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 Tuesday,
FINANCIAL AND PERFORMANCE
Historic Performance
for the years ended 31 March
2026 2025 2024 2023 2022 2021
Net asset value per share (total 10.0% -10.3% 12.0% -0.1% -5.8% 30.0%
return)*^
Benchmark (total return)* 1.8% -3.2% 10.9% 2.5% 20.4% 16.0%
Net asset value per share 371.0p 339.5p 381.1p 343.5p 346.5p 370.3p
Share price 334.0p 297.5p 335.0p 311.5p 327.5p 369.5p
Discount of share price to net (10.0)% (12.4)% (12.1)% (9.3)% (5.5)% (0.2)%
asset value per share^
Dividends per share 2.4p 2.4p 2.8p 3.1p 2.7p 2.2p
Leverage 12.5% 12.0% 10.8% 10.5% 10.9% 7.6%
Ongoing charges^ 0.9% 0.8% 0.9% 0.8% 0.9% 0.9%
Ongoing charges (including
performance fees paid or 0.9% 0.8% 0.9% 0.8% 1.4% 0.9%
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
* “: Morningstar
^ Alternative Performance Measure (see Glossary).
STATEMENT FROM THE CHAIR
“Net asset value per share total return during the year was +10.0%, significantly outperforming our Benchmark. Long-term returns remain strong, at +13.3% pa since the Company’s inception”
INVESTMENT PERFORMANCE
I am pleased to report that the Company’s net asset value (NAV) per share total return in the financial year was +10.0% (2025: -10.3%). In comparison, our Benchmark, the MSCI World Health Care Index, measured on a net total return, sterling adjusted basis, returned +1.8% (2025: -3.2%). During the year, on
The Company’s share price total return during the year was +13.1% (2025: -10.5%). The disparity between the performance of the Company’s NAV per share and its share price contributed to the narrowing of our share price discount to our NAV per share from 12.4% at
These results were achieved in uncertain and volatile conditions during which global equity markets were influenced by a combination of changing interest rate expectations,
In the healthcare sector, the first half of the financial year was marked by underperformance relative to the broader markets, largely due to uncertainty regarding
More specifically, with the
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, 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 NAV 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 NAV per share for remaining shareholders and go some way to dampening discount volatility.
During the financial year, a total of 121,219,387 shares were repurchased for treasury at a cost of £396.3m and at an average discount of 7.0%. The shares repurchased during the year equated to 24.5% of the Company’s share capital at the beginning of the year. Share buybacks contributed 1.8% to the Company’s NAV per share return over the year.
* Source: Winterflood
The Company’s commitment to its share buyback policy is demonstrated by the fact that we continue to have one of the most active buyback programmes in the investment trust sector. A General Meeting was held during the year (in
The renewals were approved by shareholders and, therefore, the Company has been able to continue the operation of the discount management policy. Since the current renewed authority will expire at the conclusion of the Company’s forthcoming Annual General Meeting, in line with usual practice, the Company will ask shareholders to renew the authority again at the Annual General Meeting in July.
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 share buyback and marketing activities, is provided on page 9 of the 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 £9.5m from £12.3m. This was due largely to the relatively low 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 2.2p (2025: 2.4p per share).
Accordingly, the Board is proposing an unchanged final dividend for the year of 1.7p per share. Together with the interim dividend already paid, this makes a total dividend for the year of 2.4p per share (2025: 2.4p 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 337.5p on
The final dividend will be payable, subject to shareholder approval, on
The Company’s dividend policy, which is set out on page 34 of the Annual Report, will be proposed for approval at the forthcoming Annual General Meeting.
BOARD OF DIRECTORS
As mentioned previously, I will be retiring as Chair of the Company’s Board at the conclusion of this year’s Annual General Meeting. The four years of my tenure as Chair have seen a renewal of the Board. With the process of reshaping the Board now complete, the Board has a more evenly spread maturity profile established for the years ahead. In addition, it is the Board’s intention going forward to limit the tenure of all Directors to nine years.
As already announced, the Board has, by way of a thorough succession process, chosen
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, in 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.
Following recent market guidance and a review of the Company’s governance arrangements, a resolution is to be proposed to shareholders at the Company’s Annual General Meeting to adopt new Articles of Association. The new provisions of the Company’s Articles of Association are intended to strengthen the Company’s governance framework and ensure that the Board has appropriate protections and flexibility to respond effectively to unforeseen circumstances arising at shareholder meetings, including scenarios where insufficient directors are elected. The Board remains committed to maintaining a robust and effective system of governance and to engaging constructively with shareholders. Further details of the changes are set out on page 50 of the Annual Report.
ANNUAL GENERAL MEETING (“AGM”)
The Company’s AGM will this year be held at Barber-Surgeons’ 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
The near-term outlook for global equity markets remains, as always, uncertain. Current issues contributing to market volatility and risk appetite include the impact of wars and supply constraints on inflation and consumer spending, the potentially positive and negative impacts of Artificial Intelligence (“AI”) and, in this context, the future direction and level of interest rates.
Within this environment, both our Portfolio Manager and the Board remain positive on the outlook for global equities over the long-run and, in particular, for the global healthcare sector. The
Overall, the Board remains confident in our Portfolio Manager’s successful long-term investment strategy of focusing on innovation and growth opportunities across the healthcare spectrum and believes that the Company will continue to generate attractive long-term returns for shareholders.
IN CLOSING
It has been my privilege to serve the Company as a Director for 14 years and as Board Chair for the last four years. In addition to the many strong relationships I have developed during my time with the Company, I am grateful for the support and inspiration I have received from the Directors I have worked with, for the world-class expertise and professionalism of OrbiMed and for our shareholders and their continued confidence. I leave knowing the Company is in good hands.
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 held quarterly meetings and additional Board meetings as required.
In addition, meetings of the Management Engagement & Remuneration, Nominations and Audit & Risk Committees are held (see page 58 of the Annual Report for details of the Board and Committee meetings held during the year).
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 advisers; 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 121,219,387 shares, representing 24.5% of the shares outstanding at the beginning of the year, were repurchased at a cost of £396.3m and an average discount of 7.0% to the net asset value per share.
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 2025, OrbiMed had 20 meetings with professional investors, the Chairman and Chairman elect had 8 and Frostrow held a further 83 professional investor meetings, which involved both existing and potential shareholders.
Frostrow arranged a professional investor webinar for OrbiMed, in
The AGM held on
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
The Company’s broker, Winterflood, held an investment companies’ conference in
Edison writes two research notes every year and produces accompanying videos, which are typically viewed by over 2,000 people. Their webinar in
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 on pages 16 to 31 of the Annual Report.
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.$10bn );
-- At least 20% of the portfolio will normally be invested in smaller
companies (i.e. with a market capitalisation of less than U.S.$10bn );
-- Investment in unquoted securities will not exceed 10% of the portfolio
at the time of acquisition;
-- A maximum of 5% of the portfolio, at the time of acquisition, may be
invested in each of debt instruments, convertibles and royalty bonds
issued by pharmaceutical and biotechnology companies;
-- A maximum of 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 London Stock Exchange , except where the investment companies
themselves have stated investment policies to invest no more than 15% of
their gross assets in other closed ended investment companies (including
investment trusts) listed on the London Stock Exchange , where such
investments shall be limited to 15% of the Company’s gross assets at the
time of acquisition.
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 148,410 11.3
Health Care
Boston Scientific Equipment & United States 92,370 7.1
Supplies
AstraZeneca Pharmaceuticals Britain 84,982 6.5
Health Care
Intuitive Surgical Equipment & United States 62,245 4.8
Supplies
Edwards Health Care
Lifesciences Equipment & United States 60,764 4.7
Supplies
Merck Pharmaceuticals United States 60,519 4.6
Roche Pharmaceuticals Switzerland 57,913 4.4
Argenx Biotechnology Netherlands 49,527 3.8
Bristol-Myers Pharmaceuticals United States 42,536 3.3
Squibb
Pfizer Pharmaceuticals United States 41,433 3.2
Top 10 investments 700,699 53.7
Health Care
Stryker Equipment & United States 38,863 3.0
Supplies
Danaher Life Sciences Tools United States 33,427 2.6
& Services
Daiichi Sankyo Pharmaceuticals Japan 31,976 2.4
Alnylam Biotechnology United States 29,830 2.3
Pharmaceuticals
Structure Biotechnology United States 29,264 2.2
Therapeutics
Natera Life Sciences Tools United States 27,466 2.1
& Services
Caris Life Sciences Life Sciences Tools United States 27,025 2.1
& Services
CG Oncology Biotechnology United States 26,907 2.1
Health Care
Elevance Health Providers & United States 25,488 2.0
Services
UCB Pharmaceuticals Belgium 22,586 1.7
Top 20 investments 993,531 76.2
Shanghai INT Health Care
Medical Instruments Equipment & China 22,368 1.7
Supplies
Sino Pharmaceuticals Hong Kong 21,353 1.6
Biopharmaceutical
Mineralys Biotechnology United States 20,119 1.5
Therapeutics
Guardant Health Life Sciences Tools United States 19,294 1.5
& Services
Praxis Precision Biotechnology United States 18,838 1.4
Medicines
Abivax Biotechnology France 18,349 1.4
Akeso Biotechnology China 18,099 1.4
Xenon Biotechnology Canada 17,636 1.3
Pharmaceuticals
Thermo Fisher Life Sciences Tools United States 17,348 1.3
Scientific & Services
Ascendis Pharma Biotechnology Denmark 15,693 1.2
Top 30 investments 1,182,628 90.5
BrightSpring Health Health Care
Services Providers & United States 14,537 1.1
Services
Axsome Therapeutics Biotechnology United States 14,344 1.1
Dyne Therapeutics Biotechnology United States 13,932 1.1
Beijing Yuanxin Health Care
Technology* Providers & China 13,531 1.0
Services
Hangzhou Tigermed Health Care
Consulting Providers & China 12,923 1.0
Services
uniQure Biotechnology Netherlands 10,946 0.8
EDDA Healthcare & Health Care
Technology* Equipment & China 10,272 0.8
Supplies
Alignment Health Care
Healthcare Providers & United States 9,517 0.7
Services
Health Care
Ruipeng Pet Group* Providers & China 6,733 0.5
Services
Health Care
Carlsmed Equipment & United States 5,846 0.4
Supplies
Top 40 investments 1,295,209 99.0
* Unquoted holding
Market value % of
Investments Sector Country £’000 investments
Health Care
API Holdings* Providers & India 4,626 0.4
Services
Visen Biotechnology China 2,612 0.2
Pharmaceuticals
Peloton
Therapeutics - Biotechnology United States 1,308 0.1
Milestone*
ImageneBio Biotechnology United States 509 0.0
Total investments 1,304,264 99.7
Biotech M&A Target Swap Baskets United States 189,383 14.5
Swap
Jiangsu Hengrui Pharmaceuticals China 65,469 5.0
Pharmaceuticals
Less: Gross
exposure on (251,062) (19.2)
financed swaps
Total OTC Swaps 3,790 0.3
Total investments 1,308,054 100.0
including OTC Swaps
* Unquoted holding
SUMMARY
Market value % of
Investments £’000 investments
Quoted Equities 1,267,795 96.9
Unquoted Equities 36,469 2.8
Equity Swaps 3,790 0.3
Total of all investments 1,308,054 100.0
ABSOLUTE CONTRIBUTION BY INVESTMENT FOR THE YEAR ENDED
Principal contributors to and detractors from net asset value performance
Contribution
Contribution Per share
Top Five Sector Country £’000 P
Contributors
AstraZeneca Pharmaceuticals Europe 32,142 7.6
CG Oncology Biotechnology United States 22,198 5.2
Exact Sciences* Health Care Services United States 22,026 5.2
Avidity Biotechnology United States 21,440 5.1
Biosciences*
Apellis Biotechnology United States 21,173 5.0
Pharmaceutical*
Contribution
Contribution Per share
Top Five Sector Country £’000 P
Detractors
Stryker Health Care United States (7,493) (1.8)
Equipment & Supplies
Vertex Biotechnology United States (10,328) (2.4)
Pharmaceuticals*
Daiichi Sankyo Pharmaceuticals Japan (11,426) (2.7)
United Health Health Care United States (50,312) (11.9)
Group* Providers & Services
Boston Scientific Health Care United States (59,693) (14.1)
Equipment & Supplies
*
Not held at
PORTFOLIO MANAGER’S REVIEW
MARKETS
The year ended
The financial year can broadly be divided into two distinct themes: a robust recovery phase driven by the relief-rally rebound post Liberation Day, followed by a severe macroeconomic contraction precipitated by conflict in the
Healthcare stocks, meanwhile, had a very different path. Whilst the broad market was able to shake off
The shape of healthcare returns then took a dramatic turn on
ALLOCATION
The core philosophy governing the portfolio’s allocation strategy remains steadfast: prioritising investment in paradigm-shifting medical innovation across the entire global healthcare ecosystem. The portfolio is dynamically managed to optimise risk-adjusted returns, deliberately deviating from the constraints of the MSCI World Health Care Index to capture the alpha generated by clinical trial successes, regulatory approvals, and corporate consolidation. Throughout the year, the Manager remained agile in navigating valuation dislocations and opportunities created by both macro factors and changing industry fundamentals.
The most critical element of the portfolio’s allocation was the maintenance of a structural overweight position in Biotechnology, specifically targeting Emerging Biotechnology companies. As of the year-end, the Company’s portfolio held a 31.8% absolute weight in Biotechnology compared to an index weight of 10.6%, reflecting our ongoing bullishness and fundamental belief around the enormous therapeutic innovation and new drug opportunities emanating from the sector. This was a modest increase from the 29.6% Biotechnology weight at the prior year-end, when the index weight was 9.0% and the active overweight was +20.6%. Within this, Emerging Biotechnology increased from 27.0.% to 31.8% on
Within the broader Pharmaceuticals sub-sector, the portfolio maintained a selective posture and remained structurally underweight. The portfolio’s strategy avoids passive exposure to Pharmaceuticals, instead concentrating capital exclusively in companies possessing industry-leading drug discovery, pipelines, development, pricing, new product flow, and dominant positions in growth categories such as oncology, rare diseases, immunology, and cardiometabolic disorders. This selective approach allowed the portfolio to maximise exposure to superior commercial execution while minimising the drag of sector-wide patent expirations. However, given the greater clarity on federal drug pricing and company-specific tariff stays, while recognising that tariff risk has not disappeared entirely, we materially increased our weighting here, particularly in the second half of the year. Overall, we closed the year with a weighting of 34.1% in Pharmaceuticals, representing more than a 10% increase from the start of year positioning but still notably below the benchmark weight of 50.9%.
The allocation to Healthcare Equipment & Supplies (MedTech) required the most tactical manoeuvring during the financial year. The portfolio entered the period with an overweight position, anticipating a continued recovery in global surgical procedure volumes and the acceleration of specific new product super-cycles in cardiovascular and robotic surgery. However, the macroeconomic environment began to deteriorate and rotation into Pharmaceuticals and Biotechnology (from MedTech) became evident. Recognising the vulnerability of highly elevated MedTech valuation multiples at this time, we reduced exposure. By the end of
WWH vs MSCI World HC Index
(
Change
WWH MSCI HC +/-
Subsector since 31
% of NAV % %
March 2025
Pharmaceutic +1000 bps 34.1 50.9 (16.7)
Large Cap Pharma 31.5 46.1 (14.6)
Specialty Pharma 2.6 4.7 (2.1)
Biotechnology +320 bps 31.8 10.6 21.2
Large Cap Biotech - 7.6 (7.6)
Emerging Biotech 31.8 3.1 28.7
Life Science Tools +300 bps 9.0 9.0 -
Medical Technology -1050 bps 18.8 14.1 4.7
Healthcare Services -330 bps 3.6 11.4 (7.8)
Japan -70 bps 2.3 4.0 (1.7)
Emerging Markets +260 bps 10.3 - 10.3
Unquoteds -370 bps 2.6 - 2.6
Total 112.5 100.0 12.5
Exposure to
Geographically, the portfolio maintained targeted exposure to Emerging Markets, with a specific focus on the burgeoning life sciences sector in
More broadly, the investment case for
PERFORMANCE
The Company delivered strong absolute performance and very strong relative performance for the financial year ended 31
The financial year began with significant headwinds; in
The final quarter of the financial year was dominated by the macroeconomic shock of the
This resilience culminated in a historic achievement on the final trading day of the financial year. On
Performance since inception to
SUB-SECTOR CONTRIBUTION
For the full year, outsized contribution came primarily from two sub-sectors: Biotechnology and Pharmaceuticals. The main offset of significance was MedTech, predominantly due to the dramatic share price decline in Boston Scientific.
Biotechnology was the primary alpha generator for the financial year. On an absolute basis, listed Biotechnology contributed +7.8%, while the Company’s proprietary, Biotech M&A Basket” added a further +5.6%, together accounting for +13.4% of NAV performance. On a relative basis, these two areas were also the dominant contributors to the Company’s +8.2% in excess return, with listed Biotechnology contributing +6.6% and the Biotech M&A Basket contributing +5.6%, before offsets elsewhere in the portfolio.
In Pharmaceuticals, positive absolute returns were generated through stock selection, although the portfolio’s underweight allocation meant the contribution to relative performance was modestly negative. Despite positioning, the portfolio’s carefully curated Pharmaceutical holdings contributed a positive +4.3% to absolute performance by maintaining a strategy of avoiding the “Have Nots” of the industry— companies with deteriorating pipelines and material exposure to patent expirations. Instead, the portfolio concentrated its capital exclusively in the “Haves” – companies with strong growth, large pipelines, impressive new product flow, and minimal patent exposure. When the sector re-rated following the resolution of the Trump administration’s pricing policies, these high-quality entities captured the vast majority of the upside, including AstraZeneca and Eli Lilly .
Contributions or detractions from other sub-sectors were more subdued. In Emerging Markets for example, contribution reached +3.7% in the first half of the year but fell to +1.4% for the full financial year. This was due to a mix of profit taking in
In Life Science Tools, the sub-sector provided a solid, positive contribution of +1.1% to absolute returns and outperformed the benchmark contribution that was close to flat. For reporting purposes, Diagnostics is captured within the Life Science Tools line rather than as a separate sub-sector. Within this area, the portfolio is focused on differentiated diagnostic platforms, including molecular residual disease testing and AI-enabled tumour profiling, where clinical utility can influence treatment selection and improve patient outcomes. The portfolio’s outperformance was driven by a deliberate tilt away from commoditised laboratory equipment providers and toward high-margin, technology-enabled diagnostic companies. Investments in entities pioneering molecular residual disease (MRD) testing and leveraging artificial intelligence for tumour profiling provided significant fundamental growth, as these technologies increasingly dictated targeted therapy selection in oncology.
Whilst Healthcare Services detracted -3.3% from the portfolio’s absolute performance, the corresponding benchmark was down -3.5%. This marginal excess return was primarily the result of the portfolio’s underweight allocation. Sector margins came under pressure for managed care organisations during the period and companies with prominent Medicare exposure experienced significant share price pressure. We identified these structural headwinds and reduced exposure to mitigate losses during the financial year.
The MedTech sub-sector was the primary detractor from absolute and excess performance in the financial year. Specifically, MedTech detracted -5.4% from the portfolio’s absolute return, underperforming the Benchmark’s -3.0% drag and costing the fund 240 basis points in excess return. While the underlying demand for surgical intervention remained structurally sound, the sector had entered the financial year trading at premium valuation multiples that required flawless execution. Boston Scientific was the prototypical example where a small misstep in commercial operations and a clinical data announcement on a new cardiovascular device triggered investor concern. Estimates were lowered, the multiple collapsed, and the share price faltered.
PRIVATE HOLDINGS
For the full year ended
During the financial year, the unquoted portfolio saw three exits. Caris Life Sciences, a precision medicine company that specialises in molecular profiling and AI-driven cancer diagnostics to guide personalised treatment decisions, completed its IPO in
At the end of the year, unquoted investments made up 2.6% of the portfolio, compared to 6.1% at the end of the previous year. For the full year ended
The remaining unquoted portfolio is concentrated in Healthcare Services, with smaller exposures to Biotechnology and MedTech. Geographically, exposure is predominantly in Emerging Markets, with a minor allocation to North American companies. The Company continues to monitor funding requirements, exit opportunities, and valuation developments across the remaining unquoted holdings.
MAJOR CONTRIBUTORS TO PERFORMANCE
The top contributor for the full year was the Company’s proprietary swap basket of M&A targeted securities, the Biotech M&A basket’. The basket returned +55.9% (sterling) during the year, on an absolute basis, significantly outperforming the Emerging Biotechnology portion of the benchmark which returned +19.2%. This outperformance was driven by a concerted effort to populate the basket with Emerging and Commercial stage biotechnology companies, selected by the manager through a variety of factors. We use an ongoing screening process including but not limited to the examination of (1) therapeutic area, (2) clinical innovation, (3) management teams that are willing sellers, and (4) capital situation. Further discussion of the basket performance is contained below (see Derivative Strategy below). Outright investments in the portfolio were also M&A targets during the financial year, three of which were major contributors to performance and are detailed below.
On an individual security basis, AstraZeneca was the largest contributor in the financial year, contributing +228 basis points to NAV performance. Over the reported period, the company solidified its status as the premier global, diversified, pharmaceutical player with leading franchises in oncology, respiratory, rare disease, and cardiovascular disease. The breadth of AstraZeneca’s innovation remains impressive; with a plethora of announced Phase 3 clinical trials and a portfolio of 16 distinct blockbuster medicines. Key drivers of share price appreciation included the flawless commercial execution of its new and existing blockbuster medicines: the continued dominance of Enhertu (trastuzumab deruxtecan) across multiple HER-2+-expressing solid tumours, the successful launch of Datroway (datopotamab deruxtecan) in advanced EGFR-mutated non-small cell lung cancer, and the expansion of the rare disease portfolio via the subcutaneous formulation of Saphnelo (anifrolumab), a novel biologic approved to treat moderate to severe systemic lupus erythematosus (SLE) in adults. While Datroway was one positive element of AstraZeneca’s year, it should be viewed in the context of a much broader and more diversified investment case. AstraZeneca benefited from strong execution across oncology, respiratory, rare disease, and cardiometabolic franchises, meaning the market rewarded the company for breadth, pipeline depth, and commercial delivery rather than for a single product alone.
A dominant force in non-invasive cancer screening,
Exact
Sciences
, was another top contributor to performance,
contributing +147 basis points to NAV performance after the company was acquired by Abbott for U.S.
The portfolio’s strategic focus on next-generation genetic medicines was validated by another
MAJOR DETRACTORS TO PERFORMANCE
MedTech stock,
Boston Scientific
, was the portfolio’s single largest detractor in the financial year, detracting -421 basis points to NAV performance. After a multi-year re-rating in which the company’s share price tripled from 2022 and reached an all-time high on
The managed care titan,
UnitedHealth
, was the second-largest detractor in the financial year, detracting -340 basis points to NAV performance. Overall, the confluence of soaring costs, shrinking patient enrolment, a massive cyber attack in the previous year, and a difficult government rate-setting environment caused a structural de-rating of the company’s valuation, dragging down the entire services subsector. Unfortunately,
UnitedHealth’s
share price in
Daiichi-Sankyo , the global Japanese pharmaceutical company, remains a leader in antibody-drug conjugate technology and has been central to the development of both Enhertu and Datroway in partnership with AstraZeneca . However, Daiichi Sankyo’s share price was more sensitive to Datroway-related setbacks than AstraZeneca’s because the antibody-drug conjugate platform represents a larger proportion of Daiichi Sankyo’s investment case. For AstraZeneca , Datroway was one of many growth drivers across a broad global portfolio; for Daiichi Sankyo , delays and uncertainty around Datroway had a more direct impact on investor confidence in the depth, timing, and profitability of the company’s next wave of growth. During the year, investor expectations for Datroway were affected by clinical trial design complexity, evolving biomarker requirements, and delays to key readouts. This has weighed heavily on the share price, detracting -80 basis points to NAV performance. Meanwhile, investor concerns have also increased after a complete turnover of the management and subsequent concerns over profitability and increased R&D spending by the new CEO and CFO. Furthermore, broader macroeconomic pressures and intense volatility in the Japanese yen prompted investors to liquidate Japanese equities, regardless of underlying corporate fundamentals.
Of the many
Stryker is a global leader in medical technology offering a variety of innovative products and services in Medical Surgery, Neurotechnology and Orthopaedics. Whilst largely executing above industry average, the share price came under pressure in the latter half of the financial year, detracting -53 basis points to NAV performance. First, the stock was pressured by a macro rotation out of MedTech stocks – in part due to rotation into therapeutics and in part due to the “ Boston Scientific Effect” – in which high-multiple medical device manufacturers sold off, highlighting the vulnerability of the sector to sudden shifts in investor sentiment regarding hospital capital expenditures. Second, the stock was also pressured by investor scepticism around volume growth, despite a fourth quarter increase in net sales of +11.4%. However, we note that management has consistently overdelivered on its commitments, and we expect this to remain part of the algorithm in 2026 and beyond as it advances the “super cycle” of innovation, including new cameras, power tools, defibrillators, and plating systems which are launching across different geographies. Hence, we continued to own the stock into year-end.
DERIVATIVE STRATEGY
The Company has the ability to use 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 group of stocks (Equity Basket Swaps).
Equity basket swaps are typically constructed within a well-defined theme; the basket format facilitates efficient management of the investment theme and easier tracking of performance. For example, maintaining 15 to 50+ additional positions at smaller weights (i.e. non-core) directly in the portfolio is often suboptimal. The equity basket swap contains multiple single stock long positions, with Goldman Sachs acting as the counterparty, ensuring confidence in forward trading and rebalancing strategies.
The Company strategically invested in one customised tactical basket swap targeting growth opportunities in undervalued small and mid-capitalisation Biotechnology, Pharmaceutical, and MedTech companies. This basket was constructed to capitalise on investment opportunities possessing considerable potential as attractive acquisition targets for larger corporations (Biotech M&A basket). The basket was one of the key differentiators of performance during the year, returning +55.9% in sterling and generating £75.3 million, equivalent to 5.6% of the Company’s total return for the financial year. Single stock equity swaps, used to gain exposure to
LEVERAGE STRATEGY
Historically, the typical leverage level employed by the Company has been in the low-double digit to mid-to-high teens range, with an average of +11%. Considering the market volatility during the past five plus financial years, we have tended to use leverage in a more tactical fashion in recent periods.
In 2025, we have flexed leverage more notably than in some prior financial years, going as low as +9% (coming out of President Trump’s “Liberation Day” tariff announcements, which created some market tumult and uncertainty) and as high as +20% (as performance inflected and our bullishness for a sustained move in Biotechnology and Emerging Markets increased).
The Company ended the period with 12.5% leverage, a result of the final trading day of the financial year, in which multiple M&A transactions were announced, including the announced acquisition of
SECTOR DEVELOPMENTS
Without question, the most significant development in healthcare during the financial year, and perhaps the most significant development in the past decade, was the substantial clarification, but not full elimination, of uncertainty surrounding
Whilst constant threats and rhetoric have rained from
On the drug pricing front, we believe
The first domino fell on
First, a new online website was created, called “TrumpRx. gov”, where cash-paying Americans will be able to fill their prescriptions at prices that will be up to 85% lower than current list prices, with an average discount of 50%. This is a win for Pfizer (and ultimately the entire industry) as this level of discount (50% off list prices) is already what drug makers sell to Managed Care and PBMs in the commercial sales channel. In fact, we may see a dramatic increase in cash pay volumes given this new pricing scheme in what was otherwise a de minimis sales opportunity historically. And of course, this is a win for the Administration as the pledge of “lowering prescription drug prices by 80%” was not only achieved but exceeded.
Second, on tariffs,
Pfizer
received a complete stay on tariffs (for a minimum of three years) for accepting several specific deal terms, in addition to TrumpRx. This included a pledge to commit up to U.S.
Surprisingly,
Pfizer
also agreed to terms on a Most Favoured Nation (MFN) drug pricing scheme, one area about which investors were most concerned. However, based on the details that were disclosed, the outcome appears to be rather benign for
Pfizer
. MFN pricing today will apply only to current Medicaid patients, where prices are already low, and represents only 2.5% of total company sales. We estimate that pricing compression here will result in <1% hit to
Pfizer
’s topline, a manageable impact. A clear win for
Pfizer
.
For
Finally,
Pfizer
agreed to MFN pricing to be applied to all new products going forward, across both Medicaid and Medicare channels. A blow to the industry? Hardly. Whilst most details have been kept confidential, what details we do know are suggestive of a benign outcome. Here,
Pfizer
will not be able to launch a new product ex-
The
Pfizer
agreement triggered an additional 16 dominoes in which, over the subsequent seven months into
The market quickly recognised the win/win nature of these deals, a de-risking development that materially reduced the near-term risk of broad, punitive tariffs and draconian price cuts for companies agreeing terms with the Administration. However, tariff risk remains a live policy issue, particularly for companies without agreement, companies with more complex supply chains, and any future changes in implementation, but offers sales volume expansion facilitated by the TrumpRx platform, higher European pricing floors, and avoidance of any material domestic margin compression. This realisation triggered the pharmaceutical equity rally witnessed in late 2025.
Throughout 2025, the FDA experienced intense internal turmoil as its regulatory philosophy underwent a radical shift under President Trump’s second term as President. Under the leadership of Commissioner
Perhaps Dr. Makary’s signature program thus far is the Commissioner’s National Priority Voucher (CNPV) program, a pilot “voucher-style” initiative under which selected drug developers can receive a voucher that entitles them to a significantly shortened review timeline for a new drug or biologic, from 10 to 12 months to as little as one to two months. Selection is focused on criteria that investors are likely to value, such as (1) a health crisis in the
Eli Lilly
received one such voucher, a byproduct of its own price negotiation deal. In an unprecedented event, CEO
An additional byproduct of these negotiations was support for GLP-1 medicines by
This aggressive agenda, however, clashed with the established scientific rigour of the
Following a period of internal disagreement over the FDA’s regulatory approach,
Looking at novel approvals in 2025, the FDA approved 52 new molecular entities (NMEs) across CDER and CBER, representing a decline from 59 in 2024 but only modestly below the average of 55 that has characterised the most recent 10-year innovation cycle. The quality of approvals remained high, with a continued emphasis on scientifically novel, targeted therapies, particularly in oncology, rare diseases, and precision medicine, alongside notable first-in-class mechanisms (e.g., new pain and immunology pathways). Small molecules dominated (about two-thirds of approvals), but the class was diverse across modalities, including monoclonal antibodies, ADCs, siRNA, and other advanced platforms. Oncology again accounted for the largest share, though innovation extended into infectious disease (e.g., novel antibiotics) and chronic conditions, reflecting a balance of breakthrough science and unmet-need targeting. Whilst slightly lower in volume, 2025 approvals were characterised by continued productivity and increasing precision in pharmaceutical development, rather than sheer breadth, reinforcing the trend toward more targeted, mechanism-driven drug development.
Artificial intelligence (AI) continued to develop as an important enabling technology across healthcare, rather than as a standalone pure-play investment category for the portfolio. Its most immediate benefits are in drug discovery, clinical trial design, imaging, diagnostics, and workflow automation. The portfolio’s exposure is therefore primarily through companies that use AI to improve R&D productivity, clinical decision-making, diagnostic accuracy or operating efficiency, rather than through companies whose investment case depends solely on AI.
Biotechnology M&A continued at a brisk pace in 2025, and after a brief slowdown to start 2026, inflected yet again into the financial year-end. A total of 51 deals, representing over U.S.
China’s biotechnology ecosystem also became an increasingly important source of innovation for global pharmaceutical companies. While geopolitical risk remains a consideration, the volume and quality of
OUTLOOK
The year ended
As the portfolio transitions into the 2026 financial year, the fundamental state of the global healthcare industry remains exceptionally strong, underpinned by a continued wave of scientific innovation and the significant deployment of corporate capital. Whilst the macroeconomic environment remains uncertain, dictated by the ongoing energy shock stemming from the
Looking ahead, we remain constructive on the outlook for global healthcare equities. Greater clarity on key
We expect oncology, obesity, rare disease, immunology, neuroscience, genetic medicines, and precision medicine to remain fertile areas for investment. While geopolitical uncertainty, currency volatility, and periodic macroeconomic shocks are likely to persist, the fundamental drivers of healthcare demand remain intact and largely non-cyclical. With a portfolio positioned toward differentiated innovation, high-quality pipelines, and companies with strategic scarcity value, the Company enters the new financial year with confidence in its ability to generate long-term capital growth for shareholders.
Portfolio Manager
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. OrbiMed 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 which do not have manufacturing and are focused 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. OrbiMed has developed an in-house ESG Controversies Monitor. Any hits from the Controversies Monitor require the analysts to provide their views on material impact.
OrbiMed also generally engages on a regular basis with its portfolio companies through meetings with management, proxy voting, and in some cases, through board representation.
OrbiMed’s analysts 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 the 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 Votes
Number of Voted Voted Abstained/
Proposed by Proposals For Against Withheld
Management 454 413 25 1
Shareholder 11 5 6 0
Most proposals focused on director elections (239), auditors appointments (39), and executive compensation (25). There were several shareholder proposals on golden parachute provisions that came to vote, and one on improving health outcomes. The Portfolio Manager provides a periodic update on ESG to the Board of the Company.
CLIMATE CHANGE
The Company published its TCFD-based report on its website in
Portfolio Manager
BUSINESS REVIEW
The Strategic Report, on pages 1 to 45 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 10 and 11 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, with the exception of
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 3, 4 and 5 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 48 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 page 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; 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, under the terms described on page 48 of the Annual Report 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
These principal risks and the ways they are managed or mitigated are detailed below. Further details on financial risks and exposure to them is included in note 16.
Principal risks and uncertainties Mitigation
Market risks
While this risk is accepted as inherent
Systematic market risks to the nature of the Company’s objective
the Board monitor exposures and ensure
By the nature of its activities, the that the risk is adequately disclosed to
Company’s portfolio is exposed to investors.
fluctuations in market price (both
individual security prices and FX In addition, the Board and the AIFM have
rates) and due to exposure to the appointed OrbiMed to manage the
global healthcare sector, it is portfolio within the remit of the
expected to have higher volatility than investment objective and policy, and
the wider market. As such investors imposed various limits and guidelines,
should be aware that by investing in set out on pages 10 and 11 of the Annual
the Company they are exposing Report. These limits ensure that the
themselves to market risks and those portfolio is diversified, reducing the
additional risks specific to the risks associated with individual stocks,
sectors in which the Company invests, and that the maximum exposure (through
such as political interference in drug derivatives and an overdraft facility)
pricing. is limited. The compliance with those
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
This could lead to reduced demand for Company to current and potential
the Company’s shares, resulting in a investors and have appointed Quill PR to
widening of the discount between the assist with 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 pages 34 and
35 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 global
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
policy. Such risks can lead to market
volatility, shifts in investor
sentiment, currency fluctuations, and
disruptions to the business models of
underlying portfolio companies. While macroeconomic and geopolitical
events remain outside the direct control
The U.S. administration may introduce of the Company, the Board conducts
material uncertainty, particularly in regular reviews of the broader economic,
relation to healthcare policy, trade political, and regulatory environment,
relationships, taxation, and regulatory in close consultation with the Portfolio
oversight. Given the portfolio’s Manager. Particular attention is paid to
substantial exposure to U.S .-domiciled emerging developments that may
healthcare companies, political materially impact the healthcare sector
intervention — including reforms to or the geographies in which the
drug pricing, regulatory approval portfolio is invested.
processes, or public healthcare funding
— could materially impact the The Board monitors the execution of the
valuations and earnings outlook of Company’s investment strategy in the
certain holdings. context of long-term objectives and the
evolving risk landscape. This includes
Further risks include: reviewing portfolio exposures to
specific countries, sectors, and
· Geopolitical conflict or rising currencies, particularly in relation to
protectionism, which may disrupt supply areas of heightened geopolitical
chains, affect cross-border investment tension, such as the Middle East and
flows, or trigger volatility in global Asia Pacific regions, and in light of
equity markets; potential risks stemming from trade
disputes, tariffs, or regulatory reform
· Escalating strategic and economic — including those under the U.S.
tensions, in particular, between the administration.
United States and China , including the
implementation of “U.S.-first” The Portfolio Manager’s risk team
industrial and trade policies, which undertakes systematic risk analysis,
may incentivise onshoring of including ongoing monitoring of
manufacturing, impose tariffs or country-specific, sector-specific, and
regulatory barriers on non-U.S. issuer-level risks.
production, and disproportionately
affect Chinese and other overseas In addition, the Board is supported by a
manufacturers. Such developments could specialist Alternative Investment Fund
disrupt global healthcare supply Manager (AIFM) and Company Secretary,
chains, increase input costs, constrain who provide regular updates on market
market access, and adversely impact developments, industry regulation, and
companies with cross-border relevant legislative or tax changes,
manufacturing, sourcing, or revenue enabling timely and informed oversight.
exposure to these markets;
· Rising levels of cybercrime,
particularly where healthcare companies
are targeted for sensitive commercial
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
to influence the Company’s investment themselves 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 limits and on an, at least, annual basis
companies. While this style may enhance consider the re-appointment of the
long-term returns, it can also lead to 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 a
governance (“ESG”) considerations. periodic update on ESG issues to the
There is a risk that failure to Board, highlighting examples where ESG
incorporate ESG factors effectively issues influenced investment decisions
into the investment decision-making and/or led to engagement with an
process could negatively impact investee company. The Portfolio Manager
long-term investment returns. Companies also 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 32 of
to current and prospective the 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
through:
Counterparty risk
· reviews of the arrangements with,
In addition to market and foreign and services provided by, the Depositary
currency risks, discussed above, the and the Custodian and Prime Broker to
Company is exposed to risk arising from ensure that the security of the
the use of counterparties. If a Company’s assets is being maintained.
counterparty were to fail, the Company Legal opinions are sought, where
could be adversely affected through appropriate, as part of this review.
either delay in settlement or loss of Also, the Board regularly monitors the
assets. credit rating of the Company’s Custodian
and Prime Broker;
The most significant counterparty the
Company is exposed to is J.P. Morgan · monitoring of the assets taken as
Securities LLC which is responsible for collateral (further details can be found
the safekeeping of the Company’s assets in note 16);
and provides the overdraft facility to
the Company. As part of the · reviews of OrbiMed’s approved list
arrangements with J.P. Morgan of counterparties, the Company’s use of
Securities LLC they may take assets, up those counterparties and OrbiMed’s
to 140% of the value of the drawn process for monitoring, and adding to,
overdraft, as collateral and have first the approved counterparty list;
priority security interest or lien over
all of the Company’s assets. Such · monitoring of counterparties,
assets taken as collateral may be used, including reviews of internal control
loaned, sold, rehypothecated or reports and credit ratings, as
transferred by J.P. Morgan Securities appropriate;
LLC. Although the Company maintains the
economic benefit from the ownership of · by primarily investing in markets
those assets it does not hold any of that operate DVP (Delivery Versus
the rights associated with those Payment) settlement. The process of DVP
assets. Any of the Company’s assets mitigates the risk of losing the
taken as collateral are not covered by principal of a trade during the
the custody arrangements provided by settlement process; and
J.P. Morgan Securities LLC . The Company
is, however, afforded protection in · J.P. Morgan Securities LLC is
accordance with SEC rules and U.S. subject to regular monitoring by J.P.
legislation equal to the value of the Morgan 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, inter
alia , details of compliance with
applicable laws and regulations;
· reviews internal control reports,
Service provider risk key policies, including measures taken
to combat cyber security issues, and
The Company is reliant on the systems also the disaster recovery procedures of
of its service providers to run its 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
currently. to the regulatory and legal environment
and progress towards the Company’s
compliance with these; and
· has considered the increased risk of
cyber-attacks and received reports and
assurance at meetings with its service
providers where the information security
controls in place were reviewed.
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
· Water scarcity is an emerging risk for healthcare companies reliant on water-intensive manufacturing and laboratory processes. Constraints on water availability may increase costs, disrupt production, and necessitate investment in efficiency or treatment infrastructure. These pressures could impact margins, supply chain resilience, and expose companies to reputational risks in water-stressed regions.
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.
Details of share issuance and share buybacks are set out on page 49 of the Annual Report.
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.
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 (see page 32 of the Annual Report for further information).
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. The Board expects that the Company’s principal service providers have appropriate policies in place and carry out a regular review of their arrangements.
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
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 c.72.5% of the current portfolio could be liquidated and the funds received within three trading days. 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 0.9%, 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 121,129,387 shares in the year under review at a total cost of £396.3 million. It had shareholders’ funds in excess of £1,385.5 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 following disclosure which is required by the Companies Act 2006 and the AIC Code of Corporate Governance, describes how the Directors have had regard to the views of the Company’s stakeholders in their decision-making.
Stakeholder group How the board, the portfolio manager and the AIFM have
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 include:
Investors
· The Annual General Meeting.
· The Annual and Half-Year Reports.
· The Company’s website which hosts reports, articles
and insights, monthly fact sheets and video interviews
with the Portfolio Manager.
· One-on-one and group investor meetings.
· Online and in person seminars with presentations
from the Portfolio Manager.
The Board met regularly with the Company’s Portfolio
Manager throughout the year. The Board also receives
monthly performance and compliance reporting.
The Portfolio Manager’s attendance at each Board
meeting provides the opportunity for the Portfolio
Manager and Board to further reinforce their mutual
understanding of what is expected from both parties.
Portfolio Manager
The Board encourages the Company’s Portfolio Manager to
engage with companies and in doing so expects ESG
issues to be an important consideration.
The Board receives an update on Frostrow’s engagement
activities by way of a dedicated report at Board
meetings and at other times during the year as
required.
The Board and Frostrow, acting in its capacity as AIFM,
engage regularly with other service providers both in
one-to-one meetings and via regular written reporting.
This regular interaction provides an environment where
topics, issues and business development needs can be
dealt with efficiently and collegiately.
Other Service Providers The Board together with Frostrow also carried out a
review of the service providers’ business continuity
plans and additional cyber security provisions.
The review of the performance of the Portfolio Manager
and Frostrow is a continuous process carried out by the
Board and the Management Engagement & Remuneration
Committee with a formal evaluation being undertaken
annually.
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
· Ongoing dialogue with shareholders his successor, William Hemmings , also
concerning the strategy of the Company, met with key shareholders during the
performance and the portfolio. year to discuss corporate governance
matters and also the Company’s
· Net asset value and share price investment strategy.
performance.
· Throughout the year the Board
· Composition of the Board and closely monitored the Company’s
Director tenure. discount/premium to NAV per share and
received regular updates from the
· The operation of the Company’s broker. 121,219,387 shares were bought
discount management policy. back during the year, and a further
10,373,640 shares were bought back since
the year end to 3 June 2026. No new
shares were issued during the year, nor
following the year end to 3 June 2026.
(Please see the statement from the Chair
for further information.)
· The Board engaged with the Portfolio
· Regular review of the performance Management team to discuss the Company’s
and make-up of the investment overall performance as well as
portfolio. developments in individual portfolio
companies and wider macroeconomic
· The integration of ESG factors into developments.
the Portfolio Manager’s investment
processes. · The Portfolio Manager provides a
periodic update on ESG issues to the
Board.
· No specific action required as the
reviews of the Company’s service
· The Directors have frequent providers, have been positive and the
engagement with the Company’s other Directors believe their continued
service providers through the annual appointment is in the best interests of
cycle of reporting. This engagement is the Company.
completed with the aim of maintaining
an effective working relationship and Having nearly exhausted the authority
oversight of the services provided. granted at the 2025 AGM, the Board asked
shareholders to renew the Company’s
· The Board is cognisant that the authority to buy back shares in the
trading of the Company‘s shares at a market at a General Meeting held on 1
persistent and significant discount or October 2025 . Shareholders approved the
premium to the prevailing NAV per share proposal. Following the year-end, a
is not in the interests of further General Meeting was held on 2
shareholders. June 2026 to further renew this
authority. Shareholders again approved
the proposal.
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.
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’ on page 35 of the Annual Report. 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 on page 36 of the Annual 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).
Prime brokerage agreement
The Company appointed
The Custodian and Prime Broker receives interest on the drawn overdraft.
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 76 and 77 of the Annual Report. Details of the Company’s dividend record can be found on page 5 of the Annual Report.
Substantial interests in share capital
As at
Number of % held
shares held
Rathbones Investment Management Limited 67,482,629 15.1
This table reflects those shareholders
SHARE CAPITAL
At
At the start of the year under review, the Directors had shareholder authority to issue up to 49,463,180 shares on a non-pre-emptive basis and, having utilised a proportion of the authority granted at the 2024 AGM, to buy back up to 45,203,448 shares in the market. At the Company’s AGM held on
The giving of powers to issue or buy back the Company’s shares requires the relevant resolution to be passed by shareholders. Proposals for the renewal of the Board’s authorities to issue and buy back shares are detailed in the Notice of AGM.
There are no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to the securities; no restrictions on voting rights; no agreements between holders of securities regarding their transfer known to the Company; and no agreements which the Company is party to that might affect its control following a successful takeover bid.
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 AGM 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
Amendments of the Company’s Articles of Association require a special resolution to be passed by shareholders.
The Company is proposing to adopt new articles of association at the AGM in July. The change proposed will provide a mechanism to ensure continuity of governance in the unlikely event that the number of directors falls below the minimum required.
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
–
Senior Independent Director
– Dr.
Five additional non-executive Directors, all considered independent, except for
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 &
Tim Livett*
Remuneration Committee
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 AGM.
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
The Board notes that Provision 29 of the
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 as set out on page 34 and 35 of the Annual Report.
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 10 and 11 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, on pages 52 to 66 of the Annual Report, includes a statement of compliance with corporate governance codes and best practice, and the Business Review (pages 34 to 45 of the Annual Report) framework within which the Board operates.
BOARD COMPOSITION AND SUCCESSION
Succession planning
During the year, the Nominations Committee met to consider
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 re-election every year. The Board considers that a Director’s tenure does not necessarily reduce his or her ability to act independently and assesses each Director’s independence annually through a formal performance evaluation.
The Board asked
With the process of Board renewal now complete, going forward, it is the Board’s intention to limit the tenure of all Directors and, accordingly, the intention is that no Director will stand for re-election at the AGM following the ninth anniversary of their appointment to the Board.
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 +13.3%, 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 non-independent Director of the Company, which is less common in the investment trust sector today than when the Company was founded.
The current OrbiMed representative on the Board,
Appointments to the Board
The Nominations Committee considers annually the skills possessed by the Board and identifies any skill shortages to be filled by new Directors.
The rules governing the appointment and replacement of Directors are set out in the Company’s articles of association and the aforementioned succession planning policy. Where the Board appoints a new Director during the year, that Director will stand for election by shareholders at the next AGM. Subject to there being no conflict of interest, all Directors are entitled to vote on candidates for the appointment of new Directors and on the recommendation for shareholders’ approval for the Directors seeking re-election at the AGM. When considering new appointments, the Board endeavours to ensure that 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.
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 positions
Members of the Board on 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 positions
Members of the Board on the Board*
White British or other White (including 6 86% 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
Engagement &
Audit & Risk Nominations Remuneration
Board Committee Committee Committee
Type and number of meetings (8) (2) (2) (2)
held in 2025/26
Doug McCutcheon~ 8 – 2 2
Dr Bina Rawal 8 2 2 2
Tim Livett 7 2 2 1
Sven Borho^ 7 – – –
Sian Hansen 8 2 2 2
William Hemmings 8 2 2 2
Jo Parfrey 8 2 2 2
~
Not a member of the
^
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 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 seeking re-election as part of the evaluation process, and believes that it would be in the Company’s best interests to propose them for re-election for the following reasons:
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.
REVIEW OF TERMS OF ENGAGEMENT AND PERFORMANCE
As part of its review of service provider arrangements, the Committee undertook a comprehensive review of the Company’s broking arrangements. Following a formal competitive tender process,
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 stockbroker, 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 Barber-Surgeons’ 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 To adopt new articles of association
Resolution 18 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 18 will be proposed as Special Resolutions.
The full text of the resolutions can be found in the Notice of Annual General Meeting. Explanatory notes regarding the resolutions can be found on pages 106 to 108 of the Annual Report.
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
2026 2025
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Gains/
(Losses) on 9 – 120,111 120,111 – (200,614) (200,614)
investments
Exchange
losses on – (2,047) (2,047) – (157) (157)
currency
balances
Income from 2 12,533 – 12,533 15,243 – 15,243
investments
AIFM,
portfolio
management 3 (620) (11,769) (12,389) (765) (14,542) (15,307)
and
performance
fees
Other 4 (1,394) (3) (1,397) (1,252) – (1,252)
expenses
Net return/
(loss) before
finance 10,519 106,292 116,811 13,226 (215,313) (202,087)
charges and
taxation
Finance costs 5 (126) (2,402) (2,528) (354) (6,726) (7,080)
Net return/
(loss) before 10,393 103,890 114,283 12,872 (222,039) (209,167)
taxation
Taxation 6 (920) – (920) (601) – (601)
Net return/
(loss) after 9,473 103,890 113,363 12,271 (222,039) (209,768)
taxation
Return/
(loss) per 7 2.2p 24.5p 26.7p 2.4p (42.8)p (40.4)p
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 1 April 15,042 9,564 841,599 794,833 18,308 1,679,346
2025
Net return – – – 103,890 9,473 113,363
after taxation
Final dividend
paid in respect – – – – (8,174) (8,174)
of year ended
31 March 2025
Interim
dividend paid
in respect of – – – – (2,726) (2,726)
year ended 31
March 2026
Shares
purchased for – – – (396,339) – (396,339)
treasury
At 31 March 15,042 9,564 841,599 502,384 16,881 1,385,470
2026
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 1 April 15,042 9,564 841,599 1,193,396 20,816 2,080,417
2024
Net
(loss)/return – – – (222,039) 12,271 (209,768)
after taxation
Final dividend
paid in respect – – – – (11,197) (11,197)
of year 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 15,042 9,564 841,599 794,833 18,308 1,679,346
2025
STATEMENT OF FINANCIAL POSITION
As at
2026 2025
Notes £’000 £’000
Fixed assets
Investments 9 1,304,264 1,673,659
Derivative – OTC swaps 9 & 10 6,511 1,487
1,310,775 1,675,146
Current assets
Debtors 11 49,459 8,003
Cash 70,821 93,584
120,280 101,587
Current liabilities
Creditors: amounts falling due within one year 12 (42,864) (72,109)
Derivative – OTC swaps 9 & 10 (2,721) (25,278)
(45,585) (97,387)
Net current assets 74,695 4,200
Total net assets 1,385,470 1,679,346
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 17 502,384 794,833
Revenue reserve 16,881 18,308
Total shareholders’ funds 1,385,470 1,679,346
Net asset value per share 14 371.0p 339.5p
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
2026 2025
Notes £’000 £’000
Net cash outflow from operating activities 18 (775) (1,544)
Purchases of investments and derivatives (889,411) (1,048,871)
Sales of investments and derivatives 1,329,282 1,272,404
Realised loss on foreign exchange transactions (2,061) (157)
Net cash inflow from investing activities 437,810 223,376
Shares repurchased (397,188) (179,317)
Equity dividends paid (10,900) (14,779)
Interest paid (2,528) (7,080)
Net cash outflow from financing activities (410,616) (201,176)
Increase in net cash 26,419 20,656
Cash flows from operating activities include interest received of £2,671,000 (2025: £3,722,000) and dividends received of £9,563,000 (2025: £12,881,000).
RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN
2026 2025
£’000 £’000
Increase in net cash resulting from cashflows 26,419 20,656
Gains on foreign currency cash and cash equivalents 14 –
Movement in net cash in the year 26,433 20,656
Net cash at 1 April 25,511 4,855
Net cash at 31 March 51,944 25,511
Net cash consists of the drawn overdraft of £18,877,000 (2025: £68,073,000) (see note 12) and cash as per the balance sheet of £70,821,000 (2025: £93,584,000).
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
Cash comprises cash at bank.
Drawn overdrafts are considered a component of cash as they are repayable on demand and form an integral part of the Company’s cash management.
2. INCOME FROM INVESTMENTS
2026 2025
£’000 £’000
Income from investments
Overseas dividends 8,131 8,358
UK dividends 1,731 3,163
9,862 11,521
Other income
Derivatives – 470
Deposit interest 2,671 3,252
Total income from investments 12,533 15,243
Total income comprises:
Dividends 9,862 11,521
Interest 2,671 3,722
12,533 15,243
3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
AIFM fee 124 2,351 2,475 139 2,640 2,779
Portfolio management fee 496 9,418 9,914 626 11,902 12,528
620 11,769 12,389 765 14,542 15,307
See page 48 of the Annual Report for further information on the performance fee. No performance fee was payable during the year.
Further details on the above fees are set out in the Strategic Report on pages 35 and 36 of the Annual Report and in the Report of the Directors on page 48 of the Annual Report.
4. OTHER EXPENSES
2026 2025
£’000 £’000
Directors’ remuneration 250 222
Employer’s NIC on Directors’ remuneration 23 19
Auditors’ remuneration for the audit of the Company’s financial 78 75
statements
Depositary and custody fees 191 208
Listing fees 95 98
Registrar fees 72 52
Legal and professional costs 165 157
Other costs 520 421
1,394 1,252
Professional fees (Capital) 3 –
1,397 1,252
Details of the amounts paid to Directors are included in the Directors’ Remuneration Report.
5. FINANCE COSTS
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Finance costs 126 2,402 2,528 354 6,726 7,080
6. TAXATION
(A) Analysis of charge in year
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Corporation tax at 25% (2025: – – – – – –
25%)
Overseas taxation 920 – 920 601 – 601
920 – 920 601 – 601
(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 (2025: lower) than the standard rate of corporation tax of 25% (2025: 25%). The difference is explained below.
2026 2025
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Net return/(loss) 10,393 103,890 114,283 12,872 (222,039) (209,167)
before taxation
Corporation tax at 25% 2,598 25,972 28,570 3,218 (55,510) (52,292)
(2025: 25%)
Non-taxable
(gains)/losses on – (29,516) (29,516) – 50,194 50,194
investments
Overseas withholding 920 – 920 601 – 601
taxation
Non taxable dividends (2,465) – (2,465) (2,881) – (2,881)
Excess management (133) 3,544 3,411 (337) 4,977 4,640
expenses
Disallowed expenses – – – – 339 339
Total tax charge 920 – 920 601 – 601
(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 £63,944,000 (25% tax rate) (2025: £59,499,000 (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
2026 2025
£’000 £’000
The return/(loss) per share is based on the following
figures:
Revenue return 9,473 12,271
Capital return/(loss) 103,890 (222,039)
113,363 (209,768)
Weighted average number of ordinary shares in issue 424,478,964 518,984,143
during the year
Revenue return per ordinary share 2.2p 2.4p
Capital return/(loss) per ordinary share 24.5p (42.8)p
26.7p (40.4)p
The calculation of the total, revenue and capital return/(loss) 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
2026 2025
£’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 2025 8,174 –
Interim dividend in respect of the year ended 31 March 2026 2,726 –
10,900 14,779
In respect of the year ended 31 March 2026, an interim dividend of 0.7p per share was paid on 9 January 2026. A final dividend of 1.7p will be payable, subject to shareholder approval, on 14 July 2026, the associated ex-dividend date will be 11 June 2026. The total dividends payable in respect of the year ended 31 March 2026 amount to 2.4p per share (2025: 2.4p per share,). The aggregate cost of the final dividend, based on the number of shares in issue (excluding shares held in treasury) at 3 June 2026, will be £6,348,000. In accordance with FRS 102 dividends will be reflected in the financial statements for the year in which they become payable. Total dividends in respect of the financial year, which is the basis on which the requirements of s1158 of the Corporation Tax Act 2010 are considered, are set out below.
2026 2025
£’000 £’000
Revenue available for distribution by way of dividend for the 9,473 12,271
year
Interim dividend in respect of the year ended 31 March 2026 (2,726) –
Final dividend in respect of the year ended 31 March 2026* (6,348) –
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 399 472
* based on 363,038,777 shares in issue (excluding shares held in treasury) as at 3 June 2026.
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 1,260,233 119,894 1,380,127 – 1,380,127
2025
Investment
holdings gains/ 306,621 (13,089) 293,532 (23,791) 269,741
(losses) at 1
April 2025
Valuation at 1 1,566,854 106,805 1,673,659 (23,791) 1,649,868
April 2025
Movement in the
year:
Transfer* 31,118 (31,118) – – –
Purchases at cost 908,049 – 908,049 – 908,049
Sales
proceeds/Close-out (1,293,302) (21,456) (1,314,758) (55,216) (1,369,974)
costs
Net movement in
investment 55,076 (17,762) 37,314 82,797 120,111
holdings gains/
(losses)
Valuation at 31 1,267,795 36,469 1,304,264 3,790 1,308,054
March 2026
Cost at 31 March 1,006,331 81,402 1,087,733 – 1,087,733
2026
Investment holding
gains/(losses) at 261,464 (44,933) 216,531 3,790 220,321
31 March 2026
Valuation at 31 1,267,795 36,469 1,304,264 3,790 1,308,054
March 2026
* See Note 16. One unquoted investment was transferred to the quoted category following its listing during the year.
The Company received £1,369,974,000 (2025: £1,271,177,000) from investments and derivatives sold in the year. The book cost of these was £1,200,443,000 (2025: £1,319,008,000). 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. The figures disclosed within this note represent the transactions recorded during the year on an accruals basis and will not necessarily align with the corresponding cash movement within the Cash Flow Statement due to the timing of transactions settling.
2026 2025
£’000 £’000
Net movement in investment holding gains/(losses) in the 37,314 (159,939)
year
Net movement in derivative holding gains/(losses) in the 82,797 (40,675)
year
Gains/(losses) on investments 120,111 (200,614)
Purchase transaction costs were £827,000 (2025: £646,000). Sales transaction costs were £949,000 (2025: £915,000). These comprise mainly commission and stamp duty.
10. DERIVATIVES
2026 2025
£’000 £’000
Fair value of OTC equity swaps - asset 6,511 1,487
Fair value of OTC equity swaps - liability (2,721) (25,278)
3,790 (23,791)
See note 9 above for movements during the year.
11. DEBTORS
2026 2025
£’000 £’000
Amounts due from brokers 45,973 5,281
Withholding taxation recoverable 2,413 1,949
Prepayments and accrued income 1,073 773
49,459 8,003
12. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2026 2025
£’000 £’000
Amounts due to brokers 18,638 –
Overdraft drawn* 18,877 68,073
Other creditors and accruals 5,349 4,036
42,864 72,109
*
The Company’s borrowing requirements are met through the utilisation of an overdraft facility provided by
As described on page 93 of the Annual Report,
13. SHARE CAPITAL
2026 2025
Number Number
As at 1 April 494,631,804 545,942,332
Purchase of shares into treasury (121,219,387) (51,310,528)
As at year end:
In circulation 373,412,417 494,631,804
In Treasury 228,252,783 107,033,396
Listed 601,665,200 601,665,200
Nominal Value of 2.5p (2025: 2.5p) ordinary shares 15,042 15,042
(£000)
During the year, the Company bought back ordinary shares at a cost of £396,339,000 (Year ended 31 March 2025: £176,524,000).
14. NET ASSET VALUE PER SHARE
2026 2025
Net asset value per share 371.0p 339.5p
The net asset value per share is based on the assets attributable to equity shareholders of £1,385,470,000 (2025: £1,679,346,000) and on the number of shares in issue at the year end (excluding those shares held in treasury) of 373,412,417 (2025: 494,631,804) in issue.
15. RELATED PARTIES AND TRANSACTIONS WITH THE AIFM
The following are considered to be related parties:
·
· OrbiMed Capital LLC (the Company’s Portfolio Manager)
· The Directors of the Company
Details of the remuneration of all Directors can be found on page 67 of the Annual Report. Details of the Directors’ interests in the capital of the Company can also be found on page 67 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.
† International Swap Dealers Association Inc.
(i) Other price risk
In pursuance of the Company’s Investment Objective the Company’s portfolio, including its derivatives, is exposed to the risk of fluctuations in market prices and foreign exchange rates.
The Board manage these risks through the use of limits and guidelines, monthly compliance reports from Frostrow and reports from Frostrow and OrbiMed presented at each Board meeting.
Other price risk exposure
The Company’s gross exposure to other price risk is represented by the fair value of the investments and the underlying exposure through the derivative investments held at the year end as shown in the table below.
2026 2025
Notional* Notional*
Assets Liabilities exposure Assets Liabilities exposure
£’000 £’000 £’000 £’000 £’000 £’000
Investments 1,304,264 – 1,304,264 1,673,659 – 1,673,659
OTC equity 6,511 (2,721) 254,852 1,487 (25,278) 207,565
swaps
1,310,775 (2,721) 1,559,116 1,675,146 (25,278) 1,881,224
* 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 (2025: 25% higher or lower) while all other variables remained constant: the revenue return would have decreased/increased by £0.2 million (2025: £0.2 million); the capital return would have increased/decreased by £386.0 million (2025: £462.8 million); and, the return on equity would have increased/decreased by £385.8 million (2025: £462.6 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.
2026 2025
Current Current Current Current
assets liabilities Investments assets liabilities Investments
£’000 £’000 £’000 £’000 £’000 £’000
U.S. 117,623 (37,515) 1,031,645 98,209 (68,073) 1,371,703
dollar
Swiss 1,762 – 57,913 1,301 – –
franc
Japanese 406 – 31,976 386 – 50,227
yen
Hong Kong – – 77,356 – – 87,177
dollar
Other 651 – 24,183 643 – 22,132
120,142 (37,515) 1,223,073 100,539 (68,073) 1,531,239
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 (2025: 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.
2026 2025
USD YEN CHF HKD USD YEN CHF HKD
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Sterling 151,391 3,598 6,631 8,595 181,466 5,624 145 9,686
depreciates
Sterling (5,425) (7,032) (148,472) (4,601) (118) (7,925)
appreciates (123,865) (2,944)
(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.
2026 2025
Floating Floating
Rate Rate
£’000 £’000
Cash 70,821 101,502
Drawn overdraft (18,877) (75,991)
Financed swap positions (251,062) (231,356)
(199,118) (205,845)
All interest rate exposures are held in
Cash of £70.8 million (2025: £76.0 million) was held as collateral against the financed swap positions. In 2025 £7.9 million of the collateral cash 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 2026 and the net assets would increase/decrease by £2.0 million (2025: increase/decrease by £2.1 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 2026, based on the earliest date on which payment can be required, are as follows:
2026 2025
3 to 12 3 Months 3 to 12 3 Months
Months or less Months or less
£’000 £’000 £’000 £’000
Drawn overdraft – 18,877 – 75,991
Amounts due to brokers and accruals – 23,987 – 4,036
OTC equity swaps 2,721 – 25,278 –
2,721 42,864 25,278 80,027
(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
2026 2025
£’000 £’000
Derivative – OTC equity swaps 6,511 1,487
Current assets:
Other receivables (amounts due from brokers, dividends and 49,459 8,003
interest receivable)
Cash 70,821 93,584
(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 2026 £’000 £’000 £’000 £’000
Investments held at fair value through 1,267,795 – 36,469 1,304,264
profit or loss
Derivatives: OTC swaps (assets) – 6,511 – 6,511
Derivatives: OTC swaps (liabilities) – (2,721) – (2,721)
Financial instruments measured at fair 1,267,795 3,790 36,469 1,308,054
value
As at 31 March 2026, four equity investments (2025: nine) 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). See note 9 for reconciliation of movements in Level 3 investments.
During 2026 one unquoted investment (2025: two) was transferred to Level 1 following its initial public offering. In 2025 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 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
(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 11 of the Annual Report.
As at 31 March 2026 the Company had a net leverage percentage of 12.5% (2025: 12.0%).
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 2025 525,092 269,741 794,833
Net gains/(losses) on investments 169,531 (49,420) 120,111
Expenses and taxation charged to capital (14,174) – (13,935)
Exchange loss on currency balances (2,047) – (2,047)
Shares repurchased for Treasury (396,339) – (396,339)
At 31 March 2026 282,063 220,321 502,384
* Investment holding gains relate to the revaluation of investments and derivatives held at the reporting date. (See note 9 for further details).
Under the Company’s Articles of Association, sums within “capital reserves – other” are available for distribution. The figures disclosed within this note represent the transactions recorded during the year on an accruals basis and will not necessarily align with the corresponding cash movement within the Cash Flow Statement due to the timing of transactions settling.
18. RECONCILIATION OF OPERATING RETURN/(LOSS) TO NET CASH INFLOW FROM OPERATING ACTIVITIES
2026 2025
£’000 £’000
Net return/(loss) before finance charges and taxation 116,811 (202,087)
Add: capital (return)/loss before finance charges and (106,292) 215,313
taxation
Revenue return before finance charges and taxation 10,519 13,226
Expenses charged to capital (11,772) (14,542)
(Increase)/decrease in other debtors (300) 1,286
Increase/(decrease) in other creditors 2,162 (629)
Net taxation suffered on investment income (1,384) (885)
Net cash outflow from operating activities (775) (1,544)
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.
2026 2025
£’000 £’000
Fair Value Exposure* Fair Value Exposure*
Investments 1,304,264 1,304,264 1,673,659 1,673,659
OTC equity swaps 3,790 254,852 (23,791) 207,565
1,308,054 1,559,116 1,649,868 1,881,224
Shareholders’ funds 1,385,470 1,679,346
Leverage % 12.5% 12.0%
* 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:
NAV per share (pence)
The value of the Company’s assets, principally investments made in other companies and cash being held, minus any liabilities. The NAV is also described as ‘shareholders’ funds’ per share. The NAV is often expressed in pence per share after being divided by the number of shares which have been issued. The NAV per share is unlikely to be the same as the share price which is the price at which the Company’s shares can be bought or sold by an investor. The share price is determined by the relationship between the demand and supply of the shares.
* Alternative Performance Measure
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.
2026 2025
NAV Total Return p p
Opening NAV 339.5 381.1
Increase/(decrease) in NAV 31.5 (41.6)
Closing NAV 371.0 339.5
% increase/(decrease) in NAV 9.3% (10.9)%
Impact of reinvested dividends 0.7% 0.6%
NAV Total Return 10.0% (10.3)%
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.
2026 2025
£’000 £’000
AIFM & Portfolio Management fees (Note 3) 12,389 15,307
Other Expenses – Revenue (Note 4) 1,394 1,252
Total Ongoing Charges 13,783 16,559
Performance fees paid/crystallised – –
Total 13,783 16,559
Average net assets 1,517,239 1,984,818
Ongoing Charges 0.9% 0.8%
Ongoing Charges (including performance fees paid or 0.9% 0.8%
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.
Share Price Total Return*
Return to the investor on mid-market prices assuming that all dividends paid were reinvested.
2026 2025
Share Price Total Return p p
Opening share price 297.5 335.0
Increase/(decrease) in share price 36.5 (37.5)
Closing share price 334.0 297.5
% increase/(decrease) in share price 12.3% (11.2)%
Impact of reinvested dividends 0.8% 0.7%
Share Price Total Return 13.1% (10.5)%
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.
* Alternative Performance Measure
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 Financial Statements for the year ended 31 March 2026 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 2026.
3. To approve the Company’s dividend policy, as set out on page 34 of the Annual Report for the year ended 31 March 2026.
4.
To re-elect Mr
5.
To re-elect Ms
6.
To re-elect Mr
7.
To re-elect Mr
8.
To re-elect Ms
9.
To re-elect Dr
10.
To re-appoint
11. To approve the Directors’ Remuneration Report for the year ended 31 March 2026.
12. To approve the Directors' Remuneration Policy.
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 3 June 2026 (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 2027 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 3 June 2026 (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 15 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 3 June 2026 (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 2027 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.
Adoption of the new Articles of Association
17. THAT the Articles of Association set out in the document produced to this meeting and signed by the Chairman of the meeting for the purposes of identification be and are hereby approved and adopted as the Articles of Association of the Company in substitution for and to the exclusion of the existing Articles of Association of the Company.
General Meetings
18. THAT the Directors be authorised to call general meetings (other than the Annual General Meeting of the Company) on not less than 14 clear days’ notice, such authority to expire on the conclusion of the next Annual General Meeting of the Company, or, if earlier, on the expiry 15 months from the date of the passing of the resolution.
By order of the Board Registered Office:
One Wood Street
Frostrow Capital LLP London EC2V 7WS
Company Secretary
4 June 2026
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
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 Friday, 10 July 2026 (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 3 June 2026 (being the last business day prior to the publication of this notice) the Company’s issued share capital consists of 601,665,200 ordinary shares, carrying one vote each. The Company holds 238,626,423 shares in treasury. Therefore, the total voting rights in the Company as at 3 June 2026 are 363,038,777.
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 10 July 2026 in order to be considered valid or, in the event of any adjournment, 48 hours, excluding non-business 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 Financial Statements
The Annual Report and Financial Statements for the year ended 31 March 2026 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 34 of the Annual Report.
Resolutions 4 to 9 – Re-election of Directors
Resolutions 4 to 9 deal with the re-election of the Directors. Biographies of each of the Directors can be found on pages 46 to 47 of the Annual Report.
The Board has confirmed, following a performance review, that the Directors standing for re-election continue to perform effectively.
Resolution 10 – Re-appointment of Auditors and the determination of their remuneration
Resolution 11 relates to the re-appointment of
Resolution 11 – Directors’ Remuneration Report
The Directors’ Remuneration Report is set out on pages 66 to 68 in the Annual Report.
Resolution 12 – Directors’ Remuneration Policy
The Directors’ Remuneration Policy is set out on page 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 3 June 2026, 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 3 June 2026 (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 3 June 2026 (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 – New Articles of Association
Under Special Resolution 17, the Company is proposing to amend the Articles of Association to introduce additional contingency provisions relating to the election of directors at general meetings. These amendments reflect recent market guidance and are intended to ensure the orderly and effective governance of the Company in the event that insufficient directors are elected at a general meeting.
Set out below is a summary of the main differences between the current and the proposed new Articles of Association (the “New Articles”).
The Company is proposing to amend the Articles of Association to introduce additional contingency provisions relating to the election of directors at general meetings. These amendments reflect recent market guidance and are intended to ensure the orderly and effective governance of the Company in the event that insufficient directors are elected at a general meeting.
The new provisions operate automatically in the limited circumstances where, following a general meeting at which directors are to be elected or re - elected, the Board would be left with none or only one director in office. In such circumstances, the provisions allow for a small number of retiring directors to be temporarily re - appointed for the sole purpose of maintaining continuity, protecting shareholders’ interests and convening a further general meeting to elect directors.
Any such appointments are strictly interim and are designed to protect shareholders’ interests and ensure compliance with applicable legal and regulatory requirements.
A copy of the current Articles and of the proposed New Articles marked up to show the proposed amendments will be available for inspection at the Company’s registered office during normal business hours and will be available for inspection at the Annual General Meeting, in each case until conclusion of the meeting.”
Resolution 18 – General Meetings
Special Resolution 18 seeks shareholder approval for the Company to hold General Meetings (other than the AGM) at 14 clear days’ notice. The Board confirms that the shorter notice period would only be used where it was merited by the purpose of the meeting.
Recommendation
The Board considers that the resolutions relating to the above items are in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends to the shareholders that they vote in favour of the above resolutions to be proposed at the forthcoming AGM as the Directors intend to do in respect of their own beneficial holdings totalling 635,864 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
