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