these
are being managed or mitigated;
The (cid:39)irectors’ statement in the financial statements
about whether they considered it appropriate to
adopt the going concern basis of accounting in
preparing them, and their identification of any material
uncertainties to the Company’s ability to continue to do
so over a period of at least twelve months from the date
of approval of the financial statements(cid:30)
The (cid:39)irectors’ explanation as to their assessment of
the Company’s prospects, the period this assessment
covers and why the period is appropriate; and
The Directors’ statement as to whether they have a
reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the Directors’ statement regarding the
longer-term viability of the group was substantially less in
scope than an audit and only consisted of making inquiries
and considering the Directors’ process supporting their
statement; checking that the statement is in alignment with
the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent
with the financial statements and our knowledge and
understanding of the Company and its environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of
our audit, we have concluded that each of the following
elements of the corporate governance statement is
materially consistent with the financial statements and our
knowledge obtained during the audit:
•
•
•
The Directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the Company’s position,
performance, business model and strategy;
The section of the Annual Report that describes the
review of effectiveness of risk management and internal
control systems; and
The section of the Annual Report describing the work of
the Audit & Risk Committee.
We have nothing to report in respect of our responsibility
to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Responsi(cid:69)ilities for the financial statements and
the audit
(cid:53)e(cid:86)(cid:83)on(cid:86)i(cid:69)ilitie(cid:86) of t(cid:75)e (cid:71)irector(cid:86) for t(cid:75)e financial
statements
As explained more fully in the Statement of (cid:39)irectors’
Responsibilities, the directors are responsible for the
preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they
give a true and fair view. The directors are also responsible
for such internal control as they determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
70
GOVERNANCE
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are
capable of detecting irregularities, including fraud, is
detailed below.
Based on our understanding of the Company and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to breaches of section
11(cid:24)(cid:27) of the Corporation Tax Act 2010 (see page (cid:24)(cid:26) of
the Annual Report), and we considered the extent to
which non-compliance might have a material effect on
the financial statements. We also considered those laws
and regulations that have a direct impact on the financial
statements such as the Companies act 2006. We evaluated
management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk
of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries
to increase revenue (investment income and capital gains)
or to increase net asset value, and management bias in
accounting estimates. Audit procedures performed by the
engagement team included:
•
•
discussions with the AIFM and the Audit & Risk
Committee, including consideration of known or
suspected instances of non-compliance with laws and
regulation and fraud;
reviewing relevant meeting minutes, including those of
the Audit & Risk Committee;
•
•
•
•
assessment of the Company’s compliance with the
requirements of section 11(cid:24)(cid:27) of the Corporation Tax Act
2010, including recalculation of numerical aspects of
the eligibility conditions;
challenging assumptions and judgements made by
management in their significant accounting estimates,
in particular in relation to the valuation of unquoted
investments (see related key audit matter above)(cid:30)
identifying and testing journal entries, in particular
any material or revenue-impacting manual journal
entries posted as part of the Annual Report preparation
process; and
designing audit procedures to incorporate
unpredictability around the nature, timing or extent of
our testing.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting
a material misstatement due to fraud is higher than the
risk of not detecting one resulting from error, as fraud may
involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances, possibly
using data auditing techniques. However, it typically involves
selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target
particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to
enable us to draw a conclusion about the population from
which the sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at(cid:29)
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared
for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this report
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GOVERNANCE
71
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC
CONTINUED
is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
•
•
(cid:829)
(cid:829)
we have not obtained all the information and
explanations we require for our audit(cid:30) or
adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not
been received from branches not visited by us; or
certain disclosures of directors’ remuneration specified
by law are not made; or
the financial statements and the part of the (cid:39)irectors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of the Audit & Risk
Committee, we were appointed by the members on 1(cid:23) July
201(cid:23) to audit the financial statements for the year ended (cid:22)1
March 201(cid:24) and subsequent financial periods. The period
of total uninterrupted engagement is 8 years, covering the
years ended 31 March 2015 to 31 March 2022.
Allan McGrath (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
26 May 2022
72
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2022
(Losses)/gains on investments
Exchange losses on currency
balances
Income from investments
AIFM, portfolio management and
performance fees
Other expenses
(cid:49)et ret(cid:88)rn(cid:18)(cid:11)lo(cid:86)(cid:86)(cid:12) (cid:69)efore finance
c(cid:75)arge(cid:86) an(cid:71) ta(cid:91)ation
Finance costs
(cid:49)et ret(cid:88)rn(cid:18)(cid:11)lo(cid:86)(cid:86)(cid:12) (cid:69)efore ta(cid:91)ation
Taxation on net return
(cid:49)et ret(cid:88)rn(cid:18)(cid:11)lo(cid:86)(cid:86)(cid:12) after ta(cid:91)ation
(cid:53)et(cid:88)rn(cid:18)(cid:11)lo(cid:86)(cid:86)(cid:12) (cid:83)er (cid:86)(cid:75)are
Notes
Revenue
£’000
2022
Capital
£’000
Total
£’000
Revenue
£’000
2021
Capital
£’000
Total
£’000
9
2
3
4
5
6
7
–
–
(152,475)
(152,475)
(6,342)
(6,342)
–
–
517,267
517,267
(6,076)
(6,076)
23,471
–
23,471
19,247
–
19,247
(938)
(1,305)
1,061
(529)
123
(853)
(47,963)
(48,816)
(1,834)
(1,338)
(155)
(1,493)
21,228
(158,285)
(137,057)
17,056
463,073
480,129
(40)
(761)
(801)
(20)
(379)
(399)
21,188
(159,046)
(137,858)
17,036
462,694
479,730
(3,668)
–
(3,668)
(2,712)
–
(2,712)
17,520
(159,046)
(141,526)
14,324
462,694
477,018
26.8p
(243.5)
(216.7)
24.1p
777.8p
801.9p
The “Total” column of this statement is the Income Statement of the Company. The “Revenue” and “Capital” columns are supplementary to
this and are prepared under guidance published by The Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
The Company has no recognised gains and losses other than those shown above and therefore no separate Statement of Total
Comprehensive Income has been presented.
The accompanying notes are an integral part of these statements.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
73
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2022
S(cid:75)are
ca(cid:83)ital
£’000
16,078
–
–
–
307
–
Capital
re(cid:71)em(cid:83)tion
reserve
£’000
S(cid:75)are
(cid:83)remi(cid:88)m
acco(cid:88)nt
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
(cid:86)(cid:75)are(cid:75)ol(cid:71)er(cid:86)(cid:821)
f(cid:88)n(cid:71)(cid:86)
£’000
8,221
796,357
1,542,628
18,141
2,381,425
–
–
–
45,242
–
–
–
–
–
(159,046)
17,520
(141,526)
–
–
–
(10,085)
(10,085)
(4,586)
(4,586)
–
–
45,549
(2,544)
–
(2,544)
16,385
8,221
841,599
1,381,038
20,990
2,268,233
At 1 April 2021
Net (loss)/return after taxation
Final dividend paid in respect of year ended
31 March 2021
Interim dividend paid in respect of year ended
31 March 2022
New shares issued
Shares purchased for treasury
(cid:36)t (cid:22)1 (cid:48)arc(cid:75) (cid:21)0(cid:21)(cid:21)
FOR THE YEAR ENDED 31 MARCH 2021
At 1 April 2020
Net return after taxation
Second interim dividend paid in respect of year
ended 31 March 2020
Interim dividend paid in respect of year ended
31 March 2021
New shares issued
(cid:36)t (cid:22)1 (cid:48)arc(cid:75) (cid:21)0(cid:21)1
S(cid:75)are
ca(cid:83)ital
£’000
13,406
–
–
–
2,672
Capital
re(cid:71)em(cid:83)tion
reserve
£’000
S(cid:75)are
(cid:83)remi(cid:88)m
acco(cid:88)nt
£’000
Capital
reserve
£’000
Revenue
reserve
£’000
Total
(cid:86)(cid:75)are(cid:75)ol(cid:71)er(cid:86)(cid:821)
f(cid:88)n(cid:71)(cid:86)
£’000
8,221
418,441
1,079,934
18,296
1,538,298
–
–
–
–
–
–
–
377,916
462,694
14,324
477,018
–
–
–
(10,512)
(10,512)
(3,967)
(3,967)
–
380,588
16,078
8,221
796,357
1,542,628
18,141
2,381,425
74
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STATEMENT OF FINANCIAL POSITION
As at 31 March 2022
(cid:41)i(cid:91)e(cid:71) a(cid:86)(cid:86)et(cid:86)
Investments
Derivative – OTC swaps
Current assets
Debtors
Cash
Current liabilities
Creditors: amounts falling due within one year
Derivative – OTC swaps
(cid:49)et c(cid:88)rrent lia(cid:69)ilitie(cid:86)
Total net assets
(cid:38)a(cid:83)ital an(cid:71) re(cid:86)erve(cid:86)
Share capital
Capital redemption reserve
Share premium account
Capital reserve
Revenue reserve
(cid:55)otal (cid:86)(cid:75)are(cid:75)ol(cid:71)er(cid:86)(cid:10) f(cid:88)n(cid:71)(cid:86)
(cid:49)et a(cid:86)(cid:86)et val(cid:88)e (cid:83)er (cid:86)(cid:75)are
Notes
2022
£’000
2021
£’000
9
2,379,848
2,416,038
9 & 10
283
18,864
2,380,131
2,434,902
11
14,724
26,594
18,172
29,595
41,318
47,767
12
(147,804)
(92,932)
9 & 10
(5,412)
(8,312)
(153,216)
(101,244)
(111,898)
(53,477)
2,268,233
2,381,425
13
16,385
16,078
8,221
8,221
841,599
796,357
17
1,381,038
1,542,628
20,990
18,141
2,268,233
2,381,425
14
3,465.2p
3,703.0p
The financial statements on pages 72 to 92 were approved by the Board of Directors and authorised for issue on 26 May 2022 and were
signed on its behalf by:
Sir (cid:48)artin Smit(cid:75)
Chairman
The accompanying notes are an integral part of this statement.
Worldwide Healthcare Trust PLC – Company Registration Number 3023689 (Registered in England)
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
75
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2022
(cid:49)et ca(cid:86)(cid:75) (cid:11)o(cid:88)tflo(cid:90)(cid:12)(cid:18)inflo(cid:90) from o(cid:83)erating activitie(cid:86)
Purchases of investments and derivatives
Sales of investments and derivatives
Realised (loss)/gain on foreign exchange transactions
(cid:49)et ca(cid:86)(cid:75) o(cid:88)tflo(cid:90) from inve(cid:86)ting activitie(cid:86)
Issue of shares
Shares repurchased
Equity dividends paid
Interest paid
(cid:49)et ca(cid:86)(cid:75) inflo(cid:90) from financing activitie(cid:86)
(cid:11)Increa(cid:86)e(cid:12)(cid:18)(cid:71)ecrea(cid:86)e in net (cid:71)e(cid:69)t
Notes
2022
£’000
18
(13,329)
2021
£’000
931
13
13
(1,330,279)
(1,709,998)
1,253,138
1,481,508
(5,541)
3,205
(82,682)
(225,285)
48,126
378,728
(2,544)
(14,671)
(801)
–
(14,479)
(399)
30,110
363,850
(65,901)
139,496
Cash flows from operating activities include interest received of £968,000 (2021: £1,265,000) and dividends received of £23,853,000
(2021(cid:29)(cid:98)(cid:101)1(cid:27),(cid:28)0(cid:26),000).
RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET DEBT
(Increase)/decrease in net debt resulting from cashflows
Losses on foreign currency cash and cash equivalents
(cid:48)ovement in net (cid:71)e(cid:69)t in t(cid:75)e (cid:92)ear
Net debt at 1 April
(cid:49)et (cid:71)e(cid:69)t at (cid:22)1 (cid:48)arc(cid:75)
2022
£’000
2021
£’000
(65,901)
139,496
(801)
(9,281)
(66,702)
130,215
(20,301)
(150,516)
(87,003)
(20,301)
Net debt includes the bank overdraft of £113,597,000 (2021: £49,896,000) (see note 12) and cash as per the balance sheet of £26,594,000
(2021: £29,595,000).
The accompanying notes are an integral part of this statement.
76
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these financial
statements, are set out below:
(A) Basis of preparation
These financial statements have been prepared in accordance with the Companies Act 200(cid:25), FRS 102 (cid:820)The Financial Reporting
Standard applicable in the UK and Ireland’ ((cid:820)UK (cid:42)AAP’) and the guidelines set out in the Statement of Recommended Practice
((cid:820)S(cid:50)RP’), published in February 2021, for Investment Trust Companies and (cid:57)enture Capital Trusts issued by the Association of
Investment Companies ((cid:820)AIC’), the historical cost convention, as modified by the valuation of investments and derivatives at fair value.
The Board has considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due, including stress and
liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity (including further
stressing the current economic conditions caused by the coronavirus pandemic) on the Company’s financial position and cash flows.
Further information on the assumptions used in the stress scenarios is provided in the Audit & Risk Committee report beginning on
page 55. The(cid:98)results of the tests showed that the Company would have sufficient cash, or the ability to liquidate a sufficient proportion
of its listed holdings, to meet its liabilities as they fall due. Based on the information available to the Directors at the time of this report,
including the results of the stress tests, the Company’s cash balances, and the liquidity of the Company’s listed investments, the
(cid:39)irectors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months
from the date of approval of these financial statements and that, accordingly, it is appropriate to adopt the going concern basis in
preparing these financial statements.
The Company’s financial statements are presented in sterling, being the functional and presentational currency of the Company.
All(cid:98)values are rounded to the nearest thousand pounds ((cid:101)’000) except where otherwise indicated.
In addition, investments and derivatives held at fair value are categorised into a fair value hierarchy based on the degree to which the
inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety,
which are described as follows:
•
•
•
Level 1 – Quoted prices in active markets.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data), either
directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable).
(cid:51)re(cid:86)entation of t(cid:75)e Income Statement
In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information
which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income
Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with
certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.
(cid:38)ritical (cid:36)cco(cid:88)nting (cid:45)(cid:88)(cid:71)gement(cid:86) an(cid:71) (cid:46)e(cid:92) So(cid:88)rce(cid:86) of (cid:40)(cid:86)timation (cid:56)ncertaint(cid:92)
Critical accounting judgements and key sources of estimation uncertainty used in preparing the financial information are continually
evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable. The resulting estimates will, by definition, seldom equal the related actual results.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES continued
In the course of preparing the financial statements, the only key source of estimation uncertainty in the process of applying the
Company’s accounting policies, is in relation to the valuation of the unquoted (Level 3) investments. The nature of estimation means
that the actual outcomes could differ from those estimates, possibly significantly. The estimates relate to the investments where there
is no appropriate market price i.e. the private investments. Whilst the board considers the methodologies and assumptions adopted
in the valuation are supportable, reasonable and robust, because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready market for the investment existed. As at (cid:22)1 March 2022,
there is no single key assumption used in the valuation of the unquoted investments, or other key source of estimation uncertainty,
that, in the (cid:39)irectors’ opinion has a significant risk of causing a material adjustment to the carrying values of assets and liabilities
within the next financial year.
Unquoted investments are all valued in line with the accounting policy set out below.
(B) Investments
Investments are measured under FRS 102 and are measured initially, and at subsequent reporting dates, at fair value. Investments
are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the
time frame established by the market concerned. Changes in fair value and gains or losses on disposal are included in the Income
Statement as a capital item.
For quoted securities fair value is either bid price or last traded price, depending on the convention of the exchange on which the
investment is listed.
Fair value is the price for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.
In estimating the fair value of unquoted investments, the AIFM and Board apply valuation techniques which are appropriate in light of
the nature, facts and circumstances of the investment, and use reasonable current market data and inputs combined with judgement
and assumptions and apply these consistently. The following principles used in determining the valuation of unquoted investments,
are consistent with the International Private Equity and (cid:57)enture Capital (cid:57)aluation (“IPE(cid:57)”) (cid:42)uidelines. The assumptions and estimates
made in determining the fair value of each unquoted investment are considered at least each six months or sooner if there is a
triggering event. An example of where a valuation would be considered out of the six-month cycle is the success or failure of a drug
under development to meet an anticipated outcome of its trial, announcement of the company undergoing an initial public offering, or
other performance against tangible development milestones.
The primary valuation method applied in the valuation of the unquoted investments is the probability-weighted expected return
method (PWERM), which considers on a probability weighted basis the future outcomes for the investment. When using the PWERM
method significant judgements are made in estimating the various inputs into the model and recognising the sensitivity of such
estimates. Examples of the factors where significant judgement is made include, but are not limited to, the probability assigned to
potential future outcomes; discount rates; and, the likely exit scenarios for the investor company, for example, IPO or trade sale.
Where the investment being valued was itself made recently, or there has been a third party transaction in the investment, the price
of the transaction may provide a good indication of fair value. Using the Price of Recent Investment technique is not a default and at
each reporting date the fair value of recent investments is estimated to assess whether changes or events subsequent to the relevant
transaction would imply a material change in the investment’s fair value.
When using the price of a recent transaction in the valuations the Company looks to (cid:820)re-calibrate’ this price at each valuation point by
reviewing progress within the investment, comparing against the initial investment thesis, assessing if there are any significant events
or milestones that would indicate the value of the investment value has changed materially and considering whether an alternative
methodology would be more appropriate.
78
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES continued
(C) Derivative financial instruments
The Company uses derivative financial instruments (namely put and call options and equity swaps).
All derivative instruments are valued initially, and at subsequent reporting dates, at fair value in the Statement of Financial Position.
The equity swaps are accounted for as Fixed Assets or Current Liabilities.
All gains and losses on over-the-counter (OTC) equity swaps are accounted for as gains or losses on investments. Where there has
been a re-positioning of the swap, gains and losses are accounted for on a realised basis. All such gains and losses have been debited
or credited to the capital column of the Income Statement.
Cash collateral held by counterparties is included within cash, except where there is a right of offset against the overdraft(cid:812)facility.
(D) Investment income
Dividends receivable are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the
Company’s right to receive payment is established. Foreign dividends are grossed up at the appropriate rate of withholding tax, with
the withholding tax recognised in the taxation charge.
Income from fixed interest securities is recognised on a time apportionment basis so as to reflect the effective interest rate. (cid:39)eposit
interest is accounted for on an accruals basis.
(E) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement
except as follows:
•
•
expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income
Statement; and
expenses are charged to the capital column of the Income Statement where a connection with the maintenance or enhancement
of the value of the investments can be demonstrated. In this respect the portfolio management and AIFM fees have been charged
to the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income, from
the Company’s portfolio. As a result 5% of the portfolio management and AIFM fees are charged to the revenue column of the
Income Statement and 95% are charged to the capital column of the Income Statement.
Any performance fee is charged in full to the capital column of the Income Statement.
(F) Finance costs
Finance costs are accounted for on an accruals basis. Finance costs are charged to the Income Statement in line with the Board’s
expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio. As a result 5% of the
finance costs are charged to the revenue column of the Income Statement and (cid:28)(cid:24)(cid:8) are charged to the capital column of the Income
Statement. Finance charges are accounted for on an accruals basis in the Income Statement using the effective interest rate method
and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES continued
(G) Taxation
The tax effect of different items of expenditure is allocated between capital and revenue using the marginal basis.
Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial
Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised when it
is probable that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax
is provided for at the rate of tax enacted or substantially enacted.
(H) Foreign currency
Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates.
Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the
exchange rates ruling at that date.
(cid:40)(cid:91)c(cid:75)ange gain(cid:86)(cid:18)lo(cid:86)(cid:86)e(cid:86) on foreign c(cid:88)rrenc(cid:92) (cid:69)alance(cid:86)
Any gains or losses on the translation of foreign currency balances, including the foreign currency overdraft, whether realised or
unrealised, are taken to the capital or the revenue column of the Income Statement, depending on whether the gain or loss is of a
capital or revenue nature.
(I) Capital redemption reserve
This reserve arose when ordinary shares were redeemed by the Company and subsequently cancelled. When ordinary shares are
redeemed by the Company and subsequently cancelled, an amount equal to the par value of the ordinary share capital is transferred
from the ordinary share capital to the capital redemption reserve.
((cid:45)) Capital reserve
The following are transferred to this reserve:
•
•
•
•
gains and losses on the disposal of investments;
exchange differences of a capital nature, including the effects of changes in exchange rates on foreign currency borrowings;
expenses, together with the related taxation effect, in accordance with the above policies; and
changes in the fair value of investments and derivatives.
This reserve can be used to distribute realised capital profits by way of dividend or share buy backs. Any gains in the fair value of
investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve. Distributions are only payable
out of the capital reserve if capital reserves are greater than the proposed distribution and positive on the date of distribution.
((cid:46)) Revenue reserve
The revenue reserve is distributable by way of dividend. Dividends are only payable out of the revenue reserve if revenue reserves are
greater than the proposed dividend and positive on the date of distribution.
80
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
1. ACCOUNTING POLICIES continued
(L) Dividend payments
(cid:39)ividends paid by the Company on its shares are recognised in the financial statements in the year in which they become payable and
are shown in the Statement of Changes in Equity.
(M) Cash and cash equivalents
Cash comprises cash at bank and cash equivalents are short-term, highly liquid investments that are readily convertible to known
amounts of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts are considered as a component of cash and cash equivalents as they are repayable on demand and form an integral
part of the Company’s cash management.
2. INCOME FROM INVESTMENTS
Income from inve(cid:86)tment(cid:86)
Overseas dividends
Fixed interest income
UK dividends
Ot(cid:75)er income
Derivatives
Deposit interest
Income from liquidity stocks
(cid:55)otal income from inve(cid:86)tment(cid:86)
(cid:55)otal income com(cid:83)ri(cid:86)e(cid:86)(cid:29)
Dividends
Interest
2022
£’000
2021
£’000
19,678
16,730
772
2,825
999
1,449
23,275
19,178
151
45
–
–
24
45
23,471
19,247
22,503
18,179
968
1,068
23,471
19,247
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES
AIFM fee
Portfolio management fee
Performance fee (reversal)/charge*
Revenue
£’000
160
778
–
938
2022
Capital
£’000
3,046
Total
£’000
3,206
14,781
15,559
(18,888)
(18,888)
(1,061)
(123)
Revenue
£’000
152
701
–
853
2021
Capital
£’000
2,892
13,323
31,748
Total
£’000
3,044
14,024
31,748
47,963
48,816
* During the year ended 31 March 2022, due to underperformance against the Benchmark , a reversal of prior period performance fee provisions totalling
£18,888,000 occurred (2021: charge of £31,748,000).
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES continued
See page 43 for further information on the performance fee.
Further details on the above fees are set out in the Strategic Report on pages 27 and 28 and in the Report of the Directors on
pages 43 and 44.
4. OTHER EXPENSES
Directors’ remuneration
Employer’s NIC on Directors’ remuneration
Auditors’ remuneration for the audit of the Company’s financial statements
Auditors’ remuneration for non-audit services
Depositary and custody fees
Listing fees*
Registrar fees
Legal and professional costs
Broker fees
Other costs
Professional fees (Capital)^
2022
£’000
207
2021
£’000
222
20
47
5
213
77
63
255
117
301
1,305
529
1,834
20
49
–
177
461
48
78
30
253
1,338
155
1,493
Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on page 61.
* 2021 includes £405,000 in respect of London Stock Exchange block listing fees required as a result of the issuance of new shares by the Company during the year.
^ Professional fees in respect of acquisition of unquoted investments. These fees do not form part of the ongoing charge ratio, see (cid:42)lossary on page (cid:28)(cid:25).
5. FINANCE COSTS
Finance costs
6. TAXATION ON NET RETURN
(A) Analysis of charge in year
Corporation tax at 19% (2020: 19%)
Overseas taxation
Revenue
£’000
40
2022
Capital
£’000
761
Total
£’000
801
Revenue
£’000
20
Revenue
£’000
–
3,668
3,668
2022
Capital
£’000
–
–
–
Total
£’000
–
3,668
3,668
Revenue
£’000
–
2,712
2,712
2021
Capital
£’000
379
2021
Capital
£’000
–
–
–
Total
£’000
399
Total
£’000
–
2,712
2,712
82
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6. TAXATION ON NET RETURN continued
((cid:37)) Factors affecting the tax charge for the year
Approved investment trusts are exempt from tax on capital gains made within the Company.
The tax charged for the year is lower (2021: lower) than the standard rate of corporation tax of 19% (2021: 19%).
The(cid:98)difference is explained below.
Revenue
£’000
2022
Capital
£’000
Total
£’000
Revenue
£’000
2021
Capital
£’000
Total
£’000
Net return before taxation
21,188
(159,046)
(137,858)
17,036
462,694
479,730
Corporation tax at 19% (2021: 19%)
4,026
(30,219)
(26,193)
3,237
87,912
91,149
Non-taxable gains on investments
–
30,175
30,175
–
(97,126)
(97,126)
Overseas withholding taxation
Non taxable dividends
Excess management expenses
(cid:55)otal ta(cid:91) c(cid:75)arge
(C) Provision for deferred tax
3,668
(4,276)
250
3,668
–
–
44
–
3,668
2,712
(4,276)
(3,468)
294
3,668
231
2,712
–
–
9,214
–
2,712
(3,468)
9,445
2,712
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 £45,055,000 (25% tax rate) (2021: £33,851,000 (19% 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.
7. RETURN PER SHARE
The return per share is based on the following figures(cid:29)
Revenue return
Capital (loss)/return
Weighted average number of ordinary shares in issue during the year
Revenue return per ordinary share
Capital (loss)/return per ordinary share
2022
£’000
2021
£’000
17,520
14,324
(159,046)
462,694
(141,526)
477,018
65,307,132
59,487,545
26.8p
24.1p
(243.5p)
777.8p
(216.7p)
801.9p
The calculation of the total, revenue and capital (loss)/return per ordinary share is carried out in accordance with IAS 33,
“Earnings per Share”, in accordance with the requirements of FRS 102.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8. DIVIDENDS
Under UK Company Law, final dividends are not recognised until they are approved by shareholders and interim dividends are
not recognised until they are paid. They are also debited directly from reserves. Amounts recognised as distributable in these
financial statements were as follows(cid:29)
Second interim dividend in respect of the year ended 31 March 2020
Interim dividend in respect of the year ended 31 March 2021
Final dividend in respect of the year ended 31 March 2021
Interim dividend in respect of the year ended 31 March 2022
2022
£’000
–
–
10,085
4,586
2021
£’000
10,512
3,967
–
–
14,671
14,479
In respect of the year ended 31 March 2022, an interim dividend of (cid:26).0p per share was paid on 11 January 2022. A final
dividend of 19.5p will be payable, subject to shareholder approval, on 15 July 2022, the associated ex dividend date will be
9 June 2022. The total dividends payable in respect of the year ended 31 March 2022 amount to 26.5p per share (2021:
22.0p per share). The aggregate cost of the final dividend, based on the number of shares in issue at 25 May 2022, will be
(cid:101)12,(cid:26)21,000. In accordance with FRS 102 dividends will be reflected in the financial statements for the year in which they
become payable. Total dividends in respect of the financial year, which is the basis on which the requirements of s11(cid:24)(cid:27) of the
Corporation Tax Act 2010 are considered, are set out below.
Revenue available for distribution by way of dividend for the year
Interim dividend in respect of the year ended 31 March 2022
Final dividend in respect of the year ended 31 March 2022*
Interim dividend in respect of the year ended 31 March 2021
Final dividend in respect of the year ended 31 March 2021
(cid:49)et retaine(cid:71) reven(cid:88)e
* based on 65,233,404 shares in issue as at 25 May 2022.
2022
£’000
2021
£’000
17,520
14,324
(4,586)
(12,721)
–
–
–
–
(3,967)
(10,085)
213
272
84
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9. INVESTMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS
Cost at 1 April 2021
(cid:52)(cid:88)ote(cid:71)
Inve(cid:86)tment(cid:86)
£’000
(cid:56)n(cid:84)(cid:88)ote(cid:71)
Inve(cid:86)tment(cid:86)
£’000
Derivative
(cid:41)inancial
In(cid:86)tr(cid:88)ment(cid:86) (cid:16)
Net
£’000
Total
£’000
1,887,379
126,577
–
2,013,956
Investment holdings gains at 1 April 2021
388,030
14,052
10,552
412,634
Valuation at 1 April 2021
Movement in the year:
(cid:807)Purchases at cost
(cid:807)Sales - proceeds
Transfer between levels*
2,275,409
140,629
10,552
2,426,590
1,284,504
69,066
–
1,353,570
(1,243,999)
(15,622)
6,304
(1,253,317)
44,424
(44,424)
–
–
Net movement in investment holding gains
(152,963)
22,824
(21,985)
(152,124)
(cid:57)al(cid:88)ation at (cid:22)1 (cid:48)arc(cid:75) (cid:21)0(cid:21)(cid:21)
Cost at 31 March 2022
2,207,375
172,473
(5,129)
2,374,719
1,952,701
136,760
–
2,089,461
Investment holding gains/(losses) at 31 March 2022
254,674
35,713
(5,129)
285,258
(cid:57)al(cid:88)ation at (cid:22)1 (cid:48)arc(cid:75) (cid:21)0(cid:21)(cid:21)
* See Note 16.
2,207,375
172,473
(5,129)
2,374,719
The Company received £1,253,317,000 (2021: £1,484,698,000) from investments and derivatives sold in the year. The book
cost of these was £1,278,065,000 (2021: £1,217,151,000). These investments and derivatives have been revalued over time
and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Net movement in investment holding (losses)/gains in the year
Net movement in derivative holding (losses)/gains in the year
Effective interest rate amortisation
(cid:11)(cid:47)o(cid:86)(cid:86)e(cid:86)(cid:12)(cid:18)gain(cid:86) on inve(cid:86)tment(cid:86)
2022
£’000
2021
£’000
(130,139)
483,612
(21,985)
33,760
(351)
(105)
(152,475)
517,267
Purchase transaction costs were £1,668,000 (2021: £2,808,000). Sales transaction costs were £1,244,000 (2021: £1,352,000).
These comprise mainly commission and stamp duty.
10. DERIVATIVE FINANCIAL INSTRUMENTS
Fair value of OTC equity swaps (asset)
Fair value of OTC equity swaps (liability)
See note 9 above for movements during the year.
2022
£’000
283
2021
£’000
18,864
(5,412)
(8,312)
(5,129)
10,552
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11. DEBTORS
Amounts due from brokers
Issue of own shares awaiting settlement
Withholding taxation recoverable
(cid:57)AT recoverable
Prepayments and accrued income
12. CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR
Amounts due to brokers
Overdraft drawn*
Performance fee provision**
Other creditors and accruals
2022
£’000
2021
£’000
10,581
10,402
–
2,587
–
2,577
2,295
66
1,556
2,832
14,724
18,172
2022
£’000
30,131
113,597
–
4,076
2021
£’000
6,840
49,896
31,748
4,448
147,804
92,932
* The Company’s borrowing requirements are met through the utilisation of an overdraft facility provided by J.P. Morgan Securities LLC. The overdraft is drawn down
in U.S. dollars. Interest on the drawn overdraft is charged at the United States Overnight Bank Funding Rate plus 45 basis points.
As described on page 90, J.P. Morgan Securities LLC may take investments up to 140% of the value of the overdrawn balance as collateral and has been granted a
first priority security interest or lien over the Company’s assets.
** As at 31 March 2022 no performance fees were accrued or payable (31 March 2021: £31.7 million). Of the 31 March 2021 accrual, £12.9 million crystallised and
became payable as at 30 June 2021 and £18.9 million reversed due to underperformance, as set out in note 3. The performance fee paid related to outperformance
generated as at 30 June 2020 that was maintained to 30 June 2021.
13. SHARE CAPITAL
Issued and fully paid at 1 April 2021
New shares issued
Shares purchased for treasury
At 31 March 2022
Issued and fully paid:
Ordinary Shares of 25p
(cid:55)rea(cid:86)(cid:88)r(cid:92)
(cid:86)(cid:75)are(cid:86)
n(cid:88)m(cid:69)er
Total
(cid:86)(cid:75)are(cid:86)
in issue
n(cid:88)m(cid:69)er
–
–
64,310,255
1,227,500
S(cid:75)are(cid:86)
n(cid:88)m(cid:69)er
64,310,255
1,227,500
(80,509)
80,509
–
65,457,246
80,509
65,537,755
2022
£’000
2021
£’000
16,385
16,078
During the year ended 31 March 2022 1,227,500 shares were issued raising £45,549,000 and 80,509 shares were
repurchased into Treasury at a cost of £2,544,000 (2021: 10,690,977 shares were issued raising £380,588,000 and no shares
were repurchased).
86
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14. NET ASSET VALUE PER SHARE
Net asset value per share
2022
2021
3,465.2p
3,703.0p
The net asset value per share is based on the assets attributable to equity shareholders of £2,268,233,000 (2021:
£2,381,425,000) and on the number of shares in issue at the year end of 65,457,246 (2021: 64,310,255).
15. RELATED PARTIES
The following are considered to be related parties:
•
Frostrow Capital LLP (under the Listing Rules only)
• OrbiMed Capital LLC
•
The Directors of the Company
Details of the relationship between the Company and Frostrow Capital LLP, the Company’s AIFM, and OrbiMed Capital LLC,
the Company’s Portfolio Manager, are disclosed on pages 27 and 28 and page 43. Sven Borho, who joined the Board on
7 June 2018, is a Managing Partner at OrbiMed. Sven Borho has waived his Director’s fee of £33,573 (2021: £32,282). Details
of fees paid to OrbiMed by the Company can be found in note 3 on page 80. All material related party transactions have been
disclosed in notes 3 and 4 on pages 80 and 81.
Details of the remuneration of all Directors can be found on page 61. Details of the Directors’ interests in the capital of the
Company can also be found on page 61.
Three current and two former partners at (cid:50)rbiMed Capital LLC have a minority financial interest totalling 20(cid:8) in Frostrow
Capital LLP, the Company’s AIFM. Details of the fees paid to Frostrow Capital LLP by the Company can be found in note 3
on(cid:98)page 80.
16. FINANCIAL INSTRUMENTS
Risk management policies and procedures
The Company’s financial instruments comprise securities and other investments, derivative instruments, cash balances,
loans and debtors and creditors that arise directly from its operations.
As an investment trust, the Company invests in equities and other investments for the long term so as to secure its
investment objective as stated on pages 8 and 9. 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(cid:29)
(i) market risk (including foreign currency risk, interest rate risk and other price risk)
(ii) liquidity risk
(iii) credit risk
These risks, with the exception of liquidity risk, and the Directors’ approach to the management of them, are set out in
the Strategic Report on pages 28 to 33 and have not changed from the previous accounting year. The AIFM, in close co-
operation with the Board and the Portfolio Manager, co-ordinates the Company’s risk management.
Use of derivatives
As noted in the Strategic Report, on pages 8 and 9, equity swaps are used within the Company’s portfolio.
More details on swaps can be found in the (cid:42)lossary beginning on page 94.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. FINANCIAL INSTRUMENTS continued
OTC equity swaps
The Company uses OTC equity swap positions to gain access to the Indian and Chinese markets either when it is more cost
effective to gain access via swaps or to gain exposure to thematic baskets of stocks.
(cid:39)etails of financed swap positions(cid:13) are noted in the Portfolio as set out on pages 10 and 11.
* See glossary beginning on page 94.
Offsetting disclosure
Swap trades and OTC derivatives are traded under ISDA† Master Agreements. The Company currently has such agreements
in place with (cid:42)oldman Sachs and JP Morgan.
These agreements create a right of set-off that becomes enforceable only following a specified event of default, or in
other circumstances not expected to arise in the normal course of business. As the right of set-off is not unconditional, for
financial reporting purposes, the Company does not offset derivative assets and derivative liabilities.
†International Swap Dealers Association Inc.
(cid:11)i(cid:12) Ot(cid:75)er (cid:83)rice ri(cid:86)(cid:78)
In pursuance of the Company’s Investment Objective the Company’s portfolio, including its derivatives, is exposed to the risk
of fluctuations in market prices and foreign exchange rates.
The Board manage these risks through the use of limits and guidelines, monthly compliance reports from Frostrow and
reports from Frostrow and OrbiMed presented at each Board meeting, as set out on pages 29 and 30.
Ot(cid:75)er (cid:83)rice ri(cid:86)(cid:78) e(cid:91)(cid:83)o(cid:86)(cid:88)re
The Company’s gross exposure to other price risk is represented by the fair value of the investments and the underlying
exposure through the derivative investments held at the year end as shown in the table below.
Investments
OTC equity swaps
2022
2021
Assets
£’000
Liabilities
£’000
Notional*
e(cid:91)(cid:83)o(cid:86)(cid:88)re
£’000
Assets
£’000
Liabilities
£’000
Notional*
e(cid:91)(cid:83)o(cid:86)(cid:88)re
£’000
2,379,848
–
2,379,848
2,416,038
–
2,416,038
283
(5,412)
135,018
18,864
(8,312)
145,636
2,380,131
(5,412)
2,514,866
2,434,902
(8,312)
2,561,674
* The notional exposure is calculated in accordance with the AIFMD requirements for calculating exposure via derivatives. See glossary beginning on page 97.
Ot(cid:75)er (cid:83)rice ri(cid:86)(cid:78) (cid:86)en(cid:86)itivit(cid:92)
If market prices of all of the Company’s financial instruments including the derivatives at the Statement of Financial Position
date had been 25% higher or lower (2021: 25% higher or lower) while all other variables remained constant: the revenue return
would have decreased/increased by £0.2 million (2021: £0.2 million); the capital return would have increased by £608.4 million
(2021: £540.4 million)/decreased by £625.4 million (2021: £604.0 million); and, the return on equity would have increased by
£608.2 million (2021: £540.1 million)/decreased by £625.2 million (2021: £603.8 million). The calculations are based on the
portfolio as at the respective Statement of Financial Position dates and are not representative of the year as a whole.
88
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. FINANCIAL INSTRUMENTS continued
(cid:11)ii(cid:12) (cid:41)oreign c(cid:88)rrenc(cid:92) ri(cid:86)(cid:78)
A significant proportion of the Company’s portfolio and derivative positions are denominated in currencies other than sterling
(the Company’s functional currency, and the currency in which it reports its results). As a result, movements in exchange
rates can significantly affect the sterling value of those items.
(cid:41)oreign c(cid:88)rrenc(cid:92) e(cid:91)(cid:83)o(cid:86)(cid:88)re
The fair values of the Company’s monetary assets and liabilities that are denominated in foreign currencies are shown below.
U.S. dollar
Swiss franc
Japanese yen
Hong Kong dollar
Other
Current
assets
£’000
2022
Current
liabilities
£’000
Inve(cid:86)tment(cid:86)
£’000
Current
assets
£’000
2021
Current
liabilities
£’000
Inve(cid:86)tment(cid:86)
£’000
64,264
(169,551)
1,821,239
72,352
(99,943)
2,034,533
113,899
1,513
2,202
332
851
155
–
114
83,225
(851)
190,260
–
30,803
858
–
489
–
–
–
–
47,411
42,203
179,407
17,642
67,804
(170,288)
2,239,426
75,212
(99,943)
2,321,196
(cid:41)oreign c(cid:88)rrenc(cid:92) (cid:86)en(cid:86)itivit(cid:92)
The following table details the sensitivity of the Company’s net return for the year and shareholders’ funds to a 10% increase
and decrease in sterling against the relevant currency (2021: 10% increase and decrease).
These percentages have been determined based on market volatility in exchange rates over the previous 12 months. The
sensitivity analysis is based on the Company’s significant foreign currency exposures at each Statement of Financial Position
date.
(cid:56)S(cid:39)
£’000
Sterling depreciates
206,233
2022
(cid:60)(cid:40)(cid:49)
£’000
9,297
CHF
£’000
(cid:43)(cid:46)(cid:39)
£’000
(cid:56)S(cid:39)
£’000
12,900
21,140
238,003
2021
(cid:60)(cid:40)(cid:49)
£’000
4,785
CHF
£’000
5,436
(cid:43)(cid:46)(cid:39)
£’000
19,934
Sterling appreciates
(168,736)
(7,606)
(10,555)
(17,296)
(194,730)
(3,915)
(4,448)
(16,310)
(cid:11)iii(cid:12) Intere(cid:86)t rate ri(cid:86)(cid:78)
Interest rate changes may affect:
– the interest payable on the Company’s variable rate borrowings;
– the level of income receivable from floating and fixed rate securities and cash at bank and on deposit(cid:30)
– the fair value of investments in fixed interest securities.
Intere(cid:86)t rate e(cid:91)(cid:83)o(cid:86)(cid:88)re
The Company’s main exposure to interest rate risks is through its overdraft facility with J.P. Morgan Securities LLC, which is
repayable on demand, and its holding in fixed interest securities. The exposure of financial assets and liabilities to fixed and
floating interest rates, is shown below.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. FINANCIAL INSTRUMENTS continued
At 31 March 2022, the Company held 0.4% of the portfolio in securitised debt (2021: 0.7% of the portfolio). The exposure is
shown in the table below.
2022
2021
(cid:58)eig(cid:75)te(cid:71)
average
(cid:83)erio(cid:71)
for (cid:90)(cid:75)ic(cid:75)
rate is
fi(cid:91)e(cid:71)
Years
(cid:58)eig(cid:75)te(cid:71)
average
fi(cid:91)e(cid:71)
interest
rate
%
2.9
2.6
(cid:58)eig(cid:75)te(cid:71)
average
(cid:83)erio(cid:71)
for (cid:90)(cid:75)ic(cid:75)
rate is
fi(cid:91)e(cid:71)
Years
(cid:58)eig(cid:75)te(cid:71)
average
fi(cid:91)e(cid:71)
interest
rate
%
(cid:41)loating
rate
£’000
–
3.9
2.6
56,336
(143,339)
(140,147)
(cid:41)i(cid:91)e(cid:71)
rate
£’000
5,024
–
–
–
(cid:41)i(cid:91)e(cid:71)
rate
£’000
6,945
–
–
–
(cid:41)loating
rate
£’000
4,486
40,858
(61,159)
(135,084)
5,024
(227,150)
6,945
(150,899)
Unquoted debt
investments
Cash
Overdraft facility
Financed swap
positions
All interest rate exposures are held in U.S. dollars.
Cash of (cid:101)(cid:24)(cid:25).(cid:22) million (2021(cid:29) (cid:101)(cid:23)0.(cid:28) million) was held as collateral against the financed swap positions, of which (cid:101)2(cid:28).(cid:26) million
(2021: £11.3 million) was offset against the overdraft position.
Intere(cid:86)t rate (cid:86)en(cid:86)itivit(cid:92)
If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s net return for the year
ended 31 March 2022 and the net assets would increase/decrease by £2.3 million (2021: increase/decrease by £1.5 million).
(cid:11)iv(cid:12) (cid:47)i(cid:84)(cid:88)i(cid:71)it(cid:92) ri(cid:86)(cid:78)
This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.
(cid:48)anagement of t(cid:75)e ri(cid:86)(cid:78)
Liquidity risk is not considered significant as the majority of the Company’s assets are investments in quoted securities
that are readily realisable within one week, in normal market conditions. There maybe circumstances where market liquidity
is lower than normal. Stress tests have been performed to understand how long the portfolio would take to realise in such
situations. The Board is comfortable that in such a situation the Company would be able to meet its liabilities as they fall due.
(cid:47)i(cid:84)(cid:88)i(cid:71)it(cid:92) e(cid:91)(cid:83)o(cid:86)(cid:88)re an(cid:71) mat(cid:88)rit(cid:92)
Contractual maturities of the financial liability exposures as at (cid:22)1 March 2022, based on the earliest date on which payment
can be required, are as follows:
Overdraft facility
Amounts due to brokers and accruals
OTC equity swaps
2022
2021
3 to 12
mont(cid:75)(cid:86)
£’000
–
–
(cid:22) mont(cid:75)(cid:86)
or less
£’000
143,339
30,131
5,412
–
5,412
173,470
3 to 12
mont(cid:75)(cid:86)
£’000
(cid:22) mont(cid:75)(cid:86)
or less
£’000
–
–
8,312
8,312
61,159
6,840
–
67,999
90
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. FINANCIAL INSTRUMENTS continued
£56.3 million of cash held as collateral is offset against the overdraft facility in the Statement of Financial Position, as set out
in Note 16(iii) above.
(cid:11)v(cid:12) (cid:38)re(cid:71)it ri(cid:86)(cid:78)
Credit risk is the risk of failure of a counterparty to discharge its obligations resulting in the Company suffering a financial loss.
The carrying amounts of financial assets best represent the maximum credit risk at the Statement of Financial Position date.
The Company’s quoted securities are held on its behalf by J.P. Morgan Securities LLC acting as the Company’s Custodian
and Prime Broker.
As noted on page 31, certain of the Company’s assets can be held by J.P. Morgan Securities LLC as collateral against
the overdraft provided by them to the Company. As at 31 March 2022 such assets held by J.P. Morgan Securities LLC are
available for rehypothecation (see (cid:42)lossary beginning on page 94 for further information). As at 31 March 2022, assets
with a total market value of £203.1 million (2021: £106.9 million) were available to J.P. Morgan Securities LLC to be used as
collateral against the overdraft facility which equates to 140% of the overdrawn position (calculated on a settled basis).
(cid:38)(cid:53)(cid:40)(cid:39)I(cid:55) (cid:53)IS(cid:46) (cid:40)(cid:59)(cid:51)OS(cid:56)(cid:53)(cid:40)
Unquoted debt investments
Derivative – OTC equity swaps
(cid:38)(cid:88)rrent a(cid:86)(cid:86)et(cid:86)(cid:29)
Other receivables (amounts due from brokers, dividends and interest receivable)
Cash
2022
£’000
5,024
283
2021
£’000
11,430
18,864
14,724
18,172
26,594
29,595
(cid:11)vi(cid:12) (cid:41)air val(cid:88)e of financial a(cid:86)(cid:86)et(cid:86) an(cid:71) financial lia(cid:69)ilitie(cid:86)
Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments
and derivatives) or the Statement of Financial Position amount is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accrual, cash at bank, bank overdraft and amounts due under the loan facility).
(cid:11)vii(cid:12) (cid:43)ierarc(cid:75)(cid:92) of inve(cid:86)tment(cid:86)
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).
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FINANCIAL STATEMENTS
91
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. FINANCIAL INSTRUMENTS continued
As of 31 March 2022
Investments held at fair value through profit or loss
Derivatives: OTC swaps (assets)
Derivatives: OTC swaps (liabilities)
Level 1
£’000
2,207,375
–
–
Level 2
£’000
Level 3
£’000
Total
£’000
–
283
(5,412)
172,473
2,379,848
–
–
283
(5,412)
Financial instruments measured at fair value
2,207,375
(5,129)
172,473
2,374,719
As at (cid:22)1 March 2022, one debt, twelve equity and a deferred consideration investment (included in the portfolio on pages(cid:98)10
to 11) have been classified as level (cid:22). All level (cid:22) positions have been valued in accordance with the accounting policy set out
in Note 1(b).
During 2022 four unquoted investments were transferred to Level 1 following their initial public offerings.
As of 31 March 2021
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
Investments held at fair value through profit or loss
2,275,409
–
140,629
2,416,038
Derivatives: OTC swaps (assets)
Derivatives: OTC swaps (liabilities)
–
–
18,864
(8,312)
–
–
18,864
(8,312)
Financial instruments measured at fair value
2,275,409
10,552
140,629
2,426,590
As at 31 March 2021, three debt, eleven equity and a deferred consideration investment have been classified as Level (cid:22). All
level 3 positions have been valued using an independent third party pricing source or using the price of a recent transaction.
During 2021 three unquoted investments were acquired and subsequently transferred to Level 1 following their initial public
offerings.
(cid:11)viii(cid:12) (cid:38)a(cid:83)ital management (cid:83)olicie(cid:86) an(cid:71) (cid:83)roce(cid:71)(cid:88)re(cid:86)
The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to
maximise the income and capital return to its equity shareholders through an appropriate level of gearing or leverage.
The Board’s policy on gearing and leverage is set out on page 8.
As at 31 March 2022, the Company had a net leverage percentage of 10.9% (2021: 7.6%).
The capital structure of the Company consists of the equity share capital, retained earnings and other reserves as shown in
the Statement of Financial Position on page 74.
The Board, with the assistance of the AIFM and the Portfolio Manager, monitors and reviews the broad structure of the
Company’s capital on an ongoing basis. This includes a review of:
– the planned level of gearing, which takes into account the Portfolio Manager’s view of the market;
–
the need to buy back equity shares, either for cancellation or to hold in treasury, in light of any share price discount to net
asset value per share in accordance with the Company’s share buy-back policy;
– the need for new issues of equity shares, including issues from treasury; and
– the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting year.
92
FINANCIAL STATEMENTS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
17. CAPITAL RESERVE
At 31 March 2021
Net losses on investments
Expenses charged to capital
Exchange loss on currency balances
Shares repurchased for Treasury
(cid:36)t (cid:22)1 (cid:48)arc(cid:75) (cid:21)0(cid:21)(cid:21)
Capital Reserves
Inve(cid:86)tment
(cid:43)ol(cid:71)ing
Gains*
£’000
Ot(cid:75)er
£’000
Total
£’000
966,717
575,911
1,542,628
(25,105)
(127,370)
(152,475)
(229)
(6,342)
(2,544)
–
–
–
(229)
(6,342)
(2,544)
932,497
448,541
1,381,038
* Investment holding gains relate to the revaluation of investments and derivatives held at the reporting date. (See note 9 beginning on page 84 for further details).
Under the Company’s Articles of Association, sums within “capital reserves – other” are also available for distribution.
18. RECONCILIATION OF OPERATING (LOSS)/RETURN TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
(Loss)/returns before finance charges and taxation
Add(cid:29) capital loss(cid:18)(less(cid:29) capital gain) before finance charges and taxation
(cid:53)even(cid:88)e ret(cid:88)rn (cid:69)efore finance c(cid:75)arge(cid:86) an(cid:71) ta(cid:91)ation
Expenses charged to capital
Decrease in other debtors
(Decrease)/increase in provisions, and other creditors and accruals
Net taxation suffered on investment income
Amortisation
(cid:49)et ca(cid:86)(cid:75) (cid:11)o(cid:88)tflo(cid:90)(cid:12)(cid:18)inflo(cid:90) from o(cid:83)erating activitie(cid:86)
2022
£’000
2021
£’000
(137,057)
480,129
158,285
(463,073)
21,228
17,056
532
(48,118)
1,342
934
(32,120)
33,302
(3,960)
(2,138)
(351)
(13,329)
(105)
931
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
93
SHAREHOLDER INFORMATION
FINANCIAL CALENDAR
31 March
Financial Year End
May
July
Final Results Announced
Annual General Meeting
30 September
Half Year End
November
Half Year Results Announced
January/July
Dividends Payable
Annual general meeting
The Annual General Meeting of Worldwide Healthcare Trust
PLC will be held at Wednesday, 6 July 2022 from 12.30 p.m.
Please refer to the Chairman’s Statement on pages 4 to 7
for details of this year’s arrangements.
Dividends
The Company pays an interim and a final dividend 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, Link Group, on request.
Share prices
The Company’s 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, Link Group, 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.
(cid:53)(cid:87)(cid:78)(cid:91)(cid:70)(cid:89)(cid:74)(cid:5)(cid:60)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:5)(cid:50)(cid:70)(cid:83)(cid:70)(cid:76)(cid:74)(cid:87)(cid:88)
(cid:56)(cid:77)(cid:70)(cid:87)(cid:74)(cid:88)(cid:5)(cid:77)(cid:74)(cid:81)(cid:73)(cid:5)(cid:91)(cid:78)(cid:70)(cid:5)(cid:78)(cid:83)(cid:91)(cid:74)(cid:88)(cid:89)(cid:82)(cid:74)(cid:83)(cid:89)(cid:5)(cid:85)(cid:81)(cid:70)(cid:89)(cid:75)(cid:84)(cid:87)(cid:82)(cid:88)
(cid:50)(cid:90)(cid:89)(cid:90)(cid:70)(cid:81)(cid:5)(cid:43)(cid:90)(cid:83)(cid:73)(cid:88)
(cid:53)(cid:74)(cid:83)(cid:88)(cid:78)(cid:84)(cid:83)(cid:88)
(cid:53)(cid:87)(cid:78)(cid:91)(cid:70)(cid:89)(cid:74)(cid:5)(cid:60)(cid:74)(cid:70)(cid:81)(cid:89)(cid:77)(cid:5)(cid:50)(cid:70)(cid:83)(cid:70)(cid:76)(cid:74)(cid:87)(cid:88)
(cid:56)(cid:77)(cid:70)(cid:87)(cid:74)(cid:88)(cid:5)(cid:77)(cid:74)(cid:81)(cid:73)(cid:5)(cid:91)(cid:78)(cid:70)(cid:5)(cid:78)(cid:83)(cid:91)(cid:74)(cid:88)(cid:89)(cid:82)(cid:74)(cid:83)(cid:89)(cid:5)(cid:85)(cid:81)(cid:70)(cid:89)(cid:75)(cid:84)(cid:87)(cid:82)(cid:88)
(cid:46)(cid:83)(cid:88)(cid:90)(cid:87)(cid:70)(cid:83)(cid:72)(cid:74)
(cid:55)(cid:74)(cid:89)(cid:70)(cid:78)(cid:81)
(cid:50)(cid:90)(cid:89)(cid:90)(cid:70)(cid:81)(cid:5)(cid:43)(cid:90)(cid:83)(cid:73)(cid:88)
(cid:53)(cid:74)(cid:83)(cid:88)(cid:78)(cid:84)(cid:83)(cid:88)
(cid:40)(cid:77)(cid:70)(cid:87)(cid:78)(cid:89)(cid:78)(cid:74)(cid:88)
(cid:46)(cid:83)(cid:88)(cid:90)(cid:87)(cid:70)(cid:83)(cid:72)(cid:74)
(cid:43)(cid:90)(cid:83)(cid:73)(cid:5)(cid:84)(cid:75)(cid:5)(cid:43)(cid:90)(cid:83)(cid:73)(cid:88)
(cid:55)(cid:74)(cid:89)(cid:70)(cid:78)(cid:81)
(cid:46)(cid:83)(cid:91)(cid:5)(cid:57)(cid:87)(cid:90)(cid:88)(cid:89)(cid:88)
(cid:40)(cid:77)(cid:70)(cid:87)(cid:78)(cid:89)(cid:78)(cid:74)(cid:88)
(cid:40)(cid:84)(cid:87)(cid:85)(cid:84)(cid:87)(cid:70)(cid:89)(cid:74)
(cid:43)(cid:90)(cid:83)(cid:73)(cid:5)(cid:84)(cid:75)(cid:5)(cid:43)(cid:90)(cid:83)(cid:73)(cid:88)
(cid:41)(cid:78)(cid:87)(cid:74)(cid:72)(cid:89)(cid:84)(cid:87)(cid:88)
(cid:46)(cid:83)(cid:91)(cid:5)(cid:57)(cid:87)(cid:90)(cid:88)(cid:89)(cid:88)
(cid:40)(cid:84)(cid:87)(cid:85)(cid:84)(cid:87)(cid:70)(cid:89)(cid:74)
(cid:41)(cid:78)(cid:87)(cid:74)(cid:72)(cid:89)(cid:84)(cid:87)(cid:88)
(cid:22)(cid:19)(cid:22)
(cid:21)(cid:19)(cid:23)
(cid:21)(cid:19)(cid:26)
(cid:22)(cid:19)(cid:22)
(cid:22)(cid:19)(cid:30)
(cid:22)(cid:19)(cid:22)
(cid:22)(cid:19)(cid:22)
(cid:21)(cid:19)(cid:23)
(cid:21)(cid:19)(cid:26)
(cid:24)(cid:19)(cid:29)
(cid:22)(cid:19)(cid:22)
(cid:22)(cid:19)(cid:30)
(cid:21)(cid:19)(cid:22)
(cid:22)(cid:19)(cid:22)
(cid:28)(cid:19)(cid:26)
(cid:21)(cid:19)(cid:22)
(cid:24)(cid:19)(cid:29)
(cid:28)(cid:19)(cid:26)
(cid:23)(cid:25)(cid:19)(cid:23)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:23)(cid:21)(cid:23)(cid:21)
(cid:26)(cid:29)(cid:19)(cid:26)
(cid:23)(cid:21)(cid:23)(cid:23)
(cid:23)(cid:21)(cid:23)(cid:21)
(cid:23)(cid:25)(cid:19)(cid:23)
(cid:26)(cid:29)(cid:19)(cid:26)
(cid:23)(cid:27)(cid:19)(cid:21)
(cid:21)(cid:19)(cid:27)
(cid:23)(cid:19)(cid:28)
(cid:22)(cid:19)(cid:22)
(cid:22)(cid:19)(cid:27)
(cid:21)(cid:19)(cid:22)
(cid:21)(cid:19)(cid:24)
(cid:21)(cid:19)(cid:22)
(cid:21)(cid:19)(cid:27)
(cid:22)(cid:19)(cid:22)
(cid:24)(cid:19)(cid:26)
(cid:22)(cid:19)(cid:27)
(cid:23)(cid:19)(cid:28)
(cid:29)(cid:19)(cid:29)
(cid:21)(cid:19)(cid:22)
(cid:21)(cid:19)(cid:24)
(cid:21)(cid:19)(cid:22)
(cid:24)(cid:19)(cid:26)
(cid:29)(cid:19)(cid:29)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:23)(cid:21)(cid:23)(cid:21)
(cid:26)(cid:26)(cid:19)(cid:23)
(cid:23)(cid:27)(cid:19)(cid:21)
(cid:23)(cid:21)(cid:23)(cid:22)
(cid:23)(cid:21)(cid:23)(cid:21)
(cid:26)(cid:26)(cid:19)(cid:23)
94
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GLOSSARY OF TERMS AND ALTERNATIVE
PERFORMANCE MEASURES (‘APMS’)
ALTERNATIVE INVESTMENT FUND
MANAGERS DIRECTIVE (AIFMD)
Agreed by the European Parliament and the Council of the
European Union and transported into UK legislation, the
AIFM(cid:39) classifies certain investment vehicles, including
investment companies, as Alternative Investment Funds
(AIFs) and requires them to appoint an Alternative
Investment Fund Manager (AIFM) and a depositary to
manage and oversee the operations of the investment
vehicle. The Board of the Company retains responsibility
for strategy, operations and compliance and the Directors
retain a fiduciary duty to shareholders.
Alternative performance measure (‘APM’)
An APM is a numerical measure of the Company’s current,
historical or future financial performance, financial position
or cash flows, other than a financial measure defined or
specified in the applicable financial framework. In selecting
these Alternative Performance Measures, the Directors
considered the key objectives and expectations of typical
investors in an investment trust such as the Company.
Discount or premium*
Equity swaps
An equity swap is an agreement where one party
(counterparty) transfers the total return of an underlying
equity position to the other party (swap holder) in exchange
for a payment of the principal, and interest for financed
swaps, at a set date. Total return includes dividend income
and gains or losses from market movements. The exposure
of the holder is the market value of the underlying equity
position.
The company uses two types of equity swap:
•
•
funded, where payment is made on acquisition. They are
equivalent to holding the underlying equity position with
the exception of additional counterparty risk and not
possessing voting rights in the underlying; and,
financed, where payment is made on maturity. Financed
swaps increase exposure by the value of the underlying
equity position, with no initial outlay and no increase
in the investment portfolio’s value – there is therefore
embedded leverage within a financed swap due to the
deferral of payment to maturity.
The Company employs swaps for two purposes:
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.
•
•
To gain access to individual stocks in the Indian,
Chinese and other emerging markets, where the
Company is not locally registered to trade or is able to
gain in a more cost efficient manner than holding the
stocks directly; and,
To gain exposure to thematic baskets of stocks (a
Basket Swap). Basket Swaps are used to build exposure
to themes, or ideas, that the Portfolio Manager believes
the Company will benefit from and where holding a
Basket Swap is more cost effective and operationally
efficient than holding the underlying stocks or individual
swaps.
Gearing*
Gearing is calculated as the overdraft drawn, less net
current assets (excluding dividends), divided by Net Assets,
expressed as a percentage. For years prior to 2013, the
calculation was based on borrowings as a percentage of
Net Assets.
* Alternative Performance Measure
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
95
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMS’) CONTINUED
International swaps and derivatives association (‘ISDA’)
ISDA has created a standardised contract (the ISDA Master Agreement) which sets out the basic trading terms between the
counterparties to derivative contracts.
Leverage*
Leverage is defined in the AIFM(cid:39) as any method by which the AIFM increases the exposure of an AIF. In addition to the
gearing limit the Company also has to comply with the AIFMD leverage requirements. For these purposes the Board has set
a maximum leverage limit of 140% for both methods. This limit is expressed as a % with 100% representing no leverage or
gearing in the Company. There are two methods of calculating leverage as follows:
The Gross Method is calculated as total exposure divided by Shareholders’ Funds. Total exposure is calculated as net assets,
less cash and cash equivalents, adding back cash borrowing plus derivatives converted into the equivalent position in their
underlying assets.
The Commitment Method is calculated as total exposure divided by Shareholders Funds. In this instance total exposure is
calculated as net assets, less cash and cash equivalents, adding back cash borrowing plus derivatives converted into the
equivalent position in their underlying assets, adjusted for netting and hedging arrangements.
See the definition of (cid:50)ptions and Equity Swaps for more details on how exposure through derivatives is calculated.
Investments
OTC equity swaps
Shareholders’ funds
Leverage %
2022
£’000
2021
£’000
Fair Value
Exposure*
Fair Value
Exposure*
2,379,848
2,379,848
2,416,038
2,416,038
(5,129)
135,018
10,552
145,636
2,374,719
2,514,866
2,426,590
2,561,674
2,268,233
10.9%
2,381,425
7.6%
* Calculated in accordance with AIFMD requirements using the Commitment Method
MSCI World Health Care Index (the company’s Benchmark)
The MSCI World Health Care Index is designed to capture the large and mid capitalisation segments across 23 developed
markets countries(cid:29) All securities in the index are classified as healthcare as per the (cid:42)lobal Industry Classification Standard
(GICS). Developed Markets countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland
the UK and the U.S. The net total return of the Index is used which assumes the reinvestment of any dividends paid by its
constituents after the deduction of relevant withholding taxes. The performance of the Index is calculated in U.S.$ terms.
Because the Company’s reporting currency is £ the prevailing U.S.$/£ exchange rate is applied to obtain a £ based return.
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.
* Alternative Performance Measure
96
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
GLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMS’) CONTINUED
Net asset value (NAV) per share total return*
The theoretical total return on shareholders’ funds per share, reflecting the change in NAV assuming that dividends paid
to shareholders were reinvested at NAV at the time the shares were quoted ex-dividend. A way of measuring investment
management performance of investment trusts which is not affected by movements in discounts/premiums.
NAV Total Return
Opening NAV
(Decrease)/increase in NAV
Closing NAV
% (decrease)/increase in NAV
Impact of reinvested dividends
NAV Total Return
2022
p
2021
p
3,703.0
2,868.9
(237.8)
834.1
3,465.2
3,703.0
(6.4%)
0.6%
(5.8%)
29.1%
0.9%
30.0%
Ongoing Charges*
(cid:50)ngoing charges are calculated by taking the Company’s annualised ongoing charges, excluding finance costs, taxation,
performance fees and exceptional items, and expressing them as a percentage of the average daily net asset value of the
Company over the year.
AIFM & Portfolio Management fees (Note 3)
Other Expenses – Revenue (Note 4)
Total Ongoing Charges
Performance fees paid/crystallised
Total
Average net assets
Ongoing Charges
Ongoing Charges (including performance fees paid or crystallised during the year)
Rehypothecation
2022
£’000
18,765
1,305
20,070
12,861
32,931
2021
£’000
17,068
1,338
18,406
–
18,406
2,356,131
2,112,164
0.9%
1.4%
0.9%
0.9%
Rehypothecation is the practice by banks and brokers of using, for their own purposes, assets that have been posted as
collateral by clients.
Share Price Total Return*
Return to the investor on mid-market prices assuming that all dividends paid were reinvested.
Share Price Total Return
Opening share price
(Decrease)/increase in share price
Closing share price
% (decrease)/increase in share price
Impact of reinvested dividends
Share Price Total Return
* Alternative Performance Measure
2022
p
2021
p
3,695.0
2,920.0
(420.0)
775.0
3,275.0
3,695.0
(11.4%)
0.6%
(10.8%)
26.5%
0.9%
27.4%
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
97
HOW TO INVEST
RETAIL INVESTORS ADVISED BY IFAS
The Company currently conducts its affairs so that its shares can be recommended by Independent Financial Advisers (‘IFAs’)
in(cid:98)the UK to ordinary retail investors in accordance with the Financial Conduct Authority ((cid:820)FCA’) rules in relationship to non-
mainstream investment procedures 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 investment trust.
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 (cid:39)ealing 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
http://www.youinvest.co.uk/
Barclays Smart Investor
https://www.smartinvestor.barclays.co.uk/
Bestinvest
http://www.bestinvest.co.uk/
Charles Stanley Direct
https://www.charles-stanley-direct.co.uk/
Halifax Share Dealing
https://www.halifaxsharedealing-online.co.uk/
Hargreaves Lansdown
http://www.hl.co.uk/
HSBC
iDealing
https://www.hsbc.co.uk/investments/
http://www.idealing.com/
Interactive Investor
http://www.iii.co.uk/
IWEB
http://www.iweb-sharedealing.co.uk/share-dealing-home.asp
The Share Centre
https://www.share.com/
98
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of Worldwide Healthcare Trust PLC will be held at etc. venues 1-3
Bonhill Street, London EC2A 4BX on Wednesday, 6 July 2022 from 12.30 p.m. for the following purposes:
ORDINARY BUSINESS
To consider and, if thought fit, pass the following as ordinary resolutions(cid:29)
1.
To receive and, if thought fit, to accept the Audited Accounts and the Report of the (cid:39)irectors for the year ended (cid:22)1 March
2022
2. To approve the payment of a final dividend of 19.5p per ordinary share for the year ended 31 March 2022
3. To approve the Company’s dividend policy, as set out on page 26 of the Annual Report for the year ended 31 March 2022
4. To re-elect Mrs Sarah Bates as a Director of the Company
5. To re-elect Mr Humphrey van der Klugt as a Director of the Company
6. To re-elect Mr Doug McCutcheon as a Director of the Company
7. To re-elect Mr Sven Borho as a Director of the Company
8. To re-elect Dr Bina Rawal as a Director of the Company
9.
To re-appoint PricewaterhouseCoopers LLP as the Company’s Auditors and to authorise the Audit & Risk Committee to
determine their remuneration
10. To approve the Directors’ Remuneration Report for the year ended 31 March 2022
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolutions of which resolutions 12, 1(cid:22), 1(cid:23) and 1(cid:24) 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
£1,630,835 (being 10% of the issued share capital of the Company at 25 May 2022) and representing 6,523,340 shares
of 25 pence each (or, if changed, the number representing 10% of the issued share capital of the Company at the date
at which this resolution is passed), provided that this authority shall expire at the conclusion of the Annual General
Meeting of the Company to be held in 2023 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.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
99
NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED
Disapplication of pre-emption rights
12. THAT in substitution for all existing powers (and 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 (cid:39)irectors 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 practical problems arising in any overseas
territory, the requirements of any regulatory body or stock exchange, or any other matter whatsoever;
(b) provided that (otherwise than pursuant to sub-paragraph (a) above) this power shall be limited to the allotment
of equity securities up to an aggregate nominal value of £1,630,835, being 10% of the issued share capital of the
Company as at 25 May 2022 and representing 6,523,340 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
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 for all existing powers (and 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 (cid:26)2(cid:23) of the Act (“treasury
shares”)), for cash as if Section 561(1) of the Act did not apply to any such sale provided that:
(a) this power shall be limited to the sale of relevant shares having an aggregate nominal value of £1,630,835 being 10%
of the issued share capital of the Company as at 25 May 2022 and representing 6,523,340 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.
100
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED
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) the maximum aggregate number of Shares authorised to be purchased shall be that number of shares which is equal
to 14.99% of the issued share capital of the Company as at the date of the passing of this resolution;
(b) the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;
(c) the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to the greater of
(i)(cid:98)10(cid:24)(cid:8) of the average of the middle market quotations for a Share as derived from the (cid:39)aily (cid:50)fficial List of the
London Stock Exchange for the five business days immediately preceding the day on which that Share is purchased
and (ii) the higher of the price of the last independent trade and the highest then current independent bid on the
London Stock Exchange as stipulated in Article 5(1) of Regulation No. 2233/2003 of the European Commission
(Commission Regulation of 22 December 2003 implementing the Market Abuse Directive as regards exemptions for
buy-back programmes and stabilisation of financial instruments)(cid:30)
(d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held
in 2023 or, if earlier, on the expiry of 15 months from the date of the passing of this resolution unless such authority is
renewed prior to such time; and
(e) the Company may make a contract to purchase Shares under this authority before the expiry of such authority which
will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of Shares in
pursuance of any such contract.
General meetings
15. THAT the Directors be authorised to call general meetings (other than the Annual General Meeting of the Company) on
not less than 14 clear days’ notice, such authority to expire on the conclusion of the next Annual General Meeting of the
Company, or, if earlier, on the expiry 15 months from the date of the passing of the resolution.
By order of the Board
Frostrow Capital LLP
Company Secretary
26 May 2022
Registered (cid:50)ffice(cid:29)
One Wood Street
London EC2V 7WS
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
101
NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED
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 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(cid:18)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.
This year, hard copy forms of proxy have not been included with this notice. Members can vote by: logging onto www.signalshares.com and following
instructions; requesting a hard copy form of proxy directly from the registrars, Link Group at enquiries@linkgroup.co.uk or in the case of CREST members,
utilising the CREST electronic proxy appointment service in accordance with the procedures set out below. To be valid any proxy form or other instrument
appointing a proxy must be completed and signed and received by post or (during normal business hours only) by hand at Link Group, PXS1, 10th Floor, Central
Square, 29 Wellington Street, Leeds LS1 4DL no later than 12.30 p.m. on Monday, 4 July 2022.
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 (cid:23)1 of the Uncertificated Securities Regulations 2001, only shareholders registered on the register of members of the Company (the
“Register of Members”) at the close of business on Monday, 4 July 2022 (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 25 May 2022 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 65,537,755 ordinary
shares, carrying one vote each. The Company holds 304,351 shares in treasury. Therefore, the total voting rights in the Company as at 25 May 2022 are
65,233,404.
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 (cid:22)(cid:24)((cid:24))(a) of the Uncertificated Securities
Regulations(cid:812)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).
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.
2.
3.
4.
5.
6.
7.
(cid:27).
9.
10.
11.
12.
1(cid:22).
14.
15.
102
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED
16.
1(cid:26).
18.
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
Link Group on 0371 600 0300 or +44 371 600 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United
Kingdom are charged at the applicable international rate. Lines are open 09.00 to 17.30 Monday to Friday excluding public holidays in England and Wales.
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(cid:812)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 Link Group, PXS1, 29 Wellington Street, 10th Floor, Central Square, Leeds LS1 4DL.
In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the
company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of
such power of attorney) must be included with the revocation notice. If a member attempts to revoke their proxy appointment but the revocation is received
after the time for receipt of proxy appointments (see above) then, subject to paragraph 4 on page 101, the proxy appointment will remain valid.
Location of the Annual General Meeting
etc.venues 1-3 Bonhill Street
London EC2A 4BX
A
2
0
1
E
V
A
Y
R
E
B
E
S
O
R
A 5 2 0 1
A
5
2
0
0
CHANCERY
CHANCERY
LANE
LANE
B
5
2
1
H
A
T
T
O
N
G
A
R
D
E
N
A40
4
A
KING’S
KING’S
COLLEGE
COLLEGE
LONDON
LONDON
C
H
A
N
C
E
R
Y
L
A
N
E
B
4
0
0
S T
F L E E T
01
4
A
B
5
0
1
A
1
B 5 0 2
L E V E R S T
A
501
MOORFIELDS
MOORFIELDS
EYE HOSPITAL
EYE HOSPITAL
OLD
OLD
STREET
STREET
B
1
4
4
C
I
T
Y
A 5 2 0 1
OLD
OLD
STREET
STREET
S T
T
S
O L D
A
B
R
N N E
W
H
I
T
E
C
R
O
S
S
S
T
G
O
L
D
E
N
L
A
N
E
R
D
A
5
0
1
B
U
N
H
I
L
L
R
O
W
B
1
4
4
O L D
G
R
E
A
T
E
A
T
S
C
U
R
T
A
I
N
R
D
L E O N A R D R D
T
S
E
L
C
A
N
R
E
B
A
T
B O N H I L L
B O N H I L L
S T
S T
L
U
A
P
T
S
S
T
E
R
N
S
T
S T
SCR U T T O N
W O R S H I P S T
0
1
A
SU
N
ST
Bonhill House
A
L
D
E
R
S
G
A
T
E
S
T
B E E C H S T
B100
BARBICAN
BARBICAN
CENTRE
CENTRE
SILK
ST
E
N
A
L
R
O
O
M
MOORGATE
MOORGATE
MUSEUM OF
MUSEUM OF
LONDON
LONDON
E
T
A
G
R
O
O
M
L O N D O N WA L L
C
I
RC U S
S T
P E R C I V A L
S
T
J
O
H
N
C
S
T
T O N
O M P
G
O
S
S T
W
E
L
L
R
D
B
5
0
1
C
E
N
T
R
A
L
S
T
1
0
2
5
A
C L E R K E N W E L L
R D
S
T
A
1
J
O
H
N
S
T
BARBICAN
BARBICAN
FARRINGDON
FARRINGDON
B
502
F
A
R
R
I
N
G
D
O
N
R
D
T
S
E
S
U
O
L O N G
A N E
L
H
R
E
T
R
A
H
C
H
T
S M I
T
S
D
L
E
I
F
SAINT
SAINT
BARTHOLOMEW'S
BARTHOLOMEW'S
HOSPITAL
HOSPITAL
N VIA
D
U
C
T
H
O
L
B
O
R
8
0
A 1 2
T
S
H
G
I
H
H
C
T
I
D
B
O
U
N
D
A
R
Y
R D
I R G I N I A
V
B
1
2
2
S
W
A
N
F
I
E
L
D
S
T
E
R
S
T
O
H
S
R E D C H U R C H S T
1
2
0
A
B 1 3 5
SHOREDITCH
SHOREDITCH
HIGH STREET
HIGH STREET
QUAKER ST
A
1
2
0
2
9
B
R
I
C
K
L
A
N
E
B
1
3
4
B
R
I
C
K
G O S S E T S T
T
U
R
I
N
S
T
B E T H N A L G R E E N R D
V
A
C H E S H I R E S T
BUXTON ST
B 1 3 5
L
L
A
N
C
E
R
D
B
1
0
8
V
A
L
L
A
N
C
E
R
D
1
1
A
D
R
5
5
1
1
0
0
2
2
t
t
h
h
g
g
i
i
r
r
e
e
s
s
a
a
b
b
a
a
t
t
a
a
d
d
9
9
9
9
B
0
0
8
8
1
0
8
4
4
8
8
5
5
LIVERPOOL
LIVERPOOL
STREET
STREET
B R U S H F I E L D S T
EL
D
O
N
F I N SB
U
R
Y
S
T
E
T
A
G
S
P
O
H
S
I
B
LIVERPOOL
LIVERPOOL
LIVERPOOL
STREET
STREET
STREET
A1211
C
O
M
M
E
R
C
I
A
L
A
N
E
T
N
M O
D
O L
T
S
E
U
G
L
E
P
A
H
C
A
E
L
L
L
A
N
E
S
T
W H I T
GUILDHALL
GUILDHALL
S
T
E
T
A
G
R
O
O
M
LOT H B U R Y
R
B
L D
O
T
S
D
A
O
0
1
A
BANK OF
BANK OF
ENGLAND
ENGLAND
POULTRY
BANK
BANK
K
I
N
G
C O R N H I L L
BANK
BANK
L
O
M
B
A
R
D
H
O
U
N
D
S
E
B
E
X
A
V
I
S
D
I
T
C
H
Y
R
A
M
T
S
M
A
THE
THE
GHERKIN
GHERKIN
R
L E A D E N HALL ST
M
I
D
D
L
E
B
E
L
S
E
X
S
T
1
1
A
K
S
ALDGATE
ALDGATE
M
I
N
O
R
ST
W
I
L
L
I
A
M
S
T
FE N C H U R C H
T
S
FENCHURCH
FENCHURCH
STREET
STREET
I
E
S
CANNON
CANNON
STREET
STREET
ST
S
T
MONUMENT
MONUMENT
EAS T C HEAP
G
T
T
O
W
E
R
LOWER THAM E S S
S
T
T
A3211
3
A
LONDON
BRIDGE
TOWER
TOWER
HILL
HILL
A32 1 1
TOWER
TOWER
GATEWAY
GATEWAY
TOWER OF
TOWER OF
LONDON
LONDON
0
0
1
A
COMMERCIAL RD
4
A13
E
N
A
L
H
C
R
U
H
C
K
C
A
B
D
O
C
K
S
T
C A B L E S T
A 1 2 0 3
1
1
9
9
1
1
0
0
:
:
l
l
e
e
T
T
|
|
s
s
p
p
a
a
M
M
t
t
l
l
e
e
w
w
O
O
©
©
y
y
b
b
d
d
e
e
n
n
g
g
s
s
e
e
d
d
i
i
p
p
a
a
M
M
d
d
n
n
a
a
t
t
h
h
g
g
i
i
r
r
y
y
p
p
C
o
o
A
c
c
N
N
O
N
n
n
w
w
o
o
r
r
C
C
©
©
a
a
t
t
a
a
d
d
y
y
e
e
v
v
r
r
u
u
S
S
e
e
c
c
n
n
a
a
n
n
d
d
r
r
O
O
s
s
n
n
i
i
a
a
t
t
n
n
o
o
C
C
ALDGATE
ALDGATE
EAST
EAST
L
E
3
1
B
T
S
E
I
A L
M
A
N
S
T
M
A
N
S
E
L
L
S
T
S T
S T
S T
P R E S C O T
C H A M B E R
R O Y A L M I N T
E
A
S
T S M I T H F I E L D
A
4
0
ST PAUL’S
ST PAUL’S
CITY
CITY
THAMESLIKNK
THAMESLIKNK
LUDGATE HILL
ST PAUL’S
ST PAUL’S
CATHEDRAL
CATHEDRAL
N
E
W
G
R
E
S
H
A
M
CHEAPSIDE
C
H
A
N
G
E
A
2
0
1
N
E
W
B
R
I
D
G
E
S
T
V I C T O R I A E M B A N K M E N T
BLACKFRIARS
BLACKFRIARS
Q U E E N V I C T O R I A
S T
CANNON
MANSION
MANSION
HOUSE
HOUSE
U PPER THAMES
BLACKFRIARS
BRIDGE
1
0
2
A
MILLENNIUM
BRIDGE
SOUTHWARK
BRIDGE
0
0
3
A
How To Vote
If you hold your shares directly you can:
•
•
Log on to https://www.signalshares.com and follow the instructions; or
Request a hard copy form of proxy from the Company’s registrars, Link Group, by emailing enquiries@linkgroup.co.uk
or by calling +44 (0)371 664 0321 and returning the completed form to Link Group, PXS1, 10th Floor, Central Square,
2(cid:28)(cid:98)Wellington Street, Leeds LS1 (cid:23)(cid:39)L, no later than 12.(cid:22)0 pm on (cid:23) July 2022.
If you hold your shares via an investment platform (e.g. Hargreaves Lansdown) or a nominee, you should contact them to
enquire about arrangements to vote.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
103
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 2022 will be presented to the Annual General
Meeting (AGM). These accounts accompany this Notice of
Meeting.
Resolution 2 – To approve a Final Dividend
The rationale for the payment of a final dividend is set out
in the Chairman’s Statement beginning on page 4 and the
Report of the Directors on page 44.
Resolution 3 – Approval of the Company’s Dividend
Policy
Resolution 3 seeks shareholder approval of the Company’s
dividend policy, which is set out on page 26.
Resolutions 4 to 8 – Re-election of Directors
Resolutions 4 to 8 deal with the re-election of each Director.
Biographies of each of the Directors can be found on
pages(cid:98)41 and 42 of the annual report.
The Board has confirmed, following a performance review,
that the Directors standing for re-election and election
continue to perform effectively.
Resolution 9 – Re-appointment of Auditors and the
determination of their remuneration
Resolution 9 relates to the re-appointment of
PricewaterhouseCoopers LLP as the Company’s
independent Auditors to hold office until the next A(cid:42)M
of the Company and also authorises the Audit & Risk
Committee to set their remuneration.
Resolutions 10 – Remuneration Report
The Directors’ Remuneration Report is set out in full in the
annual report on pages 60 to 62.
Resolutions 11, 12 and 13 – Issue of Shares
Ordinary Resolution 11 in the Notice of AGM will renew
the authority to allot the unissued share capital up to an
aggregate nominal amount of £1,630,835 (equivalent to
6,523,340 shares, or 10% of the Company’s existing issued
share capital on 25 May 2022, being the nearest practicable
date prior to the signing of this Report (or if changed, the
number representing 10% of the issued share capital of the
Company at the date at which the resolution is passed).
Such authority will expire on the date of the next AGM or
after a period of 15 months from the date of the passing
of the resolution, whichever is earlier. This means that the
authority will have to be renewed at the next AGM.
When shares are to be allotted for cash, Section 551 of
the Companies Act 2006 (the “Act”) provides that existing
shareholders have pre-emption rights and that the new
shares must be offered first to such shareholders in
proportion to their existing holding of shares. However,
shareholders can, by special resolution, authorise the
Directors to allot shares otherwise than by a pro rata
issue to existing shareholders. Special Resolution 12
will, if passed, give the Directors power to allot for cash
equity securities up to 10% of the Company’s existing
share capital on 25 May 2022 (or if changed, the number
representing 10% of the issued share capital of the
Company at the date at which the resolution is passed), as
if Section 551 of the Act does not apply. This is the same
nominal amount of share capital which the Directors are
seeking the authority to allot pursuant to Resolution 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(cid:98)1(cid:22),
if passed, will give the Directors authority to sell shares held
in treasury on a non pre-emptive basis. No dividends may
be paid on any shares held in treasury and no voting rights
will attach to such shares. The benefit of the ability to hold
treasury shares is that such shares may be resold. This
should give the Company greater flexibility in managing its
share capital, and improve liquidity in its shares. It is the
intention of the Board that any re-sale of treasury shares
would only take place at a premium to the cum income net
asset value per share. It is also the intention of the Board
that sales from treasury would only take place when the
Board believes that to do so would assist in the provision
of liquidity to the market. The number of treasury shares
104
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
EXPLANATORY NOTES TO THE RESOLUTIONS CONTINUED
paid is 25p per Share. Existing shares which are purchased
under this authority will either be cancelled or held as
Treasury Shares.
Special Resolution 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 as at the date of the passing of
the resolution. Such authority will expire on the date of the
next AGM or after a period of 15 months from the date of
passing of the resolution, whichever is earlier. This means in
effect that the authority will have to be renewed at the next
AGM or earlier if the authority has been exhausted.
Resolution 15 – General Meetings
Special Resolution 15 seeks shareholder approval for the
Company to hold General Meetings (other than the AGM) at
1(cid:23) clear days’ notice. The Board confirms that the shorter
notice period would only be used where it was merited by
the purpose of the meeting.
Recommendation
The Board considers that the resolutions relating to the
above items are in the best interests of shareholders as a
whole. Accordingly, the Board unanimously recommends
to the shareholders that they vote in favour of the above
resolutions to be proposed at the forthcoming AGM as the
(cid:39)irectors intend to do in respect of their own beneficial
holdings totalling 53,881 shares.
which may be sold pursuant to this authority is limited to
10% of the Company’s existing share capital on 25 May
2022 (or if changed, the number representing 10% of the
issued share capital of the Company at the date at which
the resolution is passed) (reduced by any equity securities
allotted for cash on a non-pro rata basis pursuant to
Resolution 12, as described above). This authority will also
expire on the date of the next Annual General Meeting or
after a period of 1(cid:24)(cid:98)months, whichever is earlier.
The Directors intend to use the authority given by
Resolutions 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.
New Shares will only be issued at a premium to the
Company’s cum income net asset value per share at the
time of issue.
Resolution 14 – Share Repurchases
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 Shares, when they are trading at a discount to
net asset value per share should result in an increase in the
net asset value per share for the remaining shareholders.
This authority, if conferred, will only be exercised if to do
so would result in an increase in the net asset value per
share for the remaining shareholders and if it is in the best
interests of shareholders generally. Any purchase of shares
will be made within guidelines established from time to time
by the Board. It is proposed to seek shareholder authority to
renew this facility for another year at the AGM.
Under the current Listing Rules, the maximum price that
may be paid on the exercise of this authority must not
exceed the higher of (i) 105% of the average of the middle
market quotations for the shares over the five business
days immediately preceding the date of purchase and
(ii)(cid:98)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
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
105
REGULATORY DISCLOSURES (UNAUDITED)
ALTERNATIVE INVESTMENT FUND
MANAGERS DIRECTIVE (AIFMD)
DISCLOSURES
the Company’s involvement in and exposure to Total Return
Swaps for the accounting year ended 31 March 2022 are
detailed below.
Investment objective and leverage
Global data
A description of the investment strategy and objectives of
the Company, the types of assets in which the Company
may invest, the techniques it may employ, any applicable
investment restrictions, the circumstances in which it may
use leverage, the types and sources of leverage permitted
and the associated risks, any restrictions on the use of
leverage and the maximum level of leverage which the AIFM
and Portfolio Manager are entitled to employ on behalf of
the Company and the procedures by which the Company
may change its investment strategy and/or the investment
policy can be found on pages 7 and 8 under the heading
“Investment Strategy”.
The table below sets out the current maximum permitted
limit and actual level of leverages for the Company: as a
percentage of net assets
Maximum level of leverage
Actual level at 31 March 2022
Gross
Method
Commitment
Method
140.0%
113.4%
140.0%
110.9%
REMUNERATION OF AIFM STAFF
Following completion of an assessment of the application
of the proportionality principle to the FCA’s AIFM
Remuneration Code, the AIFM has disapplied the pay-out
process rules with respect to it and any of its delegates.
This is because the AIFM considers that it carries out
non-(cid:814)complex activities and is operating on a small scale.
Further disclosures required under the AIFM Rules can
be found within the Investor Disclosure Document on the
Company’s website: www.worldwidewh.com.
SECURITY FINANCING TRANSACTIONS
DISCLOSURES
As defined in Article (cid:22) of Regulation (EU) 201(cid:24)(cid:18)2(cid:22)(cid:25)(cid:24),
securities financing transactions (SFT) include repurchase
transactions, securities or commodities lending and
securities or commodities borrowing, buy-sell back
transactions or sell-buy back transactions and margin
lending transactions. Whilst the Company does not engage
in such SFT’s, it does engage in Total Return Swaps (TRS)
therefore, in accordance with Article 13 of the Regulation,
Amount of assets engaged in TRS
The following table represents the total value of assets
engaged in TRS:
TRS
Concentration Data
£’000
% of AUM
(5,129)
(0.2)
Counterparties
The following table provides details of the counterparties
and their country of incorporation (based on gross volume
of outstanding transactions with exposure on a gross basis)
in respect of TRS as at the balance sheet date:
Goldman Sachs
JPMorgan
Country of
Incorporation
U.S.A.
U.S.A.
£’000
99,898
35,120
Aggregate transaction data
Type, quality, maturity, tenor and currency of collateral
No collateral was received by the Company in respect
of TRS during the year to 31 March 2022. The collateral
provided by the Company to the above counterparties is set
out below.
Type
Currency
Maturity
Quality
£’000
Cash
USD
less than 1 day
n/a
56,336
Maturity tenor of TRS
The following table provides an analysis of the maturity
tenor of open TRS positions (with exposure on a gross
basis) as at the balance sheet date:
Maturity
1 to 3 months
3 to 12 months
TRS
Value
£’000
–
135,018
Settlement and clearing
OTC derivative transactions (including TRS) are entered
into by the Company under an International Swaps
and Derivatives Associations, Inc. Master Agreement
(“ISDA Master Agreement”). An ISDA Master Agreement
is a bilateral agreement between the Company and a
106
FURTHER INFORMATION
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
REGULATORY DISCLOSURES (UNAUDITED) CONTINUED
counterparty that governs OTC derivative transactions
(including TRS) entered into by the parties. All OTC
derivative transactions entered under an ISDA Master
Agreement are netted together for collateral purposes,
therefore any collateral disclosures provided are in respect
of all OTC derivative transactions entered into by the
Company under the ISDA Master agreement, not just total
return swaps.
Safekeeping of collateral
There was no non-cash collateral provided by the Company
in respect of OTC derivatives (including TRS) with the
counterparties noted above as at the statement of financial
position date.
Return and cost
All returns from TRS transactions will accrue to the
Company and are not subject to any returns sharing
arrangements with the Company’s AIFM, Portfolio Manager
or any other third parties. Returns from those instruments
are disclosed in (cid:49)ote (cid:28) to the Company’s financial
statements.
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
FURTHER INFORMATION
107
COMPANY INFORMATION
Directors
Portfolio Manager
Shareholder Portal
Sir Martin Smith (Chairman)
Sarah Bates (Senior Independent
Director and Chair of the
Nominations Committee)
Sven Borho
Humphrey van der Klugt,
FCA (Chairman of the Audit &
Risk(cid:98)Committee)
Doug McCutcheon (Chairman of
the Management Engagement &
Remuneration Committee)
Dr Bina Rawal
Company Registration Number
3023689 (Registered in England)
The Company is an investment
company as defined under Section (cid:27)(cid:22)(cid:22)
of the Companies Act 2006
Website
Website: www.worldwidewh.com
Registered Office
One Wood Street
London EC2V 7WS
Alternative Investment Fund
Manager, Company Secretary and
Administrator
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.
OrbiMed Capital LLC
601 Lexington Avenue, 54th Floor
New York NY 10022
Website: www.orbimed.com
Registered under the U.S. Securities & Exchange
Commission
Depositary
J.P. Morgan Europe Limited
25 Bank Street London
E14 5JP
Independent Auditors
PricewaterhouseCoopers LLP
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Custodian and Prime Broker
J.P. Morgan Securities LLC
Suite 1, Metro Tech Roadway
Brooklyn, NY 11201
USA
Stockbroker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge, 25 Dowgate Hill
London EC4R 2GA
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS1 4DL
E-mail: enquiries@linkgroup.co.uk
Telephone (in UK): 0371 664 0300†
Telephone (from overseas):
+ 44 371 664 0300†
Shareholder Portal:
www.signalshares.com
Website: www.linkgroup.eu
Please contact the Registrars if you
have a query about a certificated
holding in the Company’s shares.
† Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the UK are
charged at the applicable international rate. Lines
are open between 09.00 and 17.30 Monday to Friday
excluding public holidays in England and Wales.
You can register online to view your
holdings using the Share Portal,
a(cid:98)service offered by Link (cid:42)roup at
www.signalshares.com.
The Share Portal is an online service
enabling you to quickly and easily
access and maintain your shareholding
online – reducing the need for
paperwork and providing 24 hour
access to your shareholding details.
Through the Share Portal you may:
•
•
•
Cast your proxy vote online;
View your holding balance and get
an indicative valuation;
View movements on your holding;
• Update your address;
• Register and change bank mandate
instructions so that dividends can be
paid directly to your bank account;
•
•
Elect to receive shareholder
communications electronically; and
Access a wide range of shareholder
information including the ability to
download shareholder forms.
Share Price Listings
The price of your 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
: 0338530
: GB0003385308
: WWH
ISIN
BLOOMBERG : WWH LN
EPIC
Foreign Account Tax
Compliance Act (“FATCA”)
(cid:42)lobal Intermediary Identification
(cid:49)umber ((cid:42)II(cid:49))(cid:806)(cid:29)(cid:806)FI(cid:61)WR(cid:49).(cid:28)(cid:28)(cid:28)(cid:28)(cid:28).SL.(cid:27)2(cid:25)
Legal Entity Identifier (LEI) :
5493003YBCY4W1IMJU04
D
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
Financial Highlights
Key Information
Company Performance
Chairman’s Statement
Investment Objective and Policy
Portfolio
OrbiMed Capital LLC (‘OrbiMed’)
Portfolio Manager’s Review
Contribution by Investment
ESG and Climate Change
Business Review
GOVERNANCE
Board of Directors
Report of the Directors
Statement of Directors’
Responsibilities
Corporate Governance
Audit & Risk Committee Report
Directors’ Remuneration Report
Independent Auditors’ Report
FINANCIAL STATEMENTS
Income Statement
Statement of Changes in Equity
Statement of Financial Position
Statement of Cash Flows
1
2
3
4-7
8-9
10-12
13
14-23
24
25
26-40
41-42
43-46
47
48-54
55-59
60-62
63-71
72
73
74
75
Notes to the Financial Statements 76-92
FURTHER INFORMATION
Shareholder Information
93
Glossary of Terms and Alternative 94-96
Performance Measures
How to Invest
97
Notice of Annual General Meeting 98-102
Explanatory Notes to the
103-104
Resolutions
Regulatory Disclosures
105-106
(Unaudited)
Company Information
107
For more information about Worldwide
Healthcare Trust PLC visit the website at
www.worldwidewh.com
Follow us on Twitter @worldwidewh
Winner – Best Investment Trust in the
specialist sector – FT Adviser Investment
100 Club Awards 2021
WORLDWIDE HEALTHCARE TRUST PLC
Worldwide Healthcare Trust PLC (the
“Company”) is a specialist investment trust
which invests in the global healthcare sector
with the objective of achieving a high level of
capital growth.
In order to achieve its investment objective, the Company invests worldwide
in a diversified portfolio of shares in pharmaceutical and biotechnology
companies and related securities in the healthcare sector. It uses
gearing, and derivative transactions to enhance returns and mitigate risk.
Performance is measured against the MSCI World Health Care Index on a
net total return, sterling adjusted basis (“Benchmark”). Further details of the
Company’s investment policy, including how it can use gearing and employ
derivatives, are set out in the Strategic Report on pages 8 and 9.
ACCESSING THE GLOBAL MARKET
The healthcare sector is global and accessing this market as a UK investor
can be difficult. The Company offers an opportunity to gain exposure to
pharmaceutical, biotechnology and related companies in the healthcare sector
on a global scale. The Company invests in large companies with market
capitalisations of over U.S.$10bn, smaller companies below that size, as
well as unquoted companies. The portfolio ranges from large multi-national
pharmaceutical companies with multiple products to unquoted emerging
biotechnology companies.
Worldwide Healthcare Trust PLC is able to participate in all aspects
of healthcare, anywhere in the world because of its broad investment,
mandate. These may include patented speciality medicines for small patient
populations and unpatented generic drugs, in both developed countries
and emerging markets. In addition, the Company invests in medical
device technologies, life science tools and healthcare services. The overall
geographic spread of Worldwide Healthcare Trust PLC is also extensive with
investments in the U.S., Europe, Japan, China and India (see page 12 for
further information).
HOW TO INVEST
The Company’s shares are traded openly on the London Stock Exchange
and can be purchased through a stockbroker or other financial intermediary.
The shares are available through savings plans (including investment dealing
accounts, ISAs, Junior ISAs and SIPPs) which enable both regular monthly
investments and lump sum investments in the Company’s shares. There are
a number of investment platforms that offer these facilities. Further details
can be found on page 97.
For more information about Worldwide Healthcare Trust PLC visit the website
at www.worldwidewh.com. Follow us on Twitter @worldwidewh.
Perivan 263122
WORLDWIDE HEALTHCARE TRUST PLC
A
A
STRATEGIC REPORT
STRATEGIC REPORT
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2022
STRATEGIC REPORT
C
25 SOUTHAMPTON BUILDINGS
LONDON
WC2A 1AL
WWW.WORLDWIDEWH.COM
Annual Report
for the year ended 31 March 2022
I
W
O
R
L
D
W
D
E
H
E
A
L
T
H
C
A
R
E
T
R
U
S
T
P
L
C
A
n
n
u
a
l
R
e
p
o
r
t
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
3
1
M
a
r
c
h
2
0
2
2
A member of the Association of Investment Companies
CBP008251
This report is printed on Revive 100% 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.
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,
Link Group, 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.