Worldwide Healthcare Trust PLC
Annual Report 2023

Plain-text annual report

WORLDWIDE HEALTHCARE TRUST PLC A WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 C 25 SOUTHAMPTON BUILDINGS LONDON WC2A 1AL WWW.WORLDWIDEWH.COM Annual Report for the year ended 31 March 2023 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 3 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTSTRATEGIC REPORT D STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT Financial Summary Key Information Company Performance Statement from the Chair 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 27-40 41-43 44-48 49 50-57 58-62 63-65 66-74 75 76 77 78 Notes to the Financial Statements 79-95 FURTHER INFORMATION Shareholder Information Glossary of Terms and Alternative Performance Measures How to Invest 96 97-99 100 Notice of Annual General Meeting 101-105 Explanatory Notes to the 106-107 Resolutions Regulatory Disclosures 108-109 Company Information 110 The Strategic Report, Governance and Further Information Sections are unaudited unless specifically stated otherwise. For more information about Worldwide Healthcare Trust PLC visit the website at www.worldwidewh.com Follow us on Twitter @worldwidewh 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 may use 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 in 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 also 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 100. For more information about Worldwide Healthcare Trust PLC visit the website at www.worldwidewh.com. Follow us on Twitter @worldwidewh. 1 FINANCIAL SUMMARY as at 31 March 2023 (0.1%) Net asset value per share (total return)*^ 2022: (5.8%) (9.3%) Discount of share price to net asset value per share*^ 2022: (5.5%) (4.1%) Share price (total return)*^ 2022: (10.8%) 31.0p Dividends per share 2022: 26.5p +2.5% Benchmark*†^ 2022: +20.4% 0.8% Ongoing Charges^ 2022: 0.9% *Source: Morningstar † MSCI World Health Care Index on a net total return, sterling adjusted basis. (See Glossary beginning on page 97). ^ Alternative Performance Measure (see Glossary beginning on page 97). TOTAL RETURN PERFORMANCE for the year to 31 March 2023 % 115 110 105 100 95 90 85 80 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 Feb 2023 Mar 2023 Benchmark (total return) (+2.5%) WWH NAV (total return) (-0.1%) WWH Share Price (total return) (-4.1%) Rebased to 100 as at 31 March 2022 Source: Morningstar WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT2 2 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 KEY INFORMATION TOTAL RETURN PERFORMANCE Since Launch to 31 March 2023 % 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 Mar 23 WWH NAV (total return) (+4,234.1%) WWH Share Price (total return) (+3,705.4%) Benchmark (total return) (+2,189.0%)* 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 2023 % 200 180 160 140 120 100 80 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23 Benchmark (total return) (+83.8%) WWH NAV (total return) (+48.0%) WWH Share Price (total return) (+34.6%) Rebased to 100 as at 31 March 2018. Source: Morningstar. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTCOMPANY PERFORMANCE 3 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)^ 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% 2023 (0.1%) 2.5% 3,434.5p 3,115.0p (9.3%) 31.0p 10.5% 0.8% 1.2% 1.1% 0.9% 0.9% 1.4% 0.8% *Source: Morningstar ^ Alternative Performance Measure (see Glossary beginning on page 97). DISCOUNT OF THE COMPANY’S SHARE PRICE TO THE NET ASSET VALUE PER SHARE year to 31 March 2023 % 0.0 -2.0 (5.5%) -4.0 -6.0 -8.0 -10.0 -12.0 (9.3%) Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 Feb 2023 Mar 2023 *Source: Morningstar WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT4 4 STATEMENT FROM THE CHAIR DOUG MCCUTCHEON A principal contributor to performance in the year, both in relative and absolute terms, came from emerging biotechnology stocks (defined primarily as small-and mid- capitalisation stocks). A key part of our Portfolio Manager’s strategy is to be overweight the emerging biotechnology sector, reflecting the high levels of innovation and growth found in these companies. However, for some time, part of this strategy has included our overweight position in emerging market stocks, particularly in China, which was not successful during the past year. More broadly, the Company’s results over the past two years have dragged down our medium-term performance. While our net asset value per share compound annual return over five years has been a respectable +8.2%, it was lower than that of our Benchmark (+12.9%). Nonetheless, the long-term performance of the Company continues to be strong. From the Company’s inception in 1995 to 31 March 2023, the total return of our net asset value per share has been +4,234.1%, equivalent to a compound annual return of +14.5%. This compares to a cumulative blended Benchmark return of +2,189.0% and a compound annual return of +11.9% 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. INVESTMENT PERFORMANCE This is my first full year report, having succeeded Sir Martin Smith as Chair of the Board in July 2022. I mentioned at the half-year stage that macro events, rather than industry fundamentals, had been dictating the performance of global equity markets. In the second half of the year, investors continued to be torn between the overall economic and political background, on the one hand, and company and industry developments on the other. As set out in our Portfolio Manager’s Review, during the year your Company performed well in periods when markets were being driven by sector fundamentals and struggled when macro factors were in control. Overall, the financial year ended 31 March 2023 proved to be a challenging one for the Company, with market volatility much greater than year-end to year-end results suggest. The Company’s net asset value per share total return was -0.1% (2022: -5.8%) and the share price total return was -4.1% (2022: -10.8%). Our results underperformed the Company’s Benchmark, the MSCI World Health Care Index measured on a net total return, sterling adjusted basis, which returned +2.5% during the year (2022: +20.4%). The disparity between the performance of the Company’s net asset value per share and its share price was reflected in the widening of our share price discount to our net asset value per share from 5.5% as at 31 March 2022 to 9.3% at 31 March 2023. The majority of the Company’s assets are denominated in U.S. dollars, and it should be noted that our absolute net asset value performance was helped by the weakness of sterling over the year, particularly compared to the dollar, against which it depreciated by 6.5%. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT 5 5 CAPITAL REVENUE AND DIVIDEND Challenging stock market conditions since the beginning of 2022 have continued to have a negative impact on share price discounts across the investment company sector, with the average level of discount currently standing at c.14.9%*. *Source: Winterflood Investment Trusts It is the Board’s policy to buy back our shares if the Company’s share price discount to the net asset value per share exceeds 6% on an ongoing basis. Shareholders should note, however, that it remains possible for the discount to be greater than 6% for extended periods of time, particularly when sentiment towards the Company, the sector and to investment trusts generally remains poor. In such an environment, buybacks may prove unable to prevent the discount from widening. However, they enhance the net asset value per share for remaining shareholders and go some way to dampening discount volatility, which can adversely affect investors’ risk adjusted returns. Over the year, the Company remained committed to its share buyback and issuance policy, regularly repurchasing shares. A total of 2,836,483 shares were repurchased for treasury at a cost of £91.6m and at an average discount of 8.8%. On 31 March 2023, there were 62,620,763 shares in issue (excluding the 2,438,015 shares held in treasury). Since this date to 5 June 2023, a further 1,299,037 shares have been bought back for treasury, at a cost of £42.3m and at an average discount of 10.0%. At the time of writing, the share price discount stands at 9.4%. In line with the Company’s stated policy, I confirm that all shares held in treasury at the date of the Company’s Annual General Meeting to be held on 18 July 2023, will be cancelled. Shareholders will be aware that it remains the Company’s investment policy to pursue capital growth for shareholders and to pay dividends at least to the extent required to maintain investment trust status. Therefore, the level of dividends declared can go down as well as up. An unchanged interim dividend of 7.0p per share for the year ended 31 March 2023, was paid on 11 January 2023 to shareholders on the register on 25 November 2022. Due, in large part, to an increase in exposure to higher yielding stocks in the portfolio and also to the continued weakness of sterling, the Company’s revenue return per share for the year as a whole increased to 30.6p (2022: 26.8p). Accordingly, the Board is proposing an increased final dividend of 24.0p per share (2022:19.5p per share) which, together with the interim dividend already paid, makes a total dividend for the year of 31.0p (2022: 26.5p per share). Due to the impact of share buybacks the total dividend for the year is higher than the reported return per share. Based on the closing mid market share price of 3,275.0p on 5 June 2023, 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 26 July 2023, to shareholders on the register of members on 9 June 2023. The associated ex-dividend date will be 8 June 2023. The Company’s dividend policy will be proposed for approval at the forthcoming Annual General Meeting. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT6 STATEMENT FROM THE CHAIR CONTINUED BOARD OF DIRECTORS The process of Board refreshment, which began a few years ago, continued during the year. As previously announced, Tim Livett and Jo Parfrey joined the Board in September 2022. Between them, they have a wealth of experience in the finance, investing, healthcare and governance fields, from which the Board will benefit for years to come. During the year, Tim took over from Humphrey van der Klugt as Chair of the Audit & Risk Committee, with Humphrey carrying on as a Director of the Company. In addition, Jo took over from Bina Rawal as Chair of the Management Engagement & Remuneration Committee. Sarah Bates, the Company’s Senior Independent Director and the Chair of the Nominations Committee, having served on the Board since 2013, will retire at the conclusion of the Company’s Annual General Meeting on Tuesday, 18 July 2023. Sarah’s leadership, governance and investment industry experience, including her deep knowledge of the investment trust sector, have been invaluable to the Board. Her friendship and wise counsel will be greatly missed. Bina will take over from Sarah as the Senior Independent Director and Chair of the Nominations Committee. The biographical details and Board positions of all of the Directors are set out on pages 41 to 43. SHARE SPLIT PROPOSAL As a consequence of the Company’s strong investment returns over many years, its share price has risen steadily. While this has been good news for our shareholders, the Board believes that it may be unhelpful for those investors seeking to purchase smaller quantities of shares, as well as for regular savers. Accordingly, in order to address this and to increase market liquidity and marketability, we are proposing to split the shares on a 10-for-1 basis. Following the share split, each shareholder will receive nine additional Ordinary shares for each Ordinary share held immediately prior to the transaction. The net effect is that, following the split, you will have 10 times as many shares, but the Company’s share price should, in theory, be one-tenth of what it was previously. The share split will not affect the value of your overall investment in the Company, nor will it affect your shareholder rights. Shareholders will have the opportunity to vote on this proposal at the forthcoming Annual General Meeting and details can be found under Notice of Meeting, on pages 101 to 105. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS ESG matters continue to be an important priority for the Board and our objective is to have full, transparent disclosure on the topic. Bina Rawal has been working closely with our Portfolio Manager on this matter. Our Portfolio Manager remains committed to taking a leading role in the development of meaningful ESG engagement practices in the healthcare sector. As part of this, they facilitate dialogue and an exchange of leading practices among investors, companies and other relevant experts on ESG in 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 beginning on page 25. OUTLOOK Global stock markets continue to experience higher than usual levels of uncertainty, with persistent inflation, central bank borrowing rates at much higher levels than they were one year ago, a developing ongoing economic downturn and several overhanging geopolitical issues. It is unsurprising, therefore, that investors remain relatively risk-averse for the moment, favouring more predictable businesses over the faster growing companies that make up much of our portfolio and sector. Against this challenging short-term background, however, our Portfolio Manager OrbiMed continues to remain positive on the outlook for healthcare and our Company. They expect the current accelerated levels of mergers and acquisitions to continue, supported by attractive valuations, healthy balance sheets and, within the pharmaceutical sector, a need to address future patent expirations. Regardless of the market backdrop, the pace of scientific and technological development within the sector continues unabated while clinical and regulatory catalysts will continue to provide a regular flow of key share price moving events. They further believe that the sector’s defensive growth characteristics should continue to prove attractive in times of global uncertainty. Your Board shares OrbiMed’s perspective. We believe that long-term investors in this sector will be rewarded and that the Company will continue to perform strongly over time. Thus far, in the current financial year, performance is off to WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT7 STATEMENT FROM THE CHAIR CONTINUED a positive start, both in absolute and relative terms. From 1 April 2023 to the date of this letter, our net asset value per share has increased by +6.2%, compared to +0.9% for our Benchmark. ANNUAL GENERAL MEETING (“AGM”) The Company’s AGM will be held at Saddlers’ Hall, 40 Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 at 12.30pm. As well as the formal proceedings, there will be an opportunity to meet the Board and the Portfolio Manager and to receive an update on the Company’s strategy. For those investors who are not able to attend the meeting in person, a video recording of the Portfolio Manager’s presentation will be uploaded to the website after the meeting. Shareholders can submit questions in advance by sending them to wwh@frostrow.com. I encourage all shareholders to exercise their right to vote at the AGM and to register your votes online in advance of the meeting. Registering your vote in advance will not restrict you from attending and voting at the meeting in person should you wish to do so, subject of course to the occurrence of any extraordinary events that might make attendance difficult or impossible. The votes on the resolutions to be proposed at the AGM 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. Doug McCutcheon Chair 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT8 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 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 14 to 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 2023STRATEGIC 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 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 98. Further details on how derivatives are employed can be found in note 16 beginning on page 89. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT10 PORTFOLIO INVESTMENTS HELD AS AT 31 MARCH 2023 Investments AstraZeneca Boston Scientific Bristol-Myers Squibb Humana Intuitive Surgical Sanofi UnitedHealth Novo Nordisk Roche Stryker Top 10 investments Daiichi Sankyo BioMarin Pharmaceutical Eisai Sarepta Therapeutics Thermo Fisher Scientific Biogen Evolent Health Tenet Healthcare Eli Lilly & Co Baxter International Top 20 investments Caris Life Sciences* Ionis Pharmaceuticals Edwards Lifesciences Apellis Pharmaceuticals Neurocrine Biosciences Natera SI-BONE Wuxi Biologics Cayman Vertex Pharmaceuticals WuXi AppTec Top 30 investments uniQure NV Progyny Sector Pharmaceuticals Health Care Equipment & Supplies Pharmaceuticals Health Care Providers & Services Health Care Equipment & Supplies Pharmaceuticals Health Care Providers & Services Pharmaceuticals Pharmaceuticals Health Care Equipment & Supplies Pharmaceuticals Biotechnology Pharmaceuticals Biotechnology Life Sciences Tools & Services Biotechnology Health Care Providers & Services Health Care Providers & Services Pharmaceuticals Health Care Equipment & Supplies Life Sciences Tools & Services Biotechnology Health Care Equipment & Supplies Biotechnology Biotechnology Life Sciences Tools & Services Health Care Equipment & Supplies Life Sciences Tools & Services Biotechnology Life Sciences Tools & Services Biotechnology Health Care Providers & Services Shanghai Kindly Medical Instruments Health Care Equipment & Supplies Mirati Therapeutics Crossover Health* R1 RCM New Horizon Health Beijing Yuanxin Technology* Biotechnology Health Care Providers & Services Health Care Providers & Services Life Sciences Tools & Services Health Care Providers & Services EDDA Healthcare & Technology* Health Care Equipment & Supplies VISEN Pharmaceuticals* Top 40 investments Iovance Biotherapeutics Joinn Laboratories China API Holdings* RxSight Ruipeng Pet Group* Jiangxi RiMAG* Vaxcyte Xenon Pharmaceuticals MabPlex* Dingdang Health Technology Top 50 investments Biotechnology Biotechnology Biotechnology Health Care Providers & Services Health Care Equipment & Supplies United States Health Care Providers & Services Health Care Providers & Services Biotechnology Biotechnology Health Care Providers & Services Health Care Providers & Services China China United States Canada China China Country UK United States United States United States United States France United States Denmark Switzerland United States Japan United States Japan United States United States United States United States United States United States United States United States United States United States United States United States United States United States China United States China Netherlands United States China United States United States United States China China China China United States China India Market value £’000 % of investments 139,838 114,463 112,095 104,491 103,710 99,259 91,691 88,871 84,999 76,834 6.5 5.3 5.2 4.8 4.8 4.6 4.2 4.1 3.9 3.6 1,016,251 47.1 76,125 76,049 59,273 55,344 53,900 53,740 52,218 45,509 44,971 44,832 3.5 3.5 2.7 2.6 2.5 2.5 2.4 2.1 2.1 2.1 1,578,212 73.1 40,900 36,373 36,118 32,234 31,196 28,994 28,526 28,512 28,253 22,443 1.9 1.7 1.7 1.5 1.4 1.3 1.3 1.3 1.3 1.0 1,891,761 87.6 21,955 20,833 19,475 19,009 17,163 16,620 16,011 14,606 14,550 14,281 1.0 1.0 0.9 0.9 0.8 0.8 0.7 0.7 0.7 0.7 2,066,264 95.7 14,104 13,760 13,668 12,431 11,900 11,673 10,755 10,392 5,944 4,736 0.7 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.3 0.2 2,175,627 100.7 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTPORTFOLIO CONTINUED 11 Investments Ikena Oncology Sector Pharmaceuticals Shanghai Bio-heart Biological Technology Health Care Equipment & Supplies Passage Bio Peloton Therapeutics* - DCC Total investments OTC Equity Swaps – Financed^ Healthcare M&A Target Basket Apollo Hospitals Enterprise Healthcare Catalyst Basket Pharmaron Beijing Biotechnology Biotechnology Swap Baskets Health Care Providers & Services Swap Baskets Life Sciences Tools & Services Jiangsu Yuyue Medical Equipment & Supply Health Care Equipment & Supplies Less: Gross exposure on financed swaps Total OTC Swaps Total investments including OTC Swaps * Unquoted holding DCC = deferred contingent consideration. ^ See Glossary beginning on page 97 and note 16 beginning on page 89 for further details in relation to the OTC Swaps. Country United States China United States United States Market value £’000 % of investments 4,445 4,233 1,627 485 0.2 0.2 0.1 0.0 2,186,417 101.2 United States 105,629 India United States China China 32,672 24,216 16,989 11,197 (217,596) (26,892) 2,159,525 4.9 1.5 1.1 0.8 0.5 (10.1) (1.2) 100.0 SUMMARY Investments Quoted equities Unquoted equities Equity swaps Total of all investments Market value £’000 2,041,247 145,170 (26,892) 2,159,525 % of investments 94.5 6.7 (1.2) 100.0 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT(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: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) 12 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: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: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:24) (cid:23)(cid:21)(cid:23)(cid:21) (cid:23)(cid:21)(cid:23)(cid:22) (cid:23)(cid:21)(cid:23)(cid:21) (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) Pharmaceutical 29.9% Pharmaceutical 35.1% Healthcare Equipment/Supplies/Technology 19.6% Healthcare Equipment/Supplies/Technology 21.1% Biotechnology Healthcare Providers & Services Life Sciences Tools & Services Basket Swaps 17.6% 18.7% 8.7% 5.5% Biotechnology Healthcare Providers & Services Life Sciences Tools & Services Debt Instruments 20.7% 15.2% 7.7% 0.2% (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: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) BY REGION* (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: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:24) (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: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) North America Europe China Japan India 65.3% 18.3% 8.8% 5.7% 1.9% North America Europe China Japan India 70.8% 12.0% 12.5% 3.5% 1.1% * Figures expressed as a % of the total economic exposure. This includes all derivatives as an economically equivalent position in the underlying holding. (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: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:22) (cid:23)(cid:21)(cid:23)(cid:24) (cid:23)(cid:21)(cid:23)(cid:22)(cid:23)(cid:21)(cid:23)(cid:22) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTORBIMED CAPITAL LLC OrbiMed was founded in 1989 and has evolved over time to be one of the largest dedicated healthcare investment firms in the world. OrbiMed has managed the Company’s portfolio since its launch in 1995. OrbiMed had approximately U.S.$17 billion in assets under management as of 31 March 2023, 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. 13 THE TEAM The wider 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 OrbiMed footprint now spans three continents with offices in New York, San Francisco, Herzliya (Israel), Hong Kong, Shanghai, Mumbai and London. 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT14 PORTFOLIO MANAGER’S REVIEW MARKETS PERFORMANCE Overall, for the year ended 31 March 2023, the Company generated a net asset value total return of -0.1% whilst the share price total return was -4.1%. This performance lagged the Benchmark return of +2.5%. Performance – both absolute and relative – came intermittently throughout the year, largely reflecting the aforementioned struggle between fundamental industry drivers and macroeconomic factors that heavily influenced equity markets. Certainly, the start of calendar year 2022 was dominated by the macro and global markets came under intense pressure as investors focused on tightening monetary policies, continued geopolitical tensions, and concerns about COVID-induced lockdowns in China. Preference for “value-over-growth” continued as a macro theme for investors, as did healthcare being relatively defensive. This set-up was not conducive to performance given our preference for innovative growth companies and as a result the Company’s returns materially lagged the Benchmark to start the financial year in April and May. The reported financial year was up and down for the global equity markets. Whilst the pandemic eased as a global healthcare crisis, its lingering economic impact still reverberated across the world. Inflation, rising interest rates and the war in Ukraine all played major parts in shaping equity returns. Overall, global inflation and the ensuing central bank responses led to an array of conflicting crosscurrents between currency values, gross margin pressures, and higher financing costs that all shaped the market. The year was a product of many things, with perhaps the only constant being the unyielding battle between macro factors and industry fundamentals – forcing investors to grapple with the “yin and yang” of these two disparate market forces. The net result, amazingly, was rather modest, with a global market total return of -0.5% as measured by the MSCI World Index (in sterling terms). This despite the significant volatility in between the start and end of the year with several material drawdowns. Even local geographies were not in agreement with the various market forces, with the FTSE All-Share Index finishing notably up 2.8% whilst the S&P 500 finished down 1.8% (both figures in sterling measured on a total return basis). Even healthcare stocks did not fare as expected, partially eschewing their defensive characteristics to post a +2.5% total return (sterling) in the year, obviously lagging the UK market but outpacing others. FINANCIAL YEAR PERFORMANCE COMPARISON (WORLDWIDE HEALTHCARE TRUST VS. MSCI WORLD HEALTHCARE INDEX) % 10 5 0 -5 -10 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 Feb 2023 Mar 2023 MSCI Health (total return) (+2.5%) WWH NAV (total return) (-0.1%) Source: Bloomberg, OrbiMed; Data updated through 31 March 2023. Note: WWH performance figures are net of fees WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTPORTFOLIO MANAGER’S REVIEW CONTINUED 15 PERFORMANCE SEGMENTS MACRO-DRIVEN VS. FUNDAMENTAL-DRIVEN PERFORMANCE April and May 2022 % 20 15 10 5 0 -5 % 20 15 10 5 0 -5 -0.2 -7.3 -10 Apr 22 May 22 -10 Jun 22 Jun 22 MSCI Health WWH June to September 2022 October to December 2022 % 20 15 +11.2 10 +2.3 5 0 -5 -10 +4.1 -1.5 Jul 22 Aug 22 Sep 22 Oct 22 Oct 22 Nov 22 Dec 22 Jan 23 January to March 2023 % 20 15 10 5 0 -5 -1.6 -3.6 -10 Jan 23 Feb 23 Mar 23 Apr 23 Source: Bloomberg, OrbiMed; Data updated through 31 March 2023. Note: WWH performance figures are net of fees However, as we had been expecting, mergers and acquisitions (M&A) in the therapeutics space finally inflected in June and this phenomenon carried on well into early October. This coincided with a host of important – and positive – clinical catalysts which helped to move biotechnology stocks higher during this period. Investor interest picked up and fund flows followed. The Company recorded a +11.0% return during this period, which was nearly 9.0% better than the Benchmark. As the calendar-year-end approached, investor focus shifted yet again and stock markets rounded off a tumultuous year with gains, including healthcare, only to stumble in December as recessionary fears spiked. This environment again favoured larger capitalisation stocks and value names, impacting the Company’s relative returns in this three-month period. Finally, the fourth quarter of the financial year was similarly volatile. Healthcare stocks were clear laggards in January as investors pivoted from fears of a looming recession, to the view that a softer landing may be possible given decelerating inflation, a stronger European outlook, and the swift re-opening in China. Defensive healthcare sectors – like large capitalisation pharmaceutical stocks and managed care – therefore saw investor outflows and this continued into February as healthcare stocks continued to underperform the broader markets. This set-up favoured our portfolio positioning and despite some modest declines in this segment, the Company returned over 2.0% more than Benchmark. We are pleased to report that this performance to start the calendar year has continued in the first 6 weeks of the new financial year. M&A activity has remained elevated thus far, a number of key catalysts have been positive, and this has buoyed the Company’s performance as strong fundamentals are consistent with our bullish positioning. Specifically, from the start of the financial year to the date of this report, the NAV has advanced 6.2% compared to the Benchmark return of +0.9%. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT16 PORTFOLIO MANAGER’S REVIEW CONTINUED PERFORMANCE SINCE INCEPTION (WORLDWIDE HEALTHCARE TRUST NAV VS. BLENDED BENCHMARK*) % 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 Mar 23 WWH NAV (total return) (+4,234.1%) WWH Share Price (total return) (+3,705.4%) Benchmark (total return) (+2,189.0%) FTSE (total return) (+578.8%) * 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). Source: Frostrow, Bloomberg Despite the volatility that marked the reported financial year, we are pleased to report that the long-term performance of the Company is strong. Overall, the Company’s net asset value performance since inception to 31 March 2023 (from 28 April 1995), is a return of +4,234.1%, an average of +14.5% per annum. This compares to a cumulative blended Benchmark return of +2,189.0%, an average of +11.9% per annum, over the same investment horizon. This compares to the FTSE All-Share Index return of +579% and +7.1%. As we enter our 29th year of managing the Company, the multiple since inception of 42x represents both the strength of the healthcare industry and the unyielding global demand for healthcare related goods and services. It also 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. KEY SOURCES OF CONTRIBUTION The key contributor to performance in the year was from emerging biotechnology stocks (defined primarily as small - and mid -capitalisation stocks). Positive contribution here was due to both allocation effect and individual stock picking, contributing both absolute (over 4.5%) and relative (over 4.0%) performance. Recall that our positioning in this sub-sector has been a key strategic overweight for us and will remain so given the impressive innovation cycle that continues to date. This contribution was partially offset due to allocation effect within large capitalisation biotechnology stocks, where we were not materially invested, which detracted approximately 1.0% relative to the Benchmark. The second largest contributor on a sub-sector basis was large capitalisation pharmaceuticals. The group experienced similar volatility to the broad market throughout the financial year, but finished higher on a relative basis. Our exposure here contributed nearly 1.2% to performance. This was offset by allocation, as we were materially underweight this sub-sector, creating nearly 1.6% of relative underperformance. However, we do note that we consider large capitalisation pharmaceuticals as a funding source for biotechnology, so this positioning overall was a net positive. The final subsector with absolute contribution of over 1.0% was from Japan pharmaceuticals. Here the contribution was completely due to stock picking. Overall weighting was mostly in-line with the Benchmark, creating over 0.7% of relative performance. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTPORTFOLIO MANAGER’S REVIEW CONTINUED SOURCES OF CONTRIBUTION (ABSOLUTE) % 5 4 3 2 1 0 -1 -2 -3 -4 -5 Biotech Japan Services Tools Pharma Medtech India China Source: Frostrow Lastly, another subsector of note was medical technology. Whilst we were fully invested in this space, overall performance for these stocks was negative in the financial year, down on average 7.5% in the Benchmark. The subsector was adversely impacted by a mix of macro factors and fundamental headwinds, namely hospital staffing shortages, semiconductor shortages, elevated oil and resin prices, shipping bottlenecks and a dearth of meaningful new product cycles. However, many of these issues have abated and even reversed, leading to a tailwind for the sector going forward. Due to stock picking in the reported period, our average returns were superior, down on average 0.3% in the portfolio. This added over 1.1% of relative performance. SOURCES OF CONTRIBUTION (RELATIVE) Biotech Medtech Tools Services Japan India Pharma China 3 2 1 0 % -1 -2 -3 -4 -5 Source: Frostrow 17 In terms of subsectors that materially detracted from performance, we highlight two. First, specialty pharmaceuticals detracted more than 1.0% in both absolute and relative performance, due to a single stock pick (Horizon Therapeutics – discussed below). Second, emerging market stocks, particularly China healthcare (a key strategic overweight) was particularly volatile in the financial year. That said, China detracted over 1.6% in both absolute and relative performance, due to a single stock pick (Shanghai Bio-heart Biological Technology – discussed further on page 19). UNQUOTED During the financial year ended on 31 March 2023, the Company strategically refrained from making new investments in unquoted companies, as we cautiously navigated the challenging public offering market for small and mid-capitalisation therapeutic firms. Encouragingly, however, one of the existing unquoted investments, DingDang Health Technology Group, completed its initial public offering (IPO) in mid-September, despite a subsequent share price decline (described below). With the recent encouraging signs of improvement in the capital market funding landscape, we are optimistic about the potential for more unquoted investments to achieve listings in the current financial year. As of 31 March 2023, unquoted company investments made up 6.7% of the Company’s net assets, only slightly down from 7.1% on 31 March 2022. The existing unquoted portfolio demonstrates a diverse and forward-looking approach. Geographically, around 60% is exposed to emerging markets and the remainder is invested in North American companies. On a sector basis, half of the unquoted investments are in healthcare services, with additional allocations to life sciences tools, biotechnology, and medtech. For the year ended 31 March 2023, the Company’s unquoted strategy encountered a few challenges, resulting in a loss of £17.3 million and an implied return of -10.3%, which somewhat offset the substantial gain of £42.5 million in the financial year ended 31 March 2022. The decline was primarily driven by a post-listing decrease in DingDang Health Technology Group (£7.5 million) and net write- downs in the remaining unquoted portfolio of £9.8 million. Nevertheless, given the emerging positive trends in the market and our strategic approach, we remain confident in the future performance of our unquoted investments, echoing the successes of prior years. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT18 PORTFOLIO MANAGER’S REVIEW CONTINUED MAJOR CONTRIBUTORS TO PERFORMANCE The top six contributors to absolute performance were a combination of therapeutic and non-therapeutic stocks, but the impact of M&A in the biopharmaceutical sector on performance was the distinguishing feature of positive performance in the year. M&A IMPACT ON PERFORMANCE 3 OF THE TOP 5 CONTRIBUTORS WERE BIOTECHNOLOGY TAKE-OUTS. >100% premium >100% premium >$40 billion The largest contributor in the period was Global Blood Therapeutics. The California based small-mid- capitalisation biotechnology company focuses on clinical medicines used to treat blood-based disorders, such as sickle cell disease (SCD). The company was acquired by Pfizer in an announced transaction in August 2022. The agreed upon price was for a total enterprise value of U.S.$5.4 billion, a 100% premium to the unaffected share price. In addition to an already marketed product for the treatment of SCD, Oxbryta (voxelotor), Pfizer also gained important pipeline assets, including GBT601, an oral, once-daily, next-generation sickle haemoglobin (HbS) polymerization inhibitor in the Phase 2 portion of a Phase 2/3 clinical study. GBT601 has the potential to be a best-in-class agent targeting improvement in both haemolysis and frequency of vaso-occlusive crisis (VOC). Another promising pipeline asset is inclacumab, a fully human monoclonal antibody targeting P-selectin which is being evaluated in two Phase 3 clinical trials as a potential quarterly treatment to reduce the frequency of VOCs and to reduce hospital readmission rates due to VOCs. The transaction officially closed in early October 2022. In addition to the above, Pfizer also executed on the largest M&A healthcare transaction of the year, acquiring Seattle-based oncology player, Seagen. Pfizer announced its intention in March 2023. In a U.S.$43 billion deal “to battle cancer”, the two companies entered into a definitive agreement that will see Pfizer acquire the company for $229 per share, a premium of more than 100% to the company’s 52-week low. Seagen is a pioneer in “antibody drug conjugate” (ADC) technology, with four of the twelve total U.S. Food & Drug Administration (FDA)-approved and marketed ADCs using its technology industry-wide. ADCs are a transformative modality that is emerging as a powerful tool across a broad range of cancers designed to preferentially kill cancer cells and limit off-target toxicities. ENHERTU 3RD GENERATION ANTIBODY DRUG CONJUGATE Discovered by: Overexpression of HER2 leads to cancer Enhertu First FDA Approval: Dec '19 Co-marketed & Co-Developed by: Metastatic Breast Cancer Additional Indications Mega-Blockbuster with peak sales potential in excess of $15 billion HIGH HER2+ EXPRESSION EFFICACY SUPERIOR TO KADCYLA Risk of Death by 72% LOW HER2+ EXPRESSION ESTABLISHED NEW STANDARD OF CARE Risk of Death by 50% • Gastric • Colon • Lung • Earlier lines of therapy Unprecedented Efficacy The Japanese pharmaceutical interest, Daiichi-Sankyo, has emerged as the other leader in ADC technology and is a pioneer in creating “3rd generation” ADCs that are more potent and safer than ever before. Their first offering, Enhertu (trastuzumab deruxtecan), for the treatment of specific forms of metastatic breast cancer, has already become a blockbuster product. The share price re-rated multiple times in the fiscal year as the company disclosed new data sets (low HER2+ expression), new approvals (high HER2+ expression), and sales above expectations consistently through the year (sales >$1 billion in the first nine months). One of the most interesting data disclosures occurred in June 2022 at the American Society of Clinical Oncology meeting in Chicago where Enhertu was shown to double the length of survival in women with “low HER2+” expression. The data was so impressive, the thousands of oncologists in attendance collectively rose in a standing ovation. The stock has also appreciated ahead of the first pivotal data for the company’s next ADC offering, datopotamab deruxtecan (Dato-DXd) for the treatment of specific lung cancer, which “could be bigger than Enhertu”, as per the company’s partner, AstraZeneca. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT PORTFOLIO MANAGER’S REVIEW CONTINUED 19 BioMarin Pharmaceutical is another California based small-mid-capitalisation biotechnology company that was a material contributor to performance. The company is well known for developing and commercialising therapeutic enzyme products but has more recently added efforts in gene therapy. Their lead asset, Roctavian (valoctocogene roxaparvovec), is the first gene therapy for the treatment of severe haemophilia A. An approval for Roctavian in Europe (August 2022) and an imminent approval by the FDA (expected in June 2023) helped push the share price higher in the reported period, despite some profit taking late in the year. Additionally, the company’s new product launch for achondroplasia, Voxzogo (vosoritide), has been very successful. Multiple upward sales revisions for Voxzogo through 2022 were also an important tailwind for the share price. The Cambridge, Massachusetts biotechnology company, Sarepta Therapeutics, has evolved into a rare disease company with expertise in the treatment of Duchenne Muscular Dystrophy (DMD), a severe type of muscle wasting found in young males. More recently, the company has acquired and developed a platform technology in gene therapy which they have applied to DMD patients. This development programme had moved into pivotal stages and the data had looked promising as a potential cure for these patients. The stock moved higher as a result, and moved higher still after the company was granted an accelerated approval path by the FDA for their lead gene therapy asset (delandistrogene moxeparvovec). Some share price volatility of note closed the end of the financial year due to some internal disagreement within the FDA about the approvability of delandistrogene, which was ultimately resolved with a positive recommendation for approval by an external advisory committee meeting in May 2023. Finally, yet another California based small-mid- capitalisation biotechnology company was a significant contributor to performance via its acquisition during the fiscal year. Turning Point Therapeutics was acquired by Bristol-Myers Squibb for a total equity value of U.S.$4.1 billion, representing a +125% premium to the previous closing share price. The deal was announced in June 2022 and closed August 2022. Turning Point Therapeutics is a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the most common mutations associated with oncogenesis. Their lead asset, repotrectinib, is a next generation, potential best-in-class tyrosine kinase inhibitor, targeting the ROS1 and NTRK oncogenic drivers of non-small cell lung cancer (NSCLC) and other advanced solid tumours. Repotrectinib is expected to be approved in the U.S. in the second half of 2023 and become a new standard of care for patients with ROS1-positive NSCLC in the first-line setting. MAJOR DETRACTORS FROM PERFORMANCE Investments that experienced negative returns were very diverse in nature, whether it be geographically (U.S., Europe, and China) or sector (biotechnology, pharmaceuticals, and medical technology). The one common thread each of the stocks faced was a unique individual event, such as a clinical trial failure, a commercial sales slowdown, or even de-risking ahead of a catalyst, which subsequently triggered a fall in share price. The main detractor in the year was Shanghai Bio- heart Biological Technology the China-based medical technology company is a leader in interventional cardiovascular devices. The company has enjoyed enormous success since its IPO in late 2021, with returns in excess of 250% of its original listing price. However, the stock inexplicably began to sell off, even falling in November on no obvious news. We speculated that some profit taking took place ahead of an important data disclosure for the company’s novel renal denervation device for uncontrolled hypertension, expected early in 2023. This was partially confirmed when the competitor data (from Medtronic) failed to prove that its renal denervation system reduced patients’ ambulatory systolic blood pressure. Additionally, the share price was pressured as some investors may have sold ahead of the lock-up expiration for private investors in December 2022. Mirati Therapeutics is a California-based biotechnology company developing novel small molecule drugs to treat cancer. In particular, their lead program is a targeted oncology therapy intended to treat patients with lung cancer that harbours a specific mutation in the KRAS gene. Shares rose in late 2022 amid rumours that the company might be acquired; however, they ultimately fell in December 2022 following the presentation of disappointing clinical trial data. The data suggested that their lead programme might not be superior to the standard of care therapy in first line lung cancers WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT20 PORTFOLIO MANAGER’S REVIEW CONTINUED harbouring a KRAS mutation. Instead, the drug may be used in more advanced lung cancer patients where the market opportunity is smaller. Horizon Therapeutics is a U.S. based specialty pharmaceutical company that presided over one of the most successful drug launches ever in 2020. Tepezza (teprotumumab) was developed by the company to treat “TED” or thyroid eye disease, a painful, disfiguring, and debilitating disorder of the musculature of the eye. Launched in January 2020, the drug was well on its way to blockbuster status despite the commercial headwinds of the COVID-19 pandemic. Despite a temporary government-mandated shutdown in the manufacturing of Tepezza due to the prioritisation of COVID-19 vaccine production in early 2021, the re-launch of the product in April 2021 exceeded expectations. Whilst this success continued into early 2022, the sales growth for Tepezza then began to unexpectedly flatten, and the company reported second quarter sales that were disappointing and full year sales guidance was lowered. Additionally, investors learned that a key study (Tepezza usage in chronic patients) was delayed into 2023. As a result, the stock fell. We exited the position as the company pondered new marketing initiatives and increased spend to reinvigorate Tepezza sales in 2023, whilst awaiting trial results for the chronic indication. We were no longer invested in the company when Amgen announced its intention to acquire the company in December 2022. Investing in healthcare necessarily brings with it clinical risk. For Swiss pharmaceutical giant, Roche, the bad news came in threes during 2022. First, the company started the financial year off on the wrong foot when in April 2022 they confirmed that their investigative oral hormonal therapy, giredestrant, a “SERD” (selective estrogen receptor degrader), failed to show a benefit in advanced breast cancer. Then in May 2022, Roche confirmed that their “anti-TIGIT” antibody, tiragolumab, failed on an interim look in the treatment of lung cancer. And finally in November 2022, Roche confirmed that their high risk / high reward antibody, gantenerumab, failed delaying the progression in mild-to-moderate Alzheimer’s patients. This string of unfortunate clinical trial failures coupled with declines in profits due to the dwindling effects of COVID- related sales (particularly in the company’s diagnostics unit), led to share price declines in the period. The medical technology company, Edwards Lifesciences, is a developer of tissue replacement heart valves, and more specifically transcatheter heart valves (THV). The company’s current valve portfolio is largely comprised of transcatheter aortic heart valves (TAVR), a market which has been growing solidly in the double-digit range but experienced some disruption in the second half of 2022 due to hospital staffing shortages across the U.S. This has fuelled investor concerns that the market is maturing and is one of the primary reasons for prolonged weakness in the share price during the reported period. Other headwinds facing the stock were mostly macro in nature, including the negative sentiment for growth stocks and rising interest rates. However, there is evidence that staffing shortages and other hospital difficulties have eased so far in 2023, which should benefit all medtech companies and especially those most exposed to inpatient procedure volumes, such as Edwards. Moreover, the company is the process of launching a key new product cycle in the transcatheter mitral heart valve (TMVR) market, which has the potential to accelerate top line growth in 2023 and more fully in 2024. DERIVATIVE STRATEGY The Company has the ability to utilise equity swaps and options as part of its financial strategy. Throughout the financial year, the Company leveraged single stock equity swaps to access Chinese and Indian investments in emerging markets, which would otherwise be inaccessible through more traditional investment methods. Despite detracting £22.8 million from performance in the financial year ended 31 March 2023, we remain confident in the long-term prospects of emerging market securities, particularly those trading locally in mainland China. Additionally, the Company strategically invested in two customised tactical basket swaps, targeting growth opportunities in undervalued small and mid-capitalisation therapeutic companies. These baskets were constructed to capitalise on two prevailing themes that we anticipate will deliver strong returns in current financial year: 1) investment opportunities possessing considerable potential as attractive acquisition targets for larger corporations, and 2) those exhibiting a favourable risk/ reward profile in light of upcoming clinical catalysts. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTPORTFOLIO MANAGER’S REVIEW CONTINUED 21 LEVERAGE STRATEGY Historically, the typical range of leverage level employed by the Company has been between high single digits to mid-teens. Considering the market conditions over the past three financial years, we have, more recently, used leverage in a more tactical fashion. Examples include the volatility around the original emergence of the pandemic in March 2020 and the U.S. Presidential election in November 2020 and the subsequent U.S. Senate run-off in January 2021. More recently, we increased leverage back into the low-to- double digits, a reflection of our overall bullishness on the portfolio, a turn in biotechnology stocks, and the relative outlook for healthcare ahead of a potential recession. One caveat that keeps us from extending leverage even further, is the volatile and uncertain macro backdrop, either economic in nature or even further geopolitical unsettlement in the east. SECTOR DEVELOPMENTS AND OUTLOOK Whilst healthcare stocks in general may have struggled this year given the see-saw of macro headwinds, there were a number of positive sector developments to highlight. First, some investors expressed angst over a slowdown of new drug approvals at the FDA. However, entering 2023, disrupted work schedules because of the coronavirus have dwindled and most recently, FDA inspectors returned to China for the first time in years which is encouraging (source: Washington Analysis). A significant number of complete response letters and extended user fee dates had been issued by the agency due to the inability to complete the inspections, so this is a welcome relief for the industry. More importantly, despite some delays, the past six years have been the most productive in industry history, with almost 300 new product approvals during that span. The FDA has kept pace so far in 2023, with 13 additional approvals in the first three months of the calendar year (source: fda.gov). Perhaps the largest sector development that has occurred during this period is new legislation that was approved by the U.S. Senate and signed into law in July 2022 – the Inflation Reduction Act of 2022 (“IRA”) – which settled concerns about prescription drug price reform. The threat of drug price reform in the U.S. has been a persistent source of uncertainty and negative sentiment, an overhang for the biopharmaceutical sector for decades, but particularly over the past two years since President Biden took office. The IRA was modest in scope and included a mix of positive and negative factors for the biopharmaceutical industry. Overall, we view the IRA as very manageable for the biopharmaceutical sector, with limited impact on profits into the end of the decade, and perhaps the issue of drug price reform can now begin to dissipate as an overhang on the sector. U.S. DRUG PRICE REFORM IMPACT: MIXED BUT MANAGEABLE Three Main Components to the IRA 2022 re: Drug Price Reform Drug Price Inflation Cap Medicare Part D Redesign Medicare Price Negotiations Requires drug companies to pay rebates to Medicare if they increase drug prices faster than inflation Removes the “donut hole” and replaces it with an “out-of-pocket cap” of $2,000 per patient Enables Health & Human Services to set the prices of certain costly drugs within the Medicare program INFLATION REDUCTION ACT - OF 2022 NEUTRAL • Price is no longer a revenue driver for pharma • LIST prices do rise today, but < levels of inflation • NET prices are cut even further due to rebating • Curbs bad actors = positive for industry image POSITIVE • Lowers out of pocket expenses • • • • Should result in increased volumes Increases affordability of medicines Increases adherence / treatment duration of times Increases patient access NEGATIVE but MANAGEABLE • Not in effect until 2026 • Only 10 drugs per year are negotiated • Targets medicines that are near the end of their life cycles but do not yet have generic competition (9 yrs - small molecules / 13 yrs - biologics) • Only a potential $40 billion incremental hit to U.S. Rx revenues to 2032 (out of $660 billion) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT22 PORTFOLIO MANAGER’S REVIEW CONTINUED LARGE CAP PHARMACEUTICALS: LOOMING PATENT CLIFF Sales at Risk ($bn) Company Drug Name US Loss of Exclusivity (Projected) 2021 Global Sales ($bn) $60 $50 $40 $30 $20 $10 $0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 SOURCE: Evaluate, “The Patent Winter is Coming”, May 25, 2022; S &P Global report, data as of February 17, 2022. The Company has taken advantage of accelerating M&A activity within the biotechnology space and we expect that trend to continue. With the insatiable need for large capitalisation companies to continue to fill their pipelines and replace revenues lost to patent expirations, this is a logical view. In fact, the pharmaceutical industry appears to be facing another “patent cliff”, starting in 2023 and inflecting in 2025. A number of major blockbusters will be losing their exclusivity and sales will erode substantially, leaving major gaps in revenues and earnings for a number of companies. With the historic small-mid-capitalisation biotechnology stock sell-off and large capitalisation executives talking up the need to execute deals, a plethora of transactions began in earnest, inflecting in June 2022. The result for the financial year was a near doubling in the number of biotechnology transactions to 30 and near quadrupling of the value of deals, to U.S.$113 billion. This has been a real rallying point for the industry, especially in biotechnology, and as we have seen in the past, M&A can move the entire sector higher and we have finally seen these stocks move off the bottom after experiencing the largest and longest drawdown in the history of the “XBI” (the biotech ETF). BIOTECH M&A: YEAR-OVER-YEAR ACCELERATION # of Deals $ Value of Deals FY 2021 FY 2022 17 30 $31 billion $113 billion YOY +76% +265% Periods ending March 31. SOURCE: FactSet, Company Websites We expect this accelerated M&A pace to continue. Why? The pace of innovation within the biotechnology industry remains impressive and is the number one value driver in the industry. The patent cliff keeps the appetite of large capitalisation companies for additional new pipelines and products very high. Additionally, historically low biotechnology valuations will continue to fuel biotechnology acquisitions. Over 200 life sciences companies continue to trade at negative enterprise values (i.e., market capitalisations below net cash). As shown in the following chart, revenue multiples for the sector are also bouncing off bear market recessionary lows. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT23 PORTFOLIO MANAGER’S REVIEW CONTINUED BIOTECHNOLOGY TRADING AT HISTORICALLY LOW REVENUE MULTIPLES 50x 40x 30x 20x 10x 0x 6x 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2013 2017 2019 2021 2023 Median Biotech EV/Sales Historical recession min. Another important phenomenon that typically follows an acceleration of M&A is the rekindling of clinical and regulatory catalysts as key stock moving events. After an inflection of M&A, typically there is a renewed appreciation of the catalyst strategy as investors are reminded of why companies are being bought for 100 to 200% premiums – innovation. And in 2023, we expect investor focus to return to such catalysts, across such examples as gene therapy, a highly scrutinised new therapeutic technology that was left for dead in 2022 due to emerging safety concerns, but is now on the precipice of three new product launches. And there are many more, across oncology, nephrology, neurology, and so on. The commercial opportunities that are eventually created are significant. The top 15 new product opportunities in biotechnology today could create over U.S.$60 billion in cumulative sales by the next decade (source: Jefferies). 15 NOVEL BIOTECH-SOURCED LAUNCHES WITH >U.S.$60 BILLION IN CUMULATIVE REVENUES $70 $60 $50 $40 $30 $20 $10 $0 FGEN $2.4B FibroGen BMRN $2.6B BiOMARIN PCVX $2.8B Vaxcyte AXSM $2.8B Axsome VTYX $2.8B Ventyx ASND $3B CYTK $3.6B Cytokinetics Ascendis ITCI $3.6B Intra-Cellular APLS $4.0B Apellis RXDX $4.8B Prometheus NTLA $5.1B Intellia MDGL $5.5B Madrigal KRTX $6B Karuna ARGX $6.8B Argenx ALNY $7.3B Alnylam 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 ) B $ ( e u n e v e R s u s n e s n o C d e t s u d a n U k s R j i Finally, a word on emerging markets. China’s re-emergence from its zero-COVID policy provides an important new growth driver for global healthcare companies. Major Chinese cities have gone from lockdowns to traffic jams in just a few months. The principle here is simple – as China re-opens from its zero-COVID policy, the economy and the local equity market should follow. The Hong Kong healthcare index hit all-time lows in October 2022, after ill-founded investor fears about government and political interference - both from China and the U.S. - created a market dislocation. A rebound into calendar year-end ensued in anticipation of an economic re-opening. And whilst geopolitical tensions created some volatility early in 2023, we are optimistic about China going forward as this oversold situation should reverse. Sven H. Borho and Trevor M. Polischuk OrbiMed Capital LLC Portfolio Manager 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT 24 CONTRIBUTION BY INVESTMENT ABSOLUTE CONTRIBUTION BY INVESTMENT FOR THE YEAR ENDED 31 MARCH 2023 Principal contributors to and detractors from net asset value performance Top five contributors Global Blood Therapeutics** Seagen** Daiichi Sankyo BioMarin Pharmaceutical Sarepta Therapeutics Country USA USA Japan USA USA Sector Biotechnology Biotechnology Pharmaceutical Biotechnology Biotechnology Contribution £’000 30,805 28,289 23,488 21,598 20,665 Contribution per share* £ 0.5 0.4 0.4 0.3 0.3 Top five detractors Edwards Lifesciences Roche Horizon Therapeutics** Mirati Therapeutics Shanghai Bio-heart Biological Technology USA Switzerland USA USA China Healthcare Equipment & Supplies Pharmaceutical Biotechnology Biotechnology Healthcare Equipment & Supplies (18,551) (24,481) (29,324) (33,332) (42,324) (0.3) (0.4) (0.5) (0.5) (0.7) * Calculation based on 64,474,422 shares being the weighted average number of shares in issue during the year ended 31 March 2023 ** Not held at 31 March 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTENVIRONMENTAL, SOCIAL AND GOVERNANCE AND CLIMATE CHANGE 25 The Company’s Portfolio Manager, OrbiMed, is guided by its Responsible Investing Policy in its approach to ESG (Environmental, Social and Governance). They seek to invest in innovative healthcare companies that are working towards addressing significant unmet medical needs, across biopharmaceuticals, medical devices, diagnostics, and healthcare services sectors, globally. OrbiMed believes that there is a high congruence between companies that seek to act responsibly and those that succeed in building long-term shareholder value. They seek to integrate ESG into the overall investment process, with the objective of maximising investment returns. OrbiMed has recruited a senior executive who has the responsibility of overseeing this project. Investment decisions are based on a variety of financial and non-financial company factors, including environmental, social, and governance information. As a responsible investor, OrbiMed negatively screens potential investments and business sectors that may objectively lead to negative impacts on public health or well-being. They consider healthcare sector-specific guidance from the Sustainability Accounting Standards Board (SASB) to determine material ESG factors as part of their investment research. Social factors such as affordability, pricing, access, and safety dominate the financially material ESG issues for the pharmaceutical, biotechnology, and medical devices sub-sectors, followed by governance factors. Environmental factors such as greenhouse gas (GHG) emissions are not featured as material. Energy and waste management appear as material factors for healthcare delivery, and drug retailer sub-sectors, where the physical footprint of the companies is large. The healthcare and life sciences sector is highly regulated, globally. Environmental regulation, along with quality-related regulation is well-established across both developed and emerging markets. To that end, OrbiMed considers compliance with local laws and regulations as one of the factors in its investment evaluation. Depending on the investment, all or a subset of the ESG factors that are financially material and relevant are considered in OrbiMed’s research. MONITORING AND ENGAGEMENT OrbiMed utilises ESG scores for public equity holdings from third-party service providers. To supplement the information from these providers, OrbiMed also conducts proprietary analysis of ESG performance. The scores from the third-party service providers are integrated with OrbiMed’s own analysis onto a proprietary business intelligence platform for regular monitoring. OrbiMed also generally engages on a regular basis with its portfolio companies through meetings with management, proxy voting, and in some cases, through board representation. OrbiMed’s analysts regularly track ESG information on safety of clinical trials, drug/product safety, ethical marketing, call-backs and other materially relevant factors. In addition, OrbiMed is taking the initiative in leading meaningful ESG engagement in the healthcare sector. As part of these efforts, OrbiMed engages with companies directly or through brokers, and facilitates dialogue and an exchange of best practice among investors, companies, and other relevant experts on ESG in the healthcare sector. Some examples of engagement include: • • • Engagement with large capitalisation pharmaceutical companies on reporting, environmental sustainability, access, product pricing, supplier engagement and targets on ESG through an investor conference and broker-led ESG road shows; Participation in an ESG conference where a mid- capitalisation biotechnology company disclosed its ESG governance, and discussed key programmes including increasing diversity in clinical trials, employee diversity and talent-building initiatives, and other community initiatives; and As part of the ‘Industry Investor Connect’, OrbiMed participated in an ESG roundtable discussion with a large capitalisation medical devices company and a pharmaceutical company, alongside 10 other investors. Topics discussed included drugs and product safety, litigation, and access to medicines. OrbiMed also participated in the Goldman Sachs Sustainability Conference in September 2022 and the Jefferies London Healthcare Conference in November 2022, alongside several healthcare companies and investors, to allow further dissemination and discussion of leading ESG practices in the healthcare sector. Between April 1, 2022, and March 31, 2023, a total of 776 proposals came to vote within the Company’s portfolio. Of these, 759 were management proposals and 17 were shareholder proposals. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT26 ENVIRONMENTAL, SOCIAL AND GOVERNANCE AND CLIMATE CHANGE CONTINUED Proposed by Management Shareholder Total number of proposals Voted for 759 17 667 2 Voted against 92 15 Votes abstained 0 0 against management’s proposed response 88 2 Number of votes greenwashing rules will take effect immediately and will be applicable to all regulated firms in the UK. Labelling and classification rules come into effect a year later, and the disclosure rules will follow after a further year. In May 2022, the U.S. Securities and Exchange Commission (SEC) proposed amendments to rules and reporting forms to promote disclosures for investors concerning funds’ and advisers’ incorporation of ESG. Following this, in 2023, the Division of Examinations of the SEC announced the publication of its 2023 examination priorities, which include a focus on ESG-related advisory services and fund offerings, to evaluate labelling and practices with respect to stated policies and processes, in the United States. International coherence on ESG between regimes is yet to be achieved. The changing regulatory landscape is continuously being monitored by OrbiMed. Sven H. Borho and Trevor M. Polischuk OrbiMed Capital LLC Portfolio Manager 6 June 2023 There was one management proposal referring to an ESG report and two shareholder proposals regarding product pricing. ‘Affordability and pricing’ is one of the material ESG topics listed in the Sustainability Accounting Standards Board guidance for the Biotechnology and Pharmaceuticals sub-sector. OrbiMed provides a quarterly update on ESG to the Board of the Company. This provides updates on the evolving regulatory landscape as well as details of monitoring, engagement and its proxy voting activity. ESG reporting by companies within the portfolio is also examined in the quarterly report. 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 the 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 ESG monitoring. REGULATORY UPDATE ON ESG In October 2022, the UK Financial Conduct Authority (FCA) published the Consultation Paper on UK-specific Sustainability Disclosure Requirements (SDR). The proposed SDR is focused on asset managers and their UK- based fund products and portfolio management services. The Consultation Paper’s core elements are labelling and classification; disclosure; and naming and marketing rules. The FCA has concluded the Consultation on the draft Rules. The final rules which were expected to be published in June 2023, are now expected to be published in the third quarter of 2023. Upon the release of the Final Rules, anti- WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT 27 BUSINESS REVIEW The Strategic Report, on pages 1 to 40, contains a review of the Company’s business model and strategy, an analysis of its performance during the financial year and its future developments and details of the principal risks and challenges it faces. Its purpose is to inform shareholders in the Company and help them to assess how the Directors have performed their duty to promote the success of the Company. The Strategic Report contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the date of this report. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward- looking information. BUSINESS MODEL Worldwide Healthcare Trust PLC is an externally managed investment trust and its shares are listed on the premium segment of the Official List and traded on the main market of the London Stock Exchange. Its investment objective and policy are set out on pages 8 and 9. The purpose of the Company is to achieve a high level of capital growth for its shareholders by providing a vehicle for investors to gain, through a single investment, exposure to the global healthcare sector through a diversified portfolio of shares in pharmaceutical and biotechnology companies and related securities. The Company’s strategy is to create value for shareholders by addressing its investment objective. 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 28 and 29. 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 Doug McCutcheon (Chair), Sarah Bates, Sven Borho, Dr Bina Rawal, Humphrey van der Klugt, Tim Livett and Jo Parfrey. All of these Directors, with the exception of Tim Livett and Jo Parfrey served throughout the year. All are independent non-executive Directors with the exception of Sven Borho who is not considered to be independent by the Board. Further information on the Directors can be found on pages 41 to 43. All Directors, with the exception of Sarah Bates, are seeking election or 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 2023STRATEGIC REPORT28 BUSINESS REVIEW CONTINUED KEY PERFORMANCE INDICATORS (‘KPIs’) Ongoing charges ratio The Board assesses the Company’s performance in meeting its objectives against KPI’s as follows. The KPI’s have not changed from the previous year: The Board continues to be conscious of expenses and works hard to maintain a balance between good quality service and costs. • • Net asset value (‘NAV’) per share total return against the Benchmark;* Discount/premium of share price to NAV per share;* and • Ongoing charges ratio.* * Alternative Performance Measure (See Glossary beginning on page 98) Information on the Company’s performance is provided in the Statement from the Chair and the Portfolio Manager’s Review and a record of these measures is shown on pages 1, 2 and 3. Further information can be found in the Glossary beginning on page 97. NAV per share total return against the Benchmark The Directors regard the Company’s NAV per share total return as being the overall measure of value delivered to shareholders over the long term. This reflects both net asset value growth of the Company and dividends paid to shareholders. The Board considers the most important comparator, against which to assess the NAV per share total return performance, to be the MSCI World Health Care Index measured on a net total return, sterling adjusted basis (the ‘Benchmark’). 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 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. PRINCIPAL SERVICE PROVIDERS The principal service providers to the Company are the AIFM, Frostrow, the Portfolio Manager, OrbiMed, the Custodian and Prime Broker J.P. Morgan Securities LLC, and the Depositary, J.P. Morgan Europe Limited. Details of their key responsibilities follow and further information on their contractual arrangements with the Company are included in the Report of the Directors beginning on page 44. Alternative investment fund manager (‘AIFM’) Frostrow under the terms of its AIFM agreement with the Company provides, inter alia, the following services: • oversight of the portfolio management function delegated to OrbiMed Capital LLC; • portfolio administration and valuation; • risk management services; • marketing and shareholder services; • share price discount and premium management; • administrative and secretarial services; • advice and guidance in respect of corporate governance requirements; • maintenance of the Company’s accounting records; • maintenance of the Company’s website; • • preparation and dispatch of annual and half-year reports (as applicable) and monthly fact sheets; and ensuring compliance with applicable legal and regulatory requirements. During the year, under the terms of the AIFM Agreement, Frostrow received a fee as follows: On market capitalisation up to £150 million: 0.3%; in the range £150 million to £500 million: 0.2%; in the range £500 million to £1 billion: 0.15%; in the range £1 billion to £1.5 billion: 0.125%; over £1.5 billion: 0.075%. In addition, Frostrow receives a fixed fee per annum of £57,500. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 29 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 44. 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 44 and 45. J.P. Morgan Europe Limited has discharged certain of its liabilities as Depositary to J.P. Morgan Securities LLC. Further details of this arrangement are set out on page 45. 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 93 for further details; and • foreign exchange services. AIFM AND PORTFOLIO MANAGER EVALUATION AND RE-APPOINTMENT The performance of the AIFM and the Portfolio Manager is reviewed continuously by the Board and the Management Engagement & Remuneration Committee (the “Committee”) with a formal evaluation being undertaken each year. As part of this process, the Committee monitors the services provided by the AIFM and the Portfolio Manager and receives regular reports and views from them. The Committee also receives comprehensive performance measurement reports to enable it to determine whether or not the performance objectives set by the Board have been met. The Committee reviewed the appropriateness of the appointment of the AIFM and the Portfolio Manager in March 2023 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 28 and 29, 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 2023STRATEGIC REPORT30 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation 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, OrbiMed’s approach is expected to lead to performance that will deviate from that of comparators, including both market indices and other investment companies investing in healthcare. The Company also uses leverage (both through derivatives and gearing) the effect of which is to amplify the gains or losses the Company experiences. Geopolitical/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 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 89). 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 ongoing tensions in the Asia Pacific Region and also the instability caused by the war in the Ukraine have featured in these discussions. 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 31 Principal risks and uncertainties Mitigation 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 79 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 80, which is in line with UK GAAP requirements and the International Private Equity and Venture Capital (IPEV) Guidelines. The Board also monitors the performance of these investments compared to the additional risks involved. 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 OrbiMed’s offices and encouraging the participation of the wider OrbiMed 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 2023STRATEGIC REPORT32 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation 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. Service provider risk The Company is reliant on the systems of the its service providers and as such disruption to, or a failure of, those systems (including, for example, as a result of cyber-crime or a ‘black-swan’ event) could lead to a failure to comply with law and regulations leading to reputational damage and/ or financial loss. 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 89); reviews of OrbiMed’s approved list of counterparties, the Company’s use of those counterparties and OrbiMed’s process for monitoring, and adding to, the approved counterparty list; monitoring of counterparties, including reviews of internal control reports and credit ratings, as appropriate; by primarily investing in markets that operate DVP (Delivery Versus Payment) settlement. The process of DVP mitigates the risk of losing the principal of a trade during the settlement process; and J.P. Morgan Securities LLC is subject to regular monitoring by J.P. Morgan Europe Limited, the Company’s Depositary, and the Board receives regular reports from J.P. Morgan Europe Limited. To manage these risks the Board: • • • • • receives a monthly compliance report from Frostrow, which includes, inter alia, details of compliance with applicable laws and regulations; reviews internal control reports, key policies, including measures taken to combat cyber security issues, and also the disaster recovery procedures of its service providers; maintains a risk matrix with details of risks the Company is exposed to, the controls relied on to manage those risks and the frequency of the controls operation; receives updates on pending changes to the regulatory and legal environment and progress towards the Company’s compliance with these; and has considered the increased risk of cyber-attacks and received reports and assurance at meetings with its service providers where the information security controls in place were reviewed. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 33 Principal risks and uncertainties Mitigation 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. The Portfolio Manager provides ESG reports at each Board meeting, highlighting examples where ESG issues influenced investment decisions and/ or led to engagement with an investee company. The Portfolio Manager also produces a quarterly ESG update. The Board ensures that the Portfolio Manager’s ESG approach is in line with standards elsewhere and the Board’s expectations. A summary of the Portfolio Manager’s approach to Responsible Investing can be found on pages 25 and 26. 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 and the risk of a global recession, are likely to adversely affect the performance of the Company’s shares. 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 Board undertakes a regular review of the Company’s share price compared to the NAV per share. Further information can be found on page 34. Company promotional activities have been delegated to Frostrow, who report to the Board at each Board meeting on these activities. Emerging risks COMPANY PROMOTION 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 Governance 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 & 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 far as practicable, mitigated. There are currently no emerging risks being monitored by the Audit & Risk Committee. 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: Engaging regularly with institutional investors, discretionary wealth managers and a range of execution-only platforms: Frostrow regularly talks and meets with institutional investors, discretionary wealth managers and execution-only platform providers to discuss the Company’s strategy and to understand any issues and concerns, covering both investment and corporate governance matters; Making Company information more accessible: Frostrow works to raise the profile of the Company by targeting key groups within the investment community, holding annual investment seminars, overseeing PR output and managing the Company’s website and wider digital offering, including Portfolio Manager videos and social media; WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT34 BUSINESS REVIEW CONTINUED Disseminating key Company information: Frostrow performs the Investor Relations function on behalf of the Company and manages the investor database. Frostrow produces all key corporate documents, distributes monthly Fact Sheets, Annual Reports and updates from OrbiMed on portfolio and market developments; and Monitoring market activity, acting as a link between the Company, shareholders and other stakeholders: Frostrow maintains regular contact with sector broker analysts and other research and data providers, and conducts periodic investor perception surveys, liaising with the Board to provide up-to-date and accurate information on the latest shareholder and market developments. DISCOUNT/PREMIUM CONTROL The Board undertakes a regular review of the level of discount/premium and consideration is given to ways in which share price performance may be enhanced, including the effectiveness of marketing, share issuance and share buybacks, where appropriate. It is the Board’s policy to buy back the Company’s shares if the share price discount to the net asset value per share exceeds 6% on an ongoing basis. Shares repurchased are held as treasury shares. Treasury shares can be sold back to the market at a later date at a premium to the cum-income net asset value per share (See Glossary beginning on page 97). Shareholders should note, however, that it remains very possible for the discount to be greater than 6% for extended periods of time particularly when sentiment towards the Company, the sector and to investment trusts generally remains poor. While buy backs may prove unable to prevent the discount from widening, they also enhance the net asset value per share for remaining shareholders and go some way to dampening discount volatility which can adversely affect investors’ risk adjusted returns. At times when there are unsatisfied buying orders for the Company’s shares in the market, the Company has the ability to issue new shares or to re-issue treasury shares at a small premium to the cum income net asset value per share. This acts as an effective share price premium management tool. Details of share issuance and share buybacks are set out on page 46. SOCIAL, HUMAN RIGHTS AND ENVIRONMENTAL MATTERS The Directors, through the Company’s Portfolio Manager, encourage companies in which investments are made to adhere to best practice with regard to corporate governance. In light of the nature of the Company’s business there are no relevant human rights issues and the Company does not have a human rights policy. The Company recognises that social and environmental issues can have an effect on some of its investee companies. The Company is an investment trust and so its own direct environmental impact is minimal. As an externally- managed investment trust, the Company does not have any employees or maintain any premises, nor does it undertake any manufacturing or other physical operations itself. All its operational functions are outsourced to third party service providers. Therefore, the Company has no material, direct impact on the environment or any particular community and the Company itself has no environmental, human rights, social or community policies. The Board of Directors consists of seven Directors, five of whom are resident in the UK, one in Canada and one in the U.S. The Board holds the majority of its regular meetings in the U.K., with usually one meeting held each year in New York, and has a policy that travel, as far as possible, is minimal, thereby minimising the Company’s greenhouse gas emissions. Further details concerning greenhouse gas emissions can be found within the Report of the Directors on page 48. Video conferencing has proved to be a very effective way of holding meetings, and this medium continues to be used alongside in person meetings. The Portfolio Manager engages with the Company’s underlying investee companies in relation to their corporate governance practices and the development of their policies on social, community and environmental matters. INTEGRITY AND BUSINESS ETHICS The Company is committed to carrying out business in an honest and fair manner with a zero-tolerance approach to bribery, tax evasion and corruption. As such, policies and procedures are in place to prevent this. In carrying out its activities, the Company aims to conduct itself responsibly, ethically and fairly, including in relation to social and human rights issues. The Company believes that high standards of ESG make good business sense and have the potential to protect WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 35 and enhance investment returns. The Portfolio Manager’s investment criteria provide that ESG and ethical issues are taken into account and best practice is encouraged by the Board. The Board’s expectations are that its principal service providers have appropriate governance policies in place. TASKFORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (“TCFD”) The Company notes the TCFD recommendations on climate-related financial disclosures. The Company is an investment trust with no employees, internal operations or property and, as such, it is exempt from the Listing Rules requirement to report against the TCFD framework. LONGER-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 29 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 risks and uncertainties as shown on pages 29 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 Directors 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 50. The Statement from the Chair 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 Statement from the Chair and the Business Review on pages 4 to 7 and also on page 29, 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 beginning on page 50. Representatives from other service providers are asked to attend Board meetings when deemed appropriate. Further details are set out overleaf. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT36 BUSINESS REVIEW CONTINUED Who? Stakeholder group Investors Why? How? The benefits of engagement with the company's stakeholders How the board, the portfolio manager and the AIFM have engaged with the company’s stakeholders 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. In addition, the Chairman met with a number of the Company’s larger shareholders during the year. An analysis of the Company’s shareholder register is provided to the Directors at each Board meeting along with marketing reports from Frostrow. The Board reviews and considers the marketing plans on a regular basis. Reports from the Company’s broker are submitted to the Board on investor sentiment and industry issues. Key mechanisms of engagement include: • • The Annual General Meeting, where the Portfolio Manager provides an update on the Company’s performance and strategy. This is followed by a question and answer section. The Company’s website which hosts reports, articles and insights, and monthly fact sheets. • One-on-one and group investor meetings. • • • Should any significant votes be cast against a resolution proposed at the Annual General Meeting the Board will engage with shareholders. The Board will explain in its announcement of the results of the Annual General Meeting any actions it intends to take to consult shareholders in order to understand the reasons behind significant votes against. Following any consultation, an update would be published no later than six months after the Annual General Meeting and the Annual Report will detail the impact shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 37 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 Chairman also met with key shareholders during the year to discuss the Company’s investment strategy including ESG. Frostrow and the Portfolio Manager engage with retail investors through a number of different channels: (i) The Company’s website, which is maintained by Frostrow, contains articles, webinars and quarterly updates; (ii) A distribution list of shareholders (retail and professional) which is maintained by Frostrow and is used to communicate with investors on a regular basis; (iii) The Portfolio Manager provides annual presentations online – (webcasts) and offline (Annual General Meeting), which shareholders are able to attend and participate in; and (iv) Frostrow ensures that the Company is available through a wide range of leading execution only platforms. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT38 BUSINESS REVIEW CONTINUED Who? Why? How? Stakeholder group Portfolio Manager Service Providers The benefits of engagement with the company's stakeholders How the board, the portfolio manager and the AIFM have engaged with the company’s stakeholders 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 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 also carried out a review of the service providers’ business continuity plans and additional cyber security provisions. The review of the performance of the Portfolio Manager and Frostrow is a continuous process carried out by the Board and the Management Engagement & Remuneration Committee with a formal evaluation being undertaken annually. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORTBUSINESS REVIEW CONTINUED 39 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. • • Regular review of the performance and 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. 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 engaged with the Portfolio Management team to discuss the Company’s overall performance as well as developments in individual portfolio companies and wider macroeconomic developments. The Portfolio Manager reports on ESG issues at each Board meeting. No specific action required as the reviews of the Company’s service providers, have been positive and the Directors believe their continued appointment is in the best interests of the Company. Throughout the year the Board closely monitored the Company’s discount/premium to NAV per share and received regular updates from the broker. 2,836,483 shares were bought back during the year, and a further 1,299,037 shares were bought back since the year-end to 5 June 2023. No new shares were issued during the year, nor following the year-end to 5 June 2023. (Please see the Statement from the Chair on page 5 for further information.) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023STRATEGIC REPORT 40 BUSINESS REVIEW CONTINUED PERFORMANCE AND FUTURE DEVELOPMENTS ALTERNATIVE PERFORMANCE MEASURES The Financial Statements (on pages 75 to 95) 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 28. By order of the Board Frostrow Capital LLP Company Secretary 6 June 2023 A review of the Company’s year, its performance and the outlook for the Company can be found in the Chair’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 Chair’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 2023STRATEGIC REPORTBOARD OF DIRECTORS 41 DOUG MCCUTCHEON SARAH BATES SVEN BORHO Independent Non-Executive Chair Independent Non-Executive Director Non-Executive Director Joined the Board in 2013 Joined the Board in 2018 Joined the Board in 2012 and became Chair on 6 July 2022 Annual Remuneration Year Ended 2023: £47,894 Committee Membership Doug attends the Audit & Risk Committee by invitation and is a member of the Nominations and Management Engagement & Remuneration Committees. Annual Remuneration Year Ended 2023: £36,007 Committee Membership 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. Shareholding in the Company 20,000 Shareholding in the Company 7,200 Skills and Experience 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.G. Warburg, where, most recently, he was the head of Healthcare Investment Banking for Europe, the Middle East, Africa and Asia- Pacific. Doug is involved in philanthropic organisations with a focus on healthcare and education. He attended Queen’s University, Canada. Other Appointments Doug is a non-executive Director of Labrador Iron Ore Royalty Corporation listed on the Toronto Stock Exchange. Standing for re-election: Yes Skills and Experience 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. Other Appointments Sarah is a non-executive Director and the Senior Independent 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, a mentor for Chairmen Mentors International and a senior adviser to Lansons PR. Standing for re-election: No Annual Remuneration Year Ended 2023: Nil Committee Membership Sven is not a member of any of the Company’s Committees. Shareholding in the Company 10,000 Skills and Experience 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. Other Appointments Sven is a Managing Partner of OrbiMed and does not have any other appointments. Standing for re-election: Yes WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE 42 BOARD OF DIRECTORS CONTINUED HUMPHREY VAN DER KLUGT, FCA TIM LIVETT Independent Non-Executive Director Independent Non-Executive Director Joined the Board in 2016 Joined the Board on 1 September 2022 Annual Remuneration Year Ended 2023: £40,503* Annual Remuneration Year Ended 2023: £20,124* Committee Membership A Chartered Accountant, Humphrey is a member of the Audit & Risk, the Management Engagement & Remuneration and the Nominations Committees. Committee Membership A qualified accountant, Tim is Chair of the Audit & Risk Committee and is a member of the Management Engagement & Remuneration and Nominations Committees. Shareholding in the Company 3,000 Shareholding in the Company 2,175 Skills and Experience 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 KPMG) where he qualified as a Chartered Accountant in 1979. Other Appointments Humphrey is a non-executive Director of Allianz Technology Trust PLC. Standing for re-election: Yes Skills and Experience Tim was formerly Chief Financial Officer at Wellcome Trust, the global charitable foundation focused on health research, and at Virgin Atlantic Limited. He has an extensive and broad financial background. Tim studied chemistry at Oxford University. Other Appointments Tim is the Chief Financial Officer at Caledonia Investments PLC. He is also a non-executive Director of Premier Marinas Group and a member of the Valuation and Audit & Risk Committees at Oxford University Endowment Management. Standing for election: Yes *Tim Livett succeeded Humphrey van der Klugt as Chair of the Audit & Risk Committee on 1 March 2023. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE Parfrey_Jo-0154 Parfrey_Jo-0155 Parfrey_Jo-0156 Parfrey_Jo-0159 BOARD OF DIRECTORS CONTINUED Parfrey_Jo-0161 Parfrey_Jo-0162 43 Parfrey_Jo-0163 JO PARFREY DR BINA RAWAL Independent Non-Executive Director Independent Non-Executive Director Joined the Board on 1 September 2022 Joined the Board in 2019 Annual Remuneration Year Ended 2023: £19,584 Annual Remuneration Year Ended 2023: £33,573 Committee Membership Jo is Chair of the Management Engagement & Remuneration Committee and is a member of the Audit & Risk and Nominations Committees Shareholding in the Company 2,000 Parfrey_Jo-0165 Skills and Experience Jo was formerly a non-executive Director of Guy’s and St Thomas’ Enterprises Limited and of LGV Capital Partners Limited. A Chartered Accountant, Jo has extensive experience of both global investment trusts and healthcare, including life sciences. Jo studied chemistry at Oxford University. Other Appointments Jo is non-executive Director and Chair of the Audit Committee of Henderson International Income Trust plc, and a non-executive Director of Octopus AIM VCT. She is also a non-executive Director and Chair of the Audit Committee of Start Codon Limited and IESO Digital Health Limited and the non-executive Chair of Babraham Research Campus Limited. Standing for election: Yes Committee Membership Dr Rawal is a member of the Audit & Risk, Management Engagement & Remuneration and Nominations Committees. Shareholding in the Company 2,606 Parfrey_Jo-0167 Skills and Experience 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. Other Appointments 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. Standing for re-election: Yes Parfrey_Jo-0168 Parfrey_Jo-0169 Parfrey_Jo-0173 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE 44 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 2023. SIGNIFICANT AGREEMENTS Details of the services provided under these agreements are included in the Strategic Report on pages 28 and 29. 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 28. 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. In 2022, due to underperformance against the Benchmark, a reversal of prior period performance fee provisions totalling £18.9 million occurred. As at 31 March 2023 no performance fees were accrued or payable (31 March 2022: £NIL). Depositary agreement The Company appointed J.P. Morgan Europe Limited (the “Depositary”) as its Depositary in accordance with the AIFMD on the terms and subject to the conditions of the Depositary agreement between the Company, Frostrow and the Depositary (the “Depositary Agreement”). Under the terms of the Depositary Agreement the Company has agreed to pay the Depositary a fee calculated at 1.75bp on net assets up to £150 million, 1.50 bps on net assets between £150 million and £300 million, 1.00bps on net assets between £300 million and £500 million and 0.50bps on net assets above £500 million. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEREPORT OF THE DIRECTORS CONTINUED 45 The Depositary has delegated the custody and safekeeping of the Company’s assets to J.P. Morgan Securities LLC (the “Custodian and Prime Broker”) pursuant to a delegation agreement between the Company, Frostrow, the Depositary and the Custodian and Prime Broker (the “Delegation Agreement”). The Delegation Agreement transfers the Depositary’s liability for the loss of the Company’s financial instruments held in custody by the Custodian and Prime Broker to the Custodian and Prime Broker as permitted by the AIFMD. The Company has consented to the transfer and reuse of its assets by the Custodian and Prime Broker (known as “rehypothecation”) in accordance with the terms of an institutional account agreement between the Company, the Custodian and Prime Broker and certain other J.P. Morgan entities (as defined therein). See page 29 for further details. Prime brokerage agreement The Company appointed J.P. Morgan Securities LLC on the terms and subject to the conditions of the prime brokerage agreement between the Company, Frostrow and the Depositary (the “Prime Brokerage Agreement”). The Custodian and Prime Broker receives interest on the drawn overdraft as detailed in note 12 on page 88. 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 75 and 76. 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 2023, 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 Quilter Cheviot Investment Management Brewin Dolphin Craigs Investment Partners Embark Investment Services Evelyn Partners 30 April 2023 31 March 2023 Number of shares 5,337,704 4,813,077 4,022,116 3,629,237 3,123,010 2,968,048 2,224,071 2,178,985 2,135,474 1,978,362 1,970,589 % of issued share capital 8.6 7.8 6.5 5.9 5.0 4.8 3.6 3.5 3.5 3.2 3.2 Number of shares 5,397,419 4,834,049 4,043,897 3,664,664 3,236,119 2,969,340 2,233,656 2,188,383 2,136,181 2,011,799 1,953,965 % of issued share capital 8.6 7.7 6.5 5.8 5.2 4.7 3.6 3.5 3.4 3.2 3.1 As at 31 March 2023 the Company had 62,620,763 shares in issue (excluding 2,438,015 shares held in treasury). As at 30 April 2023 there were 61,933,349 shares in issue (excluding 3,125,429 shares held in treasury). WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE46 REPORT OF THE DIRECTORS CONTINUED CAPITAL STRUCTURE The Company’s capital structure comprises solely ordinary shares. During the year, and to 5 June 2023, no new shares were issued. A total of 2,836,483 shares were repurchased during the year at an average discount of 8.8% to the prevailing cum income NAV per share. These shares are held in treasury. Following the year-end, to 5 June 2023, the latest practicable date prior to the publication of this Annual Report, a further 1,299,037 shares were repurchased at an average discount of 10.0% to the cum income NAV per share. These shares are also held in treasury. As at 5 June 2023 3,737,052 shares were held in treasury (2022: 80,509). 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 104. Each shareholder is entitled to one vote on a show of hands and, on a poll, one vote for every share held. Share split The price of the Company’s ordinary shares of 25p each (“Ordinary Shares”) has increased substantially over the last 10 years and as at 5 June 2023 (being the latest practicable date prior to publication of this document), the closing mid market share price was 3,275.0p. To assist monthly savers and those who reinvest their dividends or are looking to invest smaller amounts the Directors believe that it is appropriate to propose the sub-division of each Ordinary Share into 10 new ordinary shares of 2.5p each (“New Ordinary Shares”). The Directors believe that the sub-division (the “Share Split”) may also improve the liquidity in and marketability of the Company’s shares which would benefit all shareholders. Following the Share Split, each shareholder will hold 10 New Ordinary Shares for each Ordinary Share that they held immediately prior to the Share Split. Whilst the Share Split will increase the number of ordinary shares the Company has in issue, upon the Share Split becoming effective the net asset value, share price and dividend per share can be expected to become one-tenth of their respective values immediately preceding the Share Split. A holding of New Ordinary Shares following the Share Split will represent the same proportion of the issued ordinary share capital of the Company as the corresponding holding of Ordinary Shares immediately prior to the Share Split. The Share Split will not affect, therefore, the overall value of a shareholder’s holding in the Company. By way of example, taking the net asset value (including current year revenue) and mid market share price as at 5 June 2023 of 3,646.3p and 3,275.0p respectively per Ordinary Share, if the Share Split had become effective as at that date, each holder of one Ordinary Share would receive 10 New Ordinary Shares with an aggregate net asset value and share price of 364.6p and 327.5p (figures rounded to one decimal place), respectively immediately following the Share Split. The New Ordinary Shares will rank pari passu with each other and will carry the same rights and be subject to the same restrictions as the Ordinary Shares, including the same rights to participate in dividends paid by the Company. The ex-dividend date and the payment date for the final dividend payable per share in 2023 are before the date of the Share Split and so the dividend payable on 26 July 2023 will not be affected. In future years, dividends per share will be one-tenth of the level that they would otherwise have been but a shareholder who neither buys nor sell shares will continue to receive the same amount in dividends as they would otherwise receive. Communication preferences and mandates and other instructions for the payment of dividends via CREST or in paper form will, unless and until revised, continue to apply to the New Ordinary Shares. The Share Split will not itself give rise to any liability to UK income tax (or corporation tax on income) for shareholders. For the purposes of UK capital gains tax and corporation tax on chargeable gains, the receipt of the New Ordinary Shares will be treated as the same asset as the shareholder’s holding of Ordinary Shares and as having been acquired at the same time, and for the same consideration, as the shareholder’s holding of Ordinary Shares. The Share Split requires the approval of shareholders and, accordingly, Resolution 13 at this year’s AGM seeks such approval. The Share Split is conditional on the New Ordinary Shares being admitted to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities. Application for such admissions will be made and, if they are accepted, it is proposed that the last day of dealings in the Ordinary Shares will be 26 July 2023 (with the record date for the Share Split being 6.00 p.m. on that date) and that dealings in the New Ordinary Shares will commence on 27 July 2023. If Resolution 13 is passed, the Share Split will become effective on admission of the New Ordinary shares to the Official List, which is expected to be at 8.00 a.m. on 27 July 2023. The WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEREPORT OF THE DIRECTORS CONTINUED 47 aggregate nominal value of the Company’s issued share capital as at 5 June 2023 was £16,264,694.50 and comprised 61,321,726 ordinary shares of 25p each (a further 3,737,052 ordinary shares were held in treasury). If the Share Split is applied to the issued share capital as at 27 July 2023, the total aggregate nominal value of the share capital will remain at £16,264,694.50 but will comprise 613,217,260 ordinary shares of 2.5p each in issue and a further 37,370,520 ordinary shares in treasury. The New Ordinary Shares may be held in uncertificated or certificated form. Following the Share Split becoming effective, share certificates in respect of the Ordinary shares will cease to be valid and will be cancelled. New certificates in respect of the New Ordinary Shares will be issued to those shareholders who hold their Ordinary Shares in certificated form and are expected to be dispatched not later than 4 August 2023. No temporary documents of title will be issued. Transfers of New Ordinary Shares between 27 July 2023 and the dispatch of new certificates will be certified against the Company’s register of members held by the Company’s Registrars. It is expected that the ISIN (GB0003385308) of the Ordinary Shares will be disabled in CREST at the close of business on 26 July 2023 and the New Ordinary Shares will be credited to CREST accounts on 27 July 2023. DIRECTORS’ & OFFICERS’ LIABILITY INSURANCE COVER Directors’ & officers’ liability insurance cover was maintained by the Company during the year ended 31 March 2023 and to the date of this report. It is intended that this policy will continue for the year ending 31 March 2024 and subsequent years. DIRECTORS’ INDEMNITIES During the year under review and to the date of this report, indemnities were in force between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his or her role as a Director of the Company. The Directors are also indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006. A copy of each deed of indemnity is available for inspection at the Company’s registered office during normal business hours and will be available for inspection at the Annual General Meeting. Please refer to the Chairman’s Statement on pages 4 to 7 for details of this year’s Annual General Meeting arrangements. POLITICAL AND CHARITABLE DONATIONS The Company has not in the past and does not intend in the future to make political or charitable donations. MODERN SLAVERY ACT 2015 The Company does not provide goods or services in the normal course of business, and as a financial investment vehicle does not have customers. The Directors do not therefore consider that the Company is required to make a statement under the Modern Slavery Act 2015 in relation to slavery or human trafficking. ANTI-BRIBERY AND CORRUPTION POLICY The Board has adopted a zero tolerance approach to instances of bribery and corruption. Accordingly it expressly prohibits any Director or associated persons when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private in the UK or abroad to secure any improper benefit for themselves or for the Company. The Board ensures that its service providers apply the same standards in their activities for the Company. A copy of the Company’s Anti Bribery and Corruption Policy can be found on its website at www.worldwidewh.com. The policy is reviewed regularly by the Audit & Risk Committee. CRIMINAL FINANCES ACT 2017 The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE48 REPORT OF THE DIRECTORS CONTINUED therefore is exempt from the disclosures required under the Streamlined Energy and Carbon Reporting criteria. that, accordingly, it is appropriate to continue to adopt the going concern basis in preparing the financial statements. COMMON REPORTING STANDARD (‘CRS’) 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 Directors confirm that there are no disclosures to be made under Listing Rule 9.8.4. UK SANCTIONS The Board has made due diligence enquiries of the service providers that process the Company’s shareholder data, to ensure the Company’s compliance with the UK sanctions regime. The relevant service providers have confirmed that they check the Company’s shareholder data against the UK sanctions list on a daily basis. At the date of this report, no sanctioned individuals had been identified on the Company’s shareholder register. The Board notes that stockbrokers and execution-only platforms also carry out their own due diligence. By order of the Board Frostrow Capital LLP Company Secretary 6 June 2023 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 50 to 57. 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 58. 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 page 34, 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCESTATEMENT OF DIRECTORS’ RESPONSIBILITIES 49 The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. In preparing these financial statements, the Directors are required to: • • • • • select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; follow applicable UK accounting standards comprising FRS 102; prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business; and prepare a director’s report, a strategic report and a director’s remuneration report which comply with the requirements of the Companies Act 2006. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the Report of the Directors and other information included in the Annual Report is prepared in accordance with company law in the United Kingdom. They are also responsible for ensuring that the Annual Report includes information required by the 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 Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction. DISCLOSURE OF INFORMATION TO THE AUDITORS So far as the Directors are aware, there is no relevant information of which the Auditors are unaware. The Directors have taken all steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the Auditors are aware of such information. RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE ANNUAL FINANCIAL REPORT The Directors confirm to the best of their knowledge that: • • • the Annual Report and the Financial Statements have been prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and the return for the year ended 31 March 2023; 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, includes a fair review of the development and performance of the Company and of its financial position, together with a description of the principal risks and uncertainties it faces. Also, that taken as a whole they are fair, balanced and understandable and provide the information necessary to assess the Company’s performance, business model and strategy. On behalf of the Board Doug McCutcheon Chair 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE50 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. Chair – Doug McCutcheon Senior Independent Director – Sarah Bates THE BOARD Five 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 Chair Jo Parfrey All Independent Directors Key responsibilities: • to review regularly the contracts, the performance and remuneration of the Company’s principal service providers; • • to set the Directors’ Remuneration Policy; and to review the terms and conditions of the Directors’ appointments. 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. Chair Tim Livett* All Independent Directors (excluding the Chair, Doug McCutcheon) Key responsibilities: • to review the Company’s financial reports; • • to oversee the risk and control environment and financial reporting; and to have primary responsibility for the relationship with the Company’s external Auditors, to review their independence and performance, and to determine their remuneration. * The Board believes that Tim Livett has the necessary recent and relevant financial experience to Chair the Company’s Audit & Risk Committee. Copies of the full terms of reference, which clearly define the responsibilities of each Committee, can be obtained from the Company Secretary and can be found at the Company’s website at www.worldwidewh.com. Copies will also be available for inspection on the day of the Annual General Meeting. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCECORPORATE GOVERNANCE CONTINUED 51 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 50 to 57, forms part of the Report of the Directors on pages 44 to 48. BOARD LEADERSHIP AND PURPOSE Purpose and strategy The purpose and strategy of the Company are described in the Strategic Report. THE BOARD 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 to 43. The Board carefully considers the various guidelines for determining the independence of non-executive Directors, placing particular weight on the view that independence is evidenced by an individual being independent of mind, character and judgement. All Directors retire at the AGM each year and, if appropriate, seek election or re- election. Each Director has signed a letter of appointment to formalise the terms of their engagement as a non-executive Director, copies of which are available on request at Frostrow’s offices. BOARD CULTURE The Board aims to consider and discuss differences of opinion, unique vantage points and to exploit fully areas of expertise. The Chair encourages open debate to foster a supportive and co-operative approach for all participants. Strategic decisions are discussed openly and constructively. The Board aims to be open and transparent with shareholders and other stakeholders and for the Company to conduct itself responsibly, ethically and fairly in its relationships with service providers. The Board has gained assurance on whistleblowing procedures at the Company’s principal service providers to ensure employees at those companies are supported in speaking up and raising concerns. No concerns relating to the Company were raised during the year. Shareholder relations The Company has appointed Frostrow to provide marketing and investor relations services, in the belief that a well marketed investment company is more likely to grow over time, have a more diverse, stable list of shareholders and its shares will trade at close to net asset value per share over the long run. Frostrow actively promotes the Company as set out on pages 33 and 34. The Board is responsible for the effective Stewardship of the Company’s affairs. Strategy issues and all operational matters of a material nature are considered at its meetings. The Board consists of seven non-executive Directors, each of whom, with the exception of Sven Borho, is independent of OrbiMed and the Company’s other service 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE52 CORPORATE GOVERNANCE CONTINUED reports which include financial statements. These reports are supplemented by the daily release of the net asset value per share to the London Stock Exchange and the publication of monthly fact sheets. All this information, including interviews with the Portfolio Manager, is available on the Company’s website at www.worldwidewh.com. The Board monitors the share register of the Company; it also reviews correspondence from shareholders at each meeting and maintains regular contact with major shareholders. Shareholders who wish to raise matters with a Director may do so by writing to them at the registered office of the Company. The Board supports the principle that the Annual General Meeting be used to communicate with private investors, in particular. Shareholders are encouraged to attend the AGM, where they are given the opportunity to question the Chair, the Board and representatives of the Portfolio Manager. In addition, the Portfolio Manager makes a presentation to shareholders covering the investment performance and strategy of the Company at the AGM. Voting at the AGM is conducted on a poll and details of the proxy votes received in respect of each resolution will be made available on the Company’s website. Significant holdings and voting rights Details of the shareholders with substantial interests in the Company’s shares, the Directors’ authorities to issue and repurchase the Company’s shares, and the voting rights of the shares are set out in the Directors’ Report. BOARD MEETINGS The Board meets formally at least four times each year. A representative of OrbiMed attends all meetings; representatives from Frostrow are also in attendance at each Board meeting. The Independent Directors also meet before each formal Board meeting without representatives from Frostrow and OrbiMed being present. The Chair encourages open debate to foster a supportive and co-operative approach for all participants. The Board has agreed a schedule of matters specifically reserved for decision by the Board. This includes establishing the investment objectives, strategy and the Benchmark, the permitted types or categories of investments, the markets in which transactions may be undertaken, the amount or proportion of the assets that may be invested in any geography or category of investment or in any one investment, and the Company’s share issuance and share buyback policies. The Board, at its regular meetings, undertakes reviews of key investment and financial data, revenue projections and expenses, analyses of asset allocation, transactions and performance comparisons, share price and net asset value performance, marketing and shareholder communication strategies, the risks associated with pursuing the investment strategy, peer group information and industry issues. The Chair is responsible for ensuring that the Board receives accurate, timely and clear information. Representatives of OrbiMed and Frostrow Capital LLP report regularly to the Board on issues affecting the Company. The Board is responsible for strategy and has established an annual programme of agenda items under which it reviews the objectives and strategy for the Company at each meeting. CONFLICTS OF INTEREST Company Directors have a statutory obligation to avoid a situation in which they (and connected persons) have, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company. The Board has in place procedures for managing any actual or potential conflicts of interest. No conflicts of interest arose during the year under review. BOARD FOCUS AND RESPONSIBILITIES With the day to day management of the Company outsourced to service providers the Board’s primary focus at each Board meeting is reviewing the investment performance and associated matters, such as, inter alia, future outlook and strategy, gearing, asset allocation, investor relations, marketing, and industry issues. In line with its primary focus, the Board retains responsibility for all the key elements of the Company’s strategy and business model, including: • • the Investment Objective, Policy and Benchmark, incorporating the investment and derivative guidelines and limits, and changes to these; the maximum level of gearing and leverage the Company may employ; • a review of performance against the Company’s KPIs; WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCECORPORATE GOVERNANCE CONTINUED 53 a review of the performance and continuing appointment of service providers; and independent after appointment, while being consistent with the need for regular refreshment and diversity. • • 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 50 to 57, includes a statement of compliance with corporate governance codes and best practice, and the Business Review (pages 26 to 41) 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 Statement from the Chair on page 6 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 chair and other non-executive directors The tenure of each non-executive Director, including the Chair, is not ordinarily expected to exceed nine years. However, the Board has agreed that the tenure of the Chair 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 Chair is appropriate in the context of the regulatory rules that apply to investment companies, which ensure that the Chair remains The Board has been refreshing its membership and will continue to do so over time. It may be the case that Directors serve for longer than nine years to ensure that any changes made are done so in an orderly and structured manner. All Directors seek election or re-election every year. Further details regarding the refreshment process can be found in the Chair’s Statement on pages 4 to 7. 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 55 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 Directors. The rules governing the appointment and replacement of Directors are set out in the Company’s articles of association and the aforementioned succession planning policy. Where the Board appoints a new Director during the year, that Director will stand for election by shareholders at the next AGM. Subject to there being no conflict of interest, all Directors are entitled to vote on candidates for the appointment of new Directors and on the recommendation for shareholders’ approval for the Directors seeking 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 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. Diversity policy The Board supports the principle of Boardroom diversity, of which gender and ethnicity are two important aspects. The Company’s policy is that the Board and its committees should be comprised of directors with a diverse range of skills, knowledge and experience and that appointments WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE54 CORPORATE GOVERNANCE CONTINUED should be made on merit against objective criteria, including diversity in its broadest sense. The Board will continue to give due regard to the new diversity targets in the Listing Rules as follows: The objective of the policy is to have a broad range of approaches, backgrounds, skills, knowledge and experience represented on the Board. To this end, achieving a diversity of perspectives and backgrounds on the Board will be a key consideration in any director search process. The Board encourages any recruitment agencies it engages to find a diverse range of candidates that meet the criteria agreed for each appointment and, from the shortlist, aims to ensure that a diverse range of candidates is brought forward for interview. a) At least 40% of individuals on the board are women; b) At least one of the senior board positions is held by a woman; and c) At least one individual on the board is from a minority ethnic background. In accordance with the Listing Rules, the Board has provided the following information in relation to its diversity as at the year end. Men Women Not specified/prefer not to say White British or other White (including minority-white groups) Mixed/Multiple Ethnic Groups Asian/Asian British Black/African/Caribbean/Black British Other ethnic group, including Arab Not specified/ prefer not to say Number of Board Members Percentage of the Board Number of senior positions on the Board* 4 3 – 57% 43% – 2 1 – Number of Board Members Percentage of the Board Number of senior positions on the Board* 6 – 1 – – – 86% – 14% – – – 3 – – – – – *The format of the above tables is prescribed in the Listing Rules which define ‘senior positions on the Board’ as ‘CEO, CFO, SID and Chair’. However, as an externally managed investment trust, the Company has no executive management functions, including the roles of CEO and CFO, and the Company has therefore excluded columns relating to executive management. In the absence of the aforementioned roles, the Board considers the Chair of the Audit & Risk Committee to be a senior position and therefore the Company has defined the ‘senior positions on the Board’ as Chair, Senior Independent Director and Chair of the Audit & Risk Committee. The information above was obtained by asking the Directors to indicate on an anonymous form, how they should be categorised for the purposes of the Listing Rules disclosures. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCECORPORATE GOVERNANCE CONTINUED 55 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 2022/23 Sir Martin Smith^ Sarah Bates Sven Borho* Tim Livett+ Humphrey van der Klugt Doug McCutcheon~ Jo Parfrey** Dr Bina Rawal Board (6) Audit & Risk Committee (2) Nominations Committee (1) Management Engagement & Remuneration Committee (1) 3 6 5 2 5 6 2 6 – 2 – 1 2 1 1 2 0 1 – 1 1 1 1 1 0 1 – 1 1 1 1 1 ^ Sir Martin Smith was not a member of the Audit & Risk Committee. He retired from the Board on 6 July 2022 * Sven Borho does not sit on any of the Company’s Committees + Tim Livett joined the Board on 1 September 2022 ~Doug McCutcheon become the Chair of the Company on 6 July 2022. He ceased to be a member of the Audit & Risk Committee on that day ** Jo Parfrey joined the Board on 1 September 2022 All of the serving Directors with the exception of Humphrey van der Klugt, attended the Annual General Meeting held on 6 July 2022. Humphrey was unable to attend the Annual General Meeting and also a Board Meeting as he was unwell. Sven Borho was unable to attend one Board Meeting due to a prior long-standing commitment. 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 Chair 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 Director has the capacity to be fully engaged with the Company’s business. The Board has considered the position of all of the Directors as part of the evaluation process, and believes that it would be in the Company’s best interests to propose them for election and/or re-election (with the exception of Sarah Bates who will be retiring from the Board on the date of this year’s AGM) at the forthcoming AGM for the following reasons: Doug McCutcheon joined the Board in November 2012 and became Chair in July 2022. Doug was an investment banker at S.G. Warburg and then UBS for 25 years, most recently as the head of Healthcare Investment Banking for Europe, the Middle East, Africa and Asia-Pacific. It is noted that Doug has been a Director of the Company for more than nine years. The Board has agreed to this period of longer service to ensure an orderly succession. The Senior Independent Director conducted a preliminary evaluation of the Chair shortly after his appointment with no issues being raised. The Board continues to believe that Doug remains independent in thought and judgement. Sven Borho joined the Board in June 2018. Sven is a founder and Managing Partner of OrbiMed and heads their public Equity team and is the portfolio Manager for OrbiMed’s public equity and hedge funds. 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE56 CORPORATE GOVERNANCE CONTINUED Tim Livett joined the Board on 1 September 2022. A qualified accountant, Tim is Chair of the Audit & Risk Committee. Tim is the Chief Financial Officer at Caledonia Investments PLC, and is also a member of the Valuation and Audit & Risk Committees at Oxford University Endowment Management. He was formerly Chief Financial Officer at Wellcome Trust, the global charitable foundation focused on health research. He has an extensive and broad financial background. Tim studied chemistry at Oxford University. Jo Parfrey joined the Board on 1 September 2022. Jo is Chair of the Management Engagement & Remuneration Committee. She is a non-executive Director and Chair of the Audit Committee of Henderson International Income Trust plc, and a non-executive Director of Octopus AIM VCT. She is also a non-executive Director and Chair of the Audit Committee of Start Codon Limited and IESO Digital Health Limited and the non-executive Chair of Babraham Research Campus Limited. A Chartered Accountant, Jo has extensive experience of both global investment trusts and healthcare, including life services. Jo studied chemistry at Oxford University. 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. The Chair is pleased to report that following a formal performance evaluation, the Directors’ performance continues to be effective and they continue to demonstrate commitment to the role. TRAINING AND ADVICE New appointees to the Board are provided with a full induction programme. The programme covers the Company’s investment strategy, policies and practices. The Directors are also given key information on the Company’s regulatory and statutory requirements as they arise including information on the role of the Board, matters reserved for its decision, the terms of reference of the Board Committees, the Company’s corporate governance practices and procedures and the latest financial information. It is the Chair’s responsibility to ensure that the Directors have sufficient knowledge to fulfil their role and Directors are encouraged to participate in training courses where appropriate. The Directors have access to the advice and services of a Company Secretary through its appointed representative which is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary is also responsible for ensuring good information flows between all parties. There is an agreed procedure for Directors, in the furtherance of their duties, to take independent professional advice if necessary at the Company’s expense. RISK MANAGEMENT AND INTERNAL CONTROLS The Board has overall responsibility for the Company’s risk management and internal control systems and for reviewing their effectiveness. The Company applies the guidance published by the Financial Reporting Council on internal controls. Internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve the business objective and can provide only reasonable and not absolute assurance against material misstatement or loss. These controls aim to ensure that the assets of the Company are safeguarded, that proper accounting records are maintained and that the Company’s financial information is reliable. The Directors have a robust process for identifying, evaluating and managing the significant risks faced by the Company, which are recorded in a risk matrix. The Audit & Risk Committee, on behalf of the Board, considers each risk as well as reviewing the mitigating controls in place. Each risk is rated for its “likelihood” and “impact” and the resultant numerical rating determines its ranking into ‘Principal/Key’, ‘Significant’ or ’Minor’. This process was in operation during the year and continues in place up to the date of this report. The process also involves the Audit & Risk Committee receiving and examining regular reports from the Company’s principal service providers. The Board then receives a detailed report from the Audit & Risk Committee on its findings. The Directors have not identified any significant failures or weaknesses in respect of the Company’s internal control systems. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCECORPORATE GOVERNANCE CONTINUED 57 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, solicitor, accountant or other financial adviser authorised under the Financial Services and Markets Act 2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company, you should pass this document, together with any other accompanying documents, including the form of proxy, at once to the purchaser or transferee, or to the stock broker, bank or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee The Company’s Annual General Meeting will be held at Saddlers’ Hall, 40  Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 from 12.30 p.m. Please refer to the Chair’s Statement beginning on page 4 for details of this year’s arrangements. Resolution 17 Authority to buy-back shares Resolution 18 Authority to hold General Meetings (other than the Annual General Meeting) on at least 14 clear days’ notice Resolutions 13 and 14 will be proposed as Ordinary Resolutions and resolutions 15 to 18 will be proposed as Special Resolutions. The full text of the resolutions can be found in the Notice of Annual General Meeting on pages 101 to 105. Explanatory notes regarding the resolutions can be found on pages 106 and 107. EXERCISE OF VOTING POWERS The Board and the AIFM have delegated authority to OrbiMed to vote the shares owned by the Company. The Board has instructed that OrbiMed submit votes for such shares wherever possible. This accords with current best practice whilst maintaining a primary focus on financial returns. OrbiMed may refer to the Board on any matters of a contentious nature. The Board has reviewed OrbiMed’s Voting Guidelines and is satisfied with their approach. The Company does not retain voting rights on any shares that are held as collateral in connection with the overdraft facility provided by J.P. Morgan Securities LLC. NOMINEE SHARE CODE Where shares are held in a nominee company name, the Company undertakes: • • to provide the nominee company with multiple copies of shareholder communications, so long as an indication of quantities has been provided in advance; and to allow investors holding shares through a nominee company to attend general meetings, provided the correct authority from the nominee company is available. Nominee companies are encouraged to provide the necessary authority to underlying shareholders to attend the Company’s general meetings. In particular, resolutions relating to the following items will be proposed at the forthcoming Annual General Meeting. By order of the Board Resolution 13 Proposed share split Resolution 14 Authority to allot shares Resolution 15 Authority to disapply pre-emption rights Resolution 16 Authority to sell shares held in treasury on a non pre-emptive basis Frostrow Capital LLP Company Secretary 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE58 AUDIT & RISK COMMITTEE REPORT INTRODUCTION FROM THE CHAIRMAN I am pleased to present my first formal report to shareholders as Chair of the Audit & Risk Committee, for the year ended 31 March 2023. COMPOSITION AND MEETINGS The Committee comprises those Directors considered to be independent by the Board. The Chair of the Company 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 55. 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 Chair of the Committee on 1 March 2023, I succeeded Humphrey van der Klugt in this role. Humphrey remains a member of the Committee. I am a qualified accountant and have been a member of a number of Audit & Risk Committees over many years. 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 to 43. RESPONSIBILITIES The Committee’s main responsibilities during the year were: 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 29. 3. 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. 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. 4. 5. 6. 7. 8. To assess the going concern and viability of the Company, including the assumptions used. 9. 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. WORK OF THE AUDIT & RISK COMMITTEE DURING THE YEAR Annual Report and Financial Statements 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; WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEAUDIT & RISK COMMITTEE REPORT CONTINUED 59 • • 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. • • 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. 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 2023, 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. The Committee addressed the overall accuracy of the annual report 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. The committee also considered a number of key reporting matters which are outlined in the following sections. Valuation and ownership of the Company’s investments and derivatives, including unquoted investments 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 from both the Custodian and Prime Broker and also the Depositary (whose role it is to ensure that the Company’s assets are safeguarded and to verify their valuation); 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; In addition, the Committee considered the 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. 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 payable to the Portfolio Manager 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 1158 of the Corporation Tax Act 2010, by seeking confirmation from Frostrow that the Company continues to meet the eligibility conditions on a monthly basis. Withholding Tax The Committee monitored the reclamation of withholding tax, receiving regular updates from Frostrow on the process and the appointment of specialist local agents. 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 page 28). WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE60 AUDIT & RISK COMMITTEE REPORT CONTINUED Accounting policies During the year the Committee ensured that the accounting policies, as set out on pages 79 to 83, 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. 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. Going concern and viability statement 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 48. The Committee’s review of the Company’s financial position included consideration of the cash and cash equivalent position of the Company; the diversification of the portfolio; and the analysis of portfolio liquidity, which estimated a liquidation of c.84.5% of the portfolio within 10 trading days (based on current market volumes). The Committee also considered the longer-term viability of the Company in connection with the Board’s statement in the Strategic Report on page 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 2024, 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 NAV, 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 29 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: • • • • 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. Against this background, a risk matrix has been developed which covers 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEAUDIT & RISK COMMITTEE REPORT CONTINUED 61 Principal service providers Auditors’ reappointment 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. PwC 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. Meetings This year the nature and scope of the audit together with PwC’s audit plan were considered by the Committee on 3 November 2022. I, as Chair of the Committee, had a separate meeting with them specifically to discuss the audit and any issues that arose. The Committee then met PwC on 23 May 2023 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: • • • • 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. The Committee also reviews the outcomes of the FRC’s annual Audit Quality Reviews and discusses the findings with the Auditors. Depositary During the year, the Committee reviewed reports from the Depositary on their regulatory oversight and due diligence duties. Nothing material was brought to the attention of the Committee. 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 AUDIT Appointment and tenure PricewaterhouseCoopers LLP (“PwC”) were the Auditors for the financial year and this was their ninth audit of the Company. They were appointed on 14 July 2014 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. In addition, the Committee continues to consider annually the need to go to tender for audit quality, remuneration or independence reasons. It is expected that the next audit tender will take place in the autumn of this year, in order that the successful candidate’s appointment or re-appointment can be approved by shareholders at the AGM to be held in 2024. 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE62 AUDIT & RISK COMMITTEE REPORT CONTINUED Remuneration The Committee approved a fee of £53,900 for the audit for the year ended 31 March 2023 (2022: £46,725). 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 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. AUDIT & RISK COMMITTEE CONFIRMATION The Audit & 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 6 June 2023. 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. A copy of the Company’s non-audit services policy can be found on the Company’s website at www.worldwidewh.com. Tim Livett Chair of the Audit & Risk Committee 6 June 2023 No non-audit fees were paid to the Auditors during the year (2022: £5,000 in respect of 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. 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. I am pleased to confirm that the evaluation result was positive and no matters of concern or requirements for change were highlighted. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEDIRECTORS’ REMUNERATION REPORT 63 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 2013, the requirements of Section 421 of the Companies Act 2006 and the Enterprise and Regulatory Reform Act 2013. The Directors’ Remuneration Report is subject to an annual advisory vote and therefore an 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 68 to 74. The Management Engagement & Remuneration Committee (the “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. An Ordinary Resolution proposing the adoption of the Directors’ Remuneration Report was put to shareholders at the Annual General Meeting of the Company held on 6 July 2022, and was passed with 99.9% 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 Officer. The Company does not have any employees. There is therefore no Chief Executive Officer 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 Directors and should be sufficient to enable candidates of high calibre to be recruited. Directors are remunerated in the form of fees payable monthly in arrears, paid to the Director personally or to a specified third party. There are no long-term incentive schemes, share option schemes, pension arrangements, bonuses, or other benefits in place and fees are not specifically related to the Directors’ performance, either individually or collectively. The remuneration for the non-executive Directors is determined within the limits set out in the Company’s Articles of Association. The present limit is £350,000 in aggregate per annum. The amount paid in aggregate to the Directors in 2023 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 this year. 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 General Meeting after their appointment and to re-election annually thereafter. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office. Directors’ fees During the year, the Committee agreed that each Director’s fees should be increased by 2.0% with effect from 1 April 2023. The Committee noted that the fees had not been increased the previous year and the prevailing high level of inflation. The table overleaf shows the level of fees paid to Directors and the percentage increase from the prior year. With the exception of Tim Livett and Jo Parfrey, 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 Directors’ and shareholder meetings. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE64 DIRECTORS’ REMUNERATION REPORT CONTINUED Year Ending 31 March 2024 Year Ended 31 March 2023 Year Ended 31 March 2022 Fee Level (per annum) £54,213 £41,956 £36,727 £34,244 % Change 2.0 2.0 2.0 Fee Level (per annum) £53,150 £41,133 £36,007 % Change – – – Fee Level (per annum) £53,150 £41,133 £36,007 2.0 £33,573 – £33,573 % Change 4.0 4.0 4.0 4.0 Director Chair Audit & Risk Committee Chair Senior Independent Director Director Sums paid to third parties 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^ Tim Livett** Doug McCutcheon Jo Parfrey** Sven Borho+ Dr Bina Rawal Total Date of Appointment to the Board 8 November 2007 15 February 2016 22 May 2013 8 November 2007 1 September 2022 7 November 2012 1 September 2022 7 June 2018 1 November 2019 Fixed fees (£) 2023 14,105 40,503 36,007 – 20,124 47,894 19,584 – 33,573 211,790 Taxable Expenses (£)† 2023 – – – – – – – – – – Total (£) 2023 14,105 40,503 36,007 – 20,124 47,894 19,584 – 33,573 211,790 Fixed fees (£) 2022 53,150 41,133 35,389 9,833 – 33,573 – 33,573 206,651 Taxable Expenses (£)† 2022 865 – – – – – Total (£) 2022 54,015 41,133 35,389 9,833 – 33,573 – – 865 – 33,573 207,516 † Taxable expenses primarily comprise travel and associated expenses incurred by the Directors in attending Board and Committee meetings in London. These are reimbursed by the Company and, under HMRC Rules, are subject to tax and National Insurance and therefore are treated as a benefit in kind within this table. * Sir Martin Smith retired from the Board on 6 July 2022. # Sarah Bates was appointed as the Senior Independent Director with effect from 8 July 2021. ^ Dr David Holbrook retired from the Board on 8 July 2021. ** Tim Livett and Jo Parfrey joined the Board on 1 September 2022. + Sven Borho has waived his Director’s fee. Tim Livett succeeded Humphrey van der Klugt as Chair of the Audit & Risk Committee with effect from 1 March 2023. In certain circumstances, under HMRC rules travel and other out of pocket expenses reimbursed to the Directors 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 Directors’ 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   – Trustee Sarah Bates Sven Borho Humphrey van der Klugt Tim Livett Doug McCutcheon Jo Parfrey Dr Bina Rawal Ordinary Shares of 25p each 31 March 2023 – – 7,200 10,000 3,000 2,175 20,000 2,000 2,606 31 March 2022 11,871 2,725 7,200 10,000 3,000 – 20,000 – 1,810 46,981 56,606 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEDIRECTORS’ REMUNERATION REPORT CONTINUED 65 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 2023 % On behalf of the Board, I confirm that the Directors’ Remuneration Policy, set out on page 63 of this Annual Report, and Directors’ Remuneration Report set out on page 63 to 65 summarise, as applicable, for the year to 31 March 2023: (a) the major decisions on Directors’ remuneration; (b) any substantial changes relating to Directors’ remuneration made during the year; and (c) the context in which the changes occurred and decisions have been taken. Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23 Chair of the Management Engagement & Remuneration Committee Jo Parfrey WWH Share Price (total return) (236.9%) Benchmark (total return) (229.9%) Rebased to 100 as at 31 March 2013 Source: Morningstar 6 June 2023 500 400 300 200 100 0 Mar 13 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 2022 and 2023. (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:22) (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:22) (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:22) (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: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:27)(cid:12)(cid:17) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE66 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 2023 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, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial Position as at 31 March 2023; 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. Our 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. 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. We have provided no non-audit services to the Company in the period under audit. Our audit approach Overview Audit scope • The Company is a standalone Investment Trust Company and engages Frostrow Capital LLP (the“AIFM”) to manage its assets. • • • 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEINDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED 67 Key audit matters • Income from investments. • Valuation and existence of investments. Materiality • Overall materiality: £21,500,000 (2022: £22,682,000) based on approximately 1% of net assets. • Performance materiality: £16,125,000 (2022: £17,011,000). 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. 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. The key audit matters below are consistent with last year. . WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE68 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Key audit matter Income from investments Refer to the Audit & Risk Committee Report, Accounting Policies and Notes 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/ 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 SORP”). How our audit addressed the key audit matter 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/ 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. No material misstatements were identified from this testing. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEINDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED 69 Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Refer to the Audit & Risk Committee Report, Accounting Policies and Notes to the Financial Statements. The investment portfolio at 31 March 2023 principally comprised of listed equity investments and unquoted equity investments and totalled £2,186,417,000. 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 2023. For unquoted investments we understood and evaluated the valuation methodology applied, by reference to the International Private Equity and Venture Capital Valuation guidelines (IPEV),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 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. No 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 31 March 2023. No variances were identified from this testing. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE70 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 Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. The impact of climate risk on our audit As part of our audit we made enquiries of management to understand the process management adopted to assess the extent of the potential impact of climate risk on the Company’s financial statements and support the disclosures made within the Company’s financial statements. The Directors and the AIFM concluded that there was no material impact on the financial statements. Our 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 unquoted 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. 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: Overall Company materiality £21,500,000 (2022: £22,682,000). How we determined it Approximately 1% of net assets. Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark for investment trust Company audits. This benchmark 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. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £16,125,000 (2022: £17,011,000) 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 & Risk Committee that we would report to them misstatements identified during our audit above £1,075,000 (2022: £1,134,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEINDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED 71 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 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; 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 implication of significant 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. Our 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 2023 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 2023GOVERNANCE72 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 Governance 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: • • • • • The Directors’ 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 Directors’ 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; The Directors’ 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 Company 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. Responsibilities for the financial statements and the audit Responsibilities of the Directors for the financial statements As explained more fully in the Statement of Directors’ 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEINDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED 73 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 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. 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 1158 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); 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: 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 is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCE74 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • • • • we have not obtained all the information and explanations we require for our audit; 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 Directors’ 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 14 July 2014 to audit the financial statements for the year ended 31 March 2015 and subsequent financial periods. The period of total uninterrupted engagement is 9 years, covering the years ended 31 March 2015 to 31 March 2023. Allan McGrath (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023GOVERNANCEINCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2023 Notes Revenue £’000 Gains/(Losses) on investments Exchange losses on currency balances Income from investments AIFM, portfolio management and performance fees Other expenses Net return/(loss) before finance charges and taxation Finance costs Net return/(loss) before taxation Taxation Net return/(loss) after taxation Return/(loss) per share 9 2 3 4 5 6 7 75 2023 Capital £’000 10,388 Total £’000 10,388 (18,302) (18,302) Revenue £’000 2022 Capital £’000 Total £’000 – – (152,475) (152,475) (6,342) (6,342) – – 23,945 – 23,945 23,471 – 23,471 (877) (16,657) (17,534) (1,142) (22) (1,164) (938) (1,305) 1,061 (529) 123 (1,834) 21,926 (24,593) (2,667) 21,228 (158,285) (137,057) (193) (3,658) (3,851) (40) (761) (801) 21,733 (28,251) (6,518) 21,188 (159,046) (137,858) (2,021) (248) (2,269) (3,668) – (3,668) 19,712 (28,499) (8,787) 17,520 (159,046) (141,526) 30.6p (44.2) (13.6) 26.8p (243.5) (216.7) 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 2023FINANCIAL STATEMENTS76 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2023 At 1 April 2022 Net (loss)/return after taxation Final dividend paid in respect of year ended 31 March 2022 Interim dividend paid in respect of year ended 31 March 2023 Shares purchased for treasury Shares cancelled from treasury At 31 March 2023 FOR THE YEAR ENDED 31 MARCH 2022 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 At 31 March 2022 Share capital £’000 16,385 – – – – Share capital £’000 16,078 – – – 307 – Capital redemption reserve £’000 Share premium account £’000 Capital reserve £’000 Revenue reserve £’000 Total shareholders’ funds £’000 8,221 841,599 1,381,038 20,990 2,268,233 – – – – – (28,499) 19,712 (8,787) - - (91,514) – (12,721) (12,721) (4,490) (4,490) – – (91,514) – (120) 120 16,265 8,341 841,599 1,261,025 23,491 2,150,721 Capital redemption reserve £’000 Share premium account £’000 Capital reserve £’000 Revenue reserve £’000 Total shareholders’ funds £’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 – – – – – – – – – WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSSTATEMENT OF FINANCIAL POSITION As at 31 March 2023 77 Fixed assets Investments Derivative – OTC swaps Current assets Debtors Cash Current liabilities Creditors: amounts falling due within one year Derivative – OTC swaps Net current liabilities Total net assets Capital and reserves Share capital Capital redemption reserve Share premium account Capital reserve Revenue reserve Total shareholders' funds Net asset value per share Notes 2023 £’000 2022 £’000 9 2,186,417 2,379,848 9 & 10 209 283 2,186,626 2,380,131 11 4,376 58,925 14,724 26,594 63,301 41,318 12 (72,105) (147,804) 9 & 10 (27,101) (5,412) (99,206) (153,216) (35,905) (111,898) 2,150,721 2,268,233 13 16,265 16,385 8,341 8,221 841,599 841,599 17 1,261,025 1,381,038 23,491 20,990 2,150,721 2,268,233 14 3,434.5p 3,465.2p The financial statements on pages 75 to 95 were approved by the Board of Directors and authorised for issue on 6 June 2023 and were signed on its behalf by: Doug McCutcheon Chair The accompanying notes are an integral part of this statement. Worldwide Healthcare Trust PLC – Company Registration Number 3023689 (Registered in England) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS 78 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023 Net cash inflow/(outflow) from operating activities Purchases of investments and derivatives Sales of investments and derivatives Realised (loss)/gain on foreign exchange transactions Net cash inflow/(outflow) from investing activities Issue of shares Shares repurchased Equity dividends paid Interest paid Net cash (outflow)/inflow from financing activities Decrease/(Increase) in net cash/(debt) Notes 18 2023 £’000 5,394 2022 £’000 (13,329) 13 13 (1,189,133) (1,330,279) 1,404,617 1,253,138 (18,240) (5,541) 197,244 (82,682) – 48,126 (91,514) (2,544) (17,211) (14,671) (3,851) (801) (112,576) 30,110 90,062 (65,901) Cash flows from operating activities include interest received of £2,301,000 (2022: £968,000) and dividends received of £20,507,000 (2022: £23,853,000). RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET CASH/(DEBT) Decrease/(Increase) in net cash/(debt) resulting from cashflows Losses on foreign currency cash and cash equivalents Movement in net cash/(debt) in the year Net debt at 1 April Net cash/(debt) at 31 March 2023 £’000 2022 £’000 90,062 (65,901) (62) (801) 90,000 (66,702) (87,003) (20,301) 2,997 (87,003) Net cash/(debt) includes the bank overdraft of £55,928,000 (2022: £113,597,000) (see note 12) and cash as per the balance sheet of £58,925,000 (2022: £26,594,000). The accompanying notes are an integral part of this statement. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS 79 1. ACCOUNTING POLICIES The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these financial statements, are set out below: (A) Basis of preparation These financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 ‘The Financial Reporting Standard applicable in the UK and Ireland’ (‘UK GAAP’) and the guidelines set out in the Statement of Recommended Practice (‘SORP’), published in February 2021, for Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies (‘AIC’), the historical cost convention, as modified by the valuation of investments and derivatives at fair value. The Board has considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due, including stress and liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity (including further stressing the current economic conditions) on the Company’s financial position and cash flows. The results of the tests showed that the Company would have sufficient cash, or the ability to liquidate a sufficient proportion of its listed holdings, to meet its liabilities as they fall due. Based on the information available to the Directors at the time of this report, including the results of the stress tests, the Company’s cash balances, and the liquidity of the Company’s listed investments, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months from the date of approval of these financial statements and that, accordingly, it is appropriate to adopt the going concern basis in preparing these financial statements. The Company’s financial statements are presented in sterling, being the functional and presentational currency of the Company. All values are rounded to the nearest thousand pounds (£’000) except where otherwise indicated. In addition, investments and derivatives held at fair value are categorised into a fair value hierarchy based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: • Level 1 – Quoted prices in active markets. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data), either directly or indirectly. • Level 3 – Inputs are unobservable (i.e. for which market data is unavailable). Presentation of the Income Statement In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010. Critical Accounting Judgements and Key Sources of Estimation Uncertainty Critical accounting judgements and key sources of estimation uncertainty used in preparing the financial information are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. The resulting estimates will, by definition, seldom equal the related actual results. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS80 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 31 March 2023, there is no single key assumption used in the valuation of the unquoted investments, or other key source of estimation uncertainty, that, in the Directors’ opinion has a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year. Unquoted investments are all valued in line with the accounting policy set out below. (B) Investments Investments are measured under FRS 102 and are measured initially, and at subsequent reporting dates, at fair value. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned. Changes in fair value and gains or losses on disposal are included in the Income Statement as a capital item. For quoted securities fair value is either bid price or last traded price, depending on the convention of the exchange on which the investment is listed. Fair value is the price for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. In estimating the fair value of unquoted investments, the AIFM and Board apply valuation techniques which are appropriate in light of the nature, facts and circumstances of the investment, and use reasonable current market data and inputs combined with judgement and assumptions and apply these consistently. The following principles used in determining the valuation of unquoted investments, are consistent with the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines. The assumptions and estimates made in determining the fair value of each unquoted investment are considered at least each six months or sooner if there is a triggering event. An example of where a valuation would be considered out of the six-month cycle is the success or failure of a drug under development to meet an anticipated outcome of its trial, announcement of the company undergoing an initial public offering, or other performance against tangible development milestones. The primary valuation method applied in the valuation of the unquoted investments is the probability-weighted expected return method (PWERM), which considers on a probability weighted basis the future outcomes for the investment. When using the PWERM method significant judgements are made in estimating the various inputs into the model and recognising the sensitivity of such estimates. Examples of the factors where significant judgement is made include, but are not limited to, the probability assigned to potential future outcomes; discount rates; and, the likely exit scenarios for the investor company, for example, IPO or trade sale. Where the investment being valued was itself made recently, or there has been a third party transaction in the investment, the price of the transaction may provide a good indication of fair value. Using the Price of Recent Investment technique is not a default and at each reporting date the fair value of recent investments is estimated to assess whether changes or events subsequent to the relevant transaction would imply a material change in the investment’s fair value. When using the price of a recent transaction in the valuations the Company looks to ‘re-calibrate’ this price at each valuation point by reviewing progress within the investment, comparing against the initial investment thesis, assessing if there are any significant events or milestones that would indicate the value of the investment value has changed materially and considering whether an alternative methodology would be more appropriate. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 81 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 facility. (D) Investment income Dividends receivable are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company’s right to receive payment is established. Foreign dividends are grossed up at the appropriate rate of withholding tax, with the withholding tax recognised in the taxation charge. Income from fixed interest securities is recognised on a time apportionment basis so as to reflect the effective interest rate. Deposit interest is accounted for on an accruals basis. (E) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows: • • expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement; and expenses are charged to the capital column of the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the portfolio management and AIFM fees have been charged to the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio. As a result 5% of the portfolio management and AIFM fees are charged to the revenue column of the Income Statement and 95% are charged to the capital column of the Income Statement. Any performance fee is charged in full to the capital column of the Income Statement. (F) Finance costs Finance costs are accounted for on an accruals basis. Finance costs are charged to the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio. As a result 5% of the finance costs are charged to the revenue column of the Income Statement and 95% are charged to the capital column of the Income Statement. Finance charges are accounted for on an accruals basis in the Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS82 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. Exchange gains/losses on foreign currency balances 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. (J) Capital reserve The following are transferred to this reserve: • gains and losses on the disposal of investments; • • • exchange differences of a capital nature, including the effects of changes in exchange rates on foreign currency borrowings; expenses, together with the related taxation effect, in accordance with the above policies; and changes in the fair value of investments and derivatives. This reserve can be used to distribute realised capital profits by way of dividend or share 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. (K) Revenue reserve The revenue reserve is distributable by way of dividend. Dividends are only payable out of the revenue reserve if revenue reserves are greater than the proposed dividend and positive on the date of distribution. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 83 1. ACCOUNTING POLICIES continued (L) Dividend payments Dividends paid by the Company on its shares are recognised in the financial statements in the year in which they become payable and are shown in the Statement of Changes in Equity. (M) Cash and cash equivalents Cash comprises cash at bank and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. 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 investments Overseas dividends Fixed interest income UK dividends Other income Derivatives Deposit interest Total income from investments Total income comprises: Dividends Interest 2023 £’000 2022 £’000 18,431 19,678 184 3,212 772 2,825 21,827 23,275 79 2,039 151 45 23,945 23,471 21,643 22,503 2,302 968 23,945 23,471 3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES AIFM fee Portfolio management fee Performance fee (reversal)* Revenue £’000 151 726 – 877 2023 Capital £’000 2,862 Total £’000 3,013 13,795 14,521 – – 16,657 17,534 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) * 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. See page 44 for further information on the performance fee. Further details on the above fees are set out in the Strategic Report on pages 28 and 29 and in the Report of the Directors on page 44. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS84 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 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)^ Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on page 64. ^ Professional fees in respect of acquisition of unquoted investments. These fees do not form part of the ongoing charge ratio. 5. FINANCE COSTS Finance costs 6. TAXATION (A) Analysis of charge in year Corporation tax at 19% (2022: 19%) Overseas taxation Revenue £’000 193 2023 Capital £’000 3,658 Total £’000 3,851 Revenue £’000 40 Revenue £’000 – 2,021 2,021 2023 Capital £’000 – 248 248 Total £’000 – 2,021 2,269 Revenue £’000 – 3,668 3,668 2022 Capital £’000 761 2022 Capital £’000 – – – 2023 £’000 212 2022 £’000 207 18 54 – 208 85 45 181 (15) 354 1,142 22 1,164 20 47 5 213 77 63 255 117 301 1,305 529 1,834 Total £’000 801 Total £’000 – 3,668 3,668 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 85 6. TAXATION continued (B) Factors affecting the tax charge for the year Approved investment trusts are exempt from tax on capital gains made within the Company. The tax charged for the year is higher (2022: higher) than the standard rate of corporation tax of 19% (2022: 19%). The difference is explained below. Revenue £’000 2023 Capital £’000 Total £’000 Revenue £’000 2022 Capital £’000 Total £’000 Net return before taxation 21,733 (28,251) (6,518) 21,188 (159,046) (137,858) Corporation tax at 19% (2022: 19%) 4,129 (5,415) (1,286) 4,026 (30,219) (26,193) Non-taxable gains on investments – 1,551 Overseas withholding taxation Overseas capital gains tax Non taxable dividends Excess management expenses Total tax charge (C) Provision for deferred tax 2,021 – (4,112) (17) 2,021 – 248 – 3,864 248 1,551 2,021 248 3,668 – (4,112) (4,276) 3,847 2,269 250 3,668 – 30,175 30,175 – – – 44 – 3,668 – (4,276) 294 3,668 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 £49,985,000 (25% tax rate) (2022: £45,055,000 (25% tax rate)) as a result of excess management expenses and overdraft expenses. It is not anticipated that these excess expenses will be utilised in the foreseeable future. 7. RETURN/(LOSS) PER SHARE The return/(loss) per share is based on the following figures: Revenue return Capital (loss) Weighted average number of ordinary shares in issue during the year Revenue return per ordinary share Capital (loss) per ordinary share 2023 £’000 2022 £’000 19,712 17,520 (28,499) (159,046) (8,787) (141,526) 64,474,422 65,307,132 30.6p 26.8p (44.2p) (243.5p) (13.6p) (216.7p) 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 2023FINANCIAL STATEMENTS86 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: Final dividend in respect of the year ended 31 March 2022 Interim dividend in respect of the year ended 31 March 2023 Final dividend in respect of the year ended 31 March 2021 Interim dividend in respect of the year ended 31 March 2022 2023 £’000 12,721 4,490 – – 2022 £’000 – – 10,085 4,586 17,211 14,671 In respect of the year ended 31 March 2023, an interim dividend of 7.0p per share was paid on 11 January 2023. A final dividend of 24.0p will be payable, subject to shareholder approval, on 26 July 2023, the associated ex dividend date will be 8 June 2023. The total dividends payable in respect of the year ended 31 March 2023 amount to 31.0p per share (2022: 26.5p per share). The aggregate cost of the final dividend, based on the number of shares in issue (excluding shares held in treasury) at 5 June 2023, will be £14,717,000. In accordance with FRS 102 dividends will be reflected in the financial statements for the year in which they become payable. Total dividends in respect of the financial year, which is the basis on which the requirements of s1158 of the Corporation Tax Act 2010 are considered, are set out below. 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 2023 Final dividend in respect of the year ended 31 March 2023* Net retained revenue * based on 61,321,726 shares in issue (excluding shares held in treasury) as at 5 June 2023. 2023 £’000 2022 £’000 19,712 17,520 – – (4,586) (12,721) (4,490) (14,717) – – 505 213 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 87 9. INVESTMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS Cost at 1 April 2022 Quoted Investments £’000 Unquoted Investments £’000 Derivative Financial Instruments - Net £’000 Total £’000 1,952,701 136,760 – 2,089,461 Investment holdings gains/(losses) at 1 April 2022 254,674 35,713 (5,129) 285,258 Valuation at 1 April 2022 Movement in the year:  Purchases at cost  Sales - proceeds Transfer between levels* 2,207,375 172,473 (5,129) 2,374,719 1,168,434 – – 1,168,434 (1,390,864) (4,332) 1,072 (1,394,124) 14,019 (14,019) – – Net movement in investment holding gains/(losses) 42,283 (8,952) (22,835) 10,496 Valuation at 31 March 2023 Cost at 31 March 2023 2,041,247 145,170 (26,892) 2,159,525 1,828,139 122,597 – 1,950,736 Investment holding gains/(losses) at 31 March 2023 213,108 22,573 (26,892) 208,789 Valuation at 31 March 2023 * See Note 16. 2,041,247 145,170 (26,892) 2,159,525 The Company received £1,393,875,000 (2022: £1,253,317,000) from investments and derivatives sold in the year. The book cost of these was £1,307,159,000 (2022: £1,278,065,000). 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 gains/(losses) in the year Net movement in derivative holding (losses)/gains in the year Effective interest rate amortisation Gains/(Losses) on investments 2023 £’000 2022 £’000 33,331 (130,139) (22,835) (21,985) (108) (351) 10,388 (152,475) Purchase transaction costs were £1,660,000 (2022: £1,668,000). Sales transaction costs were £1,266,000 (2022: £1,244,000). 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. 2023 £’000 209 2022 £’000 283 (27,101) (5,412) (26,892) (5,129) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS88 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 11. DEBTORS Amounts due from brokers Withholding taxation recoverable VAT recoverable Prepayments and accrued income 12. CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR Amounts due to brokers Overdraft drawn* Other creditors and accruals 2023 £’000 2022 £’000 88 10,581 2,882 2,587 – – 1,406 1,556 4,376 14,724 2023 £’000 2022 £’000 9,432 30,131 55,928 113,597 6,745 4,076 72,105 147,804 * 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 93, J.P. Morgan Securities LLC may take investments up to 140% of the value of the overdrawn balance as collateral and has been granted a first priority security interest or lien over the Company’s assets. 13. SHARE CAPITAL Issued and fully paid at 1 April 2022 Shares purchased for treasury Shares cancelled from treasury At 31 March 2023 Issued and fully paid: Ordinary Shares of 25p Shares number Treasury shares number Total shares in issue number 65,457,246 80,509 65,537,755 (2,836,483) 2,836,483 – – (478,977) (478,977) 62,620,763 2,438,015 65,058,778 2023 £’000 2022 £’000 16,265 16,385 During the year ended 31 March 2023 no new shares were issued, 2,836,483 shares were repurchased into treasury at a cost of £91,514,000 (2022: 1,227,500 shares were issued raising £45,549,000 and 80,509 shares were repurchased for treasury at a cost of £2,544,000). WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 89 14. NET ASSET VALUE PER SHARE Net asset value per share 2023 2022 3,434.5p 3,465.2p The net asset value per share is based on the assets attributable to equity shareholders of £2,150,721,000 (2022: £2,268,233,000) and on the number of shares in issue at the year end (excluding those shares held in treasury) of 62,620,763 (2022: 65,457,246). 15. RELATED PARTIES The following are considered to be related parties: • Frostrow Capital LLP (the Company’s AIFM, a related party under the Listing Rules only) • OrbiMed Capital LLC (the Company’s Portfolio Manager) • The Directors of the Company Sven Borho is a Managing Partner at OrbiMed and has waived his Director’s fee of £33,573 (2022: £33,573). Details of fees paid to OrbiMed by the Company can be found in note 3 on page 83. All material related party transactions have been disclosed in notes 3 and 4 on pages 83 and 84. Details of the remuneration of all Directors can be found on page 65. Details of the Directors’ interests in the capital of the Company can also be found on page 64. Three current and two former partners at OrbiMed have a minority financial interest totalling 20% in Frostrow, the Company’s AIFM. Details of the fees paid to Frostrow by the Company can be found in note 3 on page 83. 16. FINANCIAL INSTRUMENTS Risk management policies and procedures The Company’s financial instruments comprise securities and other investments, derivative instruments, cash balances, overdrafts and debtors and creditors that arise directly from its operations. As an investment trust, the Company invests in equities and other investments for the long term so as to secure its investment objective. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in a reduction in the Company’s net assets. The main risks that the Company faces arising from its financial instruments are: (i) market risk (including foreign currency risk, interest rate risk and other price risk) (ii) liquidity risk (iii) credit risk These risks, with the exception of liquidity risk, and the Directors’ approach to the management of them have not changed from the previous accounting year. The AIFM, in close co-operation with the Board and the Portfolio Manager, co-ordinates the Company’s risk management. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS90 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued Use of derivatives Equity swaps are used within the Company’s portfolio. OTC equity swaps The Company uses OTC equity swap positions to gain access to the Indian and Chinese markets when it is more cost effective to gain access via swaps or to gain exposure to thematic baskets of stocks. Offsetting disclosure Swap trades and OTC derivatives are traded under ISDA† Master Agreements. The Company currently has such agreements in place with Goldman Sachs and JP Morgan. These agreements create a right of set-off that becomes enforceable only following a specified event of default, or in other circumstances not expected to arise in the normal course of business. As the right of set-off is not unconditional, for financial reporting purposes, the Company does not offset derivative assets and derivative liabilities. †International Swap Dealers Association Inc. (i) Other price risk In pursuance of the Company’s Investment Objective the Company’s portfolio, including its derivatives, is exposed to the risk of fluctuations in market prices and foreign exchange rates. The Board manage these risks through the use of limits and guidelines, monthly compliance reports from Frostrow and reports from Frostrow and OrbiMed presented at each Board meeting. Other price risk exposure The Company’s gross exposure to other price risk is represented by the fair value of the investments and the underlying exposure through the derivative investments held at the year end as shown in the table below. Investments OTC equity swaps 2023 2022 Assets £’000 Liabilities £’000 Notional* exposure £’000 Assets £’000 Liabilities £’000 Notional* exposure £’000 2,186,417 – 2,186,417 2,379,848 – 2,379,848 209 (27,101) 190,704 283 (5,412) 135,018 2,186,626 (27,101) 2,377,121 2,380,131 (5,412) 2,514,866 * The notional exposure is calculated in accordance with the AIFMD requirements for calculating exposure via derivatives. See glossary beginning on page 97. Other price risk sensitivity If market prices of all of the Company’s financial instruments including the derivatives at the Statement of Financial Position date had been 25% higher or lower (2022: 25% higher or lower) while all other variables remained constant: the revenue return would have decreased/increased by £0.2 million (2022: £0.2 million); the capital return would have increased/decreased by £596.6 million (2022: £625.4 million); and, the return on equity would have increased/decreased by £594.6 million (2022: £625.2 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 91 16. FINANCIAL INSTRUMENTS continued (ii) Foreign currency risk A significant proportion of the Company’s portfolio and derivative positions are denominated in currencies other than sterling (the Company’s functional currency, and the currency in which it reports its results). As a result, movements in exchange rates can significantly affect the sterling value of those items. Foreign currency exposure The fair values of the Company’s monetary assets and liabilities that are denominated in foreign currencies are shown below. U.S. dollar Swiss franc Japanese yen Hong Kong dollar Other Current assets £’000 2023 Current liabilities £’000 Investments £’000 Current assets £’000 2022 Current liabilities £’000 Investments £’000 115,823 (124,286) 1,488,321 64,264 (169,551) 1,821,239 2,466 793 – 194 – – – – 84,999 2,202 135,398 109,170 201,798 332 851 155 – 114 113,899 83,225 (851) 190,260 – 30,803 119,276 (124,286) 2,019,686 67,804 (170,288) 2,239,426 Foreign currency sensitivity The following table details the sensitivity of the Company’s net return for the year and shareholders’ funds to a 10% increase and decrease in sterling against the relevant currency (2022: 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. 2023 USD £’000 YEN £’000 Sterling depreciates 188,606 15,132 CHF £’000 9,718 HKD £’000 USD £’000 12,130 206,233 2022 YEN £’000 9,297 CHF £’000 HKD £’000 12,900 21,140 Sterling appreciates (154,314) (12,381) (7,951) (9,925) (168,736) (7,606) (10,555) (17,296) (iii) Interest rate risk Interest rate changes may affect: – the interest payable on the Company’s variable rate borrowings; – the level of income receivable from floating and fixed rate securities and cash at bank and on deposit; – the fair value of investments in fixed interest securities. Interest rate exposure The Company’s main exposure to interest rate risks is through its overdraft facility with J.P. Morgan Securities LLC, which is repayable on demand, and its holding in fixed interest securities. The exposure of financial assets and liabilities to fixed and floating interest rates, is shown below. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS92 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued At 31 March 2023, the Company held no investments in securitised debt (2022: 0.4% of the portfolio). The exposure is shown in the table below. 2023 2022 Weighted average period for which rate is fixed Years Weighted average fixed interest rate % – – – – – – – – Weighted average period for which rate is fixed Years Weighted average fixed interest rate % Fixed rate £’000 Floating rate £’000 – – – – – – 2.9 2.6 100,366 (97,369) (217,596) (214,599) Fixed rate £’000 5,024 – – – Floating rate £’000 – 56,336 (143,339) (140,147) 5,024 (227,150) Unquoted debt investments Cash Overdraft facility Financed swap positions All interest rate exposures are held in U.S. dollars. Cash of £100.4 million (2022: £56.3 million) was held as collateral against the financed swap positions, of which £41.4 million (2022: £29.7 million) was offset against the overdraft position. Interest rate sensitivity If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s net return for the year ended 31 March 2023 and the net assets would increase/decrease by £2.1 million (2022: increase/decrease by £2.3 million). (iv) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Management of the risk Liquidity risk is not considered significant as the 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. Liquidity exposure and maturity Contractual maturities of the financial liability exposures as at 31 March 2023, 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 2023 2022 3 to 12 months £’000 3 months or less £’000 3 to 12 months £’000 – – 97,369 16,177 – – 3 months or less £’000 143,339 30,131 27,101 – 5,412 – 27,101 113,546 5,412 173,470 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 93 16. FINANCIAL INSTRUMENTS continued £41.4 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. (v) Credit risk Credit risk is the risk of failure of a counterparty to discharge its obligations resulting in the Company suffering a financial loss. The carrying amounts of financial assets best represent the maximum credit risk at the Statement of Financial Position date. The Company’s quoted securities are held on its behalf by J.P. Morgan Securities LLC acting as the Company’s Custodian and Prime Broker. As noted on page 32, 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 2023 such assets held by J.P. Morgan Securities LLC are available for rehypothecation (see Glossary on page 99). As at 31 March 2023, assets with a total market value of £134.7 million (2022: £203.1 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). CREDIT RISK EXPOSURE Unquoted debt investments Derivative – OTC equity swaps Current assets: Other receivables (amounts due from brokers, dividends and interest receivable) Cash 2023 £’000 – 209 2022 £’000 5,024 283 4,376 58,925 14,724 26,594 (vi) Fair value of financial assets and financial liabilities Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or the Statement of Financial Position amount is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accrual, cash at bank, and the overdraft). (vii) Hierarchy of investments The Company has classified its financial assets designated at fair value through profit or loss and the fair value of derivative financial instruments using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurements. The hierarchy has the following levels: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and • Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS94 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued As of 31 March 2023 Investments held at fair value through profit or loss Derivatives: OTC swaps (assets) Derivatives: OTC swaps (liabilities) Level 1 £’000 2,041,247 – – Level 2 £’000 Level 3 £’000 Total £’000 – 209 (27,101) 145,170 2,186,417 – – 209 (27,101) Financial instruments measured at fair value 2,041,247 (26,892) 145,170 2,159,525 As at 31 March 2023, ten equity investments and a deferred consideration investment have been classified as level 3. All level 3 positions have been valued in accordance with the accounting policy set out in Note 1(b). During 2023 one unquoted investment was transferred to Level 1 following their initial public offerings. 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 31 March 2022, one debt, twelve equity and a deferred consideration investment have been classified as Level 3. All level 3 positions have been valued using an independent third party pricing source or using the price of a recent transaction. During 2022 four unquoted investments were transferred to Level 1 following their initial public offerings. (viii) Capital management policies and procedures The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the income and capital return to its equity shareholders through an appropriate level of gearing or leverage. The Board’s policy on gearing and leverage is set out on page 9. As at 31 March 2023, the Company had a net leverage percentage of 10.5% (2022: 10.9%). 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 77. 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. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTSNOTES TO THE FINANCIAL STATEMENTS CONTINUED 95 17. CAPITAL RESERVE At 1 April 2022 Net gains/(losses) on investments Expenses and taxation charged to capital Exchange loss on currency balances Shares repurchased for Treasury At 31 March 2023 Capital Reserves Investment Holding Gains* £’000 Other £’000 Total £’000 932,497 448,541 1,381,038 86,857 (76,469) 10,388 (20,585) (18,302) (91,514) – – – (20,585) (18,302) (91,514) 888,953 372,072 1,261,025 * Investment holding gains relate to the revaluation of investments and derivatives held at the reporting date. (See note 9 beginning on page 87 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/(OUTFLOW) FROM OPERATING ACTIVITIES Loss before finance charges and taxation Add: capital loss before finance charges and taxation Revenue return before finance charges and taxation Expenses charged to capital Decrease in other debtors Increase/(Decrease) in provisions, and other creditors and accruals Net taxation suffered on investment income Amortisation Net cash inflow/(outflow) from operating activities 2023 £’000 2022 £’000 (2,667) (137,057) 24,593 158,285 21,926 21,228 (16,679) 150 532 1,342 2,669 (32,120) (2,564) (3,960) (108) (351) 5,394 (13,329) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FINANCIAL STATEMENTS96 SHAREHOLDER INFORMATION 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. 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 Saddlers’ Hall, 40 Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 from 12.30 p.m. Please refer to the Statement from the Chair 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. See page 110 for their contact details. 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:5)(cid:70)(cid:83)(cid:73)(cid:5)(cid:53)(cid:87)(cid:78)(cid:91)(cid:70)(cid:89)(cid:74)(cid:5)(cid:39)(cid:70)(cid:83)(cid:80)(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: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:5)(cid:70)(cid:83)(cid:73)(cid:5)(cid:53)(cid:87)(cid:78)(cid:91)(cid:70)(cid:89)(cid:74)(cid:5)(cid:39)(cid:70)(cid:83)(cid:80)(cid:88) (cid:53)(cid:74)(cid:83)(cid:88)(cid:78)(cid:84)(cid:83)(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:24) (cid:22)(cid:19)(cid:26) (cid:22)(cid:19)(cid:22) (cid:21)(cid:19)(cid:28) (cid:21)(cid:19)(cid:27) (cid:21)(cid:19)(cid:26) (cid:21)(cid:19)(cid:22) (cid:22)(cid:19)(cid:24) (cid:22)(cid:19)(cid:22) (cid:24)(cid:19)(cid:26) (cid:24)(cid:19)(cid:25) (cid:21)(cid:19)(cid:28) (cid:22)(cid:19)(cid:26) (cid:28)(cid:19)(cid:24) (cid:29)(cid:19)(cid:29) (cid:21)(cid:19)(cid:27) (cid:21)(cid:19)(cid:26) (cid:21)(cid:19)(cid:22) (cid:24)(cid:19)(cid:26) (cid:24)(cid:19)(cid:25) (cid:28)(cid:19)(cid:24) (cid:29)(cid:19)(cid:29) (cid:23)(cid:25)(cid:19)(cid:26) (cid:23)(cid:27)(cid:19)(cid:21) (cid:23)(cid:25)(cid:19)(cid:26) (cid:23)(cid:27)(cid:19)(cid:21) (cid:23)(cid:21)(cid:23)(cid:24) (cid:23)(cid:21)(cid:23)(cid:24) (cid:22)(cid:19)(cid:22) (cid:22)(cid:19)(cid:22) (cid:22)(cid:19)(cid:22) (cid:21)(cid:19)(cid:26) (cid:21)(cid:19)(cid:23) (cid:21)(cid:19)(cid:22) (cid:22)(cid:19)(cid:30) (cid:22)(cid:19)(cid:22) (cid:22)(cid:19)(cid:22) (cid:22)(cid:19)(cid:22) (cid:24)(cid:19)(cid:29) (cid:21)(cid:19)(cid:26) (cid:21)(cid:19)(cid:23) (cid:22)(cid:19)(cid:30) (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:21) (cid:23)(cid:21)(cid:23)(cid:23) (cid:26)(cid:29)(cid:19)(cid:26) (cid:23)(cid:21)(cid:23)(cid:21) (cid:23)(cid:21)(cid:23)(cid:23) (cid:26)(cid:29)(cid:19)(cid:26) (cid:23)(cid:25)(cid:19)(cid:23) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATIONGLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMS’) 97 ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD) Agreed by the European Parliament and the Council of the European Union and transported into UK legislation, the AIFMD classifies certain investment vehicles, including investment companies, as Alternative Investment Funds (AIFs) and requires them to appoint an Alternative Investment Fund Manager (AIFM) and a depositary to manage and oversee the operations of the investment vehicle. The Board of the Company retains responsibility for strategy, operations and compliance and the Directors retain a fiduciary duty to shareholders. Alternative performance measure (‘APM’) An APM is a numerical measure of the Company’s current, historical or future financial performance, financial position or cash flows, other than a financial measure defined or specified in the applicable financial framework. In selecting these Alternative Performance Measures, the Directors considered the key objectives and expectations of typical investors in an investment trust such as the Company. 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 2023FURTHER INFORMATION98 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 AIFMD as any method by which the AIFM increases the exposure of an AIF. In addition to the gearing limit the Company also has to comply with the AIFMD leverage requirements. For these purposes the Board has set a maximum leverage limit of 140% for both methods. This limit is expressed as a % with 100% representing no leverage or gearing in the Company. There are two methods of calculating leverage as follows: The Gross Method is calculated as total exposure divided by Shareholders’ Funds. Total exposure is calculated as net assets, less cash and cash equivalents, adding back cash borrowing plus derivatives converted into the equivalent position in their underlying assets. The Commitment Method is calculated as total exposure divided by Shareholders Funds. In this instance total exposure is calculated as net assets, less cash and cash equivalents, adding back cash borrowing plus derivatives converted into the equivalent position in their underlying assets, adjusted for netting and hedging arrangements. See the definition of Equity Swaps for more details on how exposure through these instruments is calculated. Investments OTC equity swaps Shareholders’ funds Leverage % 2023 £’000 2022 £’000 Fair Value Exposure* Fair Value Exposure* 2,186,417 2,186,417 2,379,848 2,379,848 (26,892) 190,704 (5,129) 135,018 2,159,525 2,377,121 2,374,719 2,514,866 2,150,721 10.5% 2,268,233 10.9% * Calculated in accordance with AIFMD requirements using the Commitment Method MSCI World Health Care Index (the Company’s Benchmark) The MSCI World Health Care Index is designed to capture the large and mid capitalisation segments across 23 developed markets countries: All securities in the index are classified as healthcare as per the Global Industry Classification Standard (GICS). Developed Markets countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland the UK and the U.S. The net total return of the Index is used which assumes the reinvestment of any dividends paid by its constituents after the deduction of relevant withholding taxes. The performance of the Index is calculated in U.S.$ terms. Because the Company’s reporting currency is £ the prevailing U.S.$/£ exchange rate is applied to obtain a £ based return. 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATIONGLOSSARY OF TERMS AND ALTERNATIVE PERFORMANCE MEASURES (‘APMS’) CONTINUED 99 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) in NAV Closing NAV % (decrease) in NAV Impact of reinvested dividends NAV Total Return 2023 p 3,465.2 (30.7) 3,434.5 (0.9%) 0.8% (0.1%) 2022 p 3,703.0 (237.8) 3,465.2 (6.4%) 0.6% (5.8%) Ongoing Charges* Ongoing charges are calculated by taking the Company’s annualised ongoing charges, excluding finance costs, taxation, performance fees and exceptional items, and expressing them as a percentage of the average daily net asset value of the Company over the year. 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 2023 £’000 17,534 1,142 18,676 – 18,676 2,247,296 0.8% 0.8% 2022 £’000 18,765 1,305 20,070 12,861 32,931 2,356,131 0.9% 1.4% 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 2023 p 3,275.0 (160.0) 3,115.0 (4.8%) 0.7% (4.1%) 2022 p 3,695.0 (420.0) 3,275.0 (11.4%) 0.6% (10.8%) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION100 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 the UK to ordinary retail investors in accordance with the Financial Conduct Authority (‘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 Dealing Accounts, ISAs, Junior ISAs and SIPPs) which facilitate both regular monthly investments and lump sum investments in the Company’s shares. There are a number of investment platforms that offer these facilities. A list of some of them, that is not comprehensive nor constitutes any form of recommendation, can be found below: AJ Bell Youinvest 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATIONNOTICE OF THE ANNUAL GENERAL MEETING 101 Notice is hereby given that the Annual General Meeting of Worldwide Healthcare Trust PLC will be held at Saddlers' Hall, 40 Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 from 12.30 p.m. for the following purposes: Ordinary Resolutions To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions: 1. That the Report of the Directors and the audited Accounts for the year ended 31 March 2023 together with the Report of the Auditors thereon be received and adopted. 2. To approve the payment of a final dividend of 24.0p per ordinary share for the year ended 31 March 2023. 3. To approve the Company’s dividend policy, as set out on page 27 of the Annual Report for the year ended 31 March 2023. 4. To re-elect Mr Humphrey van der Klugt as a Director of the Company. 5. To re-elect Mr Doug McCutcheon as a Director of the Company. 6. To re-elect Mr Sven Borho as a Director of the Company. 7. To re-elect Dr Bina Rawal as a Director of the Company. 8. To elect Mr Tim Livett as a Director of the Company. 9. To elect Ms Jo Parfrey as a Director of the Company. 10. To re-appoint PricewaterhouseCoopers LLP as the Company’s Auditors and to authorise the Audit & Risk Committee to determine their remuneration. 11. To approve the Directors’ Remuneration Report for the year ended 31 March 2023. 12. To approve the Directors’ Remuneration Policy. Proposed share split 13. THAT each of the issued ordinary shares of 25p each in the capital of the Company (including for the avoidance of doubt ordinary shares held in treasury) be and is hereby sub-divided into ten ordinary shares of 2.5p each (the “New Ordinary Shares”) having the rights and being subject to the restrictions and obligations set out in the articles of association of the Company, provided that such sub-division shall be conditional on, and shall take effect on, the New Ordinary Shares being admitted to the Official List of the Financial Conduct Authority and to trading on the main market of the London Stock Exchange, which is expected to occur at 8.00 a.m. on 27 July 2023 (or such other time and/or date as the Directors may in their absolute discretion determine). Authority to allot shares 14. THAT in substitution for all existing authorities the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of the Company to allot relevant securities (within the meaning of section 551 of the Act) up to a maximum aggregate nominal amount equal to 10% of the issued share capital of the Company at 5 June 2023 (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 2024 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 2023FURTHER INFORMATION102 NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED Special Resolutions To consider and, if thought fit, pass the following resolutions which will be proposed as special resolutions: Disapplication of pre-emption rights 15. THAT in substitution for all existing powers (and in addition to any power conferred on them by resolution 16 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 14 set out in the Notice of Annual General Meeting or otherwise as if Section 561(1) of the Act did not apply to any such allotment: (a) pursuant to an offer of equity securities open for acceptance for a period fixed by the Directors where the equity securities respectively attributable to the interests of holders of shares in the capital of the Company (“Shares”) are proportionate (as nearly as may be) to the respective numbers of Shares held by them but subject to such exclusions or other arrangements in connection with the issue as the Directors may consider necessary, appropriate or expedient to deal with equity securities representing fractional entitlements or to deal with legal or practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange, or any other matter whatsoever; (b) provided that (otherwise than pursuant to sub-paragraph (a) above) this power shall be limited to the allotment of equity securities up to an aggregate nominal value equal to 10% of the issued share capital of the Company at 5 June 2023 (or, if changed, the number representing 10% of the issued share capital of the Company at the date at which this resolution is passed) and provided further that (i) the number of equity securities to which this power applies shall be reduced from time to time by the number of treasury shares which are sold pursuant to any power conferred on the Directors by resolution 16 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. 16. THAT in substitution for all existing powers (and in addition to any power conferred on them by resolution 15 set out in the Notice of Annual General Meeting) the Directors be and are hereby generally empowered pursuant to Section 570 of the Companies Act 2006 (the “Act”) to sell relevant shares (within the meaning of Section 560 of the Act) if, immediately before the sale, such shares are held by the Company as treasury shares (as defined in Section 724 of the Act (“treasury shares”)), for cash as if Section 561(1) of the Act did not apply to any such sale provided that: (a) this power shall be limited to the sale of relevant shares having an aggregate nominal value equal to 10% of the issued share capital of the Company at 5 June 2023 (or, if changed, the number representing 10% of the issued share capital of the Company at the date at which this resolution is passed) and provided further that the number of relevant shares to which power applies shall be reduced from time to time by the number of Shares which are allotted for cash as if Section 561(1) of the Act did not apply pursuant to the power conferred on the Directors by resolution 15 set out in the Notice of Annual General Meeting, WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED 103 and such power shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or 15 months from the date of passing this resolution, whichever is earlier, unless previously revoked, varied or renewed by the Company in General Meeting and provided that the Company shall be entitled to make, prior to the expiry of such authority, an offer or agreement which would or might otherwise require treasury shares to be sold after such expiry and the Directors may sell treasury shares pursuant to such offer or agreement as if the power conferred hereby had not expired. Authority to repurchase ordinary shares 17. THAT the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the Companies Act 2006 (the “Act”) to make one or more market purchases (within the meaning of section 693 of the Act) of ordinary shares in the capital of the Company (“Shares”) (either for retention as treasury shares for future reissue, resale, transfer or cancellation), provided that: (a) the maximum aggregate number of Shares authorised to be purchased shall be that number of shares which is equal to (i) unless and until resolution 13 (“Resolution 13”) in the notice convening the Annual General Meeting at which this resolution is proposed becomes unconditional to 14.99% of the issued share capital of the Company as of the value of the date of the passing of this resolution and (ii) if Resolution 13 becomes unconditional to 14.99% of the issued share capital of the Company immediately following Resolution 13 becoming unconditional; (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) 105% of the average of the middle market quotations for a Share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which that Share is purchased and (ii) the higher of the price of the last independent trade and the highest then current independent bid on the London Stock Exchange as stipulated in the technical standards referred to in Article 5(6) of the Market Abuse Regulation (EU) No. 596/2014 (which forms part of UK law by virtue of the European Union (Withdrawal) Act 2018); (d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2024 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 18. 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 6 June 2023 Registered Office: One Wood Street London EC2V 7WS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION 104 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/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 shareholderenquiries@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 Friday, 14 July 2023. In the case of a member which is a company, the instrument appointing a proxy must be executed under its seal or signed on its behalf by a duly authorised officer or attorney or other person authorised to sign. Any power of attorney or other authority under which the instrument is signed (or a certified copy of it) must be included with the instrument. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described below) will not prevent a shareholder attending the meeting and voting in person if he/she wishes to do so. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act 2006 to enjoy information rights (a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or have someone else appointed) as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 3 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company. Pursuant to regulation 41 of the Uncertificated Securities Regulations 2001, only shareholders registered on the register of members of the Company (the “Register of Members”) at the close of business on Friday, 14 July 2023 (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 5 June 2023 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 65,058,778 ordinary shares, carrying one vote each. The Company holds 3,737,052 shares in treasury. Therefore, the total voting rights in the Company as at 5 June 2023 are 61,321,726. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with the specifications of Euroclear UK and Ireland Limited (“CRESTCo”), and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) no later than 48 hours before the time appointed for holding the meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Register of Members in respect of the joint holding (the first named being the most senior). 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. 8. 9. 10. 11. 12. 13. 14. 15. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION NOTICE OF THE ANNUAL GENERAL MEETING CONTINUED 105 16. Members who have appointed a proxy using the hard-copy proxy form and who wish to change the instructions using another hard-copy form, should contact Link Group on 0371 664 0300 or +44 371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom are charged at the applicable international rate. Lines are open 09.00 to 17.30 Monday to Friday excluding public holidays in England and Wales. 17. If a member submits more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence. In order to revoke a proxy instruction, members will need to inform the Company. Members should send a signed hard copy notice clearly stating their intention 18. 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 104, the proxy appointment will remain valid. Location of the Annual General Meeting Saddlers’ Hall, 40 Gutter Lane, London EC2V 6BR 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 shareholderenquiries@ linkgroup.co.uk or by calling +44 (0)371 664 0300 and returning the completed form to Link Group, PXS1, 10th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL, no later than 12.30 pm on Friday, 14 July 2023. 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 2023FURTHER INFORMATION 106 EXPLANATORY NOTES TO THE RESOLUTIONS Resolution 1 – To receive and adopt the Annual Report and Accounts The Annual Report and Accounts for the year ended 31 March 2023 will be presented to the Annual General Meeting (AGM). These accounts accompany this Notice of Meeting. New Ordinary Shares being admitted to the Official List of the Financial Conduct Authority and to trading on the main market of the London Stock Exchange, which is expected to occur at 8.00 a.m. on 27 July 2023 (or such other time and/ or date as the Directors may in their absolute discretion determine). See pages 6, 46 and 47 for further information. Resolution 2 – To approve a Final Dividend The rationale for the payment of a final dividend is set out in the Statement from the Chair beginning on page 4 and the Report of the Directors on page 45. 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 27. Resolutions 4 to 9 – Election and/or Re-election of Directors Resolutions 4 to 9 deal with the election and/or re-election of each Director. Biographies of each of the Directors can be found on pages 41 to 43 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 10 – Re-appointment of Auditors and the determination of their remuneration Resolution 10 relates to the re-appointment of PricewaterhouseCoopers LLP as the Company’s independent Auditors to hold office until the next AGM of the Company and also authorises the Audit & Risk Committee to set their remuneration. Resolution 11 – Directors’ Remuneration Report The Directors’ Remuneration Report is set out in full in the annual report on pages 63 to 65. Resolution 12 – Directors’ Remuneration Policy The Directors’ Remuneration Policy is set out on page 63. Resolution 13 – Proposed Share Split That each of the issued ordinary shares of 25p each in the capital of the Company (including for the avoidance of doubt ordinary shares held in treasury) be and is hereby sub-divided into ten ordinary shares of 2.5p each (the “New Ordinary Shares”) having the rights and being subject to the restrictions and obligations set out in the articles of association of the Company, provided that such sub- division shall be conditional on, and shall take effect on, the Resolutions 14, 15 and 16 – Issue of Shares Ordinary Resolution 14 in the Notice of AGM will renew the authority to allot the unissued share capital up to an aggregate nominal amount equal to 10% of the aggregate nominal amount of the Company’s issued share capital on 5 June 2023, 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 15 will, if passed, give the Directors power to allot for cash equity securities up to an aggregate nominal amount equal to 10% of the Company’s share capital on 5 June 2023 (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 16. This authority will also expire on the date of the next Annual General Meeting or after a period of 15 months, whichever is earlier. This authority will not be used in connection with a rights issue by the Company. Under the Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 (as amended) (the “Treasury Share Regulations”) the Company is permitted to buyback and hold shares in treasury and then sell them at a later date for cash, rather than cancelling them. The Treasury Share Regulations require such sale to be on a pre-emptive, pro rata, basis to existing shareholders unless shareholders agree by special resolution to disapply such WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATIONEXPLANATORY NOTES TO THE RESOLUTIONS CONTINUED 107 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 15, Resolution 16, if passed, will give the Directors authority to sell shares held in treasury on a non pre-emptive basis. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares. The benefit of the ability to hold treasury shares is that such shares may be resold. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares. It is the intention of the Board that any re-sale of treasury shares would only take place at a premium to the cum income net asset value per share. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market. The number of treasury shares which may be sold pursuant to this authority is limited to an aggregate nominal amount equal to 10% of the Company’s share capital on 5 June 2023 (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 15, as described above). This authority will also expire on the date of the next Annual General Meeting or after a period of 15 months, whichever is earlier. The Directors intend to use the authority given by Resolutions 14, 15 and 16 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 17 – Share Repurchases The Directors wish to renew the authority given by shareholders at the previous AGM. The principal aim of a share buyback facility is to enhance shareholder value by acquiring shares at a discount to net asset value, as and when the Directors consider this to be appropriate. The purchase of Shares, when they are trading at a discount to net asset value per share should result in an increase in the net asset value per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the net asset value per share for the remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the AGM. Under the current Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per Share. Existing shares which are purchased under this authority will either be cancelled or held as Treasury Shares. Special Resolution 17 in the Notice of AGM will renew the authority to purchase in the market a maximum of 14.99% of the issued share capital of the Company as at the date of the passing of the resolution, and after Resolution 13 becomes unconditional, 14.99% of the issued share capital of the Company as changed by that resolution. Such authority will expire on the date of the next AGM or after a period of 15 months from the date of passing of the resolution, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM or earlier if the authority has been exhausted. Resolution 18 – General Meetings Special Resolution 18 seeks shareholder approval for the Company to hold General Meetings (other than the AGM) at 14 clear days’ notice. The Board confirms that the shorter notice period would only be used where it was merited by the purpose of the meeting. Recommendation The Board considers that the resolutions relating to the above items are in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends to the shareholders that they vote in favour of the above resolutions to be proposed at the forthcoming AGM as the Directors intend to do in respect of their own beneficial holdings totalling 46,981 shares. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION108 REGULATORY DISCLOSURES ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD) DISCLOSURES Investment objective and leverage 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 8 and 9 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 2023 Gross Method 140.0% 115.0% Commitment Method 140.0% 110.5% 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- 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 3 of Regulation (EU) 2015/2365, securities financing transactions (SFT) include repurchase transactions, securities or commodities lending and securities or commodities borrowing, buy-sellback transactions or sell-buyback 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, the Company’s involvement in and exposure to Total Return Swaps for the accounting year ended 31 March 2023 are detailed below. Global data Amount of assets engaged in TRS The following table represents the total value of assets engaged in TRS: TRS Concentration Data £’000 (26,892) % of AUM (1.3%) 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. £’000 141,042 49,662 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 2023. The collateral provided by the Company to the above counterparties is set out below. Type Cash Currency Maturity Quality £’000 USD less than 1 day n/a 100,366 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 – 190,704 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 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATIONREGULATORY DISCLOSURES CONTINUED 109 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 Note 9 to the Company’s financial statements. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION110 COMPANY INFORMATION Directors Portfolio Manager Shareholder Portal Doug McCutcheon (Chair) Sarah Bates (Senior Independent Director and Chair of the Nominations Committee) Sven Borho Humphrey van der Klugt, FCA Tim Livett (Chair of the Audit & Risk Committee) Jo Parfrey (Chair 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 833 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: shareholderenquiries@ 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 service offered by Link Group 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”) Global Intermediary Identification Number (GIIN) :  FIZWRN.99999.SL.826 Legal Entity Identifier (LEI) : 5493003YBCY4W1IMJU04 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023FURTHER INFORMATION WORLDWIDE HEALTHCARE TRUST PLC A WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 25 SOUTHAMPTON BUILDINGS LONDON WC2A 1AL WWW.WORLDWIDEWH.COM W O R L D W I D E H E A L T H C A R E T R U S T P L C A n n u a l R e p o r t f o r t h e y e a r e n d e d 3 1 M a r c h 2 0 2 3 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. STRATEGIC REPORT 

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