Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ## www.bellevuehealthcaretrust.com ## Annual Report and Accounts ## For the year ended 30 November 2023 ## Healthcare Trust plc Healthcare Trust plc ## DIRECTORS, INVESTMENT ## MANAGER AND ADVISERS | | DIRECTORS | INVESTMENT MANAGER (“AIFM”) | | --- | --- | --- | | | Randeep Grewal (Chairman) | Bellevue Asset Management (UK) Ltd | | | Josephine Dixon | 32 London Bridge Street | | Excellence in Specialty | Paul Southgate | 24th Floor London | | | Professor Tony Young OBE | SE1 9SG | Kate Bolsover ## Investments SECRETARY & ADMINISTRATOR Apex Listed Companies Services (UK) Limited | CORPORATE BROKER | 6th Floor | | --- | --- | | J.P. Morgan Cazenove | 125 London Wall | | 25 Bank Street | London | | Canary Wharf | EC2Y 5AS | E14 5JP AUDITORS DEPOSITARY Ernst & Young LLP CONTENTS CACEIS Bank, UK Branch 25 Churchill Place ## Bellevue – one of the largest Strategic Report Broadwalk House Canary Wharf Investment Objective, FinancialInformation, | | | 5 Appold Street | London | | --- | --- | --- | --- | | healthcare investors | Performance Summary and Overview .................... 1 | | | | | | London | E14 5EY | Chairman’s Statement ........................................... 2 EC2A 2DA Investment Manager’s Report ................................ 6 INDEPENDENT - ENTREPRENEURIAL - COMMITTED Investment Policy, Results and REGISTERED OFFICE Key Performance Indicators ................................. 15 REGISTRAR 6th Floor Bellevue Healthcare Trust plc is a high conviction, Risk and Risk Management ................................. 18 | | | Link Group | 125 London Wall | | --- | --- | --- | --- | | long-only investment trust invested in listed or quoted | Viability Statement ............................................... 22 | | | | | | Central Square | London | | global healthcare equities. It is unconstrained and | Stakeholder Engagement .................................... 23 | | | | | | 29 Wellington Street | EC2Y 5AS | Environmental, Social and able to invest regardless of market cap, sub sector Leeds Governance (“ESG”) Policy .................................. 26 or region, and the portfolio is concentrated with a LS1 4DL Other Information ................................................. 33 LEGAL ADVISER maximum of 35 holdings. Bellevue Healthcare Trust Stephenson Harwood LLP Governance is managed by Bellevue Asset Management (UK) Ltd, 1 Finsbury Circus Directors’ Report ................................................. 35 London regulated by the FCA, who have built a successful Corporate Governance ........................................ 41 EC2M 7SH track record in this sector. Directors’ Remuneration Policy and Implementation Report ........................................ 47 Report of the Audit and Risk Committee .............. 52 COMPANY SECURITY INFORMATION AND IDENTIFICATION CODES Statement of Directors’ Responsibilities ............... 55 WEBSITE www.bellevuehealthcaretrust.com Independent Auditor’s Report .............................. 56 ISIN GB00BZCNLL95 Financials SEDOL BZCNLL9 Statement of Comprehensive Income .................. 64 BLOOMBERG TICKER BBH LDN Statement of Financial Position ............................ 65 LEGAL ENTITY IDENTIFIER (LEI) 213800HQ3J3H9YF2UI82 Statement of Changes in Equity ........................... 66 GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN) VL68MY.99999.SL.826 Statement of Cash Flows ..................................... 67 Notes to the Financial Statements ....................... 68 Other Information Alternative Performance Measures....................... 83 This document is printed on Experian Satin, Glossary .............................................................. 85 : a paper sourced from well managed, Annex I – Article 8 Periodic Disclosures ............... 87 ® responsible, FSC certified forests and Notice of Annual General Meeting ........................ 97 other controlled sources. The pulp used in Notes to Notice of Annual General Meeting ......... 99 this product is bleached using an elemental Designed and WWW.BELLEVUEHEALTHCARETRUST.COM Form of Proxy .................................................... 103 chlorine free (ECF) process. printed by Directors, Investment Manager and Advisers ......IBC ## Healthcare Trust plc perivan.com Strategic Report ## Overview INVESTMENT OBJECTIVE The investment objective of Bellevue Healthcare Trust plc (“the Company”) is to provide Shareholders with capital growth and income over the long term, through investment in listed or quoted global healthcare companies. The Company’s specific return objectives are: (i) to beat the total return of the MSCI World Healthcare Index (in sterling) on a rolling 3 year period (the index total return including dividends reinvested on a net basis); and (ii) to seek to generate a double-digit total Shareholder return per annum over a rolling 3 year period. FINANCIAL INFORMATION As at 30 November As at 30 November 2023 2022 Net asset value (“NAV”) per Ordinary Share (cum income) 143.87p 171.16p Ordinary Share price 129.00p 158.20p 1 Ordinary Share price discount to NAV 10.3% 7.6% 1 Ongoing charges ratio (“OCR”) 1.02% 1.04% PERFORMANCE SUMMARY | | | 2 | | | 3 | | --- | --- | --- | --- | --- | --- | | | % change | | | % change | | | 30 November 2023 | | | 30 November 2022 | | | 1,4 Share price total return per Ordinary Share -15.1% -11.9% 1,4 NAV total return per Ordinary Share -12.7% -4.1% 4 MSCI World Healthcare Index total return (GBP) -7.1% +14.1% 1 These are Alternative Performance Measures. 2 Total returns in sterling terms for the year ended 30 November 2023. 3 Total returns in sterling terms for the year ended 30 November 2022. 4 Including dividends reinvested in the year. Source: Bellevue Healthcare Trust Factsheet November 2023. ALTERNATIVE PERFORMANCE MEASURES (“APMs”) The financial information and performance summary data highlighted in the footnote to the above tables represent APMs of the Company. In addition to these APMs other performance measures have been used by the Company to assess its performance; these can be found in the key performance indicators section of the Annual Report, on page 15. Definitions of these APMs together with how these measures have been calculated can be found on pages 83 and 84. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 1 # Chairman's Statement ![img-0.jpeg](img-0.jpeg) Dear Shareholders This is the seventh annual report of your Company. ## PERFORMANCE Over the financial year, the share price (on a total return basis, i.e. including reinvestment of dividends) fell by 15.1%. The total NAV return (i.e. including reinvestment of dividends) over the last financial year was -12.7%. The comparator index (the MSCI World Healthcare total return index in Sterling) produced a total return of -7.1% over the same period; thus, we underperformed by -5.6% over the year. The returns are summarised in the following table. ### Cumulative & annualised performance | | Cumulative | | | | Annualised | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 1 Year | 3 Years | 5 Years | Since inception | 1 Year | 3 Years | 5 Years | Since inception | | Share Price | -15.1% | -16.7% | 9.2% | 60.0% | -15.1% | -5.9% | 1.8% | 6.9% | | NAV (inc. dividend reinvested) | -12.7% | -7.6% | 22.7% | 78.3% | -12.7% | -2.6% | 4.2% | 8.6% | | MSCI World Healthcare Index (GBP) | -7.1% | 22.8% | 46.4% | 97.7% | -7.1% | 7.1% | 7.9% | 10.2% | This is the third year that the Company has failed to beat the comparator index and the second that we have failed to generate double digit total shareholder returns. We engage in regular dialogue with Bellevue and discuss performance. Clearly, when the Company was founded, there was no expectations of Covid or the resultant impact on various subsectors of healthcare; and perhaps, as pertinent, the macro responses. Of course, I appreciate that all of these 'headwinds' have also applied to companies included in our comparator index and in the portfolios of our peers. Each portfolio however, is constructed for different 'wind conditions' and ours has clearly suffered. The picture in the above table perhaps does not really show how performance progressed during the year, in the first half the portfolio was ahead of the comparator index. It is also worth acknowledging that post year end there was some improvement in performance. ## BOARD COMPOSITION AND EVALUATION The current Board composition, which remains unchanged from last year complies with the recommendations of the Hampton-Alexander and Parker reviews. Succession planning, maintaining competencies and skills remain a priority and though there are no immediate plans to recruit new Board members we are clearly aware of the need for smooth transitions. As per the AIC Code recommendations (external review every three years), we undertook an external Board review facilitated by Lintstock. This reviewed the overall performance of the Board. Its committees, individual Directors and myself as Chair. Though the overall results were good, the point of such a process is often the discussions and insights it provides; and how the Board takes those on board. Next year the review will be internal. ## FEES AND CHARGES The Board undertook its annual review of fees and ongoing charges. The biggest single element of cost is our payment 2 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Strategic Report ![DDBD logo]() to Bellevue (0.95% (per annum) of market capitalisation, paid monthly). As I have highlighted previously there are a number of costs that the manager has absorbed on behalf of the Company which helps improve our overall OCR. There is a second related point that is worth explicitly highlighting – the manager is paid based on *market capitalisation* (as opposed to Assets Under Management ('AUM')). The link to market cap in our fee structure has a positive impact on our ongoing charge ratios in years that we trade at a discount to NAV. Nonetheless, I repeat my caution from last year, that a falling AUM may mean that the ongoing charge ratio overall might increase in the forthcoming year. #### PORTFOLIO POSITIONING The portfolio continues to be exposed to US stocks, particularly in the small / mid-cap area and has a high active share. As always, I will direct readers to the investment manager report for more details. As touched on above, this year has not been smooth sailing. After a number of decades of falling interest rates, and low inflation expectations, the change in environment seen in the last year or so altered investor preferences and valuations for smaller companies and for those that have future promise or are waiting for inflexion points (whether they be a regulatory approval, widespread adoption, a move to profitability or another catalyst). Our portfolio companies often sit at the intersection of these different elements, so suffer disproportionately when there are headwinds – but hopefully benefit substantially with even a modest tailwind. #### GEARING The Company has access to a multi-currency revolving credit facility ("RCF") with The Bank of Nova Scotia, that allows it to borrow up to $280 million. The facility is 'committed' through to December 2024; i.e. the Investment Manager has guaranteed access to this borrowing (within limits agreed by the Board) should it see attractive opportunities. As of 30 November 2023, the Company's leverage ratio (under the "gross method") was 5% and our aim is to run a mid-single digit average over the lifetime of the product (the average gearing since inception is 6.96%). #### RESPONSIBLE INVESTING Both the Company and the Appointed Manager, Bellevue Asset Management (UK) Ltd are committed to reflecting Environmental, Social & Governance issues (ESG) within the capital allocation process. More details around this topic can be found on pages 26-32 of the Annual Report. #### SHARE CAPITAL AND ISSUANCE The Company's issued share capital (excluding treasury shares of 16.4 million) was 462.6 million Ordinary Shares (post redemptions) as of 30 November 2023; a decrease from 586.8 million as of the end of the previous financial year. We did not issue any shares during the year via placements or 'tap' issuance. 0.2 million shares were issued under the (scrip dividend programme. In November 2023 we received redemption notices for 77.4 million shares. The Company has the authority to issue a further c.55 million Ordinary Shares ahead of the AGM on 26 April 2024. At the AGM, we will be seeking authority to issue 47,898,719 new Ordinary Shares to meet potential investor demands. Any new tap issuance can only be done at (or at a premium to) NAV. #### REDEMPTIONS, BUYBACKS, DISCOUNT MANAGEMENT AND SHARE PREMIUM ACCOUNT ##### Redemption process Since inception, we have offered an annual redemption option for shareholders. This year we changed the record date (which had historically been 2 November) to 2 September; this was to allow the Company to undertake appropriate checks to ensure compliance with the UK sanctions regime. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 3 ### Chairman’s Statement continued Our shareholder register includes a number of nominee There are a number of elements that contribute to a discount accounts and under the sanctions regime we are required some of which we might influence (e.g. performance) or to confirm that the ‘underlying beneficial owners’ (UBOs) impact at the margins (e.g. share buybacks and marketing are not subject to the sanctions regime. In some cases, impact the balance of buyers versus sellers) but there are thenominees or the UBOs are not in the UK which adds to many (e.g. interest rates, asset allocation decisions) that we the complexity as some are not familiar with UK regulations. have no influence over. To complete this endeavour, we employed a specialist Share premium account rd external agent and also benefitted from support from our On 3 November 2023, we also announced that the Company Secretary and our broker in communicating with Company was calling a general meeting to seek shareholder shareholders on our register. Despite this we only received approval for a special resolution to cancel the Company’s confirmation of sanctions regime compliance from the final share premium account. shareholder on the afternoon of 30 November – almost three UK companies have a nominal or par value for every share months from the record date. that is issued; this is usually a very low value (in the case of Hopefully going forward greater clarity on the extent of the Company it is one penny for ordinary shares). At IPO we work required to ensure sanctions compliance, and greater issued shares at 100 pence, and subsequently even higher. familiarity with it by some nominees / UBOs should help The difference between par and issued value is assigned make the process smoother. However, in the short term, to a section of our accounts known as the ‘share premium atleast, it is likely that we will continue to have a record date account’; technically this is a ‘non-distributable reserve’. at some interval to the redemption election date to allow for Distributions (i.e. dividend payments, buybacks and the necessary checks. redemptions) utilise our ‘distributable reserves’ – which I should however alert shareholders considering future generally comprise accumulated profits and losses. Thus, redemptions that (a) the costs of any checks (for instance itis perhaps self-evident that poor performance might impact the cost of third party service providers) are offset against the our distributable reserves. redemption amount and that (b) if checks are not completed Given the scale of the redemption requests, on in time, the Board may have to decide whether to delay rd 3 November2023 the Board was obliged to prepare for the payments to some or all redeeming shareholders. worst, whilst clearly hoping for the best. Given that payments Redemptions scale for redemptions were to be made in early December (andthat This year, 77,428,034 shares were redeemed – this the Board is also committed to our regular dividends) we had to represented 14.3% of the outstanding immediately prior to ensure that there would be sufficient distributable reserves under the redemption point of 30 November 2023. all circumstances in the foreseeable future. I should emphasise that there were sufficient resources / liquidity withinthe balance Buybacks sheet to fulfilour redemption obligations, but it was clear that The Company seeks authority at each Annual General access to the share premium account (i.e.a non-distributable Meeting to buyback 14.99% of its then outstanding shares. reserve) mentioned earlier would provide extra certainty. At the last AGM this represented an authority to purchase 82,516,203 shares. During the year we bought back Hence your Board took the decision to seek shareholder 16.4million shares which are now held in treasury and will be permission to petition the High Court to transfer amounts cancelled in due course. from our share premium account into our special distributable reserves. This requirement to seek High Court permission It is perhaps worth reminding investors that we only buyback is the result of the Company being a UK domiciled public shares at a discount to net asset value – and as a result listed company. Shareholders with particularly long memories such purchases are accretive to continuing investors. will recall we undertook a similar exercise soon after IPO to Discount management ensure sufficient distributable reserves at that time. Both redemptions and buybacks can be considered I should emphasise that moving amounts between the share forms of ‘discount management’. Clearly neither would be premium account and special distributable reserve on our substantively utilised if we were not trading at a discount. balance sheet has no impact on NAV or performance. Bellevue Healthcare Trust plc Annual Report and Accounts 20234 Strategic Report The High Court hearing required preparation of witness statements including various statements of capital. During this time, in order to avoid ever changing numbers (which would require additional filings, delays and cost) the Board chose to suspend the buyback (as that might lead to a continuously changing share count). Inadvertently we created an experiment where we can see whether a pause on buybacks, albeit with better performance in the underlying portfolio, impacts the discount. I am sure this will lead to interesting conversations during forthcoming board meetings and also with investors. I should emphasise that calling a general meeting, and seeking a court order to reduce the share premium account is not an unusual event – particularly for a UK company that pays regular dividends and undertakes regular capital reduction exercises (ie buybacks or redemptions); though due to the cost and effort required no board engages in this lightly. The formal reduction of the share premium account (and matching increase in our special distributable reserve) occurred after our November year end BUT before we paid out the redemption funds in mid-December 2023. This move of amounts between the accounting entries on our balance sheet, though mentioned in the formal account section of this report, will be clearer in the next fiscal years accounts. #### DIVIDEND The Company targets an annual dividend of 3.5% of preceding year-end NAV, paid out in two equal instalments. The Company paid out a final dividend of 3.235p in respect of the year 2022, in May 2023 and an interim dividend of 2.995p in respect of the financial year 2023 in August 2023. The Board has proposed a final dividend of 2.995p per Ordinary Share in respect of the financial year 2023 and, if approved at the forthcoming Annual General Meeting, this will be paid to Shareholders in May 2024. For the financial year 2024, the Board is proposing a total dividend of 5.04p per Ordinary Share, composed of interim and final dividends of 2.52p per Ordinary Share, to be paid in August/September 2024 and April/May 2025 respectively, subject to shareholder approval. The lower dividend than last year reflects the fall in AUM. The Company introduced a scrip dividend alternative in 2019, allowing Shareholders to elect for their cash dividend to be automatically subscribed on their behalf for new Ordinary Shares. I mentioned in the last annual report that the Board was monitoring the cost of the scrip dividend alternative. Reluctantly in the interim accounts we announced the suspension of the scrip dividend. This was because the take-up had been falling, and the cost was hard to justify. Additionally, we were trading at a discount to NAV whilst scrip dividend shares are issued at NAV so economically it makes more sense for investors to receive a cash dividend and buy shares in the market. Having made commentary on discount management earlier, I should point out that if the shares are trading below NAV then a dividend of 3.5% of NAV means that the dividend yield on the stock is actually higher – which may be attractive for some new investors. Of course, if the share price subsequently rises then though the absolute level of the dividend remains the same, and the shareholder benefits from capital appreciation. #### ANNUAL GENERAL MEETING & SHAREHOLDER COMMUNICATION The next AGM will be on 26 April 2024. There were a number of requests at the last AGM for the managers to make a short formal presentation on the sector and the portfolio before a question and answer session. We will endeavour to accommodate that this year. We recognise it is not possible for everyone to attend an AGM hence may I remind readers that we have a dedicated email address for investors to submit any enquiries or feedback they might have: info@bellevuehealthcaretrust.com. I encourage you to make use of this facility. In the meantime, we will continue to post content from the Investment Manager onto the Company's website to keep you informed of the Company's progress. On behalf of the Board, may I wish you a prosperous year ahead and thank you for your continued support of Bellevue Healthcare Trust Plc. **Randeep Grewal** Chairman of the Board of Directors 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 5 # Investment Manager's Report ## PERFORMANCE SUMMARY – MACRO THOUGHTS Anyone familiar with our factsheets will know that we find much joy in the boundless variety offered by the English language. However, the seeking of superlatives to describe the tendency of geopolitics and macroeconomics to throw obstacles into the path of investors lost its lustre long ago. What we crave, more than anything else, is a bottom-up stock-driven market environment where operationally superior companies outperform poorer ones. Sadly, the prior fiscal year (30 November 2022 – 30 November 2023) will go down as yet another where external factors and extraneous information served to pressure sentiment toward our holdings for non-fundamental reasons. If there is anything positive to say about the overall macro backdrop during this period, it would be that the year ended much more positively than it began sentiment-wise. We can but hope for a more rational and stock-driven performance during 2024, although geopolitical concerns still represent a Damoclean overhang, even as the economic picture looks to be stabilising somewhat. Whilst interest rates, inflation and the attendant risks of waning consumer sentiment and thus recession remained the primary economic concerns, the dispersion of sector level performance and overall market returns was largely opposite to 2022, with most broad regional and global indices seeing positive returns in dollar terms (Figure 1). Also, in contrast to 2022, and more in line with recent history, growth led value. **Figure 1 FY2023 Total Return Data – Key Broad Indices** ![img-1.jpeg](img-1.jpeg) Within this, market leadership was notably narrow during the period, and performance was driven mainly by technology stocks (especially the US "magnificent seven" – Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA and Tesla), powered along by a frenzy for AI-related exposures. As we have seen many times before, the emergence of new technologies tends to play out more slowly than people imagine, and in ways not initially foreseen. The healthcare industry was an early adopter and integrator of machine learning into all manner of products and processes, and we think it has much to offer in terms of real-world examples of implementing this technology. As the year went on, we saw a sentiment tussle regarding expectations for a hard or soft landing (i.e. the fiscal fightening cycle will, or will not, result in a recession). As we moved into November 2023, expectations had pivoted back to where the year began; with a soft landing in the United States being the predominant view; one aided by an expectation of multiple interest rate cuts through 2024. ## PERFORMANCE SUMMARY – HEALTHCARE HIGHLIGHTS The US dollar total return of the MSCI World Healthcare Index during the fiscal year was -1.8%, which meant that it underperformed the parent MSCI World Index by 14.8%, which is again almost a mirror image of what happened in FY2022 and the worst relative annualised performance over this period in the 23 years for which comparable data is available. 6 **Bellevue Healthcare Trust plc** Annual Report and Accounts 2023 Strategic Report Healthcare was very much out of favour amongst generalist Thirdly, there was a nebulous perception of R&D investors, despite classical defensive attributes and a disappointments and lack of M&A, especially within generally worrisome backdrop of economic news. We can therapeutics. As discussed in the factsheets, we would not think of several reasons why the sector may have fallen out agree with this perception from our own vantage point, but of favour during this period. market sentiment is not what we think about. Firstly, many larger companies did not act as defensively as Figure 2 illustrates the healthcare sector performance hoped; we saw material cuts to earnings forecasts or the contribution by sub-sector. If we would make any observation outlook from mega-cap “bellwethers” like Pfizer and Sanofi. about the table, it would be that the final figures belie many a Indeed, the dynamic of market leadership being narrow was twist and turn and much volatility during the period. equally true in the healthcare sector as for the wider market. It speaks volumes that the best and second-best sub- This was the year of Novo Nordisk and Eli Lilly around the sectors could not share less in common in terms of anti-obesity theme/meme. fundamental attributes and the worst performing sector Secondly, in a market where investor money was flowing out is ironically the one that is most likely to benefit from the of equities and into bonds in the early part of the year, that machine learning-based developments that so influenced the incremental investment into Technology stocks had to be wider market’s behaviour during the year. funded from somewhere and bond-like healthcare stocks (i.e.big pharma) seemed to be a source of funds. Figure 2 FY2023 MSCI World Healthcare Index sub-sector performance data Weighting Perf (USD) Perf (GBP) Distributors 1.6% 21.6% 15.1% Dental 0.4% 15.0% 8.8% Other Healthcare/Animal Health 1.3% 5.6% 4.9% Medical Technology 12.6% 4.4% -1.1% Diversified Therapeutics 37.2% 4.4% -1.2% Facilities 1.0% 1.9% -3.5% Generics 0.4% 0.7% -4.7% Services 2.1% -0.7% -6.1% Managed Care 12.0% -3.7% -8.8% Focused Therapeutics 8.4% -8.9% -13.8% Tools 8.3% -11.8% -16.5% Healthcare Technology 0.9% -12.0% -16.7% Conglomerate 11.9% -12.7% -17.4% Diagnostics 1.5% -16.1% -20.6% Healthcare IT 0.6% -22.2% -26.4% Index performance -1.8% -7.1% Regular followers will know that we have repeatedly Such companies tend to be older and more mature, so mentioned the outsized impact of the size factor (i.e. relative less at the mercy of debt and equity markets for additional outperformance or underperformance based on market funding and thus less sensitive to interest rates. They are capitalisation grouping). In summary, the past few years have also easier to exit if the market does look like it is going down seen investors hiding in the relative safe haven of larger, and investors wish to reduce equity exposures. more liquid and typically more diversified companies. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 7 Investment Manager's Report continued Figure 3 illustrates the impact of size factor within US healthcare, by comparing returns over the past two fiscal years from the healthcare series of the S&P 500 (mega-cap dominated, $5.2bn value), S&P 400 (mid-cap focused, $212bn value) and S&P 600 (small-cap dominated, $130bn value). As the charts show, size factor dispersion was less pronounced in FY2023 than it was in FY2022, but there was still a material performance lag for smaller-capitalisation stocks within the healthcare universe, again illustrating the inherent conservatism of investors during this period of macroeconomic uncertainty. Most of this relative underperformance occurred in the late summer months (when sentiment around a soft landing receded somewhat, before reversing again into the calendar year-end). **Figure 3 FY2022 and FY2023 Total Return Data – Selected Healthcare Indices** ![img-2.jpeg](img-2.jpeg) ![img-3.jpeg](img-3.jpeg) Source: Bloomberg 8 **Bellevue Healthcare Trust plc** Annual Report and Accounts 2023 Strategic Report ![DDBD logo]() Healthcare remains a stable sector from a regulatory perspective, with very visible long-term demand growth drivers and, whilst we all recognise that the cost of equity has risen due to higher risk-free rates, it remains our view that the multiple compression seen in small and mid-cap healthcare equities went far beyond anything that could be justified by the application of higher discount rates. Neither could it be rationalised by taking earnings downgrades or changes to the healthcare industry's regulatory or operating environment into account, since in both cases the impact has been limited (downgrades have been more at the upper end of the market cap scale). The positive behaviour of these same SMD-focused indices in December 2023 and January 2024 surely attests to the arbitrary and egregious nature of the devaluation that investors have witnessed over the past two years. ## PERFORMANCE SUMMARY – BELLEVUE HEALTHCARE TRUST We would reiterate that the investment strategy we are following leads to a portfolio with certain inherent characteristics and factor exposures: dollar dominance, mid-cap focus and low benchmark correlation. As was the case in FY2022, these factor characteristics have been negatively correlated with wider market performance over the past year, leading again to an underperformance versus our key comparator index, the MSCI World Healthcare Index (Figure 4). **Figure 4 Bellevue Healthcare Trust – FY2023 Financial Performance Summary** | Total Return (GBP) | Fiscal 2023 | Rolling 3 Year | Rolling 3 Year (annual eq.) | Since Inception (1-Dec-18) | | --- | --- | --- | --- | --- | | BBH Share Price | -15.1% | -16.7% | -5.9% | +60.0% | | BBH NAV | -12.7% | -7.6% | -2.6% | +78.3% | | MSCI World Healthcare Index | -7.1% | +22.8% | +7.1% | +87.7% | | **Relative to MSCI World Healthcare Index** | | | | | | BBH Share Price | -8.0% | -39.5% | -13.0% | -37.7% | | BBH NAV | -5.6% | -30.4% | -9.7% | -19.4% | | **Performance of other comparator indices** | | | | | | MSCI World Total Return Index | +7.5% | +30.9% | +8.1% | +106.1% | | FTSE All Share Total Return Index | +1.5% | +24.8% | +2.0% | +42.2% | Source: Bloomberg. All performance figures are calculated as total return with dividends being reinvested in the relevant security, calculated in GBP and with the relevant period ending on 30 November 2023. The poor investment return performance during FY2023 pushed the Trust into underperformance since inception when measured to the end of the fiscal year (Figure 5). When considering the total shareholder return, the widening of the discount rating on the Company's share price from -7.5% at the end of FY2022 to -10.3% at the end of FY2023 further eroded the performance. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 9 ### Investment Manager’s Report continued Figure 5 Total Return (NAV) since inception of Bellevue Healthcare Trust vs. UK listed comparables | MSCI WHC | | | | | | | 97.7% | | --- | --- | --- | --- | --- | --- | --- | --- | | Comp A | | | | | | 85.8% | | | | BBH | | | | 78.3% | | | | Comp B | | | | 70.3% | | | | | Comp C | | | 39.3% | | | | | | Comp D | | 5.5% | | | | | | 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: Bloomberg. All performance figures are calculated as total return with dividends being reinvested in the relevant security, calculated in GBP and with the relevant period ending on 30 November 2023. UK listed comparables are (in no particular order) BIOG, IBT, PCGH and WWH. PORTFOLIO SUMMARY Of the remaining five exits, two were due to the companies During fiscal 2023, the Company held positions in reaching our fair values, resulting in insufficient further 34companies (compared to 37 in FY2021), beginning upside to justify continued ownership. The remainder were the year with 29 positions and ending the year with 27 cases where the investment thesis failed, or the company (fiveadditions and seven exits). In keeping with FY2022, changedits strategic direction in a manner that we did not this was again a lower turnover year than the previous one; find compelling. excluding redemption-related selling, overall trading activity The evolution of the portfolio at a sub-sector level more thanhalved. is illustrated in Figure 6. Investors can find detailed Two of the seven additions during the year were commentaryon the month-by-month evolution of the reinvestments in companies that had been in the portfolio sub-sector exposure in the monthly factsheets and these previously (Dexcom and Centene). Of the seven exits, two should be investors’ primary source of information on the were due to M&A (Amedisys and Point Therapeutics). portfolio and the strategy. Bellevue Healthcare Trust plc Annual Report and Accounts 202310 Strategic Report Figure 6 Portfolio sub-sector evolution | Subsector Allocation (month end) | November 2022 | May 2023 | November 2023 | Change (y-o-y, %) | | --- | --- | --- | --- | --- | | Conglomerates | 0.0% | 0.0% | 0.0% | n/a | | Dental | 1.2% | 0.9% | 0.0% | -1.2% | | Diagnostics | 10.5% | 11.4% | 13.3% | +2.8% | | Distributors | 0.0% | 0.0% | 0.0% | n/a | | Diversified Therapeutics | 6.4% | 4.0% | 0.0% | -6.4% | | Facilities | 0.0% | 0.0% | 0.0% | n/a | | Focused Therapeutics | 24.3% | 21.3% | 22.2 | -2.1% | | Generics | 0.0% | 0.0% | 0.0% | n/a | | Healthcare IT | 5.4% | 8.8% | 10.4% | +5.0% | | Healthcare Technology | 3.9% | 3.0% | 5.7% | +1.8% | | Managed Care | 7.0% | 7.2% | 7.8% | +0.8% | | Medical Technology | 19.3% | 18.8% | 19.1% | -0.2% | | Services | 15.3% | 14.9% | 11.7% | -3.6% | | Tools | 6.5% | 9.6% | 9.9% | +3.4% | | Other Healthcare | 0.0% | 0.0% | 0.0% | n/a | | **Total** | **100.0%** | **100.0%** | **100.0%** | | As noted previously, we feel that the predominant driver of performance during the period in review was sub-sector allocation or thematic exposure, rather than individual stock selection. In the early part of the year, size bias toward SMD healthcare was a positive attribute, until the collapse of Silicon Valley Bank ('SVB') on 7$^{th}$ March 2023. Free public companies had material exposure to this entity and, in any event, the Federal Reserve stepped in to guarantee deposits within days of its collapse. Nonetheless, the Trust's NAV fell 7.5% in dollar terms over that period, despite de minimis SVB exposure for portfolio companies. From April to July, the sector broadly went sideways as the wider market climbed higher on the rotation toward mega-cap technology stocks around AI-related excitement. In the later summer months, another meme frenzy around the impact of widespread use of GLP-1 obesity drugs gripped the market, dividing healthcare into a perceived binary grouping of obesity "winners and losers". We have devoted many pages in the factsheets to debunking the ludicrous implications of the stock moves that followed around these so-called "losers". We reiterate again that we have not seen anything quite so kneejerk since the tail end of the 1980s, and the similarly ludicrous 'old versus new economy' debate over emerging tech companies. Change takes time and is seldom so clear cut as Wall Street would have investors believe. Broadly speaking, we would characterise our activity during the year as seeking to take advantage of these repeated mispricing events to position the portfolio as best we could to benefit from a recovery in sentiment, which we felt was inevitably coming (and duly did in the last two months of 2023 and into January 2024). This is most evident in our increased allocations to Tools, Healthcare IT and Healthcare Technology and the reduced exposure to Diversified Therapeutics. With regard to the portfolio breakdown by market capitalisation, this activity saw a further downward drift in the median company size. We had ~300bp less exposure to Mega-Cap and Large-Cap companies, with offsetting increases in both the Small-Cap and Mid-Cap categories. Despite this shift, the Company's portfolio liquidity parameters are unchanged. The portfolio remained highly liquid; we estimate 100% of the portfolio could be liquidated within nine trading days at a participation rate of 20%. The already material geographic bias to the United States increased, as we exited our exposures to Europe and Rest of World and valuations in China continued to experience significant pressure due to a lacklustre post-COVID recovery and an overhang from an anti-corruption drive that has caused physicians and hospital managers to somewhat shy away from undertaking costly procedures or ordering expensive equipment. Balance Healthcare Trust plc Annual Report and Accounts 2023 11 ### Investment Manager’s Report continued Figure 7 Market capitalisation breakdown Figure 8 Geographical breakdown (operational HQ) 10.9% 22.1% Mega-Cap 14.5% Large-Cap Asia (inc. China & Japan) 97.4% Mid-Cap 2.6% United States Small-Cap 52.5% Our top five and bottom five contributors to the evolution of does not necessarily correspond to their performance for the the NAV are summarised in Figure 9, along with their share Company, since the size and duration of our holdings varies price development in sterling over the fiscal year (which over the year). Figure 9 FY2023 Top and Bottom performers Top 5 Performers (total return) Bottom 5 Performers (total return) Company Sub-sector Performance (GBP) Company Sub-sector Performance (GBP) Exact Sciences Diagnostics +34.7% Silk Road Medical Medical-Technology -83.4% Focused Healthcare Apellis Pharmaceuticals Therapeutics +2.1% Tandem Diabetes Care Technology -54.5% Focused Insmed Therapeutics +28.1% Outset Medical Medical-Technology -76.5% Focused Hutchmed Therapeutics +50.4% Charles River Services -18.4% Focused Point Therapeutics Therapeutics +88.9% Bio-Rad Laboratories Tools -30.4% We would make the following comments regarding the Hopefully this example serves as a useful illustration of companies in Figure 9: only one of the top performers (Point how the valuation discipline around share price maximums Therapeutics) was an M&A target; it was acquired by Eli Lilly. works within the strategy. We are happy to exit even good As we go to press, we still have exposure to all of the worst companies if the price is full and have no qualms about performers and see four of the five as materially undervalued going back into stocks again when circumstances are more holdings that we expect to perform well in the future. propitious and also demonstrates how the market is prone to overreactions on the downside, something that we have The standard ‘boiler plate’ comment around performance not Market capitalisation breakdownGeographical breakdown (operational HQ) seen a lot over the past two years. For us, it has always been Market capitalisation breakdownGeographical breakdown (operational HQ) corresponding to the data in the table feels particularly apposite a question of the longer-term fundamental outlook that drives in respect of Apellis Pharmaceuticals. The shares reached our decision-making, rather than short-term market sentiment. fair value and we materially reduced our holdings mid-year. 10.9% 22.1% Shortly after, the stock fell >70% in July 2023 on concerns Mega-Cap about side effects for their key drug Syfovre. We felt this was an 14.5% | | overreaction, so we scaled up the position and rode the recovery | | | | Asia | | | --- | --- | --- | --- | --- | --- | --- | | Large-Cap | | | Asia | | | Asia | | | | | (inc. China & Japan) | | (inc. China & Japan) | (inc. China & Japan) | | | to considerable profit. We have since been taking profits again. | 97.4% | | | | | | Mid-Cap | | | | 2.6% | | | | | | | Rest of World | | United States | Rest of World | Small-Cap 52.5% Bellevue Healthcare Trust plc Annual Report and Accounts 202312 Strategic Report # Full investment portfolio as of 30 November 2023 | Company | Sub-sector classification | % Portfolio | | --- | --- | --- | | 1 OPTION CARE HEALTH | Services | 6.9 | | 2 INSMED | Focused Therapeutics | 6.8 | | 3 AXONICS | Medical Technology | 6.8 | | 4 EVOLENT HEALTH | Healthcare IT | 6.6 | | 5 EXACT SCIENCES | Diagnostics | 6.4 | | 6 INTUITIVE SURGICAL | Medical Technology | 5.2 | | 7 PACIFIC BIOSCIENCES | Tools | 5.1 | | 8 APELLIS PHARMACEUTICALS | Focused Therapeutics | 4.8 | | 9 BIO-RAD LABORATORIES | Tools | 4.8 | | 10 CHARLES RIVER | Services | 4.8 | | **Total Top 10** | | **58.2** | | 11 AXSOME THERAPEUTICS | Focused Therapeutics | 4.7 | | 12 TANDEM DIABETES CARE | Health Technology | 4.5 | | 13 CAREDX | Diagnostics | 4.2 | | 14 ACCOLADE | Healthcare IT | 3.8 | | 15 ATRICURE | Medical Technology | 3.1 | | 16 UNITEDHEALTH GROUP | Managed Care | 3.1 | | 17 CASTLE BIOSCIENCES | Diagnostics | 2.7 | | 18 ELEVANCE HEALTH | Managed Care | 2.6 | | 19 HUTCHMED | Focused Therapeutics | 2.4 | | 20 CENTENE | Managed Care | 2.1 | | 21 SAREPTA THERAPEUTICS | Focused Therapeutics | 2.1 | | 22 SILK ROAD MEDICAL | Medical Technology | 1.5 | | 23 INSPIRE MEDICAL | Medical Technology | 1.5 | | 24 VERONA PHARMACEUTICALS | Focused Therapeutics | 1.4 | | 25 DEXCOM | Health Technology | 1.2 | | 26 OUTSET MEDICAL | Medical Technology | 0.7 | | 27 VENUS MEDTECH | Medical Technology | 0.2 | | **Total portfolio** | | **100.0** | | **Gross exposure** | | **£697.0 million** | | **Net value of assets** | | **£665.5 million** | # Recent trading and outlook In these fast moving and macro-oriented times, we continue to recommend that investors rely upon the detailed and discursive monthly factsheets for an up-to-date view of the outlook. These can be found on the Company's website¹. We are pleased to report that the Company's performance in the three months to the end of February 2024 has been positive on a relative and absolute basis and the macroeconomic situation is coalescing around a more constructive, narrower range of outcomes, even if the geopolitical circumstances remain febrile. It bears repeating that our strategy of investing in 'healthcare change' remains a powerful and compelling one. Healthcare continues to be the secular growth story of our age. Recession or not, there are ever more people and they are ageing. More and more countries are becoming developed economies and scientific progress continues to open up new avenues to relieve the burden of human suffering, raising expectations of what products and services will be available to this ever-greater number of people. ¹https://www.bellevuehealthconstruct.com/uk-en/private/insights/ Bellevue Healthcare Trust plc Annual Report and Accounts 2023 13 ### Investment Manager’s Report continued However, society needs to pay for all of this and the current model is neither easily scalable nor financially sound. If we cannot bend the cost curve and change the delivery paradigm, the services will need to be cut or the system will go bankrupt. Ergo, healthcare must change. There is no alternative. We have already seen profound changes implemented since the pandemic. The tools, products and services that are enabling the re-imagining of healthcare can be accessed through the public equity realm, creating a persuasive investment opportunity. The past few years may have been very challenging, but the fundamentals remain very attractive. Paul Major and Brett Darke Bellevue Asset Management (UK) Ltd 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 202314 Strategic Report ## Investment Policy, Results and ## KeyPerformance Indicators INVESTMENT POLICY wider healthcare industry and the geographic location of the The Company invests in a concentrated portfolio of investable universe, it is expected that the portfolio will have listed or quoted equities in the global healthcare industry. a majority of its exposure to stocks with their primary listing TheCompany may also invest in ADRs, or convertible in the United States and with a significant exposure to the instruments issued by such companies and may invest US dollar in terms of their revenues and profits. Although the in, or underwrite, future equity issues by such companies. base currency of the Company is sterling which creates a TheCompany may utilise contracts for differences for potential currency exposure, this will not be hedged using any investment purposes in certain jurisdictions where taxation sort of foreign currency transactions, forward transactions or or other issues in those jurisdictions may render direct derivative instruments. investment in listed or quoted equities less effective. Any use The Company will not invest in any companies which are, at of derivatives for investment purposes is made on the basis the time of investment, unquoted or untraded companies and of the same principles of risk spreading and diversification has no intention of investing in other investment funds. that apply to the Company’s direct investments, as described below, and such use is not expected in the normal course to BORROWING POLICY form a material part of the Gross Assets. The Company may deploy borrowing to enhance long-term The investable universe for the Company is the global capital growth. Gearing will be deployed flexibly up to healthcare industry including companies within industries 20per cent. of the Net Asset Value, at the time of borrowing, such as pharmaceuticals, biotechnology, medical devices although the Investment Manager expects that gearing will, and equipment, healthcare insurers and facility operators, over the longer term, average between 5 and 10 per cent. information technology (where the product or service supports, of Net Asset Value. In the event that the 20 per cent limit is supplies or services the delivery of healthcare), drug retail, breached as a result of market movements, and the Board consumer healthcare and distribution. considers that borrowing should be reduced, the Investment Manager shall be permitted to realise investments in an orderly No single holding will represent more than 10 per cent. manner so as not to prejudice shareholders. of Gross Assets at the time of investment and, when fully invested, the portfolio will have no more than 35 holdings. No material change will be made to the investment policy The Company will typically seek to maintain a high degree of without the approval of shareholders by ordinary resolution. liquidity in its portfolio holdings (such that 90 per cent of the portfolio may be liquidated in a reasonable number of trading DIVIDEND POLICY days) and as a consequence of the concentrated approach, The Company will set a target dividend each financial year it is unlikely that a position will be taken in a company unless equal to 3.5% of Net Asset Value as at the last day of the a minimum holding of 1.0 per cent. of Gross Assets at the Company’s preceding financial year. The target dividend will be time of investment can be achieved within an acceptable level announced at the start of each financial year. This is a target ofliquidity. only and not a profit forecast and there can be no assurance that it will be met. There are no restrictions on the constituents of the Company’s portfolio by index benchmark, geography, market capitalisation Dividends will be financed through distributable reserves. or healthcare industry sub-sector. Whilst the MSCI World In order to increase the distributable reserves available to Healthcare Index (in sterling) will be used to measure the facilitate the payment of dividends, the Company cancelled performance of the Company, the Company does not seek the amount of £146,412,136 standing to the credit of its share to replicate the index in constructing its portfolio. The portfolio premium account immediately following first admission of its may, therefore, diverge substantially from the constituents of Ordinary Shares to trading on the London Stock Exchange this index (and, indeed, it is expected to do so). However, in order to create a special distributable reserve. With effect the portfolio is expected to be well diversified in terms of from 14 December 2023, a further amount of £617,709,517 industry sub-sector exposures. Given the nature of the Bellevue Healthcare Trust plc Annual Report and Accounts 2023 15 Investment Policy, Results and Key Performance Indicators continued standing to the credit of the Company's share premium account was cancelled in order to increase the special distributable reserve. The Company may, at the discretion of the Board, pay all or part of any future dividends out of the special distributable reserve, taking into account the Company's investment objective. The Company intends to pay dividends on a semi-annual basis, by way of two equal dividends, with dividends declared in July and February/March and paid in August and March/April in each year. In accordance with regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations 2011, the Company will not (except to the extent permitted by those regulations) retain more than 15 per cent of its income (as calculated for UK tax purposes) in respect of an accounting period. ## RESULTS AND DIVIDEND The Company's revenue return after tax for the year amounted to a loss of £1,147,000 (2022: loss of £1,655,000). The Company's capital return after tax for the year amounted to a loss of £119,891,000 (2022: loss of £36,789,000). Therefore, the total return after tax for the Company was a loss of £121,038,000 (2022: loss of £41,424,000). The Company targeted a total dividend for the year ended 30 November 2023 of 5.99p per Ordinary Share. - Interim dividend of 2.995p paid on 25 August 2023 - Final dividend of 2.995p to be paid on 31 May 2024 (to Shareholders on the register at the close of business on 10 May 2024), subject to Shareholder approval at the AGM to be held on 26 April 2024. ## TARGET TOTAL DIVIDEND FOR THE YEAR ENDING 30 NOVEMBER 2024 As announced by the Company on 12 January 2024, for the financial year ending 30 November 2024, the target total dividend will be 5.04p per Ordinary Share, this being 3.5% of the audited net asset value per Ordinary Share of 143.87p (including current financial year revenue items) as at 30 November 2023. The Board intends to declare an interim dividend of 2.52p per Ordinary Share, being half of the target total dividend for the financial year ending 30 November 2024, in July 2024 and intends to pay this dividend in August/September 2024. The Board intends to propose a final dividend of 2.52p per Ordinary Share for the financial year ending 30 November 2024, in February/March 2025 and intends to pay this dividend in March/April 2025. ## FIVE YEAR DIVIDEND PERFORMANCE | | Interim dividend | Final dividend | Total dividend | | --- | --- | --- | --- | | **Dividends paid/payable** | | | | | Year ended 30 Nov 2019 | 2.425p | 2.425p | 4.85p | | Year ended 30 Nov 2020 | 2.508p | 2.508p | 5.08p | | Year ended 30 Nov 2021 | 3.018p | 3.018p | 6.08p | | Year ended 30 Nov 2022 | 3.235p | 3.235p | 6.47p | | Year ending 30 Nov 2023 | 2.995p | 2.995p | 5.99p | | **Target dividend*** | | | | | Year ending 30 Nov 2024 | 2.528p | 2.528p | 5.04p | * This is a target and should not be taken to imply a profit forecast. 16 Balance Healthcare Trust plc Annual Report and Accounts 2023 Strategic Report # **KEY PERFORMANCE INDICATORS (“KPIs”)** The Board measures the Company’s success in attaining its investment objective by reference to the following KPIs: # **(i) To beat the total return of the MSCI World Healthcare Index (in Sterling) on a rolling three year period** The NAV total return from 1 December 2020 to 30 November 2023 was -7.6%. The total return of the MSCI World Healthcare Index (in sterling terms) over the same period was +22.8%. The Investment Manager’s report on pages 6 to 14 incorporates a review of the highlights during the financial year ended 30 November 2023. The Investment Manager’s report on pages 6 to 14 gives details on investments made during the year and how performance has been achieved. # **(ii) To seek to generate a double-digit total Shareholder return per annum over a rolling three year period** The NAV total returns from 1 December 2020 to 30 November 2023 was -7.6%. # **(iii) To meet its target total dividend in each financial year** The Company targeted a total dividend of 5.99p per Ordinary Share for the year ended 30 November 2023. The Company paid an interim dividend of 2.995p per Ordinary Share in August 2023 and proposes a final dividend in respect of the year to 30 November 2023 of 2.995p per Ordinary Share. # **(iv) Discount/premium to NAV** The discount/premium relative to the NAV per Ordinary Share represented by the share price is monitored by the Board. The share price closed at a 10.3% discount to the NAV as at 30 November 2023 (2022: 7.8% discount). # **(v) Maintenance of reasonable level of ongoing charges** The Board monitors the Company’s operating costs. Based on the Company’s average net assets during the year ended 30 November 2023 the Company’s ongoing charges figure calculated in accordance with the Association of Investment Companies (“AIC”) methodology was 1.02% (2022: 1.04%). Defence Healthcare Trust plc Annual Report and Accounts 2023 17 ## Risk and Risk Management PRINCIPAL AND EMERGING RISKS AND Healthcare companies The Company invests in global healthcare equities. This sector UNCERTAINTIES may be affected by a number of particular risks including The Board is responsible for the management of risks faced by changes in government regulations and government healthcare the Company and delegates the review process of this to the programs, increases or decreases in the cost of medical Audit and Risk Committee (the “Committee”). The Committee products and services and product liability claims. Healthcare carries out, at least annually, a robust assessment of principal companies in particular, have patent protection, very competitive and emerging risks and uncertainties and monitors the risks forces on pricing and susceptibility to product obsolescence. on an ongoing basis. The Committee has a dynamic risk In addition, successful development of healthcare products assessment programme in place to help identify key risks in may be highly uncertain. The market prices for securities of the business and oversee the effectiveness of internal controls companies in the healthcare sector can reflect this by being and processes, providing a visual reflection of the Company’s highly volatile. identified principal and emerging risks. The Committee considers both the impact and the probability of each risk Sub-sectoral diversification occurring and ensures appropriate controls are in place to The Company has no limits on the amount it may invest in reduce risk to an acceptable level. the healthcare sector and is not subject to any sub-sector investment restrictions. Although the portfolio is expected to be During the year under review, the Committee considered the well diversified in terms of industry sub-sector exposures, the continued weak investment performance from the perspective Company may have significant exposure to portfolio companies of risk management. In that review, it considered whether the from certain sub-sectors from time-to-time. investment process adopted at the prospectus to achieve the Company’s return objective had been consistently applied. Concentrated Portfolio The conclusion was there has been consistency of approach One of the key aspects to the investment proposition is which had been very adversely affected by macro-economic selection of core high conviction portfolio driven by the reaction to geopolitical uncertainties that have arisen. Investment manager’s fundamental analysis. The maximum The concentrated high conviction portfolio selected from number of stocks being held at any one time will be 35. This bottom-up research results in a tendency to a selection of Investment approach does not propose to follow a benchmark smaller mid-sized companies which has adversely impacted and as such cannot be expected to reflect the benchmark the resulting performance. The inability to mitigate for market performance. risk led the committee, from a risk perspective conclude Changes of Risk during the year that the investment Manager is “doing what it says on the The particular investment approach has not been altered during tin” and so from a risk perspective, ensure the key risks are the year though the market risk headwinds have continued to communicated well to Shareholders. adversely affect performance. The principal and emerging risks, together with a summary Management of risk of the processes and internal controls used to manage and The Directors acknowledge that market risk is inherent in mitigate risks where possible are outlined below. the investment process. The Company is invested in a concentrated, sector specific portfolio of investments and has a (I) MARKET RISKS well-defined investment policy that states that no single holding Economic conditions will represent more than 10 per cent. of gross assets at the time Changes in general economic and market conditions including, of investment. for example, impact of pandemics on global economies and The Investment Manager also has a well-defined investment national responses to ameliorate such challenges, interest objective and process which is regularly and rigorously reviewed rates, rates of inflation, industry conditions, competition, political by the independent Board of Directors and performance is events and trends, tax laws, national and international conflicts reviewed at quarterly Board meetings. The Investment Manager and other factors could substantially and adversely affect the is experienced and employs its expertise in selecting the stocks Company’s prospects and thereby the performance of its in which the Company invests. Ordinary Shares. Bellevue Healthcare Trust plc Annual Report and Accounts 202318 Strategic Report The Board closely monitors the Company’s share price relative (III) CORPORATE GOVERNANCE AND to NAV and the Company’s discount / premium relative to INTERNAL CONTROL RISKS their peer group. A discount management policy including buy The Board has contractually delegated to external service backs and redemption facility is operated. Extensive marketing providers the management of the investment portfolio, custodial is carried out by the Company’s Investment Manager, Broker services (which include the safeguarding of the assets), and a specialist PR company and regular communication registration services, and accounting and company secretarial via the Company’s factsheets aims to inform shareholders. requirements. The major external service providers are outlined An investment research consultant is engaged to provide on page 35 and 36 of the Directors’ Report. independent research for retail shareholders. The main risk areas arising from the above contracts relate to In addition to regular market updates from the Investment allocation of the Company’s assets by the Investment Manager, Manager and reports at Board meetings, the Board convenes and the professional execution of their duties of performance more often as required. of administrative, registration and custodial services. These could lead to various consequences including the loss of the (II) FINANCIAL RISKS Company’s assets, inadequate returns to Shareholders and loss The Company’s investment activities expose it to a variety of of investment trust status. Cyber security risks could lead to financial risks which include liquidity, currency, leverage, interest breaches of confidentiality, loss of data records and inability to rate and credit risks. make investment decisions. The Company invests in equities, with equities subject to strong Management of risk price fluctuations and specifically healthcare equities, which The Board has appointed experienced service providers. can be subject to sudden substantial price movements owing Each of the contracts were entered into after full and proper to market, sector or company factors. There is therefore a risk consideration of the quality and cost of services offered, that the Company’s holdings may not be able to be realised including the financial control systems in operation in so far as at reasonable prices in a reasonable timeframe. Although they relate to the affairs of the Company. the Company’s performance is measured in sterling, a high All of the above services are subject to ongoing oversight of the proportion of the Company’s assets may be either denominated Board and the performance of the principal service providers in other currencies or be in investments with currency exposure. is reviewed on a regular basis. During the year, there have The Company pays interest on its borrowings and as such, the been significant changes to senior management of a number of Company is exposed to interest rate risk due to fluctuations service providers including at the Bellevue Asset Management in the prevailing market rates. The Company may take on Board level in Switzerland and in the UK within the management leverage, which may lead to higher price movements compared of the Administrator. The latter has been undergoing a series to the underlying market. of changes as consolidation in that industry is apparent. The Financial risks in the year under review Board ensure that all these factors are considered in ensuring Significantly, the $/£ movement negatively impacted the service provision is maintained at the highest level. results. The Board policy is not to hedge currencies as that All key service providers produce annual internal control reports is not within the remit of an equity proposition however some for review by the Audit and Risk Committee. These reviews mitigation comes from the utilisation of multi-currency debt to include consideration of their business continuity plans and the recognise the underlying investment currency. associated cyber security risks. The Company’s key service Management of risk providers report on cyber risk mitigation and management on a The Company typically maintains a high degree of liquidity in its quarterly basis. This includes confirmation of business continuity portfolio holdings. capability in the event of a cyber-attack and each service provider is reminded of their duty to disclose any cyber security Further details on the management of financial risks can be breaches to the Company Secretary at least annually. found in note 19 to the financial statements. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 19 ### Risk and Risk Management continued (IV) REGULATORY RISKS (VI) BUSINESS INTERRUPTION Breaches of Section 1158 of the Corporation Tax Act could Failure in services provided by key service providers, meaning result in loss of investment trust status. Loss of investment information is not processed correctly or in a timely manner, trust status would lead to the Company being subject to tax on resulting in regulatory investigation or financial loss, failure of any gains on the disposal of its investments. Breaches of the trade settlement, or potential loss of investment trust status. FCA’s rules applicable to listed entities could result in financial The failure or breach of information security could potentially penalties or suspension of trading of the Company’s shares on lead to breaches of confidentiality, data records being the London Stock Exchange. Breaches of the Companies Act compromised and the inability to make investment decisions. 2006, The Alternative Investment Fund Managers’ Directive, The failure or breach of physical security could lead to damage accounting standards, the Listing Rules, Disclosure Guidance or loss of equipment, with consequential negative results. and Transparency Rules, and Prospectus Rules could result in financial penalties or legal proceedings against the Company or Management of risk its Directors. Each service provider has comprehensive business continuity policies and procedures in place which facilitate continued operation Management of risk of the business in the event of a service disruption or a major The Company has contracted out relevant services to disruption event. Breaches of any nature are reported to the Board. appropriately qualified professionals. The Investment Manager, Depositary and Administrator provide regular reports to the The Committee receives the Administrator’s report on internal Audit and Risk Committee on their monitoring programmes. controls and the reports by other key third-party providers are The Investment Manager monitors investment positions and reviewed by the Investment Manager and Company Secretary on the Investment Manager and Administrator monitor the level of behalf of the Committee. The Depositary reports on custody matters, forecast income and expenditure. Major regulatory change could including the continued safe custody of the Company’s assets. impose disproportionate compliance burdens on the Company. In such circumstances representations would be made to seek Cyber security risks are considered and continually monitored to ensure that the special circumstances of investment trusts are by the Investment Manager as these threats evolve and become recognised. increasingly sophisticated. The integrity of the Company’s information security is closely monitored by the Board, with During the year there were no material changes to the risk level. each of the key service providers providing a regular report through its internal audit function which covers information (V) KEY PERSON RISK technology security and provides comfort to the Board that The Company depends on the diligence, skill and judgement appropriate safeguards are in place. of the Investment Manager’s investment professionals and the The failure or breach of information security could potentially information and ideas they generate during the normal course lead to breaches of confidentiality, data records being of their activities. The Company’s future success depends on compromised and the inability to make investment decisions. the continued service of key personnel. The departure of any The failure or breach of physical security could lead to damage of these individuals without adequate replacement may have a or loss of equipment, with consequential negative results. material adverse effect on the Company’s business prospects and results of operations. (VII) ESG AND CLIMATE CHANGE RISK Management of risk The financial risks from climate change are typically classified as The strength and depth of the investment management team physical or transitional risks. Physical risks are those arising from provides comfort that there is not over-reliance on one person specific weather events and transitional risks are those arising with alternative investment managers available to act if needed. from the changes to regulations, such as the move to net-zero The Board meets regularly with other members of the wider carbon. The Company could suffer potential reputational team employed by the Investment Manager. damage from non-compliance with regulations or incorrect disclosures or as a result of increased investor demand for products which promote ESG investments. The impact of climate change could affect the Company’s investments and Bellevue Healthcare Trust plc Annual Report and Accounts 202320 Strategic Report their valuations and potentially shareholder returns. Further information on this can be found in the principal and emerging risks and uncertainties section and Note 2 of this report. Management of risk The portfolio is well diversified to mitigate against physical risks. Changes in climate change focused regulation, governing both the Company and investee companies, will create some uncertainty. In comparison to the broader economy, the portfolio has a relatively low carbon footprint and the Investment Manager’s parent company is currently deploying a CO reduction strategy. 2 This strategy encompasses measures such as an independent audit of its CO footprint according to ISO14064-1 and GHG 2 protocols, implementation of corporate CO reduction and 2 offsetting of excess emissions with high-quality climate projects. Bellevue Group is targeting a reduction in CO emissions per 2 FTE of at least 30% by 2030. Moreover, the Bellevue Group was certified as carbon neutral by Swiss Climate in late 2021. The Board encourages the Investment Manager to consider ESG factors when selecting and retaining investments and this has been a major topic of discussion in the past year. The Investment Manager’s formal ESG guidelines cover areas such as compliance with global norms (UN Global Compact, Guiding Principles for Business and Human Rights, ILO standards), value-based exclusions, controversies, climate change factors and active ownership (management engagement, voting policies, etc.). The Company’s ESG statement is updated annually and is available on the AIC website and on pages 26 to 32 of this report. Investment trusts are currently exempt from TCFDdisclosure, but the Board will continue to monitor the situation. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 21 ## Viability Statement The Directors have assessed the viability of the Company The Company has a redemption facility through which for the five years to 30 November 2028 (the “Period”), which Shareholders are entitled to request the redemption of all or the Directors consider to be an appropriate time horizon, part of their holding of Ordinary Shares on an annual basis. taking into account the long-term nature of the Company’s The redemption point is the last business day of November. investment objective and recommendation by the Financial The Directors’ assessment assumes that the number of Reporting Council. shares redeemed will not affect the Company’s ability to continue in operational existence. At the last redemption point In reaching this conclusion, the Directors have considered of 30 November 2023, redemption requests in respect of each of the principal and emerging risks, including climate 77,428,034 Ordinary Shares were received, all of the Ordinary change and the liquidity and solvency of the Company Shares were redeemed and cancelled by the Company. All over the next five years. The Directors have considered the shareholders who validly applied to have shares redeemed Company’s income and expenditure projections and the fact received a Redemption Price of 142.07718 pence per share. that the Company’s investments comprise readily realisable The Company’s redemption facility is subject to approval by securities, which could, if necessary, be sold to meet the the Board. Company’s funding requirements. Portfolio changes and market developments are discussed at quarterly Board Based on their assessment, the Directors have a reasonable meetings. The internal control framework of the Company is expectation that the Company will be able to continue in subject to a formal review on at least an annual basis. operation and meet its liabilities as they fall due in the Period. The Directors do not expect there to be a material increase in the annual ongoing charges ratio of the Company over the Period. The Company’s income from investments and cash realisable from the sale of its investments provide substantial cover to the Company’s operating expenses under all stress test scenarios reviewed by the Directors. Bellevue Healthcare Trust plc Annual Report and Accounts 202322 Strategic Report ## Stakeholder Engagement This section of the Annual Report covers the Board’s the Company does not have any employees; rather it employs considerations and activities in discharging their duties under external suppliers to fulfil a range of functions, including s.172(1) of the Companies Act 2006, in promoting the success investment management, secretarial, administration, public of the Company for the benefit of its members as a whole. relations, corporate brokering, depositary and banking services. All of these service providers who are stakeholders in the This statement includes consideration of the likely consequences Company themselves help the Board to fulfil its responsibility to of the decisions of the Board in the longer term, how the Board engage with the Shareholders and other stakeholders. has taken wider stakeholders’ needs into account and the impact of the Company’s operations on the environment. The Board has identified the major stakeholders in the Company’s business. On an ongoing basis the Board monitors both potential The Board is ultimately responsible for all stakeholder and actual impacts of the decisions it makes in respect of the engagement. As an externally managed investment company, Company upon those major stakeholders identified. Importance of Engagement Examples of Engagement and Key Decisions Shareholders The Board’s principal concern is the interests of the With the assistance of regular discussions with and the formal Company’s Shareholders and potential investors. As a public advice of the Company’s legal counsel, secretary and corporate company listed on the London Stock Exchange, the Company broker; the Board abides by the Listing Rules at all times. is subject to the Listing Rules and the Disclosure Guidance The Board recently announced that for the financial year ending and Transparency Rules. The Listing Rules include a listing 30 November 2024, the target total dividend will be 5.04p per principle that a listed company must ensure that it treats all Ordinary Share, this being 3.5% of the audited net asset value Shareholders of the same class of shares that are in the same per Ordinary Share of 143.87p (including current financial year position equally in respect of the rights attaching to such revenue items) as at 30 November 2023. shares. The Board encourages Shareholders to attend and participate The investment objective of the Company is to provide in the Company’s AGM and the Investment Manager attends Shareholders with capital growth and income over the long to answer any questions Shareholders may have. The term, through investment in listed or quoted global healthcare Company values any feedback and questions it may receive companies. from Shareholders ahead of and during the AGM. The Board The Board maintains open dialogue between Shareholders, recognises that it is not possible for everyone to attend the AGM the Investment Manager and other service providers. and therefore encourage Shareholders to submit any enquiries or feedback to the dedicated email address: The Investment Manager and Chairman, along with the info@bellevuehealthcaretrust.com. Company’s corporate broker meets regularly with the Company’s Shareholders to provide Company updates and to The Company’s Annual and Interim Reports are made available on foster regular dialogue. the Company’s website and are also circulated to Shareholders as requested. This information is supplemented by the daily Feedback from meetings between the Investment Manager calculation and publication of the NAV per Ordinary Share and and Shareholders is communicated with the Board. a monthly factsheet, which are announced via a Regulatory Information Service feed and are also available on the Company’s website. The Board has appointed an independent research consultancy, Kepler, to ensure that information and news about the Company is regularly available for existing and potential Shareholders. On a number of occasions during the year the Board wrote to the Company’s larger Shareholders offering meetings or calls with the Chairman or other members of the Board. The Board appreciate that Shareholders vary by size and resources but the Company’s investor relations team, Investment Manager and Board of Directors are pleased to engage with Shareholders, whatever their size. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 23 ### Stakeholder Engagement continued Importance of Engagement Examples of Engagement and Key Decisions Investment Manager The most significant service provider for the Company’s long- The Board monitors the Company’s investment performance term success is Bellevue Asset Management (UK) Limited, in relation to its objectives and investment policy and strategy. who have been engaged as the Company’s Investment The Board regularly assesses the experience and resources Manager. The Investment Manager is responsible for the of the Investment Management team and the commitment management of the Company’s portfolio in accordance of the Investment Manager; to promote the Company and with the Company’s investment policy and the terms of the foster Shareholder relations and to ensure that the Company’s Investment Management Agreement. objective of providing capital growth combined with dividend income for its investors are met. The Investment Manager has also been appointed as the Company’s AIFM in accordance with the Alternative Investment During the volatile market environment caused by war in Ukraine Fund Managers Directive (“AIFMD”), for the purpose of and the Middle East, increasing energy prices and rising global providing investment advisory services to the Company. inflation, the Board held a number of additional ad hoc meetings. The Investment Manager has placed trust in the investee The Board receives and reviews regular reports and companies to respond appropriately to operational challenges presentations from the Investment Manager. and to ensure that high standards of corporate governance An open and active relationship is maintained with the and regard for Shareholders are at the forefront of managerial Investment Manager at Board meetings and additional meetings decision-making. when needed. The Management Engagement Committee met during the year and unanimously endorsed the continued appointment of the Company’s Investment Manager. Service Providers As an externally managed investment trust, the Company The Board has strong working relationships with the Investment conducts all its business through its key service providers. Manager, Broker, Company Secretary, Administrator and Before the engagement of a service provider, the Board Depositary. The Board receives internal control reports from the ensures that the Company’s business outlook as well as its service providers and the Investment Manager. values are similar to those of the service provider. During the year under review, the Board sought and received A list of the Company’s key service providers can be found on reassurance that all key service providers had appropriate page 35 and 36 of this Report. business continuity plans in place. All key service providers have maintained a high standard of service and demonstrate On an annual basis, the Board reviews the continuing operational resilience. appointment of each service provider to ensure reappointment is in the best interests of the Company’s Shareholders. The The Auditor is invited to attend the Audit and Risk Committee Board has strong working relationships with the Investment meeting twice a year. The Audit and Risk Committee Chair Manager, Broker, Company Secretary, Administrator and maintains regular contact with the Audit partner to ensure the Depositary and receives reports on the performance of the key audit process is undertaken effectively. service providers by the Investment Manager and Company Secretary. Bellevue Healthcare Trust plc Annual Report and Accounts 202324 Strategic Report Importance of Engagement Examples of Engagement and Key Decisions Wider community and environment The Company and its appointed professional suppliers keep In making investment decisions, the Investment Manager takes abreast of the rules and regulations affecting the investment into account qualitative measures such as the environmental and company sector. social impact of a company as well as financial and operational measures. The Investment Manager, as steward of the Company’s assets engages with the investee companies to ensure high The Company Secretary and AIFM regularly report to the Board standards of governance. The Board, Company Secretary and any changes in the regulatory environment and as AIC members, AIFM are responsible for ensuring that various regulatory and the Board can draw on the resources available detailing any statutory obligations are met. regulatory changes. The Company has articulated its ESG policy on pages 26 to 32. The ESG policy is also available on the AIC website. In summary, the Directors are cognisant of their duties enshrined in Section 172 of the Companies Act 2006 to make decisions taking into account the long-term consequences of all the Company’s key stakeholders and reflect the Board’s belief that the long-term sustainable success of the Company is linked directly to its key stakeholders. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 25 ## Environmental, Social and Governance ## (“ESG”) Policy OVERVIEW norms (UN Global Compact, Guiding Principles for Business This section summarises the incorporation of ESG factors and Human Rights, ILO standards), value-based exclusions, from both a company perspective at the Bellevue Healthcare controversies, climate change factors and active ownership Trust level (‘the Company’ or ‘the Trust’) and from the Bellevue (management engagement, voting policies, etc.). Bellevue’s Asset Management (UK) Ltd (‘Bellevue’) perspective, as the high-level exclusion criteria can be summarised in two guiding appointed investment manager of the Trust. ‘We’ and ‘Our’ principles: refer to Bellevue Asset Management (UK) Ltd. and its staff. Companies that are involved in serious violations At the portfolio management level, Bellevue continues to refine of internationally recognised norms regarding the and adapt its approach to ESG integration and reporting. ESG environment, human rights and business ethics are considerations are integrated into the core investment process excluded from all portfolios. for all products. Bellevue has been a signatory to the United Companies with controversial business activities that Nations Principles of Responsible Investment (UN PRI) since exceed Bellevue’s stated revenue thresholds as set forth 2019. The latest PRI update can be found on the Bellevue by norms-based criteria are excluded from all portfolios. Group website. Generally speaking, the Trust’s healthcare focus makes it Bellevue Group has a CO reduction strategy, including very unlikely that any excluded companies would ever fall into 2 an independent audit of its CO footprint according to our screening processes in the first place. However, there 2 ISO14064-1 and GHG protocols, the implementation of have been a number of investment opportunities since the corporate CO reduction and offsetting excess emissions with inception of the Trust where we have decided not to progress 2 high-quality climate projects. Bellevue Group is certified as into detailed due diligence because they have failed to meet carbon neutral by Swiss Climate. our broader ESG principles. The most common reasons for negative screen-outs continue to be governance structure THE SUSTAINABLE FINANCE DISCLOSURE and/or reporting quality. REGULATION (`SFDR’) The assessment of ESG considerations is often over-simplified The SFDR is an EU law which aims to standardise disclosure to the level of significant controversies or an aggregated ESG requirements on how financial market participants integrate score provided by third party agencies. We remain firmly of environmental, social and governance factors in their the view that the process must reflect the pitfalls of an over- investment decision-making and risk processes. With respect simplified “one size fits all” approach, especially in an industry to SFDR, the Trust is an Article 8 product and promotes as diverse and complex as human healthcare. Bellevue environmental and social characteristics in accordance with continues to use MSCI ESG reports for qualitative and Article 8 of the SFDR. Further information is provided within the quantitative external data. “ESG Disclosure” on the Trust’s website. Additional information regarding the Trust’s environmental or social characteristics The scope and quality of external ESG assessments remain can also be found in the periodic disclosures in AnnexI variable, although the situation continues to improve year-on- – Article 8 Periodic Disclosures of this Annual Report and year. Where the available MSCI data is not comprehensive, we Accounts. rely on other third-party data providers and internal evaluations. In FY2023, 100% of the companies that we were invested in The Trust remains out of the current scope for both the UK received a detailed rating from MSCI during the period. Although climate-related reporting requirements and the EU Corporate coverage has improved, it was still not the case that MSCI met Sustainability Reporting Directive. with the management team of all of the companies reviewed during the period, relying instead on public data. MANAGEMENT OF ESG FACTORS WITHIN Investors, including us, are encouraging companies to engage THE BELLEVUE HEALTHCARE TRUST with these third party agencies to address misunderstandings INVESTMENT PORTFOLIO within third party reports and we note some further progress The consideration of ESG factors is part of the initial stages of in this regard, with some of the portfolio companies previously the investment process to screen out companies that would rated as laggards (often unfairly in our view) on ESG metrics not meet Bellevue’s criteria as early as possible. These formal seeing marked improvements in their ratings. ESG guidelines cover areas such as compliance with global Bellevue Healthcare Trust plc Annual Report and Accounts 202326 Strategic Report MSCI reports are only part of the process; we have our own inclusion of one company that is not rated (note: the proportion internally-generated qualitative criteria that form the basis of not rated relates to the weighting, not the number of companies). decision-making, so we are not solely reliant on third-party It is notable that the ESG Rating and Quality Score for the data or adherence to a singular industry standard. We do not reference index have declined compared to November 2022. apply specific scoring criteria for exclusion from our portfolio To our minds, this is a positive development for all investors because we feel that an external rating or scoring approach interested in consistent and balanced ESG ratings. We note has significant limitations. Rather, we see these more as that MSCI altered its ESG rating methodology in May 2023 by tools to consider within a much more comprehensive and removing the so-called adjustment factors from the calculation holistic approach. of the ESG Quality Score. These changes were made after a consultation with clients who noticed an upward shift in ESG THIRD PARTY DATA METRICS fund ratings. As noted previously, assessments of quantitative ESG parameters must be considered carefully, since there are all Of more interest though is the outsized impact of fundamental manner of numerator and denominator issues in the third party downgrades to some of the largest stocks in the benchmark. data that confound comparisons, and the tendency of larger The median change in rating by company was positive during companies to comply by default becomes more relevant when the year (33 upgrades, 15 downgrades) but the impact of the compared to a benchmark that is dominated by some of the downgrades on a weighted basis were negative. We have world’s largest and most valuable companies. been saying for years that we want to see a more consistent approach across the market cap spectrum and these Portfolio-level data and comparables for the reference Index are movements leave us more optimistic that such changes are summarised in Figure 1 below. The portfolio’s ESG Quality Score underway. and the overall sustainable impact (which is driven largely by the social impact score on major diseases) have declined. As The Governance Score of the portfolio having risen over outlined in the Investment Manager’s report, the median market 2021-2022, remained very high in 2023. We would note that capitalisation of the portfolio has declined and this is typically the individual outputs in the table are outputs from MSCI and correlated with lower overall scores in all three categories of we do not target any specific thresholds for these individual Environmental, Social and Governance. This also resulted in the items in our ESG assessment process. Figure 1 November 30, 2021 November 30, 2022 November 30, 2023 Portfolio MSCI WHC Portfolio MSCI WHC Portfolio MSCI WHC ESG Rating A A A AAA BBB A Proportion not rated 0% 0% 0% 0% 1% 0% ESG Quality Score 6.4 6.2 6.5 10.0 5.5 7.1 Environmental Score 5.3 7.1 5.4 7.1 5.3 7.0 Social Score 4.9 5.0 4.5 5.2 4.4 5.0 Governance Score 5.6 5.2 6.1 5.8 6.1 6.0 Overall Sustainable Impact 37.0% 16.0% 34.1% 17.3% 29.3% 16.4% We reiterate the view that reducing these complex issues SFDR REPORTING to single level datapoints is unhelpful and confusing, and it In 2022, Bellevue introduced a minimum threshold of 50% remains that the larger companies that dominate benchmark “Investments with Sustainable Characteristics” for the Trust indices are able to devote more resources to providing data portfolio. This is defined by sufficient ESG research coverage, or simply score better since some of the measurement a minimum ESG Rating of BB or higher, and compliance with approaches display an inherent size bias (which is global norms. acknowledged by the rating agencies) and we are hopeful that scoring methodologies will ultimately be adjusted to better aid In addition, the Trust must have a minimum of 25% of the comparability across the company size spectrum. portfolio qualifying as “Sustainable investments”. SFDR defines a “Sustainable Investment” as an investment in an economic activity that contributes to the achievement of an environmental Bellevue Healthcare Trust plc Annual Report and Accounts 2023 27 ### Environmental, Social and Governance (“ESG”) Policy continued and/or social objective while not significantly harming any of “aligned”, “neutral”, “misaligned” and “strongly misaligned”. these objectives. Furthermore, the invested companies must As of 30 November 2023, 56% of the investment portfolio apply practices of good corporate governance. met the definition of “Sustainable investments”, which is well above the 25% minimum threshold. However, these numbers For an investment to qualify as a “Sustainable Investment”, have declined since the prior year, again reflecting the move Bellevue applies the 17 UN Sustainable Development Goals down the market capitalisation curve (we now have three (SDGs). companies that are not rated for these characteristics, versus two in FY2022 and the combined weighting of the ‘not rated’ MSCI measures the target contribution of companies to each companies is higher than was the case last year. of the SDGs and categorizes them as “strongly aligned”, Figure 2 Sustainable investments (SFDR) 56% | | Investments | Other investments | | --- | --- | --- | | | with sustainable | with sustainable | | | characteristics | characteristics | | | 87% | 31% | | Net invested assets | Other investments | | | 100% | 13% | | More detailed information on the approach and methodology Bellevue takes voting obligations seriously and there are 2 applied can be found on our website. multiple structures in place to ensure that we vote in all shareholder meetings. While we evaluate external reports when considering how we might vote, we do not outsource RESPONSIBLE STEWARDSHIP our voting to a proxy agency and are happy to go against both Responsible investing does not end with the due diligence their recommendations and the wishes of management, when process; the importance of ongoing engagement with we consider it important to do so. Over the period in review, management teams cannot be overstated. Active fund we took part at 34 votable meetings (covering 292 resolutions) management arguably derives a material proportion of its and Figures 1 & 2 below summarise how we voted in these longer-term alpha generation opportunities through the meetings: ability to proactively consider, debate and influence (via the exercising of voting powers) potential issues at investee companies. 2 https://www.bellevuehealthcaretrust.com/uk-en/private/investor-relations/legal-documents “ESG Disclosure” Bellevue Healthcare Trust plc Annual Report and Accounts 202328 Strategic Report Meeting Overview Category Number Percentage Number of votable meetings 34 Number of meetings voted 32 94.12% Number of meetings with at least 1 vote Against, Withhold or Abstain 14 41.18% Ballot Overview Category Number Percentage Number of votable ballots 68 Number of ballots voted 64 94.12% Proposal Overview Category Number Percentage Number of votable items 292 Number of items voted 251 85.96% Number of votes FOR 211 84.06% Number of votes AGAINST 18 7.17% Number of votes ABSTAIN 0 0.00% Number of votes WITHHOLD 10 3.98% Number of votes on MSOP Frequency 1 Year 12 4.78% Number of votes on MSOP Frequency 2 Years 0 0.00% Number of votes on MSOP Frequency 3 Years 0 0.00% Number of votes With Policy 250 99.60% Number of votes Against Policy 1 0.40% Number of votes With Management 218 86.85% Number of votes Against Management 33 13.15% Number of votes on MSOP (exclude frequency) 25 9.96% Number of votes on Shareholder Proposals 8 3.19% Engagement with voting is only part of the process. TRUST-SPECIFIC EXCLUSION CRITERIA Pragmatically, we are but one of many voices and it may be the AND TOLERANCE THRESHOLDS case that even after a multi-year engagement with management It would be very easy to claim that one has a blanket ban on and exercising our voting power we have not been able to elicit investing in everything that’s bad or that all one’s investments change. In such a situation, we would consider divesting our are sustainable. However, some points of view are subjective holding, depending on the materiality of the issues. and some things are what they are: every human healthcare company is involved in supporting animal testing to some We have yet to divest a holding due to ESG considerations, degree and you cannot rationally penalise an industry for a which attests to the robustness of the initial screening regulatory requirement that is designed to save human lives. approach in helping us to avoid potential controversies. We are quite happy to exit positions when we lose confidence in Finally, one must recognise that rarely are matters so clear management or strategy and several historical examples of cut as to be able to definitively state a company has zero such situations can be found in our monthly factsheets. involvement or exposure to a controversial area; one can easily Bellevue Healthcare Trust plc Annual Report and Accounts 2023 29 ### Environmental, Social and Governance (“ESG”) Policy continued take exposures off the balance sheet via outsourcing (animal These are aligned with, or go further than, the criteria testing is often outsourced, for example). enshrined by Bellevue Asset Management (UK) Ltd’s group- wide policies. With these realities in mind, it makes more sense to operate by a set of guiding principles based on data that can be The table below serves as much as a documentary ‘terms simply ascertained from management and that are realistically of reference’ for analysts compiling such reports on behalf of achievable for the portfolio overall. underlying investors as it does to inform shareholders about what we are doing in respect of running the portfolio. The list is Bellevue agreed an expansive list of thresholds with the Board unchanged from last year. of the Company that came into effect from 1 January2022. Exclusion Criteria Potential Issue/controversy Comment (max % revenues) Environmental considerations Thermal coal The company would not knowingly invest in a holding involved in the 2% production of any fossil fuels. Other fossil fuels The company would not knowingly invest in a holding involved in the 2% exploration for, or production of, any fossil fuels, including fracking and other unconventional oil sources. Nuclear power The company would not knowingly invest in a holding involved in the 2% production of nuclear energy. Palm oil Palm oil and derivatives such as tocopherol are widely used excipients in 5% biomedical preparations and unlikely to be avoidable within the investment mandate. We try to ensure that investee companies are committed to sustainable sourcing of such products and are thus not promoting deforestation. Responsible mineral To the extent that it is relevant, we aim to ensure that investee companies 2% sourcing source raw materials such as minerals from responsible suppliers who comply with relevant global standards around the environmental and social impact (e.g. no forced labour, conflict minerals etc.) of mining activities. Environmentally damaging The investment focus of the Company is on human healthcare and 10% agricultural chemicals so we would not intentionally invest into companies manufacturing or (insecticides, herbicides supplying agricultural products that may have an environmental impact. etc.) However, there is a long-standing historical linkage between the chemical, pharmaceutical and agrochemical industries and it is possible that such legacy business tie-ups do persist, therefore we apply a higher threshold. Social considerations Alcohol production The Company would not knowingly invest in a holding involved in the 2% (beverages) production of alcoholic beverages, but alcohol is a common constituent of medicinal products and sterilisation solutions. Tobacco production The Company would not knowingly invest in a holding involved in the 2% production of tobacco products. Tobacco sales Indirect exposure to tobacco sales through retail outlets or peripheral 10% activities is hard to fully discount, hence we allow for a higher threshold versus other considerations. Bellevue Healthcare Trust plc Annual Report and Accounts 202330 Strategic Report Exclusion Criteria Potential Issue/controversy Comment (max % revenues) Cannabis-based products The Company can invest, and has invested, into holdings that offer n/a therapeutic products derived from, or containing cannabinoids. However, the Company would not knowingly invest into a holding involved in the production or supply of recreational cannabis products. Pornography The Company would not knowingly invest in a holding involved in the 2% production or sale of pornographic material/content. Gambling The Company would not knowingly invest in a holding involved in the 2% provision of gambling services or the operation of gambling venues. Predatory lending practices We seek to ensure that, where applicable, investee companies do not 2% and price gouging supply products under terms that would constitute unfair, deceptive or predatory terms to customers or engage intentionally in price gouging during periods of tight supply. Animal testing and related The use of animal disease models in pharmaceutical R&D and the n/a animal welfare issues undertaking of pre-clinical testing in animal species are integral parts of the regulatory pathway for approving new medicines. Given the risks involved in unproven medicines and the human suffering such products alleviate, we agree such testing is morally and ethically justified at the current time due to the absence of credible alternatives. We therefore limit our focus to ensuring that investee companies adhere to the highest standards of welfare in respect of the animals that are used for such purposes. Genetic research Whilst we appreciate that some investors find the manipulation of genetic n/a material in animals or human cell lines to be controversial, it has the potential to greatly enhance our understanding of human disease and, via gene therapy, gene editing and gene silencing to be directly deployed as a therapeutic intervention, particularly in areas of high unmet need. As such, we do not consider this to be controversial, as long as research follows accepted ethical guidelines and is appropriately supervised. Use of embryonic stem Whilst the utilisation of embryonic stem cells (gathered historically from n/a cells aborted foetuses, more commonly today from unwanted IVF embryos that are donated with informed consent or taken from similarly donated umbilical cord material) is undoubtedly controversial, it also has the potential to greatly enhance our understanding of human disease and there are not currently viable alternatives in many cases. There are ethics guidelines (most notably those of the US National Institutes of Health, 2009) and our focus is to ensure that, where such research is undertaken, it is performed in line with these guidelines. Conventional weapons & The Company would not knowingly invest in a holding involved primarily 2% military contracts in the provision of armaments. We would note that, as large employers in many countries with their own dedicated healthcare infrastructure, many investee companies will have contracts to supply the military forces of a country with healthcare products and/or services. Military personnel are just as entitled to good healthcare as anyone else, so we do not see this as an issue. Unconventional weapons Bellevue Group maintains a list of companies connected with the supply 0% of unconventional weapons and investment into such companies is prohibited. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 31 ### Environmental, Social and Governance (“ESG”) Policy continued Exclusion Criteria Potential Issue/controversy Comment (max % revenues) Governance considerations Dealing with oppressive Whilst it may be unpalatable to deal with corrupt or oppressive regimes, it n/a regimes would only compound the misery and suffering of the oppressed people if they were also denied access to healthcare products and services. As such, we do not judge our companies on who they chose to supply life- saving products and services to. Bribery & Corruption The managers are committed to investigating serious allegations of bribery n/a or corruption made against investee companies and discussing these with management. Equitable access to Within the healthcare sector, affordable access to products for less n/a products for developing developed countries is rightly highlighted as a controversial area and countries an important topic. We do engage with management teams around this topic. However, you cannot supply regulated products into markets where those products have not yet been approved. This point is often misunderstood in the media and certain external ESG ratings, with smaller companies unfairly penalised when they only have approvals in a handful of developed countries. Human capital It is laudable that external rating agencies focus on human capital n/a development and diversity development and diversity. However, one must be pragmatic and take into account the size and geographic focus of a company. A small, research stage entity based in one location is simply not going to be able to match the diversity of a broad-based multi-national, nor will it be at a stage where it is hiring inexperienced people with a view to training them up. We see inappropriate comparisons being made in these areas all too frequently. Bellevue Healthcare Trust plc Annual Report and Accounts 202332 Strategic Report ## Other Information ENVIRONMENTAL MATTERS CONSUMER DUTY The Company has no greenhouse gas emissions to report The Company and Investment Manager are fully cognisant of from its operations, nor does it have responsibility for any other the rules which came into force on 31 July 2023 and have emissions producing sources under the Companies Act 2006 taken the necessary steps to ensure compliance. (Strategic Report and Directors’ Reports) Regulations 2013. Investment trusts are currently exempt from TCFD disclosure, OUTLOOK but the Board will continue to monitor the situation. The outlook for the Company is discussed in the Investment Manager’s Report on pages 13 and 14. EMPLOYEES The Company has no employees. As at 30 November 2023 STRATEGIC REPORT the Company had five Directors, three of whom were male The Strategic Report set out on pages 1 to 33 of this Annual (60%) and two of whom were female (40%). The Board’s policy Report was approved by the Board of Directors on 1 March on diversity is contained in the Corporate Governance Report 2024. (on page 43). For and on behalf of the Board SOCIAL, COMMUNITY AND HUMAN RIGHTS Randeep Grewal ISSUES Chairman Having no employees, the Company, as an investment 1 March 2024 company, has no direct impact on social, community, environmental or human rights matters. MODERN SLAVERY DISCLOSURE Due to the nature of the Company’s business, being a company that does not offer goods or services to consumers, the Board considers that it is not within the scope of modern slavery. The Board considers the Company’s supply chains, dealing predominantly with professional advisers and service providers in the financial service industry, to be low risk in relation to this matter. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 33 ## Governance Bellevue Healthcare Trust plc Annual Report and Accounts 202334 Bellevue Healthcare Trust plc Annual Report and Accounts 202334 Governance # Directors' Report ![img-4.jpeg](img-4.jpeg) The Directors present their annual report and accounts for the year ended 30 November 2023. ## STRATEGIC REPORT The Directors' Report should be read in conjunction with the Strategic Report on pages 1 to 33. ## LEGAL AND TAXATION STATUS The Company is an investment company within the meaning of Section 833 of the Companies Act 2006. The Company conducts its affairs in order to meet the requirements for approval as an investment trust under section 1158 of the Corporation Tax Act 2010. The Company has received initial approval as an investment trust and the Company must meet eligibility conditions and ongoing requirements in order for investment trust status to be maintained. In the opinion of the Directors, the Company has met the conditions and requirements for approval as an investment trust for the year ended 30 November 2023. ## ALTERNATIVE FUND INVESTMENT MANAGERS ("AIFM") Bellevue Asset Management (UK) Ltd ("Bellevue") is authorised and regulated by the Financial Conduct Authority ("FCA") to undertake the regulated activities as defined in the Alternative Investment Fund Managers Directive (2011/611/EU) ("AIFMD"). On 1 April 2020, it was announced that Bellevue had been appointed as AIFM to the Company, subject to the overall control and supervision of the Board. Under the terms of the AIFM agreement, Bellevue performs the activity of investment management in accordance with the investment policy of the Company and has discretion to buy, sell, retain, exchange or otherwise deal in investment assets for the account of the Company. The Investment Manager is entitled to receive a management fee payable monthly in arrears and calculated at the rate of one-twelfth of 0.95% per calendar month of market capitalisation. Market capitalisation means the average of the mid-market prices for an ordinary share, respectively, as derived from the daily official list of the London Stock Exchange on each business day in the relevant calendar month multiplied by the number of Ordinary Shares, respectively. In issue on the last business day of the relevant calendar month excluding any Ordinary Shares held in treasury. There is no performance fee payable. As allowed under the AIFMD, Bellevue has delegated the activity of Risk Management to Bellevue Asset Management AG (the "Delegated Risk Manager"). The AIFM agreement may be terminated on 12 months' written notice and may be terminated with immediate effect on the occurrence of certain events, including insolvency, on a change of control of the Investment Manager or in the event of a material breach which fails to be remedied within 30 days of receipt of notice. As an AIFM, Bellevue must ensure that it, together with the Company, is fully compliant with the terms of the AIFMD. In order to accomplish this, the required regulatory obligations are met through the cooperation of both parties as well as with significant input from the Delegated Risk Manager. Bellevue has agreed with the Delegated Risk Manager, and in full compliance with the AIFMD, a Risk Framework in respect of the Company. The Risk Framework seeks to govern the investment and operational risks as well as ensuring that all risk limits are complied with. All required risk reporting is completed by the Delegated Risk Manager. The Delegated Risk Manager monitors the Company on a daily basis in order to ensure that Bellevue is operating within the risk limits contained in the risk policy and seeks to identify breaches. If Bellevue breaches a risk management limit, then it is required to notify the Delegated Risk Manager of the breach as soon as possible, and by the day after the infraction occurred at the latest. In addition to providing details of the breach, Bellevue Bellevue Healthcare Trust plc Annual Report and Accounts 2023 35 ### Directors’ Report continued confirms how and when the breach was resolved or when and ALTERNATIVE INVESTMENT FUND how it is intended that the breach will be resolved. MANAGERS’ DIRECTIVE (“AIFMD”) In accordance with the AIFMD, the AIFM must ensure that an The AIFMD Annex IV reporting requirements are annual report containing certain information on the Company undertakenby the AIFM, Administrator and other selected is made available to investors for each financial year. The service providers. investment funds sourcebook of the FCA (the “Sourcebook”) details the requirements of the annual report. All the BROKER information required by those rules are included in this Annual The Company’s sole broker is J.P. Morgan Cazenove. The Report or is or will be made available on the Company’s Company ceased to use Alvarium Securities Limited as its website, https://www.bellevuehealthcaretrust.com. joint broker in February 2023. The AIFM is required to make certain disclosures on its remuneration in respect of the AIFM’s relevant reporting DEPOSITARY period. These disclosures are available on request from CACEIS Bank, UK Branch has been appointed as the theAIFM. Company’s depositary. LEVERAGE (UNDER AIFMD) COMPANY SECRETARY AND The AIFM is required to set leverage limits as a percentage ADMINISTRATOR of net assets for the Company utilising methods prescribed Apex Listed Companies Services (UK) Limited provide under AIFMD. These methods are known as the gross company secretarial and administration services to the method and the commitment method. Company, including calculation of its daily Net Asset Value. Under both methods the AIFM has set current maximum The Board has had continuous direct access to the advice limits of leverage for the Company of 120%. and services of the Company Secretary who is responsible for ensuring that the Board and Committee procedures A leverage percentage of 100% equates to nil leverage. The are followed, and that applicable rules and regulations are Company’s leverage under each of these methods at its year complied with. end is shown below: The Company Secretary provides full company secretarial | | | Gross | Commitment | | | --- | --- | --- | --- | --- | | services to the Company, ensuring that it complies with all | | method | | method | | legal, regulatory, and corporate governance requirements | Maximum leverage limit 120% 120% | | | | and officiating at Board meetings and Shareholders’ Actual leverage at 30 November 105% 105% meetings. The Company Secretary is also responsible to 2023* theBoard for ensuring timely delivery of information and * Definitions of this APM together with how these measures have reports and that the statutory obligations of the Company been calculated can be found on pages 83 and 84. are met. Finally, the Company Secretary is responsible for advising the Board through the Chairman on all SHARE ISSUES governancematters. During the year ended 30 November 2023, the Company issued 209,697 Ordinary Shares, through the ongoing share MANAGEMENT ENGAGEMENT issuance programme. The number of Ordinary Shares in issue The Directors are satisfied that the AIFM has the suitable at 30 November 2023 was 478,987,196 Ordinary Shares, skills and experience to manage the Company’s investments of which 16,398,646 Ordinary Shares are held in Treasury. and believe that the continuing appointment of the AIFM is in Therefore, the total number of voting rights in the Company the interests of Shareholders as a whole. is462,588,550. The authority to issue new shares pursuant to the placing programme, detailed in the Company’s prospectus dated Bellevue Healthcare Trust plc Annual Report and Accounts 202336 Governance 10 November 2016, expired on 9 November 2017. The Company published a new prospectus on 5 November 2018, for the issuance of up to 345 million Ordinary Shares by way of an Initial Placing, Offer for Subscription and Intermediaries Offer, and pursuant to a new share issuance programme. A supplementary prospectus was issued on 20 February 2019. At the AGM of the Company held on 28 April 2023, the Directors were granted authority to allot up to 55,047,500 Ordinary Shares on a non-pre-emptive basis. This authority will expire at the conclusion of the forthcoming AGM. The authorities have the following benefits for Shareholders: - Enable the Company to continue to take advantage of opportunities to make further investments in accordance with its investment objective and policy; - Increase the market capitalisation of the Company, helping to make the Company attractive to a wider investor base; - A greater number of Ordinary Shares in issue should improve liquidity in the secondary market for the Ordinary Shares and make the Ordinary Shares more attractive to a wider range of investors; and - Grow the Company, thereby spreading the Company's fixed running costs across a larger equity capital base which should reduce the level of ongoing expenses per Ordinary Share. It must be noted that the price at which any new Ordinary Shares are issued to satisfy market demand is never less than the prevailing Net Asset Value (cum-income) per Ordinary Share at the time of issue plus a premium to cover the expenses of such issue, therefore Shareholders will not suffer any dilution to the Net Asset Value (cum-income) per Ordinary Share as a result of any such issue. The Board recommends that the Company is granted a new authority to issue up to a maximum of 47,898,719 Ordinary Shares (representing 10% of the shares in issue at the date of this document) and to disapply pre-emption rights when issuing those Ordinary Shares. Resolutions to this effect will be put to Shareholders at the AGM to be held on 28 April 2024. This authority would be used to carry out a series of placings or tap issues, providing the Company with the ability to issue new Ordinary Shares over a period of time to meet investor demand and help with managing the premium that the shares typically trade at. ## SCRIP DIVIDEND As reported in the Company half-yearly report to 31 May 2023, the Board reluctantly decided to suspend the scrip dividend option for the time being. On 6 March 2023, the Board declared an interim dividend for the year ended 30 November 2022 of 3.235p per Ordinary Share and offered Shareholders the opportunity to participate in the Scrip Dividend Scheme. Accordingly, the Company posted to Shareholders a Circular setting out details of the Scrip Dividend Scheme. On 3 April 2023, the Company announced a scrip dividend reference price of 163.10p for the interim dividend, payable on 5 May 2023. The scrip dividend reference price was the unaudited net asset value per Ordinary Share as at close of business on 31 March 2023. On 5 May 2023, in line with the Company's Scrip Dividend Scheme, 209,697 Ordinary Shares were allotted and issued to Shareholders who elected for their interim dividend to be automatically subscribed on their behalf for new Ordinary Shares. Any Ordinary Shares issued for cash were issued at a premium to (cum income) net asset value. Shareholders who did not elect to participate in the Scrip Dividend Scheme received their dividends in cash. ## TREASURY SHARES The Companies Act allows companies to hold shares acquired by way of market purchase as treasury shares, rather than having to cancel them. This would give the Company the ability to re-issue Ordinary Shares quickly and cost effectively, thereby improving liquidity and providing the Company with additional flexibility in the management of its capital base. Ordinary Shares will not be sold from treasury at a price less than the (cum income) NAV per existing Ordinary Share at the time of their sale. The Company bought back 16,398,646 during the year ended 30 November 2023. The Company has not bought back any Ordinary Shares to be held in treasury since the year end. ## DISCOUNT MANAGEMENT The Company may seek to address any significant discount to NAV at which its Ordinary Shares may be trading by purchasing its own Ordinary Shares in the market on an ad Defence Healthcare Trust plc Annual Report and Accounts 2023 37 Directors' Report continued hoc basis. As outlined above, 16,398,646 Ordinary Shares have been bought back by the Company during the year to 30 November 2023. The Directors currently have the authority to make market purchases of up to 82,516,203 Ordinary Shares. The maximum price (exclusive of expenses) which may be paid for an Ordinary Share must not be more than the higher of: (i) 5% above the average of the mid-market values of the Ordinary Shares for the five Business Days before the purchase is made; or (ii) the higher of the price of the last independent trade and the highest current independent bid for the Ordinary Shares. Ordinary Shares will be repurchased only at prices below the prevailing NAV per Ordinary Share, which should have the effect of increasing the NAV per Ordinary Share for remaining Shareholders. It is intended that a renewal of the authority to make market purchases will be sought from Shareholders at each AGM of the Company and authority for the Company to purchase up to 63,342,023 Ordinary Shares (subject to a maximum of 14.99% of the Ordinary Shares in issue at the date of the AGM) will be sought at the forthcoming AGM. Purchases of Ordinary Shares will be made within guidelines established from time to time by the Board. Any purchase of Ordinary Shares would be made only out of the available cash resources of the Company. Ordinary Shares purchased by the Company may be held in treasury or cancelled. Purchases of Ordinary Shares may be made only in accordance with the Companies Act, the Listing Rules, and the Disclosure Guidance and Transparency Rules. Investors should note that the repurchase of Ordinary Shares is entirely at the discretion of the Board and no expectation or reliance should be placed on such discretion being exercised on any one or more occasions or as to the proportion of Ordinary Shares that may be repurchased. #### REDEMPTION FACILITY The Company has a redemption facility through which Shareholders are entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The redemption facility is entirely at the discretion of the Directors. The Company announced on 3 November 2023 that valid redemption requests in respect of 77,428,034 Ordinary Shares were received for the 30 November 2023 redemption point; all of the Ordinary Shares were redeemed and cancelled by the Company. All shareholders who validly applied to have shares redeemed received a Redemption Price of 142.07718 pence per share. The Company's redemption facility is subject to approval by the Board. The process for the redemption of Ordinary Shares, including the calculation of redemption price, is set out in Part 3 of the Securities Note as part of the prospectus published by the Company on 5 November 2018. #### LIFE OF THE COMPANY The Company has no fixed life. #### MARKET INFORMATION The Company's share capital is admitted to the Premium Segment of the Official List of the FCA and is admitted to trading on the London Stock Exchange. The NAV per share is calculated in sterling for each business day that the London Stock Exchange is open for business. The daily NAV per Share is published through a regulatory information service. #### REVOLVING CREDIT FACILITY ("RCF") The Company has a multi-currency revolving credit facility RCF with The Bank of Nova Scotia, London Branch. On 16 June 2022, the Company renewed and amended its RCF. Under the terms of the amended RCF, the Company may draw down loans up to an aggregate value of USD 260 million. The increased facility will expire in December 2024. The Company's borrowing policy and the terms of the facility are unchanged. As at 30 November 2023, the aggregate of loans draw down was £31.7 million (2022: £83.7 million). #### CAPITAL STRUCTURE AND VOTING RIGHTS As at 30 November 2023, the Company's issued share capital comprised 50,001 Management Shares and 478,987,196 Ordinary Shares of 1p nominal value, of which 16,398,646 Ordinary Shares are held in Treasury. Therefore, the total number of voting rights in the Company is 462,588,550. Each Ordinary Share held entitles the holder to one vote and there are no restrictions on those voting rights. Voting deadlines are stated in the Notice of Meeting and Form of Proxy and are in accordance with the Companies Act 2006. Management Shares shall not carry any right to receive notice of, nor to attend or vote at any general meeting of the Company. 36 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Governance There are no restrictions on the transfer of Ordinary Shares, nor are there any limitations or special rights associated with Ordinary Shares. ## SIGNIFICANT SHAREHOLDERS As at 30 November 2023, the Company had been formally notified of the following shareholdings comprising 3% or more of the issued share capital of the Company. | Name | Number of Ordinary Shares held | % of voting rights | | --- | --- | --- | | Brown Dolphin Wealth Management | 27,269,652 | 4.97 | | Tilney Smith & Williamson Limited | 27,767,503 | 5.81 | | Handelabaneen Wealth & Asset Management Limited | 27,669,17 | 4.97 | | Quilter plc | 20,671,991 | 4.23 | | Schroders plc | 20,671,991 | 3.17 | * Based on Ordinary Shares in issue as at 30 November 2023. ## SETTLEMENT OF ORDINARY SHARE TRANSACTIONS Ordinary Share transactions in the Company are settled by the CREST share settlement system. ## ANTI-BRIBERY CORRUPTION It is the Company's policy to conduct all of its business in an honest and ethical manner. The Company takes a zero-tolerance approach to bribery and corruption and is committed to acting professionally, fairly and with integrity in all its business dealings and relationships wherever it operates. The Company's policy and the procedures that implement it are designed to support that commitment. ## NOTICE OF GENERAL MEETINGS At least twenty-one days' notice shall be given to all the members and to the auditors of an Annual General Meeting. All other general meetings shall also be convened by not less than twenty-one days' notice to all those members and to the auditors unless the Company offers members an electronic voting facility and a special resolution reducing the period of notice to not less than fourteen days has been passed. In which case a general meeting may be convened by not less than fourteen days' notice in writing. A special resolution will be proposed at the Annual General Meeting to reduce the period of notice for general meetings other than the Annual General Meeting to not less than fourteen days. ## GOING CONCERN The Directors have adopted the going concern basis in preparing the accounts. The following is a summary of the Directors' assessment of the going concern status of the Company. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least twelve months from the date of this document. In reaching this conclusion, the Directors have considered the liquidity of the Company's portfolio of investments as well as its cash position, income and expense flows. The Company's net assets at 30 November 2023 were £655.5 million (2022: £1,004.3 million). As at 30 November 2023, the Company held £696.9 million (2022: £1,043.3 million) in investments, cash of £111.0 million, which includes £110 million payable to redeeming Shareholders (2022: £46.4 million) and bank loans of £31.7 million (2022: £83.7 million). Further details on the Company's Bank loans are detailed in note 12. The total expenses (excluding finance costs and taxation) for the year ended 30 November 2023 were £8.9 million (2022: £10.5 million), which represented approximately 1.02% (2022: 1.04%) of average net assets during the year. The Company also incurred finance costs of £4.1 million (2022: £3.1 million). At the date of approval of this report, based on the aggregate of investments and cash held, the Company has substantial asset cover against its loan facility and also substantial operating expenses cover. Accordingly, the Financial Statements have been prepared on the going concern basis as it is the Directors' opinion, having considered and assessed the adequacy of the Company's operational resources, liquidity of the investment portfolio, debt covenants and any potential impact of the ongoing war in Ukraine, that the Company will continue in operational existence for a period of at least 18 months from the date the financial statements were authorised for issue. Defence Healthcare Trust plc Annual Report and Accounts 2023 39 ### Directors’ Report continued AUDITOR INFORMATION In accordance with Section 489 of the Companies Act Each of the Directors at the date of the approval of this report 2006, a resolution to re-appoint Ernst & Young LLP confirms that: as theCompany’s auditor will be put forward at the forthcomingAGM. so far as the Director is aware, there is no relevant audit information of which the Company’s auditor are unaware; and By order of the Board the Director has taken all steps that he or she ought to have taken as Director to make himself/ herself aware of any relevant information and to establish that the Company’s auditor is aware of that information. Sinead van Duuren For and on behalf of This confirmation is given and should be interpreted in Apex Listed Companies Services (UK) Limited accordance with the provisions of Section 418 of the Company Secretary Companies Act 2006. 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 202340 Governance ## Corporate Governance INTRODUCTION The Board of the Company has considered the Principles The Board’s current composition comprises 40% and Provisions of the 2019 Association of Investment female members, 60% male members and 20% ethnic Companies Code of Corporate Governance (the “AIC Code”). minority member. Hence, the Board is compliant with the The AIC Code addresses the Principles and Provisions recommendations of the Hampton-Alexander review and the set out in the UK Corporate Governance Code 2018 (the Parker review. “UK Code”), as well as setting out additional Provisions on All of the Directors are independent of the Investment issues that are of specific relevance to the Company, as Manager. All of the Directors are able to allocate sufficient an investment trust. The AIC Code is available on the AIC time to the Company to discharge their responsibilities website, www.theaic.co.uk. effectively. The Board considers that reporting against the Principles and The Board believes that during the year ended 30 November Provisions of the AIC Code, which has been endorsed by the 2023 its composition was appropriate for an investment Financial Reporting Council (“FRC”), provides more relevant company of the Company’s nature and size. The Board’s information to Shareholders. AIC members who report policy for the appointment of Non-Executive Directors is against the AIC Code and the AIC Guide fully meet their based on its belief in the benefits of having a diverse range obligations under The UK Code and the related disclosure of experience, skills, length of service and backgrounds, requirements contained in the Listing Rules. including but not limited to gender diversity. The Company has complied with the Principles and The Directors have a broad range of relevant experience to Provisions of the AIC Code. meet the Company’s requirements and their biographies are During the financial year ended 30 November 2023, the given below. Company has complied with the recommendations of the AICCode and the relevant provisions of the UK Code, RANDEEP GREWAL (CHAIRMAN except as set out below. AND CHAIR OF THE MANAGEMENT The UK Code includes provisions relating to: ENGAGEMENT COMMITTEE) Randeep is an ex-Fund Manager, with over 19 years of the role of the chief executive; Healthcare investment experience, including Trium Capital, F&C Asset Management, ICAP Equities, Hox Therapeutics, executive Directors’ remuneration; and Tissue Regenix and Tudor. Randeep is a current non-executive † the need for an internal audit function. director of The Global Smaller Companies Trust plc and of Monks Investment Trust Plc. Randeep trained as a Vascular The Board considers that these provisions are not relevant to and General Surgeon and read both Medicine and Computer this externally managed investment company. The Company Science at Cambridge University. has no employees and the day-to-day management and administrative functions are outsourced to third parties. JOSEPHINE DIXON (CHAIR OF THE AUDIT AND RISK COMMITTEE AND SENIOR THE BOARD COMPOSITION, INDEPENDENT DIRECTOR) INDEPENDENCE AND SUCCESSION Josephine is a chartered accountant who sits on the boards PLANNING of Ventus VCT plc, Strategic Equity Capital plc, Alliance As at 30 November 2023, the Board consisted of five non- ^ Trust plc and The Global Smaller Companies Trust plc . executive Directors, including the Chairman. All Directors Herexecutive experience includes finance, governance and have served since the Company’s inception, with the general commercial roles in a number of sectors. exception of Professor Tony Young and Ms Kate Bolsover, who were appointed to the Board on 23 September 2020 † Randeep Grewal joined Global Smaller Companies Trust plc on 1st December 2023. He and Josephine Dixon will overlap on the board of and 2 July 2021 respectively. Global Smaller Companies Trust plc for a limited period (see next footnote). ^ Josephine Dixon will be retiring from the board of Global Smaller Companies Trust, at the next AGM, in July 2024. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 41 ### Corporate Governance continued PAUL SOUTHGATE (NON-EXECUTIVE DIRECTOR TENURE DIRECTOR) The Board recognises the benefits to the Company of having Paul is a London-based Portfolio Manager at Pictet Asset longer serving Directors together with progressive refreshment Management, with over 23 years’ investment experience. of the Board. The Board does not believe that length of Before joining Pictet, he was a Managing Partner at Eisenstat service necessarily disqualifies a Director from seeking Capital Partners (ECAP) and managed European Equities for reappointment but, when making a recommendation, the both Deephaven Capital and Fortress Investments Group. Board will take into account the requirements of the AIC Code. Hebegan his career with UBS Asset Management. The Board has adopted corporate governance best practice and has a succession plan in place. No Director of the Company has served for nine years or more and all Directors PROFESSOR TONY YOUNG OBE remain independent of the Company’s Investment Manager. (NON-EXECUTIVE DIRECTOR) Tony is a practicing frontline NHS Consultant Urological In line with corporate governance best practice, all of the Surgeon, Director of Medical Innovation at Anglia Ruskin Directors will offer themselves for election/re-election at University, President of the Institute of Decontamination the AGM of the Company to be held on 26 April 2024. The Sciences, and National Clinical Director for Innovation for Board recommends all the Directors stand for re-election the NHS. He has founded four Med-Tech start-ups and for the reasons highlighted above and in the performance also co-founded the £500 million Anglia Ruskin Med- appraisal section of this report. Tech Campus. Tony was previously a member of the The Directors have appointment letters which do not provide Royal Collegeof Surgeon’s Commission on the Future of for any specific term. They are subject to re-election by Surgery (2017 – 2018). In the 2019 New Year’s Honours Shareholders at a maximum interval of three years. Copies list, Professor Young was awarded the OBE for services to of the Directors’ appointment letters are available on request clinical leadership. from the Company Secretary. Upon joining the Board, any new Directors receive an induction and relevant training is KATE BOLSOVER (NON-EXECUTIVE available to Directors on an ongoing basis. DIRECTOR) Kate Bolsover worked in the City of London for over A procedure has been adopted for Directors, in the 25years, initially as an analyst and thereafter running the furtherance of their duties, to take independent professional mutual fund businesses of both Baring Asset Management advice at the expense of the Company. and Cazenove Fund Management. Latterly, she was A policy of insurance against Directors’ and officers’ liabilities appointed Director of Corporate Communications for is maintained by the Company. JPMorgan Cazenove. Kate is Chairman of Fidelity Asian Values and is an independent director at Invesco Bond Income Plus, TR Property Investment Trust and Baillie BOARD COMMITTEES Gifford& Co. The Company has established an Audit and Risk Committee which is chaired by Josephine Dixon and consists of all the Directors. RESPONSIBILITIES OF THE CHAIRMAN, THE BOARD, AND ITS COMMITTEES A report of the Audit and Risk Committee is included in this The Chairman leads the Board and is responsible for its Annual Report. The Board considers that the members of overall effectiveness in directing the affairs of the Company. the Audit and Risk Committee have the requisite skills and The Company has adopted a document setting out the experience to fulfil the responsibilities of the Audit and Risk responsibilities of the Chairman, which is available on the Committee. The Audit and Risk Committee examines the website: https://www.bellevuehealthcaretrust.com. effectiveness of the Company’s risk management and internal control systems. It reviews the half-yearly and annual reports and other financial information. It also reviews the scope, results, cost effectiveness, independence and objectivity of the external auditor. Bellevue Healthcare Trust plc Annual Report and Accounts 202342 Governance The Company has established a Management Engagement The Board appraises its collective set of cognitive and Committee which is chaired by Randeep Grewal and personal strengths, independence and diversity on an annual consists of all the Directors. The Management Engagement basis, and especially during the recruitment process, so as Committee’s principal duties are to consider the terms of to ensure it is aligned with the Company’s strategic priorities. appointment of the AIFM and other service providers, and The performance appraisal process is described below. it annually reviews those appointments and the main terms The Board believes its composition is appropriate for the of the AIFM Agreement and agreements with other service Company’s circumstances. However, in line with the Board’s providers. succession planning and tenure policy, or should strategic priorities change, the Board will review and, if required, The Board as a whole fulfils the function of the Remuneration adjust its composition. Committee and Nomination Committee. As at date of this Report, the Board comprises two female and three male Board members. BOARD DIVERSITY The Company’s policy is that the Board should have an The Board takes account of the targets set out in the FCA’s appropriate level of diversity in the boardroom, taking into Listing Rules, which are set out below. The Board discloses account relevant skills, experience, gender, social and the following information in relation to its diversity. As an ethnic backgrounds, cognitive and personal strengths. Brief externally managed investment company, the Board employs biographies of the Directors are shown on pages41 and no executive staff, and therefore does not have a chief 42. The policy is to ensure that the Company’s Directors executive officer (CEO) or a chief financial officer (CFO) – bring a wide range of knowledge, experience, skills, both of which are deemed senior board positions by the backgrounds and perspectives to the Board. There will be FCA. However, the Board considers the Chair of the Audit no discrimination on the grounds of gender, religion, race, and Risk Committee and Senior Independent Director (SID) ethnicity, sexual orientation, age or physical ability. The to be senior board positions and the following disclosure is overriding aim of the policy is to ensure that the Board is made on this basis. Other senior board positions recognised composed of the best combination of people for ensuring by the FCA are Chair of the Board. In addition, the Board effective oversight of the Company and constructive support has resolved that the Company’s year end date is the most and challenge to the Investment Manager. Consideration appropriate date for disclosure purposes. The following is given to the recommendations of the AIC Code and the information has been provided by each Director. There have Board supports the recommendations of the Hampton been no changes since 30 November 2023. Alexander Review. BOARD AS AT 30 NOVEMBER 2023 Number of senior Number of Board Percentage of the positions on the members Board Board Men 3 60% 1 Women 2 40% 1 Prefer not to say - - - Number of senior Number of Board Percentage of the positions on the members Board Board White British or Other White (including minority-white groups) 4 80% 1 Asian/Asian British 1 20% 1 Prefer not to say - - - Bellevue Healthcare Trust plc Annual Report and Accounts 2023 43 ### Corporate Governance continued MEETING ATTENDANCE The actual number of formal meetings of the Board and Committees during the year under review is given below, together with individual Director’s attendance at those meetings. The first number in the table is the meetings attended by the individual Director. Management Audit and Engagement Quarterly Board Risk Committee Committee Number held 4 3 1 Randeep Grewal 4/4 3/3 1/1 Josephine Dixon 4/4 3/3 1/1 Paul Southgate 4/4 3/3 1/1 Tony Young 4/4 3/3 1/1 Kate Bolsover 4/4 3/3 1/1 There were several other ad hoc Board and Committee meetings to deal with administrative matters, board selection, market updates and approving documentation. PERFORMANCE APPRAISAL INTERNAL CONTROL The Board recognises the importance of the AIC Code’s The AIC Code requires the Board to review the effectiveness recommendation in respect of evaluating the performance of the Company’s system of internal controls. The Board of the Board as a whole, the Committees of the Board and recognises its ultimate responsibility for the Company’s individual Directors. system of internal controls and for monitoring its effectiveness. Thesystem of internal controls is designed to manage rather In 2023, the Board appointed Lintstock Limited, an external than eliminate the risk of failure to achieve business objectives. consultant, to undertake a review of the Board and its It can provide only reasonable assurance against material Committees. The Company and the individual Directors misstatement or loss. The Board has undertaken a review of have no other connection with Lintstock Limited. A partner the aspects covered by the guidance and has identified risk of Lintstock Limited presented its Board effectiveness review management controls in the key areas of business objectives, report and recommendations to the Board in November 2023. accounting, compliance, operations and secretarial as being The review was positive, and no critical issues were identified. matters of particular importance upon which it requires reports. The recommendations from the report were agreed by the The Board believes that the existing arrangements, set out Board. Key priorities identified for the year ahead by the Board. below, represent an appropriate framework to meet the internal control requirements. By these procedures the Directors have A formal annual performance appraisal process was performed kept under review the effectiveness of the internal control on the Company’s main service providers. The results were system throughout the year and up to the date of this report. reviewed by the Chairman of the Management Engagement Committee and discussed with the Board. The results of the service provider performance evaluation were positive and FINANCIAL ASPECTS OF INTERNAL demonstrated that the service providers were fulfilling their CONTROL duties effectively. The Directors are responsible for the internal financial control systems of the Company and for reviewing their effectiveness. These aim to ensure the maintenance of proper accounting Bellevue Healthcare Trust plc Annual Report and Accounts 202344 Governance records, the reliability of the financial information upon which of the risks involved. The effectiveness of the Company’s risk business decisions are made and which is used for publication management and internal controls systems is monitored and a and that the assets of the Company are safeguarded. formal review, utilising a detailed risk assessment programme Asstated above, the Board has contractually delegated has been completed. This included consideration of the to external agencies the services the Company requires. Administrator’s, the Depositary and the Registrar’s internal TheBoard receives and reviews reports on the internal control controls report. There are no significant findings to report from environments of key suppliers, in order to provide reasonable the review. assurance on the effectiveness of internal financial controls. PRINCIPAL RISKS The key procedures include review of management accounts The Directors confirm that they have carried out a robust and net asset value and monitoring of performance at assessment of the principal risks facing the Company, quarterly Board meetings, segregation of the administrative including those that would threaten its business model, function from that of securities and cash custody and from future performance, solvency or liquidity. The principal risks investment management, maintenance of appropriate and how they are being managed are set out in the Strategic insurance, and adherence to physical and computer security Report on pages 18 to 21. procedures. Inaddition, procedures have been put in place for authorisation of all expense payments. RELATIONS WITH SHAREHOLDERS The Statement of Directors’ Responsibilities in respect of the The Board places great importance on communication accounts is on page 55 and a Statement of Going Concern with Shareholders. The Company’s Investment Manager is on page 39. The Report of the Independent Auditor is on meets with larger Shareholders and reports to the Board. pages 56 to 62. The Chairman also meets with Shareholders both with the Investment Manager and on his own. Shareholders wishing OTHER ASPECTS OF INTERNAL CONTROL to communicate with the Chairman or any other Director may The Board holds quarterly meetings, plus additional meetings do so by writing to the Company Secretary at the registered as required. Between these meetings there is regular contact office of the Company which is shown on page 105 or with the Investment Manager, the Company Secretary and the sending an email to info@bellevuehealthcaretrust.com. Administrator. Information is provided to all Shareholders via the annual and The Board has agreed policies with the Investment Manager half-yearly accounts and also by the publication of daily NAVs on key operational issues. The Investment Manager and/or and monthly factsheets. the AIFM reports in writing to the Board on operational and The Company’s Annual General Meeting provides a compliance issues. The Investment Manager reports directly to forum for communication with all Shareholders. The level the Audit and Risk Committee concerning the internal controls. of proxies lodged for each resolution is announced at The Directors review detailed management accounts from the the meeting and is published on the Company website, Administrator, including holdings in the portfolio, transactions https://www.bellevuehealthcaretrust.com, subsequent to and other aspects of the financial position of the Company. the meeting. Shareholders and potential investors may obtain The Depositary provides oversight reports for the quarterly up-to-date information on the Company from the website. Board meetings. Additional ad hoc reports are received as In line with governance recommendations, if 20% or more required and Directors have access at all times to the advice of votes cast are against any resolution, the Company and services of the Company Secretary, which is responsible would announce what action it intended to take to consult to the Board for ensuring that Board procedures are followed, Shareholders views and would provide a summary of the and that applicable rules and regulations are complied with. outcome and actions it intended to take within six months of This contact with the AIFM, Administrator and the other key the date at which the vote was held. The Board confirms that service providers enables the Board to monitor the Company’s none of the resolutions put to Shareholders at the AGM in progress towards its objectives and encompasses an analysis 2023 received 20% or more of the votes cast against. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 45 ### Corporate Governance continued ANNUAL GENERAL MEETING The Notice of Meeting sets out the business of the AGM The Company seeks to provide a minimum of twenty-one and any item not of an entirely routine nature is explained in days’ notice of the AGM and in normal circumstances the the Directors’ Report. Separate resolutions are proposed for Company would encourage all Shareholders to attend each substantive issue. theAGM. All other general meetings shall be convened by not less In line with the requirements of the Companies Act 2006, than twenty-one days’ notice to all those members and to the the Company will hold an Annual General Meeting (“AGM”) auditors unless the Company offers members an electronic of Shareholders to consider the resolutions laid out in voting facility and a special resolution reducing the period the Notice of Meeting on page 97 and 98. The Board of notice to not less than fourteen days prior to the general encourages Shareholders to attend and participate in the meeting, in which case a general meeting may be convened Company’sforthcoming AGM on 26 April 2024 at the by not less than fourteen days’ notice in writing. A special officesof Stephenson Harwood LLP, 1 Finsbury Circus, resolution will be proposed at the AGM to reduce the period London EC2M 7SH. of notice for general meetings, other than the AGM, to not less than fourteen days. We recognise it is not possible for everyone to attend the AGM and I would remind Shareholders that any questions EXERCISE OF VOTING POWERS AND relating to the business of the AGM can be sent by email STEWARDSHIP CODE toinfo@bellevuehealthcaretrust.com. The Company and the Investment Manager support the UK If Shareholders are unable to attend the meeting in person, Stewardship Code issued by the Financial Reporting Council. they are strongly encouraged to vote by proxy and to appoint the “Chairman of the AGM” as their proxy. Details of how to vote, either electronically, by proxy form or through CREST, can be found in the Notes to the Notice of AGM on pages99 to 102. The lodging of a form of proxy (or an appointment of a proxy through CREST) will not however, prevent a Shareholder from attending the AGM and voting in person if they so wish. Bellevue Healthcare Trust plc Annual Report and Accounts 202346 Governance ## Directors’ Remuneration Policy and ## Implementation Report This report has been prepared in accordance with Resolution will be proposed at the forthcoming AGM to Schedule8 of the Large and Medium-sized Companies and be held on 26 April 2024 to re-approve the Remuneration Groups (Accounts and Reports) (Amendment) Regulations Policy. The provisions set out in this policy apply until they 2013. An ordinary resolution for the approval of this report are next put forward for Shareholder approval. In the event will be put forward at the forthcoming AGM. of any proposed variation to the policy, Shareholder approval will be sought for the proposed new policy prior to its The Directors’ Remuneration Implementation Report is implementation. It is the Board’s intention that the proposed put forward for approval by Shareholders on an annual Remuneration Policy continue for three years following the basis. Theresult of the Shareholder resolution on the forthcoming AGM to the financial year ending 30 November Implementation Report is non-binding on the Company, 2027. The below stated Remuneration Policy remains although it gives Shareholders an opportunity to express their unchanged from the Remuneration Policy last presented to views, which will be taken into account by the Board. An the Shareholders at the Company’s AGM in 2021. Ordinary Resolution to approve the Directors’ Remuneration Implementation Report will be put forward for approval at the The Board has complied with the policy during the year Company’s AGM to be held on 26 April 2024. ended 30 November 2023. The Directors’ Remuneration Policy was approved by The law requires the Company’s auditor to audit certain Shareholders at the 2021 AGM. In accordance with statute, disclosures provided in this section of the report. Where the policy must be put to Shareholders for approval at least disclosures are audited, they are indicated as such. The every three years, as a binding vote. Accordingly, an Ordinary auditor’s opinion is on page 56. REMUNERATION POLICY Current and future policy Component Director Annual fee Purpose of reward Operation Annual fee Chairman of the Board See note 1 below For services as Determined by the Board Chairmanofa plc Annual fee Other Directors See note 1 below For services as Determined by the Board non-executive Directors ofa plc | Additional fee Chairman of the Audit and | | See note 1 below For additional responsibility | | Determined by the Board | | --- | --- | --- | --- | --- | | | Risk Committee | | and time commitment | | | Additional fee Chairman of the | | See note 1 below For additional responsibility | | Determined by the Board | | | Management Engagement | | and time commitment | | Committee Additional fee Senior Independent Director See note 1 below For additional responsibility Determined by the Board and time commitment Expenses All Directors Not Applicable Reimbursement of expenses Submission of appropriate incurred in the performance supporting documentation of duties 1 Annual rates are determined by the Board subject to the limit set out in the Company’s Articles of Association. All the Directors are non-executive directors, and the FEES Company has no employees. The Directors’ fees are determined within the limits set out in the Company’s Articles of Association and they are not eligible SERVICE CONTRACTS for bonuses, pension benefits, share benefits, share options, The Directors do not have service contracts with the long-term incentive schemes or other benefits. The Directors’ Company. The Directors have appointment letters and, fees will be paid at fixed annual rates and do not have any following initial election by shareholders, are subject to variable elements. The Board may determine that additional re-election by shareholders at a maximum interval of remuneration may be paid, from time to time, to any one or threeyears. more Directors in the event such Director or Directors are requested by the Board to perform extra or special services on behalf of the Company. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 47 Directors' Remuneration Policy and Implementation Report continued The non-executive Directors shall be entitled to fees at such rates as determined by the Board. The Directors shall also be entitled to be reimbursed for all expenses incurred in performance of their duties. These expenses are unlikely to be of a significant amount. Fees are payable from the date of appointment as a Director of the Company and cease on date of termination of appointment. The Directors are not entitled to compensation for loss of office. The Board will not pay any incentive fees to any person to encourage them to become a Director of the Company. The Board may, however, pay fees to external agencies to assist the Board in the search and selection of Directors. # REMUNERATION IMPLEMENTATION The Company currently has five Non-Executive Directors. Directors' fees with effect from 1 December 2022, were payable at the rate of $37,000 per annum for the Chairman of the Board; £49,550 per annum for the Chair of the Audit and Risk Committee and £39,250 per annum for the other Board members. An additional £1,000 per annum was payable to the Senior Independent Director and an additional £1,000 per annum was payable to the Chair of the Management Engagement Committee. The Board reviews the fees payable to the Directors on an annual basis and has agreed to align the review of Board fees to the Company's year end, as opposed to reviewing them after the year has already commenced. Following the Board's review during the year, no increase has been applied/ proposed with effect from 1 December 2023 for the year ending 30 November 2024. Since the Company's IPO in 2016, net fees payable to the Directors have been satisfied in Ordinary Shares acquired in the market. Given the significant growth of the Company since its IPO and in order to continually attract high quality and diverse candidates as non-executive Directors, the Company has reviewed the Directors' remuneration arrangements and determined that, with effect from 1 April 2024, the Directors' fees will be paid to the Directors in cash. The Board believes that the fees appropriately reflect the level of demands on the individual Directors, prevailing market rates for an investment trust of the Company's size and complexity, the complexity of regulation and resultant time spent by the Directors on matters, and it will also enable the Company to continue to attract appropriately experienced Directors in the future. The Board also takes into consideration RPI, CPI and other inflationary measures and the impact to the Company's ongoing charges following a rise in fees. Board fees are not considered against any performance measure. The Board agreed Directors' fees would only increase by the level of inflation over the next two years. Due to the size and nature of the Company, it was not deemed necessary to use a remuneration consultant although the Board did take into consideration views from external search consultants on the level of the Company's fees against prevailing market rates and took these into account in its deliberations. The current aggregate remuneration that can be paid to Directors under the Company's Articles of Association is £500,000 per annum. In accordance with the Shareholder Rights Directive, The Board confirms there were no variable pay awards made to the Directors and there were no deferral periods. The annual percentage change in remuneration in respect of the financial years prior to the current year in respect of each Director role is as follows: | Financial year to | 30 Nov 2019 | 30 Nov 2020* | 30 Nov 2021 | 30 Nov 2022** | 30 Nov 2023 | | --- | --- | --- | --- | --- | --- | | Chair | 3.1% | 3.0% | 4.5% | 48.2% | 3.1% | | Non-executive Director | 4.5% | 3.0% | 4.7% | 24.4% | 2.2% | | Chair of the Audit and Risk Committee Supplement | 3.8% | 3.0% | 5.8% | 85.2% | 3.3% | | Chair of the Management Engagement Committee Supplement | 4.1% | 3.0% | Nil | -60.0% | Nil | | Senior Independent Director ("SIO") Supplement** | - | 100.0% | Nil | -33.3% | Nil | * The Company appointed a Senior Independent Director in 2020. ** The Company reviewed and refreshed the Committee supplement fees for the year ended 30 November 2022. 46 Balance Healthcare Trust plc Annual Report and Accounts 2023 Governance DIRECTOR SERVICE CONTRACTS or (b) any other liability incurred by or attaching to him in the The Directors do not have service contracts with the actual or purported execution and/or discharge of his duties Company. The Directors are not entitled to compensation on and/or the exercise or purported exercise of his powers loss of office. The Directors have appointment letters which do and/ or otherwise in relation to or in connection with his duties, not provide for any specific term. However, they are subject powers or office; and purchase and maintain insurance for to re-election by Shareholders at a maximum interval of three any person who is a Director, secretary, or other officer (other years. There are no restrictions on transfers of the Company’s than an auditor) of the Company in relation to anything done or shares held by the Directors, or any special rights attached to omitted to be done or alleged to have been done or omitted to such shares. be done as Director, secretary or officer. A policy of insurance against Directors’ and officers’ liabilities is DIRECTORS’ INDEMNITIES maintained by the Company. Subject to the provisions of the Companies Act 2006, the Company may indemnify any person who is a Director, PERFORMANCE secretary or other officer (other than an auditor) of the The following chart shows the performance of the Company’s Company, against (a) any liability whether in connection with share price by comparison to the MSCI World Healthcare any negligence, default, breach of duty or breach of trust by Index (GBP), on a total return basis. him in relation to the Company or any associated company 120 100 80 60 Total Return (%) 40 20 0 2 Dec 16 31 May 17 30 Nov 17 31 May 18 30 Nov 18 31 May 19 30 Nov 19 31 May 20 31 May 2130 Nov 20 30 Nov 21 31 May 22 30 Nov 22 31 May 23 30 Nov 23 BBH Share Price (Dividend reinvested) MSCI World Healthcare Index Bellevue Healthcare Trust plc Annual Report and Accounts 2023 49 ### Directors’ Remuneration Policy and Implementation Report continued DIRECTORS’ EMOLUMENTS FOR THE YEAR ENDED 30 NOVEMBER 2023 | Fees and taxable | | | Fees and taxable | | | | --- | --- | --- | --- | --- | --- | | | benefits to | | | benefits to | | | 30 November 2023 | | | 30 November 2022 | | | | | | £’000 | | | £’000 | Randeep Grewal 68.0 66.0 Josephine Dixon 51.0 49.0 Paul Southgate 39.0 38.0 Tony Young 39.0 38.0 Kate Bolsover 39.0 38.0 Justin Stebbing* - 2.0 Total 236.0 231.0 *resigned on 21 December 2021. There are no other taxable benefits payable by the Company A non-binding ordinary resolution to approve the Directors’ other than certain expenses which may be deemed to be Remuneration Policy contained in the Annual Report for the taxable. None of the above fees were paid to third parties. year ended 30 November 2021 was put forward for approval at the Company’s AGM held on 22 April 2022. The resolution A non-binding ordinary resolution to approve the Directors’ was passed with 99.91% of the proxy votes cast (including Remuneration Implementation Report contained in the Annual discretionary votes) being in favour of the resolution. Report for the year ended 30 November 2022 was put forward at the AGM held on 28 April 2023. The resolution was passed The Directors’ Remuneration Policy will be put forward for with 99.90% of the proxy votes cast (including discretionary approval at the AGM to be held on 26 April 2024. votes) being in favour of the resolution. RELATIVE IMPORTANCE OF SPEND ON PAY The following table sets out the total level of Directors’ remuneration compared to the distributions to Shareholders by way of dividends and share buybacks, and the management fees and other expenses incurred by the Company. Year ended 30 November 2023 2023 2022 £’000 £’000 Income 2,469 2,186 Directors’ fees 236 231 Management fees and other operating expenses 8,885 10,456 Dividends paid and payable to Shareholders 30,290 36,780 Bellevue Healthcare Trust plc Annual Report and Accounts 202350 Governance DIRECTORS’ HOLDINGS (AUDITED) The Directors held the following shareholdings at 30 November 2023 and as at the date of this report. Net fees payable to the Directors, are settled in Ordinary Shares quarterly. The Directors had the following shareholdings in the Company, all of which are beneficially owned. | | Ordinary | | | Ordinary | | Ordinary | | | --- | --- | --- | --- | --- | --- | --- | --- | | Shares as at | | | Shares as at | | Shares as at | | | | 30 November | | | date of this | | 30 November | | | | | | 2023 | | report | | | 2022 | Randeep Grewal 149,552 156,592 119,693 Josephine Dixon 119,473 125,109 98,466 Paul Southgate 95,226 97,880 83,084 Tony Young 32,084 34,738 20,018 Kate Bolsover 26,335 28,989 14,232 STATEMENT On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Report on Remuneration Policy and Remuneration Implementation summarises, as applicable, for the financial year to 30 November 2023; the major decisions on Directors’ remuneration; any substantial changes relating to Directors’ remuneration made during the financial year to 30 November 2023; and the context in which the changes occurred and decisions have been taken. Randeep Grewal Chairman 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 51 ## Report of the Audit and ## Risk Committee ROLE OF THE AUDIT AND RISK INTERNAL CONTROLS AND RISK COMMITTEE MANAGEMENT The Audit and Risk Committee meets formally at least The Directors have a dynamic risk register in place to help twice a year for the purpose, amongst other things, of identify key risks and ensure there are measures in place considering the appointment, independence and objectivity, to manage and mitigate risk; and oversee the effectiveness and remuneration of the auditor and to review the annual of internal controls and processes. The risk assessment accounts and half-yearly financial report. The Audit and Risk programme provides a visual reflection of the Company’s Committee also reviews the Company’s internal financial identified principal and emerging risks, including climate controls and its internal control and risk management change and the war in Ukraine and their potential impact systems. Where non-audit services are provided by on the Company’s future development and prospects. The the auditor, full consideration of the financial and other risk assessment programme also provides the mitigation implications on the independence of the auditor arising from measures which key service providers, including the any such engagement are considered before proceeding. Investment Manager, have in place to maintain operational resilience and business continuity. The Audit and Risk Committee carries out, at least annually, a robust assessment COMPOSITION of the principal and emerging risks and uncertainties and All of the Directors of the Company are members of the monitors the risks on an ongoing basis. Audit and Risk Committee. The Audit and Risk Committee has formal written terms of reference and copies of these The Board has overall responsibility for the Company’s are available on the Company’s website or on request from risk management and systems of internal controls and the Company Secretary. The Audit and Risk Committee for reviewing their effectiveness. As is the case with most as a whole has recent and relevant financial experience. investment trusts, the investment management, accounting, The UK Code recommends that the Chairman of the Board company secretarial, registrar and depositary services have should not be a member of the Audit and Risk Committee. been delegated to third parties. The effectiveness of the However, as permitted by the AIC Code, the Directors internal controls is assessed on a continuing basis and believe that membership of the Audit and Risk Committee the Committee receives regular reports. The Committee of the independent Chair of the Board, Randeep Grewal is is satisfied that internal controls and processes remained appropriate, and welcome his contribution. satisfactory, and that appropriate systems are in place. INTERNAL AUDIT FINANCIAL STATEMENTS AND The Audit and Risk Committee has considered the need SIGNIFICANT ACCOUNTING MATTERS for an internal audit function and considers that this is not The Audit and Risk Committee reviewed the financial appropriate given the nature and circumstances of the statements and considered the following significant Company. The Audit and Risk Committee keeps the needs accounting issues in relation to the Company’s financial for an internal audit function under periodic review. statements for the year ended 30 November 2023. MEETINGS VALUATION AND EXISTENCE OF There have been three Audit and Risk Committee meetings INVESTMENTS in the year to 30 November 2023. Meeting attendance is The Company holds the majority of its assets in quoted shown on page 44 of this Annual Report. Meetings held investments. The valuation and existence of these during the year have been held in-person. Committee investments is the most material matter in the production members have operated effectively and there has been no of the financial statements. Investments are valued using break in service from the Company’s service providers. independent pricing sources and the holding quantities at the year end were agreed to the Depositary’s records. The Audit and Risk Committee has reviewed the Administrator’s procedures in place for ensuring accurate valuation and existence of investments and is comfortable that these areappropriate. Bellevue Healthcare Trust plc Annual Report and Accounts 202352 Governance RECOGNITION OF INCOME GOING CONCERN AND VIABILITY The Audit and Risk Committee has reviewed the STATEMENTS Administrator’s procedures for recognition of income and is Having reviewed the Company’s financial position, liabilities, comfortable that these are appropriate. The Audit and Risk principal/emerging risks and uncertainties, the Committee Committee reviews the treatment of any special dividends recommended to the Directors that it was appropriate for the receivable in the period to ensure that these have been Directors to prepare the financial statements on the going treated appropriately as revenue or capital. During the concern basis. The viability and going concern statements year no special dividends were received by the Company. can be found on pages 22 and 39 respectively. Revenue recognition accounting policy are disclosed on page 69 of this Annual Report. AUDIT TENURE Ernst & Young LLP has been appointed as the Company’s COVID-19 AND GEO-POLITICS auditor since the Company’s launch in October 2016 following The Russian invasion of Ukraine, and the subsequent hike in a competitive process and review of the auditor’s credentials. global energy prices has further shaken a fragile investment The re-appointment of the external auditor will be reviewed environment. During the year, the Board has paid particular annually by the Audit and Risk Committee and the Board and attention to the sensitivity of income received from investee is subject to approval by Shareholders. In accordance with companies to volatility in the Sterling/ USD foreign exchange the FRC guidance, the audit will be put out to tender within rate. Committee members have also sought reassurance tenyears of the initial appointment of Ernst & Young LLP. that external providers were not in breach of sanctions In accordance with auditor rotation best practice, Ahmer implemented against Russia following the invasion ofUkraine. Huda (in second year of tenure) is appointed as Audit Partner for the year ending 30 November 2023 audit. The EUROPEAN SINGLE ELECTRONIC FORMAT appointment of the auditor is reviewed annually by the (“ESEF”) Audit and Risk Committee and the Board and is subject to The ESEF regulations which require the Company to publish approval by Shareholders. their annual financial statements in a common electronic format apply to the Company for this accounting year ended PROVISION OF NON-AUDIT SERVICES 30 November 2023. The Audit and Risk Committee has put a policy in place on the supply of any non-audit services provided by the external MATTERS CONSIDERED IN THE YEAR auditor. Such services are considered on a case-by-case The UK Corporate Governance Code requires the Company basis and may only be provided to the Company if the to describe any significant issues considered in relation provision of such services is at a reasonable and competitive to the financial statements and how those issues were cost and does not constitute a conflict of interest or potential addressed. While there were no significant issues, three conflict of interest which would prevent the auditor from matters of particular focus at the balance sheet date were the remaining objective and independent. Company’s Annual Redemption facility, the implementation of the Company’s share buyback programme and application of No non-audit fees were payable to the Auditor in the year the appropriate valuation methodology for unlisted holdings ended 30 November 2023 (2022: Nil). in accordance with relevant guideline/standards. Both events The audit fees (excluding VAT) incurred during the year were discussed in detail by the Committee, with support from amounted to £53,025 (2022: £50,500). These fees represent the Company’s service providers and reporting included in an increase over the prior year. The Committee reviewed the year end auditor’s report. No issues werediscovered. the audit fees being paid by similar comparative companies and concluded that the increase is in line with audit fee rises experienced across the investment trust sector. Audit firms generally have increased the fees that they charge to investment trusts in order to reflect the increased level of work that they have been required to perform, in the context of more rigorous levels of audit scrutiny and regulation. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 53 ### Report of the Audit and Risk Committee continued AUDITOR INDEPENDENCE The Audit and Risk Committee considered the independence of the auditor and the objectivity of the audit process and is satisfied that Ernst & Young LLP has fulfilled its obligations to Shareholders and as independent auditor to the Company for the year. After due consideration, the Audit and Risk Committee recommends the re-appointment of Ernst & Young LLP and their re-appointment will be put forward to the Company’s Shareholders at the 2024 AGM. CONCLUSION WITH RESPECT TO THE ANNUAL REPORT AND FINANCIAL STATEMENTS The Audit and Risk Committee has concluded that the Annual Report for the year ended 30 November 2023, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s business model, strategy and performance. The Audit and Risk Committee has reported its conclusions to the Board of Directors. The Audit and Risk Committee reached this conclusion through a process of review of the document and enquiries to the various parties involved in the production of the annual report. Josephine Dixon Audit and Risk Committee Chair 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 202354 Governance ## Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report The accounts are published on the Company’s website at and the financial statements in accordance with applicable www.bellevuehealthcaretrust.com, which is maintained laws and regulations. by the Company’s Investment Manager. The work carried out by the auditor does not involve consideration of Company law requires the Directors to prepare accounts for the maintenance and integrity of these websites and, each financial year. Under that law the Directors have elected accordingly, the auditor accepts no responsibility for any to prepare the financial statements under UK adopted changes that have occurred to the accounts since being International Accounting Standards (“IAS”). Under company initially presented on the website. Legislation in the United law the Directors must not approve the financial statements Kingdom governing the preparation and dissemination of unless they are satisfied that they give a true and fair view financial statements may differ from legislation in other of the state of affairs of the Company as at the end of the jurisdictions. year and of the net return for the year. In preparing these accounts, the Directors are required to: DIRECTORS’ CONFIRMATION STATEMENT select suitable accounting policies in accordance with The Directors each confirm to the best of their knowledge IAS 8 Accounting Policies, Changes in Accounting that: Estimates and Errors and then apply them consistently; the accounts, prepared in accordance with UK adopted present information, including accounting policies, in a IAS, give a true and fair view of the assets, liabilities, manner that provides relevant, reliable, comparable and financial position and profit of the Company; and understandable information; this Annual Report includes a fair review of the make judgements and estimates which are reasonable development and performance of the business and andprudent; position of the Company, together with a description of the principal risks and uncertainties that it faces. state whether UK adopted IAS have been followed, subject to any material departures disclosed and explained in the Having taken advice from the Audit and Risk Committee, accounts; and the Directors consider that the Annual Report and financial statements taken as a whole is fair, balanced and prepare the financial statements on a going concern basis understandable and provides the information necessary unless it is inappropriate to presume that the Company will for Shareholders to assess the Company’s performance, continue in business. business model and strategy. For and on behalf of the Board. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and which disclose with Randeep Grewal reasonable accuracy at any time the financial position of Chairman the Company and enable them to ensure that the accounts 1 March 2024 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. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 55 ## Independent Auditor’s Report OPINION ability to continue to adopt the going concern basis of We have audited the financial statements of Bellevue Healthcare accounting included: Trust PLC (the ‘Company’) for the year ended 30 November Confirmation of our understanding of the Company’s going 2023 which comprise the Statement of Comprehensive Income, concern assessment process and engaging with the Directors the Statement of Financial Position, the Statement of Changes and the Company Secretary to determine if all key factors in Equity, the Statement of Cash Flows and the related notes 1 were considered in their assessment. We considered whether to 19, including a summary of significant accounting policies. the factors taken account of in the Directors’ assessment The financial reporting framework that has been applied in their addressed those matters which we considered important. preparation is applicable law and UK adopted International Inspection of the Directors’ assessment of going concern, Accounting Standards. including the revenue and expense cash flow forecast, for the period to 30 November 2025 which is at least eighteen In our opinion, the financial statements: months from the date these financial statements were give a true and fair view of the Company’s affairs as at authorised for issue. In preparing the revenue and expense 30 November 2023 and of its loss for the year then ended; forecast, the Company has concluded that it is able to continue to meet its ongoing costs as they fall due. have been properly prepared in accordance with UK adopted International Accounting Standards; and Reviewing of the factors and assumptions, including the impact of the current economic environment and other have been prepared in accordance with the requirements of significant events that could give rise to market volatility, as the Companies Act 2006. applied to the revenue and expense forecast. We considered the appropriateness of the methods used to calculate the BASIS FOR OPINION forecast and determined, through testing of the methodology We conducted our audit in accordance with International and calculations, that the methods, inputs and assumptions Standards on Auditing (UK) (ISAs (UK)) and applicable utilised were appropriate to be able to make an assessment law. Our responsibilities under those standards are further of going concern for the Company. described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the Consideration of the mitigating factors included in the revenue audit evidence we have obtained is sufficient and appropriate and expense forecast that are within the control of the to provide a basis for our opinion. Company, including a review of the Company’s assessment of the liquidity of investments held and evaluating the Company’s ability to sell investments in order to cover the working capital INDEPENDENCE requirements should its revenue decline significantly. Reviewing We are independent of the Company in accordance with of the Directors’ assessment of the impact on going concern in the ethical requirements that are relevant to our audit of the respect of the annual redemption facility. financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we In relation to the Company’s borrowing arrangements, have fulfilled our other ethical responsibilities in accordance assessing the risk of breaching the debt covenants as a with these requirements. result of a reduction in the value of the Company’s portfolio. We calculated the Company’s compliance with debt The non-audit services prohibited by the FRC’s Ethical covenants and reviewed reverse stress testing in order to Standard were not provided to the Company and we remain identify what factors would lead to the Company breaching independent of the Company in conducting the audit. the financial covenants. Reviewing the Company’s going concern disclosures included in the annual report in order CONCLUSIONS RELATING TO GOING to assess whether the disclosures were appropriate and in CONCERN conformity with the reporting standards. In auditing the financial statements, we have concluded that Based on the work we have performed, we have not identified the Directors’ use of the going concern basis of accounting any material uncertainties relating to events or conditions that, in the preparation of the financial statements is appropriate. individually or collectively, may cast significant doubt on the Our evaluation of the Directors’ assessment of the Company’s Company’s ability to continue as a going concern for a period Bellevue Healthcare Trust plc Annual Report and Accounts 202356 Governance to 30 November 2025, which is at least eighteen months from Our responsibilities and the responsibilities of the Directors when the financial statements are authorised for issue. with respect to going concern are described in the relevant sections of this report. However, because not all future In relation to the Company’s reporting on how they have applied events or conditions can be predicted, this statement is not a the UK Corporate Governance Code, we have nothing material to guarantee as to the Company’s ability to continue as a going add or draw attention to in relation to the Directors’ statement in concern. the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. OVERVIEW OF OUR AUDIT APPROACH Key audit matters • Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends as revenue or capital items in the Statement of Comprehensive Income • Risk of incorrect valuation or ownership of the investment portfolio Materiality • Overall materiality of £ 6.65m which represents 1% of the Company’s Net Asset Value. AN OVERVIEW OF THE SCOPE OF OUR there was no further impact of climate change to be taken into account. In line with UK adopted International Accounting AUDIT Standards investments are valued at fair value, which for the Tailoring the scope Company are quoted bid prices for investments in active Our assessment of audit risk, our evaluation of materiality and markets at the balance sheet date. All investments therefore, our allocation of performance materiality determine our audit except for one investment in level 3, reflect the market scope for the Company. This enables us to form an opinion participants view of climate change risk on the investments on the financial statements. We take into account size, risk held by the Company. We also challenged the Directors’ profile, the organisation of the Company and effectiveness of considerations of climate change in their assessment of controls, the potential impact of climate change and changes viability and going concern and associated disclosures. Based in the business environment when assessing the level of on our work we have not identified the impact of climate work to be performed. All audit work was performed directly change on the financial statements to be a key audit matter or by the audit engagement team. to impact a key audit matter. Climate change We also challenged the Directors’ considerations of climate Stakeholders are increasingly interested in how climate change risks in their assessment of going concern and change will impact the Company. The Company has viability and associated disclosures. Where considerations determined that the impact of climate change could affect the of climate change were relevant to our assessment of going Company’s investments and their valuations and potentially concern, these are described above. Based on our work shareholder returns. These are explained on pages 20 and we have not identified the impact of climate change on the 21 in the principal and emerging risks and uncertainties financial statements to be a key audit matter or to impact a key section, which form part of the “Other information,” rather auditmatter. than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of Key audit matters considering whether they are materially inconsistent with the Key audit matters are those matters that, in our professional financial statements, or our knowledge obtained in the course judgment, were of most significance in our audit of the of the audit or otherwise appear to be materially misstated, in financial statements of the current period and include the line with our responsibilities on “Other information”. In planning most significant assessed risks of material misstatement and performing our audit we assessed the potential impacts (whether or not due to fraud) that we identified. These matters of climate change on the Company’s business and any included those which had the greatest effect on the overall consequential material impact on its financial statements. audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters Our audit effort in considering climate change was focused on were addressed in the context of our audit of the financial the adequacy of the Company’s disclosures in the Financial statements as a whole, and in our opinion thereon, and we do Statements as set out in Note 2 and the conclusion that not provide a separate opinion on these matters. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 57 ### Independent Auditor’s Report continued Key observations communicated to Risk Our response to the risk the Audit and Risk Committee Risk of incomplete or inaccurate We performed the following The results of our procedures identified revenue recognition, including the procedures: no material misstatement in relation classification of special dividends to the risk of incomplete or inaccurate • Walked through the revenue as revenue or capital items in the revenue recognition, including incorrect recognition and classification of special Statement of Comprehensive Income classification of special dividends as dividends processes and obtained revenue or capital in the Statement of Refer to the Report of the Audit and an understanding of the design and Comprehensive Income. Risk Committee (page 52); Accounting implementation of the controls. policies (page 69); and note 5 of the • For all dividends received and Financial Statements accrued, we recalculated the dividend | The Company has reported investment | income by multiplying the investment | | --- | --- | | income for the year ended 30 November | holdings at the ex-dividend date, | | 2023 of £0.92m (2022: £1.90m), | traced from the accounting records, | | consisting of dividend income from | by the dividend rate per share, which | | listed equity investments. | was agreed to an independent data | vendor. We agreed amounts received There is a risk of incomplete or to bank statements and where inaccurate recognition of revenue applicable, agreed the exchange rates through the failure to recognise proper to an external source. income entitlements or to apply an appropriate accounting treatment. • We reviewed the investee company announcement to assess whether In addition to the above, the Directors the dividend obligation arose prior are required to exercise judgement in to 30 November 2023. We did not determining whether income receivable identify any dividends which needed in the form of special dividends should to be accrued as at the year-end. be classified as ‘revenue’ or ‘capital’ in the Statement of Comprehensive • To test completeness of recorded Income. income, for a sample of investee companies, we verified that The Company did not receive any expected dividends during the year special dividends during the year had been recorded as income with (2022: none). reference to investee company announcements obtained from an independent data vendor. • For a sample of investments held during the year, we reviewed the type of dividends paid with reference to an external data source to identify those which were special. • We evaluated the time period between each dividend payment to assess whether the dividend payment appears out of the ordinary, as well as reviewing external data sources to identify whether any companies the Company has invested in declared special dividends. Our procedures did not identify any special dividends. Bellevue Healthcare Trust plc Annual Report and Accounts 202358 Governance Key observations communicated to Risk Our response to the risk the Audit and Risk Committee • Through enquiry we confirmed with management that no special dividends had been received during the year. Our procedures did not identify any special dividends. Risk of incorrect valuation or We performed the following The results of our procedures identified ownership of the investment portfolio procedures: no material misstatement in relation to the risk of incorrect valuation or Refer to the Report of the Audit and • Walked through the investment ownership of the investment portfolio. | Risk Committee (page 52); Accounting | valuation and legal title process | | --- | --- | | policies (page 69); and note 4 of the | to obtain an understanding of the | | Financial Statements. | design and implementation of the | controls. The Company’s investment portfolio | consists of listed equity investments | • For all listed investments in the | | | --- | --- | --- | | valued at £694.9m at 30 November | | portfolio, we compared the market | | 2023 (2022: £1,043.3m). As at the | | prices and exchange rates applied | | year-end the Company holds one | | to an independent pricing vendor | | investment, which was suspended from | | and recalculated the investment | | trading amounting to £2.03m. | | valuations as at the year-end. For the | investment, which was suspended The valuation of the assets held in the from trading, we challenged the investment portfolio is the key driver of valuation approach by obtaining the Company’s net asset value and total supporting evidence and assessing return. Incorrect investment pricing or the methodology applied. a failure to maintain proper legal title of the assets held by the Company could • We inspected the stale pricing report have a significant impact on the portfolio produced by the Administrator to valuation and the return generated for identify prices that have not changed shareholders. and verified whether the listed price is a valid fair value through review of The fair value of listed investments is trading activity. determined using quoted market bid | prices at close of business on the | • We compared the Company’s | | | --- | --- | --- | | reporting date. Unquoted investments | | investment holdings at 30 November | | are valued with reference to the | | 2023 to independent confirmation | | International Private Equity and Venture | | received directly from the Company’s | | Capital Valuation Guidelines (‘IPEV’). | | Custodian. | OUR APPLICATION OF MATERIALITY of the financial statements. Materiality provides a basis for We apply the concept of materiality in planning and performing determining the nature and extent of our audit procedures. the audit, in evaluating the effect of identified misstatements We determined materiality for the Company to be on the audit and in forming our audit opinion. £6.65m (2022: £10.04m), which is 1% (2022: 1%) of the Materiality Company’s Net Asset Value. We believe that Net Asset The magnitude of an omission or misstatement that, Value provides us with the most important financial metric individually or in the aggregate, could reasonably be on which shareholders would judge the performance of the expected to influence the economic decisions of the users Company. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 59 ### Independent Auditor’s Report continued Performance materiality misstatement in the financial statements themselves. If, based The application of materiality at the individual account on the work we have performed, we conclude that there is a or balance level. It is set at an amount to reduce to an material misstatement of the other information, we are required appropriately low level the probability that the aggregate to report that fact. of uncorrected and undetected misstatements exceeds We have nothing to report in this regard. materiality. On the basis of our risk assessments, together with our OPINIONS ON OTHER MATTERS assessment of the Company’s overall control environment, PRESCRIBED BY THE COMPANIES ACT 2006 our judgement was that performance materiality was 75% In our opinion the part of the Directors’ remuneration report to (2022: 75%) of our planning materiality, namely £4.99m be audited has been properly prepared in accordance with the (2022: £7.53m). We have set performance materiality at Companies Act 2006. this percentage due to our past experience of the audit that indicates a lower risk of misstatements, both corrected and In our opinion, based on the work undertaken in the course of uncorrected. the audit: Reporting threshold the information given in the Strategic Report and the An amount below which identified misstatements are Directors’ Report for the financial year for which the considered as being clearly trivial. financial statements are prepared is consistent with the financial statements; and We agreed with the Audit and Risk Committee that we would the Strategic Report and Directors’ Report have been report to them all uncorrected audit differences in excess prepared in accordance with applicable legal requirements. of £0.33m (2022: £0.50m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We evaluate any uncorrected misstatements against both the In the light of the knowledge and understanding of the quantitative measures of materiality discussed above and in Company and its environment obtained in the course of the light of other relevant qualitative considerations in forming our audit, we have not identified material misstatements in the opinion. Strategic Report or Directors’ Report. We have nothing to report in respect of the following matters OTHER INFORMATION in relation to which the Companies Act 2006 requires us to The other information comprises the information included in report to you if, in our opinion: the annual report set out on pages 33 and 34 other than the financial statements and our auditor’s report thereon. The adequate accounting records have not been kept, or Directors are responsible for the other information contained returns adequate for our audit have not been received from within the annual report. branches not visited by us; or Our opinion on the financial statements does not cover the the financial statements and the part of the Directors’ other information and, except to the extent otherwise explicitly Remuneration Report to be audited are not in agreement stated in this report, we do not express any form of assurance with the accounting records and returns; or conclusion thereon. certain disclosures of Directors’ remuneration specified by law are not made; or Our responsibility is to read the other information and, in doing so, consider whether the other information is materially we have not received all the information and explanations inconsistent with the financial statements, or our knowledge we require for our audit. obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material Bellevue Healthcare Trust plc Annual Report and Accounts 202360 Governance CORPORATE GOVERNANCE STATEMENT the Company or to cease operations, or have no realistic We have reviewed the Directors’ statement in relation to going alternative but to do so. concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance AUDITOR’S RESPONSIBILITIES FOR THE with the provisions of the UK Corporate Governance Code AUDIT OF THE FINANCIAL STATEMENTS specified for our review by the Listing Rules. Our objectives are to obtain reasonable assurance about Based on the work undertaken as part of our audit, we have whether the financial statements as a whole are free from concluded that each of the following elements of the Corporate material misstatement, whether due to fraud or error, and to Governance Statement is materially consistent with the financial issue an auditor’s report that includes our opinion. Reasonable statements or our knowledge obtained during the audit: assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) Directors’ statement with regards to the appropriateness of will always detect a material misstatement when it exists. adopting the going concern basis of accounting and any Misstatements can arise from fraud or error and are considered material uncertainties identified set out on page 39; material if, individually or in the aggregate, they could reasonably Directors’ explanation as to its assessment of the be expected to influence the economic decisions of users taken Company’s prospects, the period this assessment covers on the basis of these financial statements. and why the period is appropriate set out on page 22; Explanation as to what extent the audit was Directors’ statement on whether it has a reasonable considered capable of detecting irregularities, expectation that the Company will be able to continue in including fraud operation and meets its liabilities set out on page 39; Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures Directors’ statement on fair, balanced and understandable in line with our responsibilities, outlined above, to detect set out on page 55; irregularities, including fraud. The risk of not detecting a Board’s confirmation that it has carried out a robust material misstatement due to fraud is higher than the risk of assessment of the emerging and principal risks set out on not detecting one resulting from error, as fraud may involve page 22 and; deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to The section of the annual report that describes the review which our procedures are capable of detecting irregularities, of effectiveness of risk management and internal control including fraud is detailed below. systems set out on page 42 and 43; However, the primary responsibility for the prevention and The section describing the work of the Audit and Risk detection of fraud rests with both those charged with Committee set out on page 52. governance of the Company and management. RESPONSIBILITIES OF DIRECTORS We obtained an understanding of the legal and regulatory As explained more fully in the Directors’ responsibilities frameworks that are applicable to the Company and statement set out on page 55, the Directors are responsible determined that the most significant are UK adopted for the preparation of the financial statements and for being International Accounting Standards, the Companies Act satisfied that they give a true and fair view, and for such 2006, AIC SORP, the Listing Rules, the UK Corporate internal control as the Directors determine is necessary to Governance Code, Section 1158 of the Corporation Tax enable the preparation of financial statements that are free Act 2010 and The Companies (Miscellaneous Reporting) from material misstatement, whether due to fraud or error. Regulations 2018. In preparing the financial statements, the Directors are We understood how the Company is complying with those responsible for assessing the Company’s ability to continue frameworks through discussions with the Audit and Risk as a going concern, disclosing, as applicable, matters Committee and Company Secretary and review of Board related to going concern and using the going concern basis minutes. of accounting unless the Directors either intend to liquidate We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud Bellevue Healthcare Trust plc Annual Report and Accounts 2023 61 ### Independent Auditor’s Report continued might occur by considering the key risks impacting the USE OF OUR REPORT financial statements. We identified a fraud risk with respect This report is made solely to the Company’s members, as to the incomplete or inaccurate revenue recognition a body, in accordance with Chapter 3 of Part 16 of the through incorrect classification of special dividends Companies Act 2006. Our audit work has been undertaken so as revenue or capital items. Further discussion of our that we might state to the Company’s members those matters approach is set out in the section on key audit matters we are required to state to them in an auditor’s report and for above. no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Based on this understanding we designed our audit the Company and the Company’s members as a body, for our procedures to identify non-compliance with such laws audit work, for this report, or for the opinions we have formed. and regulations. Our procedures involved review of the reporting to the Directors with respect to the application of the documented policies and procedures and review of the financial statements to ensure compliance with the reporting requirements of the Company. Ahmer Huda (Senior statutory auditor) A further description of our responsibilities for the audit for and on behalf of Ernst & Young LLP, Statutory Auditor of the financial statements is located on the Financial London Reporting Council’s website at https://www.frc.org.uk/ 1 March 2024 auditorsresponsibilities. This description forms part of our auditor’s report. OTHER MATTERS WE ARE REQUIRED TO ADDRESS Following the recommendation from the Audit and Risk Committee, we were appointed by the Company on 27 November 2017 to audit the financial statements for the period ended 30 November 2017 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments is 7 years, covering the years ending 30 November 2017 to 30 November 2023. The audit opinion is consistent with the additional report to the Audit and Risk Committee. Bellevue Healthcare Trust plc Annual Report and Accounts 202362 63 Strategic Report ## Financial Statements Bellevue Healthcare Trust plc Annual Report and Accounts 202363 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 63 # Statement of Comprehensive Income for the year ended 30 November 2023 | | Note | Year ended 30 November 2023 | | | Year ended 30 November 2022 | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | | Losses on investments | 4 | - | (109,626) | (109,626) | - | (19,950) | (19,950) | | Losses on currency movements | | - | (789) | (789) | - | (9,839) | (9,839) | | **Net investment losses** | | **-** | **(110,415)** | **(110,415)** | **-** | **(29,819)** | **(29,819)** | | Income | 5 | 2,469 | - | 2,469 | 2,186 | - | 2,186 | | **Total income** | | **2,469** | **(110,415)** | **(107,946)** | **2,186** | **(29,819)** | **(27,633)** | | Investment management fees | 6 | (1,558) | (6,236) | (7,795) | (1,877) | (7,510) | (9,387) | | Other operating expenses | 7 | (1,096) | - | (1,096) | (1,069) | - | (1,069) | | **Loss before finance costs and taxation** | | **(180)** | **(116,651)** | **(116,831)** | **(760)** | **(37,329)** | **(38,089)** | | Finance costs | 8 | (818) | (3,240) | (4,850) | (610) | (2,440) | (3,050) | | **Operating loss before taxation** | | **(990)** | **(119,891)** | **(120,881)** | **(1,370)** | **(39,769)** | **(41,139)** | | Taxation | 9 | (157) | - | (157) | (285) | - | (285) | | **Loss for the year** | | **(1,147)** | **(119,891)** | **(121,038)** | **(1,655)** | **(39,769)** | **(41,424)** | | **Return per Ordinary Share** | 10 | **(0.21)p** | **(21.85)p** | **(22.06)p** | **(0.28)p** | **(6.84)p** | **(7.12)p** | There is no other comprehensive income and therefore the 'Loss for the year' is the total comprehensive income for the year. The total column of the above statement is the statement of comprehensive income of the Company. The supplementary revenue and capital columns, including the earnings per Ordinary Shares, are prepared under guidance from the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. The notes on pages 68 to 81 form and integral part of these financial statements. 64 Balance Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements # Statement of Financial Position as at 30 November 2023 | | Note | 30 November 2023 £'000 | 30 November 2022 £'000 | | --- | --- | --- | --- | | **Non-current assets** | | | | | Investments held at fair value through profit or loss | 4 | 696,916 | 1,043,349 | | **Current assets** | | | | | Cash and cash equivalents | | 110,954 | 46,368 | | Sales for future settlement | | 22 | 855 | | Other receivables | 11 | 111 | 392 | | | | **111,087** | **47,615** | | **Total assets** | | **808,003** | **1,090,964** | | **Current liabilities** | | | | | Purchases for future settlement | | - | (1,395) | | Bank loans payable | 12 | (31,696) | (83,731) | | Other payables | 13 | (110,770) | (1,512) | | **Total liabilities** | | **(142,466)** | **(86,638)** | | **Net assets** | | **665,537** | **1,004,326** | | **Equity** | | | | | Share capital | 14 | 4,803 | 5,661 | | Share premium account | | 617,709 | 617,371 | | Special distributable reserve | | - | 28,347 | | Capital reserve | | 45,462 | 354,017 | | Revenue reserve | | (2,437) | (1,290) | | **Total equity** | | **665,537** | **1,004,326** | | **Net asset value per Ordinary Share** | 16 | **143.87p** | **171.16p** | Approved by the Board of Directors and authorised for issue on 1 March 2024 and signed on their behalf by: **Randeep Grewal** Chairman Registered in England and Wales with registered number 10415235. The notes on pages 65 to 81 form and integral part of these financial statements. Balance Healthcare Trust plc Annual Report and Accounts 2023 65 ## Statement of Changes in Equity for the year ended 30 November 2023 | | | | | | Share | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | | premium | | distributable | | Capital | Revenue | | | | | | Capital | | account | | | reserve | reserve | | reserve | Total | | | Notes | £’000 | | | £’000 | | £’000 | £’000 | | £’000 | £’000 | | Opening balance as at 01 December 2022 | | 5,881 617,371 28,347 354,017 (1,290) 1,004,326 | | | | | | | | | | | Loss for the year | | | - - - (119,891) (1,147) (121,038) | | | | | | | | | Issue of Ordinary Shares 14 2 340 - - - 342 Redemption of Ordinary Shares 14 (1,080) - (10,491) (148,688) - (160,259) Buybacks of Ordinary Shares - - - (23,439) - (23,439) Ordinary Share issues, Buybacks and - (2) (81) (102) - (185) Redemption costs Dividends paid 15 - - (17,775) (16,435) - (34,210) Closing balance as at 30 November 2023 4,803 617,709 - 45,462 (2,437) 665,537 for the year ended 30 November 2022 | | | | | | Share | | Special | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Share | | premium | | distributable | | Capital | Revenue | | | | | | Capital | | account | | | reserve | reserve | | reserve | Total | | | Notes | £’000 | | | £’000 | | £’000 | £’000 | | £’000 | £’000 | | Opening balance as at 01 December 2021 | | 5,602 568,910 64,804 393,786 365 1,033,467 | | | | | | | | | | | Loss for the year | | | - - - (39,769) (1,655) (41,424) | | | | | | | | | Issue of Ordinary Shares 14 279 48,887 - - - 49,166 Ordinary Share issue costs - (426) - - - (426) Dividends paid 15 - - (36,457) - - (36,457) Closing balance as at 30 November 2022 5,881 617,371 28,347 354,017 (1,290) 1,004,326 The Company’s distributable reserves consist of the special distributable reserve and revenue reserve as disclosed above; and capital reserve attributable to realised profit of £45,462,000 (30 November 2022: £354,017,000). The Company can use its distributable reserves to fund dividends, redemptions of Ordinary Shares and share buy backs. The notes on pages 68 to 81 form and integral part of these financial statements. Bellevue Healthcare Trust plc Annual Report and Accounts 202366 Financial Statements ## Statement of Cash Flows for the year ending 30 November 2023 | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | 30 November 2023 | | | 30 November 2022 | | | | | | £’000 | | | £’000 | Operating activities Cash flows Income* 2,469 2,186 Operating expenses (8,852) (10,794) Taxation (157) (285) Net cash flow used in operating activities (6,540) (8,893) Investing activities Cash flows Purchase of investments (303,144) (599,039) Sale of investments 533,774 610,527 Net cash flow from investing activities 230,630 11,488 Financing activities Cash flows Bank loans drawn 15,722 45,174 Bank loans repaid (63,121) (44,885) Loan interest and other charges paid (4,552) (2,546) Dividends paid (34,210) (36,457) Proceeds from issue of Ordinary Shares 342 49,166 Annual Redemption of Ordinary Shares (50,251) - Buybacks of ordinary shares held in treasury (23,439) - Ordinary Share issues, Buybacks and Redemption costs (185) (426) Net cash flow (used in)/from financing activities (159,694) 10,026 Increase in cash and cash equivalents 64,396 12,621 Cash and cash equivalents at start of year 46,368 27,994 Effect of foreign currency revaluations 190 5,753 Cash and cash equivalents at end of year 110,954 46,368 * Cash inflow from dividends for the financial year was £765,000 (2022: £1,618,000). Bank deposits interest income received during the year was £1,547,000 (2022: £283,000). The table below shows the movement in financing activities during the year. | | Year ended | | | Year ended | | | --- | --- | --- | --- | --- | --- | | 30 November 2023 | | | 30 November 2022 | | | | | | £’000 | | | £’000 | Opening balance 83,731 67,850 Repayment of bank loans (63,121) (44,885) Proceeds from bank loans 15,722 45,174 Foreign exchange movements (4,636) 15,592 Closing balance 31,696 83,731 The notes on pages 68 to 81 form and integral part of these financial statements. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 67 ## Notes to the Financial Statements 1. REPORTING ENTITY Bellevue Healthcare Trust plc is a closed-ended investment company, registered in England and Wales on 7 October 2016. The Company’s registered office is 6th Floor, 125 London Wall, London, EC2Y 5AS. Business operations commenced on 2December 2016 when the Company’s Ordinary Shares were admitted to trading on the London Stock Exchange. The financial statements of the Company are presented for the year from 1 December 2022 to 30 November 2023. The Company invests in a concentrated portfolio of listed or quoted equities in the global healthcare industry. The Company may also invest in American Depositary Receipts (ADRs), or convertible instruments issued by such companies and may invest in, or underwrite, future equity issues by such companies. The Company may utilise contracts for differences for investment purposes in certain jurisdictions where taxation or other issues in those jurisdictions may render direct investment in listed or quoted equities less effective. 2. BASIS OF PREPARATION Statement of compliance These financial statements have been prepared in accordance with UK adopted International Accounting Standards (“IAS”). In preparing these financial statements the directors have considered the impact of climate change as a risk as set out on pages 20 and 21, and have concluded that there was no further impact of climate change to be taken into account. In line with IAS investments are valued at fair value, which for the Company is quoted bid prices for investments in active markets at the Statement of Financial Position date and therefore reflect market participants’ view of climate change risk on the investments wehold. When presentational guidance set out in the Statement of Recommended Practice (‘SORP’) for Investment Companies issued by the Association of Investment Companies (‘the AIC’) in July 2022 is consistent with the requirements of UK adopted IAS, theDirectors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. Going concern The Directors have adopted the going concern basis in preparing the financial statements. In forming this opinion, the Directors have considered the adequacy of the Company’s operational resources, liquidity of the investment portfolio, debt covenants and any potential impact of the ongoing war in Ukraine may have on the going concern and viability of the Company. In making their assessment, the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation measures which key service providers, including the Investment Manager, have in place to maintain operational resilience. The Company’s ability to continue as a going concern for the period assessed by the Directors, being the period to 30November2025, which is at least 18 months from the date the financial statements were authorised for issue. Significant accounting estimates, judgements and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future periods affected. There have been no material estimates, judgements or assumptions, which have had a significant impact on the financial statements for the year. 68 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements Basis of measurement The financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss, which are measured at fair value. Functional and presentation currency The financial statements are presented in sterling, which is the Company’s functional currency. The Company’s investments are denominated in multiple currencies. However, the Company’s shares are issued in sterling and the majority of its investors are UK based. In addition, all expenses are paid in GBP as are dividends. All financial information presented in sterling have been rounded to the nearest thousand pounds. 3. ACCOUNTING POLICIES (a) Investments Upon initial recognition investments are classified by the Company “at fair value through profit or loss”. They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently, quoted investments are valued at fair value, which is the bid market price, or if bid price is unavailable, the last traded price on the relevant exchange. Unquoted investments are valued at fair value by the Board which is established with regard to the International Private Equity and Venture Capital Valuation Guidelines by using, where appropriate, latest dealing prices, valuations from reliable sources and other relevant factors. Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Statement of Comprehensive Income within gains/(losses) on investments. Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset. (b) Foreign currency Transactions denominated in foreign currencies are translated into sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities, and non-monetary assets held at fair value denominated in foreign currencies are translated into sterling using London closing foreign exchange rates at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss to capital or revenue in the Statement of Comprehensive Income as appropriate. (c) Income from investments Dividend income from shares is recognised on ex-dividend dates. Overseas income is grossed up at the appropriate rate of tax. Special dividends are assessed on their individual merits and may be credited to the Statement of Comprehensive Income as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. All other investment income is credited to the Statement of Comprehensive Income as a revenue item. Interest receivable is accrued on a time apportionment basis. (d) Reserves Capital reserves Profits achieved in cash by selling investments and changes in fair value arising upon the revaluation of investments that remainin the portfolio are all charged to the capital column of the Statement of Comprehensive Income and allocated to the capital reserve. 69 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Special distributable reserve Following admission of the Company’s Ordinary Shares to trading on the London Stock Exchange, the Directors applied to the Court to cancel the share premium account at the time to create a special distributable reserve which may be treated as distributable reserves and out of which redemptions, tender offers and share buybacks may be funded. This reserve may also be used to fund dividend payments. The Company’s distributable reserves consist of the special distributable reserve, revenue reserve and capital reserve attributable to realised profit. Share premium The share premium account arose from the net proceeds of issuing new shares. The excess of the issue price of a share over its nominal value is the share premium. The Board seeks Shareholder approval to petition the High Court to transfer amounts standing to the credit of the share premium account into the Company’s distributable reserves, whenever it seems appropriate to do so. Revenue reserves The revenue reserve reflects all income and expenditure recognised in the revenue column of the income statement and is distributable by way of dividends. (e) Expenses All expenses are accounted for on an accrual basis. Expenses directly related to the acquisition or disposal of an investment (transaction costs) are taken to the income statement as a capital item. Expenses are recognised through the Statement of Comprehensive Income as revenue items except as follows: Investment management fees In accordance with the Company’s stated policy and the Directors expectation of the split of future returns, 80% of investment management fees are charged as a capital item in the Statement of Comprehensive Income. Finance costs Finance costs include interest payable and direct loan costs. In accordance with Directors’ expectation of the split of future returns, 80% of finance costs are charged as capital items in the Statement of Comprehensive Income. Loan arrangement costs are amortised over the term of the loan. (f) Cash and cash equivalents Cash comprises cash at hand and on-demand deposits. Cash equivalents are short term (three months or less), highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. (g) Taxation Irrecoverable taxation on dividends is recognised on an accrual basis in the Statement of Comprehensive Income. Deferred taxation Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains in UK. 70 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements (h) Financial liabilities Bank loans and overdrafts are classified as financial liabilities at amortised cost. They are initially measured at the proceeds received, net of direct issue costs, and subsequently measured at amortised cost using the effective interest method. (i) Future Developments in IFRS standards A number of new standards and/or amendments to standards are effective for the annual periods beginning after 1January2023. None of these are expected to have a significant effect on the measurement of the amounts recognised in the financial statements of the Company. Amendments to IAS 1 Presentation of Financial Statements—Classification of Liabilities as Current or Non‑current The amendments to IAS 1 clarify that the classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period, specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability, explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted. Amendments to IAS 1 Presentation of Financial Statements—Non‑current Liabilities with Covenants The amendments specify that only covenants that an entity is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of the liability as current or noncurrent). Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date (e.g. a covenant based on the entity’s financial position at the reporting date that is assessed for compliance only after the reporting date). The amendments are applied retrospectively for annual reporting periods beginning on or after 1 January 2024. Earlier application of the amendments is permitted. Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures—Supplier Finance Arrangements The amendments add a disclosure objective to IAS 7 stating that an entity is required to disclose information about its supplier finance arrangements that enables users of financial statements to assess the effects of those arrangements on the entity’s liabilities and cash flows. In addition, IFRS 7 was amended to add supplier finance arrangements as an example within the requirements to disclose information about an entity’s exposure to concentration of liquidity risk. The amendments, which contain specific transition reliefs for the first annual reporting period in which an entity applies the amendments, are applicable for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. (j) Equity shares The Company has treated the Ordinary Shares and Management Shares as equity in accordance with IAS 32 Financial Instruments: Presentation, which classifies financial instruments into financial assets, financial liabilities and equity instruments. Both share classes have an entitlement to the residual interest in the assets of the Company after deducting liabilities, suffice that the Management Shares have no participation in any surplus beyond their paid-up capital. The Management Shares are not redeemable, but the Ordinary Shares are subject to an annual redemption option at the discretion of the Directors. Redemption requests are matched with buyers in the market or cancelled by the Company. Ordinary Shares participate in dividends and any other profits of the Company. 71 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Segmental reporting The Board has considered the requirements of IFRS 8 – “Operating Segments”. The Company has entered into an Investment Management Agreement with the Investment Manager under which the Investment Manager is responsible for the management of the Company’s investment portfolio, subject to the overall supervision of the Board of Directors. Accordingly, the Board is deemed to be the “Chief Operating Decision Maker” of the Company. The Directors are of the opinion that the Company is engaged in a single segment of business being that of an investment trust, as disclosed in note 1. 4. INVESTMENT HELD AT FAIR VALUE THROUGH PROFIT OR LOSS (a) Summary of valuation | | 30 November | | 30 November | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | As at | | £’000 | | £’000 | Investments held at fair value through profit or loss – Overseas 696,916 1,043,349 Closing valuation 696,916 1,043,349 (b) Movements in valuation £’000 £’000 Opening valuation 1,043,349 1,083,590 Opening unrealised gains on investments 131,376 7,839 Opening book cost 1,174,725 1,091,429 Additions, at cost 301,659 590,922 Disposals, at cost (491,871) (507,626) Closing book cost 984,513 1,174,725 Revaluation of investments (287,597) (131,376) Closing valuation 696,916 1,043,349 In respect of the investments sold during the year, they have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. Transaction costs on investment purchases for the year ended 30 November 2023 amounted to £90,000 (30 November 2022: £186,000) and on investment sales for the financial year to 30 November 2023 amounted to £167,000 (30 November 2022: £198,000). (c) Gains on investments £’000 £’000 Realised gains on disposal of investments 40,980 103,557 Movement in unrealised gains/(losses) on investments held (150,606) (123,537) Total losses on investments (109,626) (19,980) Under IFRS 13 ‘Fair Value Measurement’, an entity is required to classify investments using a fair value hierarchy that reflects the significance of the inputs used in making the measurement decision. 72 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements The following shows the analysis of financial assets recognised at fair value based on: Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. Level 3 Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. The classification of the Company’s investments held at fair value is detailed in the table below: 30 November 2023 Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 Investments at fair value through profit and loss 694,884 - 2,032 696,916 30 November 2022 Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 Investments at fair value through profit and loss 1,043,349 - - 1,043,349 The level 3 investment comprises the Company’s holding in Venus MedTech, which was suspended from trading during the year. As a result of the suspension, the Board, in consultation with the AIFM’s Valuation Committee decided to apply a discount to the price of the holding with the effect of its reclassification from level 1 to level 3 (2022: No level 3 investment). The discount applied took into account the projected impact of the suspension on the price movement of Venus MedTech, as well as that of its peers in the sector. Other factors directly related to Venus MedTech were also taken into consideration when deciding on the appropriate discount to be applied. The movement in the Level 3 unquoted investments during the year is shown below: | | 30 November | | 30 November | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | As at | | £’000 | | £’000 | Opening balance - 599 Transfers to level 3 during the year 9,724 - Disposals during the year - (1,305) Foreign exchange gains on disposals - 66 Realised gains on disposal - 640 Revaluation losses on level 3 investment held (7,692) - Closing valuation 2,032 - There was one transfer between levels during the year ended 30 November 2023 (30 November 2022: nil). The Board approves and determines the effective date of transfers between levels. Fair values of financial assets and financial liabilities All financial assets and liabilities are recognised in the financial statements at fair value, with the exception of short-term assets and liabilities, which are held at cost that approximates to fair value, and loans that are initially recognised at the fair value of the consideration received, less directly attributable costs, and subsequently recognised at amortised cost. The carrying value of the loans approximates to the fair value of the loans. 73 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 5. INCOME | | Year | | Year | | --- | --- | --- | --- | | | ended | | ended | | 30 November | | 30 November | | | | 2023 | | 2022 | | | £’000 | | £’000 | Income from investments: Overseas dividends 922 1,903 Other income: Bank interest on deposits 1,547 283 Total income 2,469 2,186 6. INVESTMENT MANAGEMENT FEE 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Management fee 1,559 6,236 7,795 1,877 7,510 9,387 The Company’s Investment Manager is Bellevue Asset Management (UK) Ltd (the ‘Investment Manager’). The Investment Manager is entitled to receive a management fee payable monthly in arrears and calculated at the rate of one-twelfth of 0.95% per calendar month of market capitalisation. Market capitalisation means the average of the mid-market prices for an Ordinary Share, as derived from the daily official list of the London Stock Exchange on each business day in the relevant calendar month multiplied by the number of Ordinary Shares, in issue on the last business day of the relevant calendar month excluding any Ordinary Shares held in treasury. There is no performance fee payable to the Investment Manager. 7. OTHER EXPENSES 2023 2022 £’000 £’000 Administration & secretarial fees 259 257 Auditor’s remuneration – statutory audit 53 50 Broker fees 6 4 Consultancy fees - 26 Custody services 202 203 Directors’ fees 236 231 Printing 23 28 Public relations - 2 Registrar fees 85 72 Other operating expenses 226 196 Total 1,090 1,069 74 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements 8. FINANCE COSTS Year ended 30 November 2023 Revenue Capital Total £’000 £’000 £’000 Loan interest 703 2,810 3,513 Other finance costs 107 430 537 Total 810 3,240 4,050 Year ended 30 November 2022 Revenue Capital Total £’000 £’000 £’000 Loan interest 597 2,389 2,986 Other finance costs 13 51 64 Total 610 2,440 3,050 9. TAXATION (a) Analysis of charge: 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Withholding tax expense 157 - 157 285 - 285 Total tax charge for the year 157 - 157 285 - 285 (b) Factors affecting the tax charge for the year: The effective UK corporation tax rate for the year is 23% (2022: 19%). The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below: | 2023 | 2022 | | --- | --- | | Total | Total | | £’000 | £’000 | Operating loss before taxation (120,881) (41,139) Effective UK Corporation tax at 23% (2022: 19%) (27,803) (7,816) Effects of: Losses on investments not taxable 25,395 5,666 Overseas dividends not taxable (212) (362) Withholding tax expense 157 285 Unutilised excess expenses 2,620 2,512 Total tax charge for the year 157 285 The Company is not liable to tax on capital gains due to its status as an investment trust. The Company has an unrecognised deferred tax asset of £13,350,000 (2022: £11,190,000) based on the prospective UK corporation tax rate of 25%. This asset has accumulated because deductible expenses exceeded taxable income for the year ended 30 November 2023. No asset has been recognised in the accounts because, given the composition of the Company’s portfolio, it is not likely that this asset will be utilised in the foreseeable future. 75 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 10. RETURN PER SHARE Return per share is based on the weighted average number of Ordinary Shares in issue during the year ended 30November2023 of 548,691,353 (30 November 2022: 581,357,335). Management Shares do not participate in the profit or loss of the Company, hence they are not included in the calculation below. Year ended 30 November 2023 Revenue Capital Total Loss for the year (£'000) (1,147) (119,891) (121,038) Loss per Ordinary Share (basic & diluted) (0.21)p (21.85)p (22.06)p Year ended 30 November 2022 Revenue Capital Total Loss for the year (£'000) (1,655) (39,769) (41,424) Loss per Ordinary Share (basic & diluted) (0.28)p (6.84)p (7.12)p 11. OTHER RECEIVABLES | | As at | | As at | | --- | --- | --- | --- | | 30 November | | 30 November | | | | 2023 | | 2022 | | | £’000 | | £’000 | Prepayments 46 124 VAT recoverable 28 231 Recoverable tax on dividend 37 37 Total 111 392 12. BANK LOANS The Company has a multi-currency revolving credit facility RCF with The Bank of Nova Scotia, London Branch. On 16June2022, the Company renewed and amended its RCF. Under the terms of the amended RCF, the Company may drawdown loans up to an aggregate value of USD 280 million. The increased facility will expire in December 2024. As at 30 November 2023, the aggregate of loans draw down was £31,696,000 (2022: £83,731,000). The table below shows the breakdown of the loans. As at 30 November 2023 Interest rate Local currency GBP equivalent per annum Currency of loans amount £’000 (%) Maturity date USD loan $20,000,000 15,848 Daily SOFR + 1.31% 26 Feb. 2024 USD loan $20,000,000 15,848 Daily SOFR + 1.31% 29 Feb. 2024 Total loans in GBP 31,696 76 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements As at 30 November 2022 Interest rate Local currency GBP equivalent per annum Currency of loans amount £’000 (%) Maturity date USD loan $20,000,000 16,746 3.8 28 Dec. 2022 USD loan $20,000,000 16,746 2.26 27 Jan. 2023 USD loan $20,000,000 16,746 2.26 27 Mar. 2023 USD loan $20,000,000 16,746 2.26 30 May. 2023 USD loan $20,000,000 16,747 2.26 27 Jul. 2023 Total loans in GBP 83,731 A commitment fee is calculated at 0.35 per cent per annum, if the unutilised amount equals or exceeds 50 per cent of the total commitment; or 0.45 per cent per annum if the unutilised amount is less than 50 per cent of the total commitment. In the opinion of the Directors, the fair value of the bank loans is not materially different to their amortised costs. 13. OTHER PAYABLES | | As at | | As at | | --- | --- | --- | --- | | 30 November | | 30 November | | | | 2023 | | 2022 | | | £’000 | | £’000 | Loan interest payable 26 528 Accrued expenses 736 984 2023 Annual Redemption payable* 110,008 - Total 110,770 1,512 * This is in relation to the Company’s announcement on 3 November 2023 that valid redemption requests in respect of 77,428,034 Ordinary Shares had been received for the 30 November 2023 redemption point. All of these shares were redeemed and cancelled by the Company. The calculated redemption price is 142.07718 pence per share. 14. SHARE CAPITAL As at 30 November 2023 As at 30 November 2022 No. of shares £'000 No. of shares £'000 Allotted, issued and fully paid: Redeemable Ordinary Shares of 1p each (‘Ordinary Shares’) 462,588,550 4,626 586,783,083 5,868 Shares held in treasury 16,398,646 164 - - Management Shares of £1 each 50,001 13 50,001 13 Total 479,037,197 4,803 586,833,084 5,881 77 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED Share Movement During the year ended 30 November 2023, 16,398,646 Ordinary Shares (30 November 2022: Nil) were bought back into treasury through the Company’s share buyback programme. The annual redemption point is the last business day of November and redemption price is announced the following day. Forthe 2023 annual redemption, 77,428,034 (30 November 2022: 30,577,550) Ordinary Shares were redeemed and cancelled by the Company, in line with the Company’s annual redemption programme. On 5 May 2023, in line with the Company’s Scrip Dividend Scheme, 209,697 Ordinary Shares were allotted and issued to Shareholders who elected for their final dividend to be automatically subscribed on their behalf for new Ordinary Shares. Since 30 November 2023, no Ordinary Shares were bought back into treasury through the Company’s share buyback programme. 15. DIVIDEND Year ended 30 November 2023 Year ended 30 November 2022 | | Pence per | | | Special | | Revenue | | | Pence per | | Special | Revenue | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Ordinary | | | reserve | | reserve | | Total | Ordinary | | reserve | | reserve | Total | | | | Share | | £’000 | | | £’000 | £’000 | | Share | £’000 | | £’000 | £’000 | | Final dividend - 2021 | | | - | | - - - 3.015p 17,480 - 17,480 | | | | | | | | | | | Interim dividend - 2022 | | | - | | - - - 3.235p 18,977 - 18,977 | | | | | | | | | | Final dividend - 2022 3.235p 17,775 - 17,775 - - - - Interim dividend - 2023 2.995p 16,435 - 16,435 - - - - Total 6.230p 34,210 - 34,210 6.250p 36,457 - 36,457 The dividend relating to the year ended 30 November 2023, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below: Year ended 30 November 2023 Year ended 30 November 2022 | Pence per | | Special | Revenue | | | Pence per | | Special | Revenue | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Ordinary | | reserve | reserve | | Total | Ordinary | | reserve | | reserve | Total | | | Share | £’000 | | £’000 | £’000 | | Share | £’000 | | £’000 | £’000 | Interim dividend – paid 2.995p 16,435 - 16,435 3.235p 18,977 - 18,977 Final dividend – payable/paid 2.995p 13,855 - 13,855 3.235p 17,803 - 17,803 Total 5.990p 30,290 - 30,290 6.470p 36,780 - 36,780 The Directors recommend the payment of a final dividend for the year of 2.995p per share. Subject to approval at the Company’s Annual General Meeting, the dividend will have an ex-dividend date of 09 May 2024 and will be paid on 31May2024 to shareholders on the register at 10 May 2024. The dividend will be funded from the Company’s distributable reserves as per the table above. 16. NET ASSETS PER ORDINARY SHARE Net assets per Ordinary Share as at 30 November 2023 is based on £665,537,000 of net assets of the Company attributable to the 462,588,550 Ordinary Shares in issue (excluding treasury shares) as at 30 November 2023. £12,500 of net assets as at 30 November 2023 is attributable to the Management Shares. 78 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements 17. RELATED PARTY TRANSACTIONS Fees payable to the Investment Manager are shown in the Statement of Comprehensive Income. As at 30 November 2023, thefee outstanding to the Investment Manager was £461,000 (2022: £744,000). Directors’ fees paid during the year are disclosed within the Directors’ Remuneration Report on page 50. Fees payable as at 30 November 2023 were £39,383 (2022: £37,667). The Directors’ shareholdings are disclosed in the Directors’ Remuneration Implementation Report on page 51 in this Annual Report. 18. POST BALANCE SHEET EVENTS There are no post balance sheet events, other than those disclosed in this report. On 1 December 2023, the Company announced that 77,428,034 Ordinary Shares would be redeemed and Shareholders receiving a Redemption Price of 142.07718 pence per share for the 30 November 2023 Redemption Point. As at 30 November 2023, the Company had an accrual of £110million payable to redeeming Shareholders on the 14 December 2023. With effect from 14 December 2023, an amount of £617,709,517 standing to the credit of the Company’s share premium account was cancelled in order to increase the special distributable reserve. 19. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURE (i) Market risks The Company is subject to a number of market risks in relation to economic conditions and healthcare companies. Further details on these risks and the management of these risks are included in the Directors’ report. The Company’s financial assets and liabilities at 30 November 2023 comprised: 2023 2022 | | Interest | Non-interest | | | Interest | Non-interest | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | bearing | | bearing | Total | bearing | | bearing | Total | | Investments | £’000 | | £’000 | £’000 | £’000 | | £’000 | £’000 | Swiss franc - - - - 12,269 12,269 Hong Kong - 2,032 2,032 - 9,724 9,724 US dollar - 694,884 694,884 - 1,021,356 1,021,356 Total investment - 696,916 696,916 - 1,043,349 1,043,349 Cash at bank 110,954 - 110,954 46,368 - 46,368 Short term debtors - 133 133 - 1,247 1,247 ### Bank loans payable-US dollar (31,696) - (31,696) (83,731) - (83,731) Short term creditors - (110,770) (110,770) - (2,907) (2,907) Total 79,258 (110,637) (31,379) (37,363) (1,660) (39,023) Market price risk sensitivity The effect on the portfolio of a 10.0% increase or decrease in market prices would have resulted in an increase or decrease of £69,692,000 (2022: £104,335,000) in the investments held at fair value through profit or loss at the period end, which is equivalent to 10.5% (2022: 10.4%) in the net assets attributable to equity holders. This analysis assumes that all other variables remain constant. 79 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED (ii) Liquidity risks Liquidity risk is the risk that the Company will not be able to meet its obligations when due. There is a risk that the Company’s holdings may not be able to be realised at reasonable prices in a reasonable timeframe. Financial liabilities by maturity at the year-end are shown below: | 30 November | | 30 November | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | £’000 | | £’000 | Within one month-purchases due for settlement and other payables (110,770) (2,907) Between one and three months – Bank loans payable (31,696) (83,731) Total (142,466) (86,638) Management of liquidity risks The Company will typically seek to maintain a high degree of liquidity in its portfolio holdings, which mainly consist of securities that are listed on a recognised exchange (such that a position could typically be exited within 1 to 5 trading days, with minimal price impact) and as a consequence of the concentrated approach, it is unlikely that a position will be taken in a company unless a minimum holding of 1.0 per cent of gross assets at the time of investment can be achieved within an acceptable level of liquidity. The Company’s Investment Manager monitors the liquidity of the Company’s portfolio on a regular basis. See note 12 for the maturity profiles of the loans. Other payables are typically settled within a month. (iii) Currency risks Although the Company’s performance is measured in sterling, a high proportion of the Company’s assets may be either denominated in other currencies or be in investments with currency exposure. Currency sensitivity The below table shows the strengthening/(weakening) of sterling against the local currencies over the financial year for the Company’s financial assets and liabilities held at 30 November 2023. | 30 November | | | 30 November | | | | --- | --- | --- | --- | --- | --- | | | | 2023 | | | 2022 | | | % change | | | % change | | Danish kroner -0.93 -0.07 Euro -1.20 -0.03 Swiss franc -2.84 -7.00 Hong Kong Dollar +5.67 -9.84 US dollar +5.67 -10.20 Foreign currency risk profile 30 November 2023 30 November 2022 | | | | | | | Total | | | | | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Investment | | Net monetary | | | currency | | Investment | | Net monetary | | | currency | | | exposure | | | exposure | | exposure | | exposure | | | exposure | | exposure | | | | £’000 | | | £’000 | | £’000 | | £’000 | | | £’000 | | £’000 | Swiss franc - 6 6 12,269 - 12,269 Hong Kong Dollar 2,032 - 2,032 9,724 - 9,724 US dollar 694,884 35,888 730,772 1,021,356 35,637 1,056,993 Total 696,916 35,894 732,810 1,043,349 35,637 1,078,986 80 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Financial Statements Based on the financial assets and liabilities at 30 November 2023 and all other things being equal, if sterling had weakened against the local currencies by 10%, the impact on the Company’s net assets at 30 November 2023 would have been as follows: | 30 November | | 30 November | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | £’000 | | £’000 | Swiss franc 1 1,227 Hong Kong Dollar 203 972 US dollar 73,077 105,699 Management of currency risks The Company’s Investment Manager monitors the currency risk of the Company’s portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager. Currency risk will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments. (iv) Leverage risks The Company may use borrowings to seek to enhance investment returns. While the use of borrowings should enhance the total return on the Ordinary Shares where the return on the Company’s underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the return on the Company’s underlying assets is rising at a lower rate than the cost of borrowing or falling, further reducing the total return on the Ordinary Shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value per Ordinary Share. Any reduction in the value of the Company’s investments may lead to a correspondingly greater percentage reduction in its Net Asset Value (which is likely to adversely affect the price of an Ordinary Share). Any reduction in the number of Ordinary Shares in issue (for example, as a result of buy backs or redemptions) will, in the absence of a corresponding reduction in borrowings, result in an increase in the Company’s level of gearing. To the extent that a fall in the value of the Company’s investments causes gearing to rise to a level that is not consistent with the Company’s gearing policy or borrowing limits, the Company may have to sell investments in order to reduce borrowings, which may give rise to a significant loss of value compared to the book value of the investments, as well as a reduction in income from investments. The Company will pay interest on its borrowings. As such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates. As at the year end, the Company’s gearing ratio was 4.7% (2022: 4.0%), based on the drawn down loans as a percentage of gross asset value. As at the year end, the Company did not hold any derivative instruments. Management of leverage risks Gearing will be deployed flexibly up to 20% of the Net Asset Value, at the time of borrowing, although the Investment Manager expects that gearing will, over the longer term, average between 5 and 10 per cent of the Net Asset Value. In the event the 20per cent limit is breached as a result of market movements, and the Board considers that borrowing should be reduced, the Investment Manager shall be permitted to realise investments in an orderly manner so as not to prejudice Shareholders. Further details of the Company’s bank loans is disclosed in note 12. (v) Interest rate risks The Company pays interest on its borrowings. As such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates. 81 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED As at 30 November 2023, the Company held cash balance of £111million of which £110million were payable to Redeeming Shareholders on or around 14 December 2023, consequently the Company considers it to bear no significant interest rate risk exposure. Management of interest rate risks Prevailing interest rates are taken into account when deciding on borrowings. The Company had bank loans denominated in GBP and USD in place during the year. The loan interest is based on a variable rate. Based on the loans outstanding at the year end a change of 1.00% (2022: 1.00%) in interest rates would increase/(decrease) annual profit or loss by the amounts shown below. The analysis assumes that all other variables remain constant: | | Loans at | | Profit or loss | | Profit or loss | | | Loans at | | Profit or loss | | Profit or loss | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 30 November | | | | 1.00% | | 1.00% | 30 November | | | | 1.00% | | 1.00% | | | | 2023 | | decrease | | increase | | | 2022 | | decrease | | increase | | | | £’000 | | £’000 | | £’000 | | | £’000 | | £’000 | | £’000 | USD loan 31,696 317 (317) 83,731 837 (837) Total 31,696 317 (317) 83,731 837 (837) (vi) Credit risks Credit risk is the potential of a counterparty failing to meet its obligations in accordance with the agreed terms. Cash and other assets that are required to be held in custody will be held by the depositary or its sub-custodians. Where the Company utilises derivative instruments, it is likely to take a credit risk with regard to the parties with whom it trades and may also bear the risk of settlement default. Management of credit risks The Company has appointed CACEIS Bank as its depositary. The Standard & Poor’s credit rating of CACEIS is A+ (2022: A+). The credit rating of CACEIS was reviewed at the time of appointment and is reviewed on a regular basis by the Investment Manager and/or the Board. The Investment Manager monitors the Company’s exposure to its counterparties on a regular basis and trades in equities are performed on a delivery versus payment basis. The Company’s assets are segregated from those of the Depositary or any of its sub-custodians. At 30 November 2023, the Depository held £696,916,000 (2022: £1,043,349,000) in respect of investments and £110,954,000 (2022: £46,368,000) in respect of cash on behalf of the Company. (vii) Capital management policies and procedures The Company considers its capital to consist of its share capital of Ordinary Shares of 1p each, Management Shares of £1 each, and reserves totalling £665,537,000 (2022: £1,004,326,000) and bank loans payable £31,696,000 (2022:£83,731,000). The Company has a redemption facility through which Shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The redemption point for the Ordinary Shares was 30 November 2023 andwill be annual thereafter. The Redemption facility is entirely at the discretion of the Directors. The Investment Manager and the Company’s broker monitor the demand for the Company’s shares and the Directors review the position at Board meetings. Use of distributable reserves is disclosed in the footnote on the Statement of changes in equity on page 66. The principal compliance required by the loan convenants are: 1. the borrower will not permit the adjusted asset coverage to be less than 3.50 to 1.00; and 2. the borrower will not permit the net asset value to be less than GBP 400,000,000 at any time. 82 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Other Information # Alternative Performance Measures # DISCOUNT The amount, expressed as a percentage, by which the share price is less than the Net Asset Value per Ordinary Share. | As at 30 November 2023 | | Page | £'000 | | --- | --- | --- | --- | | NAV per Ordinary Share (pence) | a | 65 | 143.87 | | Share price (pence) | b | 1 | 129.06 | | Discount | (b+a)-1 | | -10.3% | # GEARING A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing. | As at 30 November 2023 | | Page | £'000 | | --- | --- | --- | --- | | Total assets less cash/cash equivalents | a | 65 | 697,049 | | Net assets | b | 65 | 665,537 | | Gearing (net) | (a+b)-1 | | 4.7% | # LEVERAGE An alternative word for "Gearing". (See gearing for calculations). Under AIFMD, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other. # ONGOING CHARGES A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company. | Year ended 30 November 2023 | | Page | 1 | | --- | --- | --- | --- | | Average NAV | a | n/a | 870,662,248 | | Annualised expenses | b | n/a | 8,885,000 | | Ongoing charges | (b+a) | | 1.02% | Defence Healthcare Trust plc Annual Report and Accounts 2023 83 Alternative Performance Measures continued # **TOTAL RETURN** A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid out by the Company into the Ordinary Shares of the Company on the ex-dividend date. | Year ended 30 November 2022 | | Price | Short price | Net | | --- | --- | --- | --- | --- | | Opening at 1 December 2022 (p) | a | n/a | 158.20 | 171.16 | | Closing at 30 November 2023 (p) | b | 1 | 129.90 | 143.87 | | Price movement (b=a)-1 | c | n/a | -18.5% | -15.9% | | Dividend reinvestment | d | n/a | 3.4% | 3.3% | | **Total return** | **(c+d)** | | **-15.1%** | **-12.7%** | n/a = not applicable. 84 **Balance Healthcare Trust plc** Annual Report and Accounts 2023 Other Information ## Glossary American Depositary Receipt or A negotiable certificate issued by a U.S. bank representing a specified number of shares in a foreign “ADR” stock traded on a U.S. exchange. AIC Association of Investment Companies. Alternative Investment Fund or “AIF” An investment vehicle under AIFMD. Under AIFMD (see below) the Company is classified as an AIF. Alternative Investment Fund A European Union directive which came into force on 22 July 2013 and has been implemented in Managers Directive or “AIFMD” the UK and remains in force post BREXIT. Annual General Meeting or “AGM” A meeting held once a year which Shareholders can attend and where they can vote on resolutions to be put forward at the meeting and ask Directors questions about the company in which they are invested. CFD or Contract for Difference A financial instrument, which provides exposure to an underlying equity with the provider financing the cost to the buyer with the buyer receiving the difference of any gain or paying for any loss. Custodian An entity that is appointed to safeguard a company’s assets. Discount The amount, expressed as a percentage, by which the share price is less than the net asset value per share. The discount is calculated on the closing share price. Depositary Under AIFMD the depositary is appointed under a strict liability regime to oversee inter alia, those charged with safekeeping of the Company’s assets and cash monitoring. Dividend Income receivable from an investment in shares. ESG Environmental, social and governance Ex-dividend date The date from which you are not entitled to receive a dividend which has been declared and is due to be paid to Shareholders. Financial Conduct Authority or The independent body that regulates the financial services industry in the UK. “FCA” Gearing A term used to describe the extent that a portfolio has increased in size as a way to magnify incomeand capital returns, but which can also magnify losses. A bank loan is a common method ofgearing. Gross assets The Company’s total assets adjusted for any leverage amount (outstanding bank loan). Index An independent Market tool which is used to compare performance across different investment companies and funds. It quantifies performance of a basket of stocks which is considered to replicate a particular stock market or sector. Investment company A company formed to invest in a diversified portfolio of assets. Investment Trust An investment company which is based in the UK and which meets certain tax conditions which enables it to be exempt from UK corporation tax on its capital gains. The Company is an investment trust. Large-Cap A Company with a market capitalisation above $10 billion. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 85 ### Glossary continued Leverage An alternative word for “Gearing”. Under AIFMD, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other. Liquidity The extent to which investments can be sold at short notice. Management Shares Non-redeemable preference shares of £1.00 each in the capital of the Company. Mega-Cap A Company with a market capitalisation above $50 billion. Mid-Cap A Company with a market capitalisation between $2 and $10 billion. Net assets An investment company’s assets less its liabilities. Net asset value (“NAV”) per Ordinary Net assets divided by the number of Ordinary Shares in issue (excluding any shares held in treasury). Share Ongoing charges ratio A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company. Ordinary Shares The Company’s redeemable Ordinary Shares of 1p each. Portfolio A collection of different investments held in order to deliver returns to Shareholders and to spread risk. Premium The amount, expressed as a percentage, by which the share price is more than the net asset value per share. Share buyback A purchase of a company’s own shares. Shares can either be bought back for cancellation or held in treasury. Share price The price of a share as determined by a relevant stock market. Small-Cap A Company with a market capitalisation less than $2 billion. Total return A measure of performance that takes into account both income and capital returns. This may take into account capital gains, dividends, interests and other realised variables over a given period oftime. Treasury shares A company’s own shares which are available to be sold by a company to raise funds. Volatility A measure of how much a share moves up and down in price over a period of time. Bellevue Healthcare Trust plc Annual Report and Accounts 202386 Other Information ## Annex I – Article 8 Periodic Disclosures Pursuant to the Regulation (EU) 2019/2088 Sustainable Finance Disclosure Regulation (the “SFDR”), the Company has set out below the periodic disclosures based on the criteria and Sustainable investment definitions set out in the SFDR relating to sustainability risks in respect of the Company. means an investment in an economic activity ANNEX IV – periodic report as per November 30, 2023 that contributes to an environmental or social Name of product: Bellevue Healthcare Trust objective, provided that Corporate identifier (LEI): 213800HQ3J3H9YF2UI82 the investment does not significantly harm any ### ENVIRONMENTAL AND/OR SOCIAL CHARACTERISTICS environmental or social objective and that the Did this financial product have a sustainable investment objective? investee companies follow good governance practices. Yes 6 No It made sustainable investments with an 6 It promoted Environmental/Social (E/S) environmental objective: % characteristics and while it did not have as its objective a sustainable investment, it in economic activities that qualify as had a proportion of 51.9 % of sustainable environmentally sustainable under the The EU Taxonomy is a investments EU Taxonomy classification system laid with an environmental objective in down in Regulation (EU) in economic activities that do not qualify economic activities that qualify as as environmentally sustainable under 2020/852, establishing a environmentally sustainable under the the EU Taxonomy list of environmentally EU Taxonomy sustainable economic 6 with an environmental objective in activities. That economic activities that do not qualify Regulation does not as environmentally sustainable under include a list of socially the EU Taxonomy sustainable economic activities. Sustainable 6 with a social objective investments with an environmental objective It made sustainable investments with a It promoted E/S characteristics, but did not might be aligned with the social objective: % make any sustainable investments Taxonomy or not. To what extent were the environmental and/or social characteristics promoted by this financial product met? The investment strategy takes into account social, environmental as well as governance-related characteristics (ESG) as part of the implementation of its investment objectives, in accordance with the provisions of Article 8 of the EU Disclosure Regulation 2019/2088 (EU SFDR). These mainly include the following elements: Exclusion of serious violations of global norms, value-based exclusions based on revenue thresholds, ESG integration into fundamental company analysis, ESG stewardship through constructive company dialogue (engagement), and exercise of voting rights (proxy voting). 87 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ANNEX I – ARTICLE 8 PERIODIC DISCLOSURES CONTINUED **Sustainability indicators** measure how the environmental or social characteristics promoted by the financial product are attained. # **How did the sustainability indicators perform?** The sustainability indicators are represented by the minimum exclusion criteria, by ESG integration and by Stewardship (engagement and proxy voting) activities specified in the mandatory elements of the investment strategy. The mandatory exclusion criteria applied were checked by the investment monitoring system/portfolio management system and were complied with at all times. **A Global Norms:** none of the portfolio companies exhibited very severe controversies (MSCI ESG Fail status) against UN Global Compact, UN Guiding Principles on Business and Human Rights and Standards and Rights of the International Labour Organization (ILO 1 + 2). **B Value-based exclusions:** all portfolio companies were within the permissible revenue tolerances. Find below the value-based exclusions overview as per November 30, 2023: # **Value based exclusions** | Criteria | Revenue tolerance | Number of companies involved (within tolerance) | Aggr. weight of companies involved (within tolerance) in % | | --- | --- | --- | --- | | Controversial weapons | 0.0% | 0 | 0.0% | | Conventional weapons | 2.0% | 0 | 0.0% | | Thermal coal | 2.0% | 0 | 0.0% | | Other fossil fuels | 2.0% | 0 | 0.0% | | Nuclear power | 2.0% | 0 | 0.0% | | Palm oil | 5.0% | 0 | 0.0% | | Responsible mineral sourcing | 2.0% | 0 | 0.0% | | Environmentally damaging agricultural chemicals | 10.0% | 0 | 0.0% | | Alcohol production (beverages) | 2.0% | 0 | 0.0% | | Production of tobacco | 2.0% | 0 | 0.0% | | Sale of tobacco | 10.0% | 0 | 0.0% | | Cannabis-based products^{1)} | n/a | 8 | 0.8% | | Pornography | 2.0% | 0 | 0.0% | | Gambling | 2.0% | 0 | 0.0% | | Predatory lending practices | 2.0% | 0 | 0.0% | | Animal testing and welfare^{2)} | n/a | 0 | 0.0% | | Genetic research^{3)} | n/a | 0 | 0.0% | | Use of embryonic stem cells | n/a | 0 | 0.0% | 1) We may invest in holdings that offer therapeutic products derived from, or containing cannabinoids. However, the investment manager would not knowingly invest into production or supply of recreational cannabis products. 2) Pre-clinical testing in animals are, integral and legally required for approving medicines. We limit our focus to ensuring that in some companies adhere to the highest standards of welfare in respect of the animals. 3) We do not consider this to be controversial, as long as research follows accepted ethical guidelines and is appropriately supervised. **C ESG integration:** Based on the premise that sustainability risks can have a negative impact on returns, the aim of ESG integration is to identify and address such risks within the scope of the investment process. The data gained through ESG screening is also used by the asset manager to anticipate new developments with respect to sustainability and to incorporate these findings into its investment decisions. As per November 30, 2023, the fund exhibited following ESG rating profile: 80 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Other Information MSCI ESG rating distribution (portfolio) ESG research coverage ESG Rating 96.4% ESG Carbon Data 96.4% ESG Net Alignment Scores (SDG) 96.4% UN Global Compact 96.4% UNGPs (Humgan Rights) 96.4% ILO Set of Standards 96.4% D Stewardship: For the year from November 30, 2022 until November 30, 2023, the fund executed its voting rights for 32 companies or 94% of the portfolio holdings and formally engaged with selected companies on ESG. What were the objectives of the sustainable investments that the financial product partially made and how did the sustainable investment contribute to such objectives? The goals of sustainable investments are to positively contribute to at least one of the 17 United Nations Sustainable Development Goals (UN SDGs). The MSCI ESG Rating and MSCI UN SDG Alignment Score methodologies allow an investment to qualify as sustainable under the provisions of Article 2(17) of the EU SFDR. As per end of the reporting period, the fund’s holdings exhibited on aggregate a positive alignment to following UN SDGs (highlighted in color): Principal adverse impacts are the most significant negative impacts of investment decisions on sustainability factors relating to environmental, social and employee matters, respect for human rights, anti-corruption and anti- bribery matters. 89 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ANNEX I – ARTICLE 8 PERIODIC DISCLOSURES CONTINUED How did the sustainable investments that the financial product partially made not cause significant harm to any environmental or social sustainable investment objective? The sustainable investments must not significantly harm (DNSH) any of the 17 United Nations Sustainable Development Goals (UN SDGs). Therefore we currently use the so- called UN SDG Alignment Score methodology provided by MSCI ESG. The scale for the SDG Alignment Score ranges from -10.0 to +10.0. A company that shows a positive contribution to at least one of the 17 UN SDGs (i.e. MSCI ESG UN SDG Net Alignment Score >=2.0) must not show a negative contribution to any other UN SDG (i.e. MSCI ESG UN SDG Net Alignment Score <-2.0). Furthermore, the issuers must exhibit at least an MSCI ESG rating of BB (“Good Governance”). All holdings that contribute positively to UN SDGs are simultaneously tested on DNSH and good governance. BAM Risk Management and BAM Product Management perform regular portfolio checks (at least quarterly) to ensure that sustainable investments comply with DNSH and Good Governance. How were the indicators for adverse impacts on sustainability factors taken into account? The adverse impact indicators were considered within the minimum exclusion criteria (no serious violations of UN Global Compact, UN Guiding Principles on Business and Human Rights Compliance and standards and rights of the International Labor Organisation). This was implicitly accompanied by consideration of PAIs No.4 (investment in fossil fuel companies), No.10 (violations of the UNGC Principles and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises), and No.14 (engagement in controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons). Furthermore, No.3 (GHG intensity), No.8 (water emissions) and No.9 (hazardous waste) were explicitly considered as separate criteria. PAI No. 1 (GHG emissions) and No. 2 (GHG footprint) are included in the MSCI ESG overall rating with different weightings depending on the industry relevance and were thus implicitly taken into account via the MSCI ESG minimum rating of “BB” per issuer. Were sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights? Details: The OECD Guidelines were taken into account as part of the minimum exclusion criteria (no serious violations of UN Global Compact, UN Guiding Principles on Business and Human Rights Compliance and standards and rights of the International Labor Organisation). In addition to data from MSCI ESG Research, public company data, broker research and specific exchanges with companies were also used to assess sustainability. 90 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Other Information The EU Taxonomy sets out a “do not significant harm” principle by which Taxonomy-aligned investments should not significantly harm EU Taxonomy objectives and is accompanied by specific Union criteria. The “do no significant harm” principle applies only to those investments underlying the financial product that take into account the EU criteria for environmentally sustainable economic activities. The investments underlying the remaining portion of this financial product do not take into account the EU criteria for environmentally sustainable economic activities. Any other sustainable investments must also not significantly harm any environmental or social objectives. How did this financial product consider principal adverse impacts on sustainability factors? The main adverse impacts of investment decisions on sustainability factors (PAIs) were taken into account in the “minimum exclusion criteria” mentioned in the context of the mandatory elements of the investment strategy and at least for the proportion of the fund assets categorized as “investments with sustainable characteristics” and as “sustainable investments”. This was implicitly accompanied by the consideration of PAIs No.4 (investment in fossil fuel companies), No.10 (violations of UNGC principles and of the Organization for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises) and No.14 (engagement in controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons). Furthermore, No.3 (GHG intensity), No.8 (water emissions) and No.9 (hazardous waste) were explicitly considered as separate criteria. PAI No. 1 (GHG emissions) and No. 2 (GHG footprint) were included in the MSCI ESG overall rating with different weightings depending on the industry relevance and were thus implicitly taken into account via the MSCI ESG minimum rating of BB per issuer. What were the top investments of this financial product? NAME AVG WEIGHT IN % COUNTRY SECTOR OPTION CARE HEALTH INC 6.57 UNITED STATES Health Care AXONICS INC 6.40 UNITED STATES Health Care INSMED INC 6.01 UNITED STATES Health Care EXACT SCIENCES CORP 5.76 UNITED STATES Health Care EVOLENT HEALTH INC-A 5.26 UNITED STATES Health Care The list includes the CHARLES RIVER LABORATORIES 5.00 UNITED STATES Health Care investments constituting the greatest proportion BIO-RAD LABORATORIES-A 4.42 UNITED STATES Health Care of investments of PACIFIC BIOSCIENCES OF CALIF 4.35 UNITED STATES Health Care the financial product during the reference APELLIS PHARMACEUTICALS INC 4.34 UNITED STATES Health Care period which is from SAREPTA THERAPEUTICS INC 4.27 UNITED STATES Health Care November30, 2022 until November 30, 2023 UNITED HEALTH GROUP INC 3.93 UNITED STATES Health Care TANDEM DIABETES CARE INC 3.87 UNITED STATES Health Care ACCOLADE INC 3.50 UNITED STATES Health Care Asset allocation VERTEX PHARMACEUTICALS INC 3.31 UNITED STATES Health Care describes the share of AXSOME THERAPEUTICS INC 3.29 UNITED STATES Health Care investments in specific assets. Above data has been compiled based on daily closing prices and averaged for the reference period. Classification of securities including Sector and Country are determined as at the last day of the reference period. 91 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ANNEX I – ARTICLE 8 PERIODIC DISCLOSURES CONTINUED What was the proportion of sustainability-related investments? What was the asset allocation? #1A Sustainable #1 Aligned with E/S characteristics #1B Other E/S Investments characteristics #2 Other #1 Aligned with E/S characteristics includes the investments of the financial product used to attain the environmental or social characteristics promoted by the financial product. #2Other includes the remaining investments of the financial product which are neither aligned with the environmental or social characteristics, nor are qualified as sustainable investments. The category #1 Aligned with E/S characteristics covers: – The sub-category #1A Sustainable covers environmentally and socially sustainable investments. – The sub-category #1B Other E/S characteristics covers investments aligned with the environmental or social characteristics that do not qualify as sustainable investments. As per end of the reporting period, the fund exhibited following asset allocation according to EU SFDR: 92 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Other Information ![DDBD logo]() To comply with the EU Taxonomy, the criteria for **fossil gas** include limitations on emissions and switching to fully renewable power or low-carbon fuels by the end of 2035. For **nuclear energy**, the criteria include comprehensive safety and waste management rules. **Enabling activities** directly enable other activities to make a substantial contribution to an environmental objective. **Transitional activities are** activities for which low-carbon alternatives are not yet available and among others have greenhouse gas emission levels corresponding to the best performance. ![img-5.jpeg](img-5.jpeg) # **In which economic sectors were the investments made?** During the reporting period, the fund was invested in following economic sectors: | SECTOR | SUB-SECTOR | SUM OF AVG WEIGHT IN % | | --- | --- | --- | | Health Care | Biotechnology | 26.7% | | | Health Care Equipment & Supplies | 23.5% | | | Health Care Providers & Services | 21.8% | | | Health Care Technology | 5.2% | | | Life Sciences Tools & Services | 13.9% | | | Pharmaceuticals | 8.9% | | Total | | 100.0% | Above data has been calculated based on daily closing prices and averaged for the reference period. Classification of securities including Sector and Country are determined as at the last day of the reference period. During the period under review, the fund was not investing in companies, that derive revenues from exploration, mining, extraction, production, processing, storage, refining or distribution, including transportation, storage and trade, of fossil fuels as defined in Article 2, point (62), of Regulation (EU) 2018/1999 of the European Parliament and of the Council. # **To what extent were the sustainable investments with an environmental objective aligned with the EU Taxonomy?** The main objective of this fund is to achieve long-term capital growth by considering E/S characteristics. Therefore, this sub-fund does not currently commit to invest a minimum proportion of its total assets in environmentally sustainable economic activities as defined in Article 3 of the EU Taxonomy Regulation (2020/852). This also concerns information on investments in economic activities that are classified as enabling or transitional activities pursuant to Article 16 or 10(2) of the EU Taxonomy Regulation (2020/852). Defense Healthcare Trust plc Annual Report and Accounts 2023 55 ANNEX I – ARTICLE 8 PERIODIC DISCLOSURES CONTINUED Did the financial product invest in fossil gas and/or nuclear energy related 1 activities complying with the EU Taxonomy ? Taxonomy-aligned Yes: activities are expressed as a share of: In fossil gas In nuclear energy – turnover reflecting the share of revenue X No from green activities of investee companies. The graphs below show in green the percentage of investments that were aligned with the EU Taxonomy. As there is no appropriate methodology to determine the taxonomy- – capital expenditure alignment of sovereign bonds*, the first graph shows the Taxonomy alignment in (CapEx) showing the relation to all the investments of the financial product including sovereign bonds, while green investments the second graph shows the Taxonomy alignment only in relation to the investments of made by investee the financial product other than sovereign bonds. companies, e.g. for a transition to a green 2. Taxonomy-alignment of investments 1. Taxonomy-alignment of investments excluding sovereign bonds* economy. including sovereign bonds* 0% 0% – operational Turnover x% x% x% 100% Turnover x% x% x% 100% expenditure (OpEx) reflecting green 0% 0% operational activities of | investee companies. | CapEx | x% x% x% | 100% | CapEx | x% x% x% | 100% | | --- | --- | --- | --- | --- | --- | --- | | | | 0% | | | 0% | | | | OpEx | x% x% | 100% | OpEx | x% x% x% | 100% | | | 0% 50% 100% | | 0% 50% 100% | | --- | --- | --- | --- | | Taxonomy-aligned: Fossil gas | | Taxonomy-aligned: Fossil gas | | | Taxonomy-aligned: Nuclear | | Taxonomy-aligned: Nuclear | | | Taxonomy-aligned (no gas and nuclear) | | Taxonomy-aligned (no gas and nuclear) | | | Non Taxonomy-aligned | | Non Taxonomy-aligned | | This graph represents 100% of the total investments. * For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures. are sustainable What was the share of investments made in transitional and enabling investments with an activities? environmental objective Transitional activities 0%; enabling activities 0% that do not take into account the criteria for environmentally sustainable economic activities under Regulation (EU) 2020/852. 1 Fossil gas and/or nuclear related activities will only comply with the EU Taxonomy where they contribute to limiting climate change (“climate change mitigation”) and do not significantly harm any EU Taxonomy objective - see explanatory note in the The graphs below show in green the percentage of investments that were aligned with the EU Taxonomy. left hand margin. The full criteria for fossil gas and nuclear energy economic activities that comply with the EU Taxonomy are As there is no appropriate methodology to determine the taxonomy-alignment of sovereign bonds*, the laid down in Commission Delegated Regulation (EU) 2022/1214. first graph shows the Taxonomy alignment in relation to all the investments of the financial product including sovereign bonds, while the second graph shows the Taxonomy alignment only in relation to the 94 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 investments of the financial product other than sovereign bonds. * For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures. Other Information What was the share of sustainable investments with an environmental objective not aligned with the EU Taxonomy? Sustainable investments are assessed on the basis of their contributions to the 17 United Nations Sustainable Development Goals (SDGs). As those encompass environmental as well as social objectives, a separate minimum quota for E and S cannot be set. Per end of the period under review the fund held 51,9% sustainable investments whereas the total share of sustainable investments in relation to environmental goals of the fund was at least 1%. What was the share of socially sustainable investments? Sustainable investments are assessed on the basis of their contributions to the 17 United Nations Sustainable Development Goals (SDGs). As those encompass environmental as well as social objectives, a separate minimum quota for E and S cannot be set. Per end of the period under review the fund held 51,9% sustainable investments whereas the total share of sustainable investments in relation to social goals of the fund was at least 1%. What investments were included under “other”, what was their purpose and were there any minimum environmental or social safeguards? Hedging instruments, investments for diversification purposes, investments for which no data are available, or cash for liquidity management. What actions have been taken to meet the environmental and/or social characteristics during the reference period? BAM Risk Management and BAM Product Management was periodically checking the portfolios against compliance with our BAM Exclusion list which considers global norms and value-based norms compliance. Moreover, the fund was investing at least 75% of its portfolio in stocks with MSCI ESG rating of at least BB or higher in order to be qualified as an investment with ESG characteristics. With regards to its positive contributions to UN SDGs the fund was investing at least 25% of its portfolio in stocks with a positive alignment to at least one UN SDG (inlc. DNSH and good governance). As mentioned above, selected companies were subject of an engagement process and the fund voted for 94% of its holdings. How did this financial product perform compared to the reference benchmark? ? No reference benchmark is defined for the measurement of its ESG characteristics. 95 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ? ? ? ? ANNEX I – ARTICLE 8 PERIODIC DISCLOSURES CONTINUED How does the reference benchmark differ from a broad market index? N/A Reference benchmarks How did this financial product perform with regard to the sustainability are indexes to measure indicators to determine the alignment of the reference benchmark with whether the financial the environmental or social characteristics promoted? product attains the N/A environmental or social characteristics that they How did this financial product perform compared with the reference promote. benchmark? N/A How did this financial product perform compared with the broad market index? N/A 96 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 Other Information # Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Bellevue Healthcare Trust plc will be held on 26 April 2024 at 12 noon at the offices of Stephenson Harwood LLP, at 1 Finsbury Circus, London EC2M 7SH, United Kingdom or the following purposes: To consider and if thought fit pass the following resolutions of which resolutions 1 to 12 will be proposed as ordinary resolutions and resolutions 13 to 15 will be proposed as special resolutions. ## ORDINARY RESOLUTIONS 1. To receive the Company's Annual Report and Accounts for the year ended 30 November 2023, with the reports of the Directors and auditors thereon. 2. To approve the Directors' Remuneration Policy included in the Annual Report for the year ended 30 November 2023. 3. To approve the Directors' Remuneration Implementation Report included in the Annual Report for the year ended 30 November 2023. 4. To re-elect Randeep Grewal as a Director of the Company. 5. To re-elect Josephine Dixon as a Director of the Company. 6. To re-elect Paul Southgate as a Director of the Company. 7. To re-elect Tony Young as a Director of the Company. 8. To re-elect Kate Bolsover as a Director of the Company. 9. To reappoint Ernst & Young LLP as auditors to the Company. 10. To authorise the Directors to fix the remuneration of the auditors until the conclusion of the next Annual General Meeting of the Company. 11. To approve a final dividend of 2.995p per Ordinary Share of the Company in respect of the year ended 30 November 2023. 12. That the Directors be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (in substitution for all subsisting authorities to the extent unused) to exercise all the powers of the Company to allot up to 47,898,719 Ordinary Shares of 1p each in the capital of the Company ("Ordinary Shares"), such authority to expire (unless previously varied, revoked or renewed by the Company in general meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2025 or, if earlier, on the expiry of 15 months from the passing of this resolution, save that the Company may, at any time prior to the expiry of such authority, make an offer or enter into an agreement which would or might require the allotment of shares in pursuance of such an offer or agreement as if such authority had not expired; ## SPECIAL RESOLUTIONS 13. That, subject to the passing of resolution 12, in substitution for any existing power under sections 570 and 573 of the Companies Act 2006 but without prejudice to the exercise of any such power prior to the date hereof, the Directors be and are hereby empowered (pursuant to sections 570 and 573 of the Companies Act 2006) to allot Ordinary Shares of 1p each and to sell Ordinary Shares of 1p each from treasury for cash pursuant to the authority referred to in Resolution 12 above as if section 561 of the Act did not apply to any such allotment or sale, such power to expire (unless previously varied, revoked or renewed by the Company in general meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2025 or, if earlier, on the expiry of 15 months from the passing of this resolution, save that the Company may, at any time prior to the expiry of such power, make an offer or enter into an agreement which would or might require equity securities to be allotted or sold from treasury after the expiry of such power, and the Directors may allot or sell from treasury equity securities in pursuance of such an offer or an agreement as if such power had not expired; 14. That the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the Companies Act 2006 ("the Act") to make market purchases (within the meaning of section 693(4) of the Act) of its Ordinary Shares of 1p each, provided that: (a) the maximum number of Ordinary Shares hereby authorised to be purchased shall be 69,342,023 (representing 14.99% of the Company's issued Ordinary Share capital (excluding shares held in Treasury) at the date of the notice of this meeting); Bellevue Healthcare Trust plc Annual Report and Accounts 2023 57 NOTICE OF ANNUAL GENERAL MEETING CONTINUED (b) the minimum price (exclusive of any expenses) which may be paid for an Ordinary Share is 1p; (c) the maximum price (excluding expenses) which may be paid for an Ordinary Share is not more than the higher of (i) 5% above the average of the middle market quotations for the Ordinary Shares for the five business days immediately before theday on which it purchases that share and (ii)thehigher of the price of the last independent trade and thehighest current independent bid for the OrdinaryShares; (d) the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2025 or, if earlier, on the expiry of 15months from the passing of this resolution, unless such authority is renewed prior to such time;and (e) the Company may make a contract to purchase Ordinary Shares under the authority hereby conferred prior to 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 Ordinary Shares pursuant to any suchcontract. 15. That a general meeting of the Company other than an Annual General Meeting may be called on not less than 14 days’ notice, provided that this authority shall expire at the conclusion of the Company’s next Annual General Meeting after the date of the passing of this resolution. Registered office: 6th Floor, 125 London Wall, Barbican, London EC2Y 5AS By order of the Board Sinead van Duuren For and on behalf of Apex Listed Companies Services (UK) Limited Company Secretary 1 March 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 202398 Other Information ## Notes to Notice of Annual General ## Meeting WEBSITE ADDRESS else appointed, as a proxy for this meeting. If they have 1. Information regarding the meeting, including the information such right or do not wish to exercise it, they may have a required by section 311A of the Companies Act 2006, is right under such an agreement to give instructions to the available from https://www.bellevuehealthcaretrust.com. member as to the exercise of voting rights. Nominated persons should contact the registered ENTITLEMENT TO ATTEND AND VOTE member by whom they were nominated in respect 2. Only those holders of Ordinary Shares registered on the of these arrangements. The statement of rights of Company’s register of members at close of business on Shareholders in relation to the appointment of proxies 24 April 2024 or, if this meeting is adjourned, at close does not apply to nominated persons. of business on the day two days prior to the adjourned meeting, shall be entitled to vote at the meeting. PROXIES’ RIGHTS TO VOTE 4. On a vote on a show of hands, each proxy has one vote. Should a shareholder have a question that they would like to raise at the AGM, either of the Board or the Investment If a proxy is appointed by more than one member and all Manager, the Board would ask that they either ask the such members have instructed the proxy to vote in the question in advance of the AGM by sending it by email to same way, the proxy will only be entitled, on a show of info@bellevuehealthcaretrust.com or attend the AGM hands, to vote “for” or “against” as applicable. If a proxy is and asking the question at the meeting at the appropriate appointed by more than one member, but such members time. Answers to all questions will be published on the have given different voting instructions, the proxy may, on Company’s website after the AGM. a show of hands, vote both “for” and “against” in order to reflect the different voting instructions. In the case of joint holders of a voting right, the vote of the senior who tenders a vote shall be accepted to the VOTING BY CORPORATE exclusion of the votes of the other joint holders and, for this purpose, seniority shall be determined by the order REPRESENTATIVES in which the names stand in the Register of Members in 5. Corporate representatives are entitled to attend and vote respect of the joint holding. on behalf of the corporate member in accordance with Section 323 of the Companies Act provided they do not APPOINTMENT OF PROXIES do so in relation to the same shares. 3. Pursuant to Section 324 of the Companies Act 2006, a member entitled to attend and vote at the meeting may RECEIPT AND TERMINATION OF PROXIES appoint more than one proxy, provided that each proxy 6. The Form of Proxy and any power of attorney (or a is appointed to exercise the rights attached to different notarially certified copy or office copy thereof) under shares held by him. A proxy need not be a member of which it is executed must be received by Link Group at theCompany. 12 noon on 24 April 2024 in respect of the meeting. Any Forms of Proxy received before such time will be deemed If Shareholders are not attending the AGM, Shareholders to have been received at such time. In the case of an are strongly urged to appoint the Chairman as their proxy adjournment, the Form of Proxy must be received by Link to vote on their behalf. Group no later than 48 hours before the rescheduled Section 324 does not apply to persons nominated to meeting. On completing the Form of Proxy, sign it and receive information rights pursuant to Section 146 of the return it to Link Group at the address shown on the Form Companies Act 2006. Persons nominated to receive of Proxy in the envelope provided. As postage has been information rights under Section 146 of the Companies prepaid no stamp is required. Act 2006 have been sent this notice of meeting and are A member may terminate a proxy’s authority at any time hereby informed, in accordance with Section 149(2) of before the commencement of the AGM. the Companies Act 2006, that they may have the right under an agreement with the registered member by whom Termination must be provided in writing and submitted they are nominated to be appointed, or to have someone to the Company’s Registrar. In accordance with the Bellevue Healthcare Trust plc Annual Report and Accounts 2023 99 NOTES TO NOTICE OF ANNUAL GENERAL MEETING CONTINUED Company’s Articles of Association, in determining the to the instruction given to a previously appointed proxy, time for delivery of proxies, no account shall be taken of must, in order to be valid, be transmitted so as to be any part of a day that is not a working day. received by the Company’s agent (ID: RA10) by the latest time(s) for receipt of proxy appointments specified Alternatively, you may appoint a proxy or proxies din the notice of meeting. For this purpose, the time of electronically by visiting https://www.signalshares. receipt will be taken to be the time (as determined by com/. the timestamp applied to the message by the CREST You will need to register using your investor code and Applications Host) from which the Company’s agent is follow the instructions on how to vote. Proxies submitted able to retrieve the message by enquiry to CREST in the via www.signalshares.com for the AGM must be manner prescribed by CREST. After this time any change transmitted so as to be received by the Company’s of instructions to a proxy’s appointee through CREST Registrar, Link Group, no later than 48 hours before the should be communicated to the appointee through time appointed for the meeting (excluding weekends othermeans. and public holidays) or any adjournment of the meeting. CREST members and, where applicable, their CREST Proxies received after that date will not be valid. sponsors or voting service providers should note If you are an institutional investor you may be able to that Euroclear UK & Ireland Limited does not make appoint a proxy electronically via the Proxymity platform, available special procedures in CREST for any particular a process which has been agreed by the Company and messages. Normal system timings and limitations will approved by the Registrar. For further information regarding therefore apply in relation to the input of CREST Proxy Proxymity, please go to www.proxymity.io. Your proxy Instructions. It is the responsibility of the CREST member must be lodged by 12 noon on 24 April 2024 in order to concerned to take (or, if the CREST member is a be considered valid. Before you can appoint a proxy via CREST personal member or sponsored member or has this process you will need to have agreed to Proxymity’s appointed a voting service provider(s), to procure that his associated terms and conditions. It is important that you CREST sponsor or voting service provider(s) take(s)) such read these carefully as you will be bound by them and they action as shall be necessary to ensure that a message will govern the electronic appointment of your proxy. is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, APPOINTMENT OF PROXY THROUGH where applicable, their CREST sponsors or voting service CREST providers are referred, in particular, to those sections of 7. CREST members who wish to appoint a proxy or proxies the CREST Manual concerning practical limitations of the through the CREST electronic proxy appointment service CREST system and timings. may do so for the meeting to be held on the above date The Company may treat as invalid a CREST and any adjournment(s) thereof by using the procedures Proxy Instruction in the circumstances set out in described in the CREST Manual. CREST Personal Regulation35(5) (a) of the Uncertificated Securities Members or other CREST sponsored members, and Regulations 2001. those CREST members who have appointed a voting All messages relating to the appointment of a proxy or service provider(s), should refer to their CREST sponsor an instruction to a previously appointed proxy, which or voting service provider(s), who will be able to take the are to be transmitted through CREST, must be lodged appropriate action on their behalf. at 12 noon on 24 April 2024 in respect of the meeting. In order for a proxy appointment or instruction made using Any such messages received before such time will be the CREST service to be valid, the appropriate CREST deemed to have been received at such time. In the message (a “CREST Proxy Instruction”) must be properly caseof an adjournment, all messages must be lodged authenticated in accordance with Euroclear UK & Ireland with Link Group no later than 48 hours before the Limited’s specifications sand must contain the information rescheduled meeting. required for such instructions, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment Bellevue Healthcare Trust plc Annual Report and Accounts 2023100 Other Information DDD # NOMINATED PERSONS 8. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights: - You may have a right under an agreement between you and the member of the Company who has nominated you to have information rights (Relevant Member) to be appointed or to have someone else appointed as a proxy for the meeting. - If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights. - Your main point of contact in terms of your investment in the Company remains the Relevant Member (or, perhaps, your custodian or broker) and you should continue to contact them (and not the Company) regarding any changes or queries relating to your personal details and your interest in the Company (including any administrative matters). The only exception to this is where the Company expressly requests a response from you. If you are not a member of the Company but you have been nominated by a member of the Company to enjoy information rights, you do not have a right to appoint any proxies under the procedures set out in the notes to the form of proxy. # QUESTIONS AT THE MEETING 9. Under section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the business being dealt with at the meeting unless: - answering the question would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; - the answer has already been given on a website in the form of an answer to a question; or - it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. If Shareholders would like to ask any questions prior to the meeting, Shareholders are invited to submit their questions by email to info@bellevuehealthcaretrust.com or attend the AGM virtually and ask the question at the meeting at the appropriate time. Answers to all questions will be published on the Company's website after the AGM. Please note all questions should be submitted by close of business on 22 April 2024. # ISSUED SHARES AND TOTAL VOTING RIGHTS 10. As at 1 March 2024, the total number of shares in the Company in respect of which members are entitled to exercise voting rights is 462,588,550 Ordinary Shares of £0.01 each, additionally the Company holds 16,398,646 of its ordinary shares in treasury. The total number of voting rights in relation to the Ordinary Shares in the Company is 462,588,550. # COMMUNICATION 11. Members who have general queries about the meeting should use the following means of communication: - calling Link Group's Shareholder helpline (lines are open from 9:00 a.m. to 5:30 p.m. Monday to Friday, excluding public holidays) +44 371 664 0300 (calls cost 12p per minute plus network extras); or - in writing to Link Group. You may not use any electronic address provided either in this notice of meeting or in any related documents (including the Form of Proxy for this meeting) to communicate with the Company for any purposes other than those expressly stated. Bellevue Healthcare Trust plc Annual Report and Accounts 2023 101 THIS PAGE IS INTENTIONALLY LEFT BLANK Bellevue Healthcare Trust plc Annual Report and Accounts 2023102 Other Information # Bellevue Healthcare Trust plc ## Form of Proxy I/We ... of ... (BLOCK CAPITALS PLEASE) being (a) member(s) of Bellevue Healthcare Trust plc appoint the Chairman of the meeting, or ... (see note 1) ... of ... as my/our proxy and, on a poll, to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 28 April 2024 at 12.00 noon and any adjournment thereof. Please indicate with an 'X' in the spaces provided how you wish your votes to be cast on the resolutions specified. | Resolution | For | Against | Withheld | Discretionary | | --- | --- | --- | --- | --- | | 1. To receive and adopt the Annual Report and Accounts for the year ended 30 November 2023. | | | | | | 2. To approve the Directors' remuneration policy. | | | | | | 3. To approve the Directors' remuneration implementation report. | | | | | | 4. To re-elect Randeep Grewal as a Director. | | | | | | 5. To re-elect Josephine Dixon as a Director. | | | | | | 6. To re-elect Paul Southgate as a Director. | | | | | | 7. To re-elect Tony Young as a Director. | | | | | | 8. To re-elect Kate Bolsover as a Director. | | | | | | 9. To re-appoint Ernst & Young LLP as auditors to the Company. | | | | | | 10. To authorise the Directors to fix the remuneration of the auditors. | | | | | | 11. To approve a final dividend of 2.995 pence per Ordinary Share. | | | | | | 12. To give authority to allot new shares. | | | | | | 13. To give authority to allot new shares free from pre-emption rights. | | | | | | 14. To give authority for the Company to purchase its own shares. | | | | | | 15. To authorise calling general meetings (other than Annual General Meetings) on 14 clear days' notice. | | | | | Subject to any voting instructions so given the proxy will vote, or may abstain from voting, on any resolution as he may think fit. Signature ... Dated this... day of ... 2024 Bellevue Healthcare Trust plc Annual Report and Accounts 2023 100 FORM OF PROXY CONTINUED NOTES 1. If any other proxy is preferred, strike out the words “Chairman of the Meeting” and add the name and address of the proxy you wish to appoint and initial the alteration. The proxy need not be a member. 2. If the appointer is a corporation this form must be completed under its common seal or under the hand of some officer or attorney duly authorised in writing. 3. A vote withheld is not a vote in law and will not be counted in the calculation of the proportion of the votes for or against aresolution. 4. The signature of any one of joint holders will be sufficient, but the names of all the joint holders should be stated. 5. To appoint more than one proxy you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. All forms must be signed and should be returned together in the same envelope. 6. To be valid, this form and the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power, must reach the registrars of the Company, Link Group not less than forty-eight hours before the time appointed for holding the Annual General Meeting or adjournment as the case may be. 7. The completion of this form will not preclude a member from attending the Meeting and voting in person. 8. Any alteration of this form must be initialled. Your completed and signed proxy form should be posted, in the enclosed reply paid envelope, to the Company’s Registrars, Link Group, PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL, so as to arrive before 12 noon on 26 April 2023. ## # Bellevue Healthcare Trust plc Annual Report and Accounts 2023104 ## DIRECTORS, INVESTMENT ## MANAGER AND ADVISERS | | DIRECTORS | INVESTMENT MANAGER (“AIFM”) | | --- | --- | --- | | | Randeep Grewal (Chairman) | Bellevue Asset Management (UK) Ltd | | | Josephine Dixon | 32 London Bridge Street | | Excellence in Specialty | Paul Southgate | 24th Floor London | | | Professor Tony Young OBE | SE1 9SG | Kate Bolsover ## Investments SECRETARY & ADMINISTRATOR Apex Listed Companies Services (UK) Limited | CORPORATE BROKER | 6th Floor | | --- | --- | | J.P. Morgan Cazenove | 125 London Wall | | 25 Bank Street | London | | Canary Wharf | EC2Y 5AS | E14 5JP AUDITORS DEPOSITARY Ernst & Young LLP CONTENTS CACEIS Bank, UK Branch 25 Churchill Place ## Bellevue – one of the largest Strategic Report Broadwalk House Canary Wharf Investment Objective, FinancialInformation, | | | 5 Appold Street | London | | --- | --- | --- | --- | | healthcare investors | Performance Summary and Overview .................... 1 | | | | | | London | E14 5EY | Chairman’s Statement ........................................... 2 EC2A 2DA Investment Manager’s Report ................................ 6 INDEPENDENT - ENTREPRENEURIAL - COMMITTED Investment Policy, Results and REGISTERED OFFICE Key Performance Indicators ................................. 15 REGISTRAR 6th Floor Bellevue Healthcare Trust plc is a high conviction, Risk and Risk Management ................................. 18 | | | Link Group | 125 London Wall | | --- | --- | --- | --- | | long-only investment trust invested in listed or quoted | Viability Statement ............................................... 22 | | | | | | Central Square | London | | global healthcare equities. It is unconstrained and | Stakeholder Engagement .................................... 23 | | | | | | 29 Wellington Street | EC2Y 5AS | Environmental, Social and able to invest regardless of market cap, sub sector Leeds Governance (“ESG”) Policy .................................. 26 or region, and the portfolio is concentrated with a LS1 4DL Other Information ................................................. 33 LEGAL ADVISER maximum of 35 holdings. Bellevue Healthcare Trust Stephenson Harwood LLP Governance is managed by Bellevue Asset Management (UK) Ltd, 1 Finsbury Circus Directors’ Report ................................................. 35 London regulated by the FCA, who have built a successful Corporate Governance ........................................ 41 EC2M 7SH track record in this sector. Directors’ Remuneration Policy and Implementation Report ........................................ 47 Report of the Audit and Risk Committee .............. 52 COMPANY SECURITY INFORMATION AND IDENTIFICATION CODES Statement of Directors’ Responsibilities ............... 55 WEBSITE www.bellevuehealthcaretrust.com Independent Auditor’s Report .............................. 56 ISIN GB00BZCNLL95 Financials SEDOL BZCNLL9 Statement of Comprehensive Income .................. 64 BLOOMBERG TICKER BBH LDN Statement of Financial Position ............................ 65 LEGAL ENTITY IDENTIFIER (LEI) 213800HQ3J3H9YF2UI82 Statement of Changes in Equity ........................... 66 GLOBAL INTERMEDIARY IDENTIFICATION NUMBER (GIIN) VL68MY.99999.SL.826 Statement of Cash Flows ..................................... 67 Notes to the Financial Statements ....................... 68 Other Information Alternative Performance Measures....................... 83 This document is printed on Experian Satin, Glossary .............................................................. 85 : a paper sourced from well managed, Annex I – Article 8 Periodic Disclosures ............... 87 ® responsible, FSC certified forests and Notice of Annual General Meeting ........................ 97 other controlled sources. The pulp used in Notes to Notice of Annual General Meeting ......... 99 this product is bleached using an elemental Designed and WWW.BELLEVUEHEALTHCARETRUST.COM Form of Proxy .................................................... 103 chlorine free (ECF) process. printed by Directors, Investment Manager and Advisers ......IBC ## Healthcare Trust plc perivan.com Bellevue Healthcare Trust plc Annual Report and Accounts 2023 ## www.bellevuehealthcaretrust.com ## Annual Report and Accounts ## For the year ended 30 November 2023 ## Healthcare Trust plc Healthcare Trust plc