![Worldwide Healthcare Trust logo with text 'WWH' and 'WHR'.]() WORLDWIDE HEALTHCARE TRUST PLC STRATEGIC REPORT 6 # Annual Report for the year ended 31 March 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ![Frostrow Capital logo with text 'Frostrow CAPITAL'.]() ![OrbiMed Healthcare Fund Management logo with text 'OrbiMed Healthcare Fund Management'.]() D STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Financial Summary 1 ### Worldwide Healthcare Trust PLC (the Key Information 2 Company Performance 3 ### “Company”) is a specialist investment trust Statement from the Chair 4-7 ### Investment Objective and Policy 8-9 which invests in the global healthcare sector Portfolio 10-12 ### with the objective of achieving a high level of OrbiMed Capital LLC (‘OrbiMed’) 13 ### Portfolio Manager’s Review 14-23 capital growth. Contribution by Investment 24 ESG and Climate Change 25-26 Business Review 27-40 GOVERNANCE In order to achieve its investment objective, the Company invests worldwide Board of Directors 41-43 Report of the Directors 44-48 in a diversified portfolio of shares in pharmaceutical and biotechnology Statement of Directors’ 49 companies and related securities in the healthcare sector. It may use Responsibilities gearing, and derivative transactions to enhance returns and mitigate risk. Corporate Governance 50-57 Performance is measured against the MSCI World Health Care Index on a Audit & Risk Committee Report 58-62 net total return, sterling adjusted basis (“Benchmark”). Further details of the Directors’ Remuneration Report 63-65 Company’s investment policy, including how it can use gearing and employ Independent Auditors’ Report 66-74 derivatives, are set out in the Strategic Report on pages 8 and 9. FINANCIAL STATEMENTS ACCESSING THE GLOBAL MARKET Income Statement 75 The healthcare sector is global and accessing this market as a UK investor Statement of Changes in Equity 76 can be difficult. The Company offers an opportunity to gain exposure to Statement of Financial Position 77 pharmaceutical, biotechnology and related companies in the healthcare sector Statement of Cash Flows 78 on a global scale. The Company invests in large companies with market Notes to the Financial Statements 79-95 capitalisations of over U.S.$10bn, smaller companies below that size, as well as in unquoted companies. The portfolio ranges from large multi-national FURTHER INFORMATION pharmaceutical companies with multiple products to unquoted emerging Shareholder Information 96 biotechnology companies. Glossary of Terms and Alternative 97-99 Performance Measures Worldwide Healthcare Trust PLC is able to participate in all aspects How to Invest 100 of healthcare, anywhere in the world because of its broad investment, Notice of Annual General Meeting 101-105 mandate. These may include patented speciality medicines for small patient Explanatory Notes to the 106-107 populations and unpatented generic drugs, in both developed countries Resolutions and emerging markets. In addition, the Company invests in medical Regulatory Disclosures 108-109 device technologies, life science tools and healthcare services. The overall Company Information 110 geographic spread of Worldwide Healthcare Trust PLC is also extensive with The Strategic Report, Governance and Further investments in the U.S., Europe, Japan, China and India (see page 12 for Information Sections are unaudited unless further information). specifically stated otherwise. HOW TO INVEST The Company’s shares are traded openly on the London Stock Exchange and can be purchased through a stockbroker or other financial intermediary. The shares are also available through savings plans (including investment dealing accounts, ISAs, Junior ISAs and SIPPs) which enable both regular monthly investments and lump sum investments in the Company’s shares. There are a number of investment platforms that offer these facilities. Further details For more information about Worldwide can be found on page 100. Healthcare Trust PLC visit the website at For more information about Worldwide Healthcare Trust PLC visit the website www.worldwidewh.com at www.worldwidewh.com. Follow us on Twitter @worldwidewh. Follow us on Twitter @worldwidewh WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 1 FINANCIAL SUMMARY as at 31 March 2023 | (0.1%) | | (4.1%) | | +2.5% | | | --- | --- | --- | --- | --- | --- | | Net asset value per share | | Share price (total return)*^ | | | Benchmark*†^ | | | (total return)*^ | | 2022: (10.8%) | | 2022: +20.4% | 2022: (5.8%) | | (9.3%) | 31.0p 0.8% | | | | | --- | --- | --- | --- | --- | --- | | | Discount of share price | Dividends per share | | Ongoing Charges^ | | | to net asset value per share*^ | | | 2022: 26.5p | | 2022: 0.9% | 2022: (5.5%) *Source: Morningstar † MSCI World Health Care Index on a net total return, sterling adjusted basis. (See Glossary beginning on page 97). ^ Alternative Performance Measure (see Glossary beginning on page 97). TOTAL RETURN PERFORMANCE for the year to 31 March 2023 % 115 110 105 100 95 90 85 80 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Jan 2023 Feb 2023 Mar 2023 WWH NAV (total return) (-0.1%) WWH Share Price (total return) (-4.1%)Benchmark (total return) (+2.5%) Rebased to 100 as at 31 March 2022 Source: Morningstar 2 2 STRATEGIC REPORT STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## KEY INFORMATION TOTAL RETURN PERFORMANCE Since Launch to 31 March 2023 % 6000 5000 4000 3000 2000 1000 0 | Apr | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | | WWH NAV (total return) (+4,234.1%) | | | | | | | | | | WWH Share Price (total return) (+3,705.4%) Benchmark (total return) (+2,189.0%)* | | | | | | | | | | | | | | | | | | | Rebased to 100 as at 28 April 1995. Source: Morningstar, Thomson Reuters & Bloomberg * With effect from 1 October 2010, the performance of the Company is measured against the MSCI World Health Care Index on a net total return, sterling adjusted basis. Prior to this date, performance was measured against the Datastream World Pharmaceutical & Biotechnology Index (total return, sterling adjusted) FIVE YEAR TOTAL RETURN PERFORMANCE to 31 March 2023 % 200 180 160 140 120 100 80 Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23 WWH NAV (total return) (+48.0%) WWH Share Price (total return) (+34.6%)Benchmark (total return) (+83.8%) Rebased to 100 as at 31 March 2018. Source: Morningstar. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 3 # COMPANY PERFORMANCE ## HISTORIC PERFORMANCE for the years ended 31 March | | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | --- | --- | --- | --- | --- | --- | --- | | **Net asset value per share (total return)*^** | **2.8%** | **13.7%** | **6.5%** | **30.0%** | **(5.8%)** | **(0.1%)** | | **Benchmark (total return)*^** | **(2.5%)** | **21.1%** | **5.7%** | **16.0%** | **20.4%** | **2.5%** | | Net asset value per share | 2,411.1p | 2,722.9p | 2,868.9p | 3,703.0p | 3,465.2p | 3,434.5p | | Share price | 2,405.0p | 2,730.0p | 2,920.0p | 3,695.0p | 3,275.0p | 3,115.0p | | (Discount)/Premium of share price to net asset value per share^ | (0.3%) | 0.3% | 1.8% | (0.2%) | (5.5%) | (9.3%) | | Dividends per share | 17.5p | 26.5p | 25.0p | 22.0p | 26.5p | 31.0p | | Leverage^ | 16.4% | 4.9% | 12.0% | 7.6% | 10.9% | 10.5% | | Ongoing charges^ | 0.9% | 0.9% | 0.9% | 0.9% | 0.9% | 0.8% | | Ongoing charges (including performance fees paid or crystallised during the year)^ | 1.2% | 1.1% | 0.9% | 0.9% | 1.4% | 0.8% | *Source: Morningstar ^ Alternative Performance Measure (see Glossary beginning on page 97). ## DISCOUNT OF THE COMPANY'S SHARE PRICE TO THE NET ASSET VALUE PER SHARE year to 31 March 2023 ![img-0.jpeg](img-0.jpeg) *Source: Morningstar 4 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## STATEMENT FROM THE CHAIR DOUG MCCUTCHEON ![img-1.jpeg](img-1.jpeg) ### INVESTMENT PERFORMANCE This is my first full year report, having succeeded Sir Martin Smith as Chair of the Board in July 2022. I mentioned at the half-year stage that macro events, rather than industry fundamentals, had been dictating the performance of global equity markets. In the second half of the year, investors continued to be torn between the overall economic and political background, on the one hand, and company and industry developments on the other. As set out in our Portfolio Manager's Review, during the year your Company performed well in periods when markets were being driven by sector fundamentals and struggled when macro factors were in control. Overall, the financial year ended 31 March 2023 proved to be a challenging one for the Company, with market volatility much greater than year-end to year-end results suggest. The Company's net asset value per share total return was -0.1% (2022: -5.8%) and the share price total return was -4.1% (2022: -10.8%). Our results underperformed the Company's Benchmark, the MSCI World Health Care Index measured on a net total return, sterling adjusted basis, which returned +2.5% during the year (2022: +20.4%). The disparity between the performance of the Company's net asset value per share and its share price was reflected in the widening of our share price discount to our net asset value per share from 5.5% as at 31 March 2022 to 9.3% at 31 March 2023. The majority of the Company's assets are denominated in U.S. dollars, and it should be noted that our absolute net asset value performance was helped by the weakness of sterling over the year, particularly compared to the dollar, against which it depreciated by 6.5%. A principal contributor to performance in the year, both in relative and absolute terms, came from emerging biotechnology stocks (defined primarily as small- and mid-capitalisation stocks). A key part of our Portfolio Manager's strategy is to be overweight the emerging biotechnology sector, reflecting the high levels of innovation and growth found in these companies. However, for some time, part of this strategy has included our overweight position in emerging market stocks, particularly in China, which was not successful during the past year. More broadly, the Company's results over the past two years have dragged down our medium-term performance. While our net asset value per share compound annual return over five years has been a respectable +8.2%, it was lower than that of our Benchmark (+12.9%). Nonetheless, the long-term performance of the Company continues to be strong. From the Company's inception in 1995 to 31 March 2023, the total return of our net asset value per share has been +4,234.1%, equivalent to a compound annual return of +14.5%. This compares to a cumulative blended Benchmark return of +2,189.0% and a compound annual return of +11.9% over the same period. Further information on the healthcare sector, the Company's investments and performance during the year can be found in the Portfolio Manager's Review beginning on page 14. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 5 ![img-2.jpeg](img-2.jpeg) ## CAPITAL Challenging stock market conditions since the beginning of 2022 have continued to have a negative impact on share price discounts across the investment company sector, with the average level of discount currently standing at c.14.9%*. *Source: Winterflood Investment Trusts It is the Board's policy to buy back our shares if the Company's share price discount to the net asset value per share exceeds 6% on an ongoing basis. Shareholders should note, however, that it remains possible for the discount to be greater than 6% for extended periods of time, particularly when sentiment towards the Company, the sector and to investment trusts generally remains poor. In such an environment, buybacks may prove unable to prevent the discount from widening. However, they enhance the net asset value per share for remaining shareholders and go some way to dampening discount volatility, which can adversely affect investors' risk adjusted returns. Over the year, the Company remained committed to its share buyback and issuance policy, regularly repurchasing shares. A total of 2,836,483 shares were repurchased for treasury at a cost of £91.6m and at an average discount of 8.8%. On 31 March 2023, there were 62,620,763 shares in issue (excluding the 2,438,015 shares held in treasury). Since this date to 5 June 2023, a further 1,299,037 shares have been bought back for treasury, at a cost of £42.3m and at an average discount of 10.0%. At the time of writing, the share price discount stands at 9.4%. In line with the Company's stated policy, I confirm that all shares held in treasury at the date of the Company's Annual General Meeting to be held on 18 July 2023, will be cancelled. ## REVENUE AND DIVIDEND Shareholders will be aware that it remains the Company's investment policy to pursue capital growth for shareholders and to pay dividends at least to the extent required to maintain investment trust status. Therefore, the level of dividends declared can go down as well as up. An unchanged interim dividend of 7.0p per share for the year ended 31 March 2023, was paid on 11 January 2023 to shareholders on the register on 25 November 2022. Due, in large part, to an increase in exposure to higher yielding stocks in the portfolio and also to the continued weakness of sterling, the Company's revenue return per share for the year as a whole increased to 30.6p (2022: 26.8p). Accordingly, the Board is proposing an increased final dividend of 24.0p per share (2022: 19.5p per share) which, together with the interim dividend already paid, makes a total dividend for the year of 31.0p (2022: 26.5p per share). Due to the impact of share buybacks the total dividend for the year is higher than the reported return per share. Based on the closing mid market share price of 3,275.0p on 5 June 2023, the total dividend payment for the year represents a current yield of 0.9%. The final dividend will be payable, subject to shareholder approval, on 26 July 2023, to shareholders on the register of members on 9 June 2023. The associated ex-dividend date will be 8 June 2023. The Company's dividend policy will be proposed for approval at the forthcoming Annual General Meeting. 6 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STATEMENT FROM THE CHAIR CONTINUED BOARD OF DIRECTORS ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS The process of Board refreshment, which began a few years ago, continued during the year. As previously ESG matters continue to be an important priority for announced, Tim Livett and Jo Parfrey joined the Board the Board and our objective is to have full, transparent in September 2022. Between them, they have a wealth disclosure on the topic. Bina Rawal has been working of experience in the finance, investing, healthcare and closely with our Portfolio Manager on this matter. governance fields, from which the Board will benefit Our Portfolio Manager remains committed to taking for years to come. During the year, Tim took over from a leading role in the development of meaningful ESG Humphrey van der Klugt as Chair of the Audit & Risk engagement practices in the healthcare sector. As part of Committee, with Humphrey carrying on as a Director of this, they facilitate dialogue and an exchange of leading the Company. In addition, Jo took over from Bina Rawal as practices among investors, companies and other relevant Chair of the Management Engagement & Remuneration experts on ESG in the large capitalisation pharmaceutical Committee. sector. They also engage with a broad range of companies Sarah Bates, the Company’s Senior Independent Director on a regular basis where areas of improvement can be and the Chair of the Nominations Committee, having served identified. Further information on both ESG matters and on the Board since 2013, will retire at the conclusion of climate change can be found in the Portfolio Manager’s the Company’s Annual General Meeting on Tuesday, 18 ESG report beginning on page 25. July 2023. Sarah’s leadership, governance and investment OUTLOOK industry experience, including her deep knowledge of the investment trust sector, have been invaluable to the Board. Global stock markets continue to experience higher Her friendship and wise counsel will be greatly missed. than usual levels of uncertainty, with persistent inflation, Bina will take over from Sarah as the Senior Independent central bank borrowing rates at much higher levels than Director and Chair of the Nominations Committee. they were one year ago, a developing ongoing economic downturn and several overhanging geopolitical issues. It The biographical details and Board positions of all of the is unsurprising, therefore, that investors remain relatively Directors are set out on pages 41 to 43. risk-averse for the moment, favouring more predictable businesses over the faster growing companies that make SHARE SPLIT PROPOSAL up much of our portfolio and sector. As a consequence of the Company’s strong investment returns over many years, its share price has risen steadily. Against this challenging short-term background, however, While this has been good news for our shareholders, the our Portfolio Manager OrbiMed continues to remain Board believes that it may be unhelpful for those investors positive on the outlook for healthcare and our Company. seeking to purchase smaller quantities of shares, as well They expect the current accelerated levels of mergers and as for regular savers. Accordingly, in order to address this acquisitions to continue, supported by attractive valuations, and to increase market liquidity and marketability, we are healthy balance sheets and, within the pharmaceutical proposing to split the shares on a 10-for-1 basis. Following sector, a need to address future patent expirations. the share split, each shareholder will receive nine additional Regardless of the market backdrop, the pace of scientific Ordinary shares for each Ordinary share held immediately and technological development within the sector continues prior to the transaction. The net effect is that, following unabated while clinical and regulatory catalysts will the split, you will have 10 times as many shares, but the continue to provide a regular flow of key share price moving Company’s share price should, in theory, be one-tenth of events. They further believe that the sector’s defensive what it was previously. The share split will not affect the growth characteristics should continue to prove attractive value of your overall investment in the Company, nor will it in times of global uncertainty. affect your shareholder rights. Shareholders will have the Your Board shares OrbiMed’s perspective. We believe that opportunity to vote on this proposal at the forthcoming long-term investors in this sector will be rewarded and that Annual General Meeting and details can be found under the Company will continue to perform strongly over time. Notice of Meeting, on pages 101 to 105. Thus far, in the current financial year, performance is off to WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 7 STATEMENT FROM THE CHAIR CONTINUED a positive start, both in absolute and relative terms. From 1April 2023 to the date of this letter, our net asset value per share has increased by +6.2%, compared to +0.9% for our Benchmark. ANNUAL GENERAL MEETING (“AGM”) The Company’s AGM will be held at Saddlers’ Hall, 40Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 at 12.30pm. As well as the formal proceedings, there will be an opportunity to meet the Board and the Portfolio Manager and to receive an update on the Company’s strategy. For those investors who are not able to attend the meeting in person, a video recording of the Portfolio Manager’s presentation will be uploaded to the website after the meeting. Shareholders can submit questions in advance by sending them to wwh@frostrow.com. I encourage all shareholders to exercise their right to vote at the AGM and to register your votes online in advance of the meeting. Registering your vote in advance will not restrict you from attending and voting at the meeting in person should you wish to do so, subject of course to the occurrence of any extraordinary events that might make attendance difficult or impossible. The votes on the resolutions to be proposed at the AGM will be conducted on a poll. The results of the proxy votes will be published immediately following the conclusion of the AGM by way of a stock exchange announcement and will also be able to be viewed on the Company’s website at www.worldwidewh.com. Doug McCutcheon Chair 6 June 2023 8 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## INVESTMENT OBJECTIVE AND POLICY INVESTMENT OBJECTIVE INVESTMENT POLICY INVESTMENT LIMITS AND GUIDELINES ### The Company invests in the global • The Company will not invest more than 15% of the ### healthcare sector with the objective of portfolio in any one individual stock at the time of ### achieving a high level of capital growth. acquisition; • At least 50% of the portfolio will normally be invested In order to achieve its investment objective, the Company in larger companies (i.e. with a market capitalisation of invests worldwide in a diversified portfolio of shares in at least U.S.$10bn); pharmaceutical and biotechnology companies and related • At least 20% of the portfolio will normally be invested securities in the healthcare sector. It uses gearing, and in smaller companies (i.e. with a market capitalisation derivative transactions to enhance returns and mitigate of less than U.S.$10bn); risk. Performance is measured against the MSCI World Health Care Index on a net total return, sterling adjusted • Investment in unquoted securities will not exceed 10% basis (“Benchmark”). of the portfolio at the time of acquisition; INVESTMENT STRATEGY • A maximum of 5% of the portfolio, at the time of acquisition, may be invested in each of debt The implementation of the Company’s Investment instruments, convertibles and royalty bonds issued by Objective has been delegated to OrbiMed by Frostrow pharmaceutical and biotechnology companies; (asAIFM) under the Board’s and Frostrow’s supervision and guidance. • A maximum of 30% of the portfolio, at the time of acquisition, may be invested in companies in each of Details of OrbiMed’s investment strategy and approach the following sectors: are set out in the Portfolio Manager’s Review on pages14to23. – healthcare equipment and supplies; While the Board’s strategy is to allow flexibility in – healthcare providers and services; managing the investments, in order to manage investment • The Company will not invest more than 10% of its risk it has imposed various investment, gearing and gross assets in other closed ended investment derivative guidelines and limits, within which Frostrow and companies (including investment trusts) listed on the OrbiMed are required to manage the investments, as set London Stock Exchange, except where the investment out below. companies themselves have stated investment Any material changes to the Investment Objective, Policy policies to invest no more than 15% of their gross and Benchmark or the investment, gearing and derivative assets in other closed ended investment companies guidelines and limits require approval from shareholders. (including investment trusts) listed on the London Stock Exchange, where such investments shall be limited to 15% of the Company’s gross assets at the time of acquisition. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 9 INVESTMENT OBJECTIVE AND POLICY CONTINUED DERIVATIVE STRATEGY AND LIMITS In line with the Investment Objective, derivatives are employed, when appropriate, in an effort to enhance returns and to improve the risk-return profile of the Company’s portfolio. Only Equity Swaps were employed within the portfolio during the year. The Board has set the following limits within which derivative exposures are managed: • Derivative transactions (excluding equity swaps) can be used to mitigate risk and/or enhance capital returns and will be restricted to a net exposure of 5% of the portfolio; and • Equity Swaps may be used in order to meet the Company’s investment objective of achieving a high level of capital growth, and counterparty exposure through these is restricted to 12% of the gross assets of the Company at the time of acquisition. The Company does not currently hedge against foreign currency exposure. GEARING LIMIT The Board has set a maximum gearing level, through borrowing, of 20% of the net assets. LEVERAGE LIMITS Under the AIFMD the Company is required to set maximum leverage limits. Leverage under the AIFMD is defined as any method by which the total exposure of an AIF is increased. The Company has two current sources of leverage: the overdraft facility, which is subject to the gearing limit; and, derivatives, which are subject to the separate derivative limits. The Board and Frostrow have set a maximum leverage limit of 140% on both the commitment and grossbasis. Further details on the gearing and leverage calculations, and how total exposure through derivatives is calculated, are included in the Glossary beginning on page 98. Further details on how derivatives are employed can be found in note 16 beginning on page 89. 10 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## PORTFOLIO INVESTMENTS HELD AS AT 31 MARCH 2023 Market value % of Investments Sector Country £’000 investments AstraZeneca Pharmaceuticals UK 139,838 6.5 Boston Scientific Health Care Equipment & Supplies United States 114,463 5.3 Bristol-Myers Squibb Pharmaceuticals United States 112,095 5.2 Humana Health Care Providers & Services United States 104,491 4.8 Intuitive Surgical Health Care Equipment & Supplies United States 103,710 4.8 Sanofi Pharmaceuticals France 99,259 4.6 UnitedHealth Health Care Providers & Services United States 91,691 4.2 Novo Nordisk Pharmaceuticals Denmark 88,871 4.1 Roche Pharmaceuticals Switzerland 84,999 3.9 Stryker Health Care Equipment & Supplies United States 76,834 3.6 Top 10 investments 1,016,251 47.1 Daiichi Sankyo Pharmaceuticals Japan 76,125 3.5 BioMarin Pharmaceutical Biotechnology United States 76,049 3.5 Eisai Pharmaceuticals Japan 59,273 2.7 Sarepta Therapeutics Biotechnology United States 55,344 2.6 Thermo Fisher Scientific Life Sciences Tools & Services United States 53,900 2.5 Biogen Biotechnology United States 53,740 2.5 Evolent Health Health Care Providers & Services United States 52,218 2.4 Tenet Healthcare Health Care Providers & Services United States 45,509 2.1 Eli Lilly & Co Pharmaceuticals United States 44,971 2.1 Baxter International Health Care Equipment & Supplies United States 44,832 2.1 Top 20 investments 1,578,212 73.1 Caris Life Sciences* Life Sciences Tools & Services United States 40,900 1.9 Ionis Pharmaceuticals Biotechnology United States 36,373 1.7 Edwards Lifesciences Health Care Equipment & Supplies United States 36,118 1.7 Apellis Pharmaceuticals Biotechnology United States 32,234 1.5 Neurocrine Biosciences Biotechnology United States 31,196 1.4 Natera Life Sciences Tools & Services United States 28,994 1.3 SI-BONE Health Care Equipment & Supplies United States 28,526 1.3 Wuxi Biologics Cayman Life Sciences Tools & Services China 28,512 1.3 Vertex Pharmaceuticals Biotechnology United States 28,253 1.3 WuXi AppTec Life Sciences Tools & Services China 22,443 1.0 Top 30 investments 1,891,761 87.6 uniQure NV Biotechnology Netherlands 21,955 1.0 Progyny Health Care Providers & Services United States 20,833 1.0 Shanghai Kindly Medical Instruments Health Care Equipment & Supplies China 19,475 0.9 Mirati Therapeutics Biotechnology United States 19,009 0.9 Crossover Health* Health Care Providers & Services United States 17,163 0.8 R1 RCM Health Care Providers & Services United States 16,620 0.8 New Horizon Health Life Sciences Tools & Services China 16,011 0.7 Beijing Yuanxin Technology* Health Care Providers & Services China 14,606 0.7 EDDA Healthcare & Technology* Health Care Equipment & Supplies China 14,550 0.7 VISEN Pharmaceuticals* Biotechnology China 14,281 0.7 Top 40 investments 2,066,264 95.7 Iovance Biotherapeutics Biotechnology United States 14,104 0.7 Joinn Laboratories China Biotechnology China 13,760 0.6 API Holdings* Health Care Providers & Services India 13,668 0.6 RxSight Health Care Equipment & Supplies United States 12,431 0.6 Ruipeng Pet Group* Health Care Providers & Services China 11,900 0.6 Jiangxi RiMAG* Health Care Providers & Services China 11,673 0.5 Vaxcyte Biotechnology United States 10,755 0.5 Xenon Pharmaceuticals Biotechnology Canada 10,392 0.5 MabPlex* Health Care Providers & Services China 5,944 0.3 Dingdang Health Technology Health Care Providers & Services China 4,736 0.2 Top 50 investments 2,175,627 100.7 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 11 # PORTFOLIO CONTINUED | Investments | Sector | Country | Market value £'000 | % of investments | | --- | --- | --- | --- | --- | | Ikena Oncology | Pharmaceuticals | United States | 4,445 | 0.2 | | Shanghai Bio-heart Biological Technology | Health Care Equipment & Supplies | China | 4,233 | 0.2 | | Passage Bio | Biotechnology | United States | 1,627 | 0.1 | | Peloton Therapeutics* - DCC | Biotechnology | United States | 485 | 0.0 | | **Total investments** | | | **2,186,417** | **101.2** | | **OTC Equity Swaps – Financed^** | | | | | | Healthcare M&A Target Basket | Swap Baskets | United States | 105,629 | 4.9 | | Apollo Hospitals Enterprise | Health Care Providers & Services | India | 32,672 | 1.5 | | Healthcare Catalyst Basket | Swap Baskets | United States | 24,216 | 1.1 | | Pharmaron Beijing | Life Sciences Tools & Services | China | 16,989 | 0.8 | | Jiangsu Yuyue Medical Equipment & Supply | Health Care Equipment & Supplies | China | 11,197 | 0.5 | | Less: Gross exposure on financed swaps | | | (217,596) | (10.1) | | **Total OTC Swaps** | | | **(26,892)** | **(1.2)** | | **Total investments including OTC Swaps** | | | **2,159,525** | **100.0** | \* Unquoted holding DCC = deferred contingent consideration. ^ See Glossary beginning on page 97 and note 16 beginning on page 89 for further details in relation to the OTC Swaps. # SUMMARY | Investments | Market value £'000 | % of investments | | --- | --- | --- | | Quoted equities | 2,041,247 | 94.5 | | Unquoted equities | 145,170 | 6.7 | | Equity swaps | (26,892) | (1.2) | | **Total of all investments** | **2,159,525** | **100.0** | 12 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 PORTFOLIO CONTINUED PORTFOLIO DISTRIBUTION BY SECTOR* ##     | Pharmaceutical 29.9% | Pharmaceutical 35.1% | | --- | --- | | Healthcare Equipment/Supplies/Technology 19.6% | Healthcare Equipment/Supplies/Technology 21.1% | | Biotechnology 17.6% | Biotechnology 20.7% | | Healthcare Providers & Services 18.7% | Healthcare Providers & Services 15.2% | | Life Sciences Tools & Services 8.7% | Life Sciences Tools & Services 7.7% | | Basket Swaps 5.5% | Debt Instruments 0.2% | BY REGION* ##     | 'NTYJHMSTQTL^ 'NTYJHMSTQTL^ | | | | | | --- | --- | --- | --- | --- | | 3TWYM&RJWNHF 3TWYM&RJWNHF | | | | | | 5MFWRFHJZYNHFQ 5MFWRFHJZYNHFQ | | North America 65.3% | | North America 70.8% | | *RJWLNSL2FWPJYX *RJWLNSL2FWPJYX | | | | | | -JFQYMHFWJ5WT[NIJWX8JW[NHJX -JFQYMHFWJ5WT[NIJWX8JW[NHJX | | | | | | | | Europe 18.3% | | Europe 12.0% | | *ZWTUJ *ZWTUJ | | | | | | -JFQYMHFWJ*VZNURJSY8ZUUQNJX9JHMSTQTL^ -JFQYMHFWJ*VZNURJSY8ZUUQNJX9JHMSTQTL^ | | | | | | &XNF &XNF | | China 8.8% | | China 12.5% | | 1NKJ8HNJSHJX9TTQX8JW[NHJX 1NKJ8HNJSHJX9TTQX8JW[NHJX | | | | | | .SINF .SINF | | Japan 5.7% | | Japan 3.5% | | )JGY.SXYWZRJSYX )JGY.SXYWZRJSYX | | | | | | | | India 1.9% |   | India 1.1% | | |   | |   | | * Figures expressed as a % of the total economic exposure. This includes all derivatives as an economically equivalent position in the underlying holding. ##   3TWYM&RJWNHF *RJWLNSL2FWPJYX *ZWTUJ &XNF .SINF ##    WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 13 ## ORBIMED CAPITAL LLC ### OrbiMed was founded in 1989 and THE TEAM The wider OrbiMed Investment Team continues to expand ### has evolved over time to be one of and now has over 100 professionals that cover all aspects ### the largest dedicated healthcare of research, trading, finance, and compliance. This includes over 30 degree holders with MD and/or PhD credentials, ### investment firms in the world. healthcare industry veterans, and finance professionals ### OrbiMed has managed the Company’s with over 20 years of experience. ### portfolio since its launch in 1995. The firm has a global investment horizon and the OrbiMed footprint now spans three continents with offices in New OrbiMed had approximately U.S.$17 billion in assets under York, San Francisco, Herzliya (Israel), Hong Kong, Shanghai, management as of 31 March 2023, across a range of Mumbai and London. funds, including investment trusts, hedge funds, and private The lead managers with responsibility for the Company’s equityfunds. portfolio are as follows: INVESTMENT STRATEGY AND PROCESS Within the guidelines set by the Board, the OrbiMed team works to identify sources of outperformance, or alpha, with a focus on fundamental research. In healthcare, there are many primary sources of alpha generation, especially in therapeutics. Clinical events such as the publication of new Sven H. Borho, CFA, is a founder and Managing Partner of clinical trial data is a prominent example and historically OrbiMed. Sven heads the public equity team and he is the has been the largest source of share price volatility. portfolio manager for OrbiMed’s public equity and hedge Regulatory events, such as new drug approvals by U.S., funds. He has been a portfolio manager for the firm’s funds European, or Japanese regulatory authorities are also since 1993 and has played an integral role in the growth of stock moving events. Subsequent new product launches OrbiMed’s asset management activities. are carefully tracked and forecasted. Other sources include legal events and, of course, merger and acquisition activity. He started his career in 1991 when he joined OrbiMed’s predecessor firm as a Senior Analyst covering European The team has a global focus with a universe of coverage pharmaceutical firms and biotechnology companies that covers the entire spectrum of companies, from early worldwide. Sven studied business administration at stage companies with pre-clinical assets to fully integrated Bayreuth University in Germany and received a M.Sc. biopharmaceutical companies. The universe of actively (Econs.), Accounting and Finance, from The London School covered companies is approaching 1,000. of Economics. OrbiMed emphasises investments in companies with under-appreciated products in the pipeline, high quality management teams, and adequate financial resources. A disciplined portfolio construction process is utilised to ensure the portfolio is focused on high conviction positions. Finally, the portfolio is subject to a rigorous risk management process. Trevor M. Polischuk, Ph.D., is a Partner at OrbiMed focused on the global pharmaceutical industry. Trevor joined OrbiMed in 2003 and became a Partner in 2011. Previously, he worked at Lehman Brothers as a Senior Research Analyst covering the U.S. pharmaceutical industry. Trevor began his career at Warner Lambert as a member of the Global Marketing Planning team within Parke-Davis. Trevor holds a Doctorate in Neuropharmacology & Gross Human Anatomy and an M.B.A. from Queen’s University, Canada. 14 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # PORTFOLIO MANAGER'S REVIEW ## MARKETS The reported financial year was up and down for the global equity markets. Whilst the pandemic eased as a global healthcare crisis, its lingering economic impact still reverberated across the world. Inflation, rising interest rates and the war in Ukraine all played major parts in shaping equity returns. Overall, global inflation and the ensuing central bank responses led to an array of conflicting crosscurrents between currency values, gross margin pressures, and higher financing costs that all shaped the market. The year was a product of many things, with perhaps the only constant being the unyielding battle between macro factors and industry fundamentals – forcing investors to grapple with the “yin and yang” of these two disparate market forces. The net result, amazingly, was rather modest, with a global market total return of -0.5% as measured by the MSCI World Index (in sterling terms). This despite the significant volatility in between the start and end of the year with several material drawdowns. Even local geographies were not in agreement with the various market forces, with the FTSE All-Share Index finishing notably up 2.8% whilst the S&P 500 finished down 1.8% (both figures in sterling measured on a total return basis). Even healthcare stocks did not fare as expected, partially eschewing their defensive characteristics to post a +2.5% total return (sterling) in the year, obviously lagging the UK market but outpacing others. ## PERFORMANCE Overall, for the year ended 31 March 2023, the Company generated a net asset value total return of -0.1% whilst the share price total return was -4.1%. This performance lagged the Benchmark return of +2.5%. Performance – both absolute and relative – came intermittently throughout the year, largely reflecting the aforementioned struggle between fundamental industry drivers and macroeconomic factors that heavily influenced equity markets. Certainly, the start of calendar year 2022 was dominated by the macro and global markets came under intense pressure as investors focused on tightening monetary policies, continued geopolitical tensions, and concerns about COVID-induced lockdowns in China. Preference for “value-over-growth” continued as a macro theme for investors, as did healthcare being relatively defensive. This set-up was not conducive to performance given our preference for innovative growth companies and as a result the Company’s returns materially lagged the Benchmark to start the financial year in April and May. ## FINANCIAL YEAR PERFORMANCE COMPARISON (WORLDWIDE HEALTHCARE TRUST VS. MSCI WORLD HEALTHCARE INDEX) ![img-3.jpeg](img-3.jpeg) Source: Bloomberg, OrbiMed; Data updated through 31 March 2023. Note: WWH performance figures are net of fees WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 15 PORTFOLIO MANAGER’S REVIEW CONTINUED PERFORMANCE SEGMENTS MACRO-DRIVEN VS. FUNDAMENTAL-DRIVEN PERFORMANCE | % | April and May 2022 June to September 2022 October to December 2022 January to March 2023 | % | % | % | | --- | --- | --- | --- | --- | | 20 | | 20 | 20 | 20 | | 15 | | 15 | 15 | 15 | | 10 | | 10 | 10 | 10 | +11.2 +4.1 5 5 5 5 -0.2 | | | | +2.3 | | | | -1.6 | | --- | --- | --- | --- | --- | --- | --- | --- | | 0 | | 0 | | 0 | | 0 | | | -5 | -7.3 | -5 | | -5 | -1.5 | -5 | | -3.6 | -10 | | | | -10 | | | | | -10 | | | | -10 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Apr | | May | Jun | Jun | Jul | Aug | Sep | Oct | Oct | Nov | Dec | Jan | Jan | Feb | Mar | Apr | | 22 | | 22 | 22 | 22 | 22 | 22 | 22 | 22 | 22 | 22 | 22 | 23 | 23 | 23 | 23 | 23 | | | MSCI Health | | WWH | | | | | | | | | | | | | | Source: Bloomberg, OrbiMed; Data updated through 31 March 2023. Note: WWH performance figures are net of fees However, as we had been expecting, mergers and swift re-opening in China. Defensive healthcare sectors acquisitions (M&A) in the therapeutics space finally – like large capitalisation pharmaceutical stocks and inflected in June and this phenomenon carried on well managed care – therefore saw investor outflows and this into early October. This coincided with a host of important continued into February as healthcare stocks continued to – and positive – clinical catalysts which helped to move underperform the broader markets. This set-up favoured biotechnology stocks higher during this period. Investor our portfolio positioning and despite some modest interest picked up and fund flows followed. The Company declines in this segment, the Company returned over 2.0% recorded a +11.0% return during this period, which was more than Benchmark. nearly 9.0% better than the Benchmark. We are pleased to report that this performance to start As the calendar-year-end approached, investor focus the calendar year has continued in the first 6 weeks of the shifted yet again and stock markets rounded off a new financial year. M&A activity has remained elevated tumultuous year with gains, including healthcare, only to thus far, a number of key catalysts have been positive, and stumble in December as recessionary fears spiked. This this has buoyed the Company’s performance as strong environment again favoured larger capitalisation stocks fundamentals are consistent with our bullish positioning. and value names, impacting the Company’s relative Specifically, from the start of the financial year to the date returns in this three-month period. of this report, the NAV has advanced 6.2% compared to the Benchmark return of +0.9%. Finally, the fourth quarter of the financial year was similarly volatile. Healthcare stocks were clear laggards in January as investors pivoted from fears of a looming recession, to the view that a softer landing may be possible given decelerating inflation, a stronger European outlook, and the 16 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 PORTFOLIO MANAGER’S REVIEW CONTINUED PERFORMANCE SINCE INCEPTION (WORLDWIDE HEALTHCARE TRUST NAV VS. BLENDED BENCHMARK*) % 5000 4000 3000 2000 1000 0 | Apr | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | Mar | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 95 | 96 | 97 | 98 | 99 | 00 | 01 | 02 | 03 | 04 | 05 | 06 | 07 | 08 | 09 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | | | WWH NAV (total return) (+4,234.1%) | | | | | | | | | WWH Share Price (total return) (+3,705.4%) | | | | | | | | | | | | | | | | | | | * With effect from 1 October 2010, the performance of the Company is measured against the MSCI World Health Care Index on a net total return, sterling adjusted basis. Prior to this date, performance was measured against the Datastream World Pharmaceutical & Biotechnology Index (total return, sterling adjusted). Source: Frostrow, Bloomberg Despite the volatility that marked the reported financial picking, contributing both absolute (over 4.5%) and relative year, we are pleased to report that the long-term (over 4.0%) performance. Recall that our positioning in this performance of the Company is strong. Overall, the sub-sector has been a key strategic overweight for us and Company’s net asset value performance since inception will remain so given the impressive innovation cycle that to 31 March 2023 (from 28 April 1995), is a return of continues to date. This contribution was partially offset due +4,234.1%, an average of +14.5% per annum. This to allocation effect within large capitalisation biotechnology compares to a cumulative blended Benchmark return of stocks, where we were not materially invested, which +2,189.0%, an average of +11.9% per annum, over the same detracted approximately 1.0% relative to the Benchmark. investment horizon. This compares to the FTSE All-Share The second largest contributor on a sub-sector basis Index return of +579% and +7.1%. As we enter our 29th year was large capitalisation pharmaceuticals. The group of managing the Company, the multiple since inception of experienced similar volatility to the broad market 42x represents both the strength of the healthcare industry throughout the financial year, but finished higher on a and the unyielding global demand for healthcare related relative basis. Our exposure here contributed nearly 1.2% goods and services. It also shows what an active manager to performance. This was offset by allocation, as we were or specialist investor can do in healthcare, especially in the materially underweight this sub-sector, creating nearly face of a highly idiosyncratic, global sector that possesses 1.6% of relative underperformance. However, we do note many barriers to understanding the scientific, clinical, that we consider large capitalisation pharmaceuticals as a regulatory, technological, and political environment that funding source for biotechnology, so this positioning overall envelops all ofhealthcare. was a net positive. KEY SOURCES OF CONTRIBUTION The final subsector with absolute contribution of over 1.0% The key contributor to performance in the year was from was from Japan pharmaceuticals. Here the contribution emerging biotechnology stocks (defined primarily as small was completely due to stock picking. Overall weighting was - and mid -capitalisation stocks). Positive contribution mostly in-line with the Benchmark, creating over 0.7% of here was due to both allocation effect and individual stock relative performance. Mar Benchmark (total return) (+2,189.0%) FTSE (total return) (+578.8%) WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 17 # PORTFOLIO MANAGER'S REVIEW CONTINUED # SOURCES OF CONTRIBUTION (ABSOLUTE) ![img-4.jpeg](img-4.jpeg) Source: Frostrow Lastly, another subsector of note was medical technology. Whilst we were fully invested in this space, overall performance for these stocks was negative in the financial year, down on average 7.5% in the Benchmark. The subsector was adversely impacted by a mix of macro factors and fundamental headwinds, namely hospital staffing shortages, semiconductor shortages, elevated oil and resin prices, shipping bottlenecks and a dearth of meaningful new product cycles. However, many of these issues have abated and even reversed, leading to a tailwind for the sector going forward. Due to stock picking in the reported period, our average returns were superior, down on average 0.3% in the portfolio. This added over 1.1% of relative performance. # SOURCES OF CONTRIBUTION (RELATIVE) ![img-5.jpeg](img-5.jpeg) Source: Frostrow In terms of subsectors that materially detracted from performance, we highlight two. First, specialty pharmaceuticals detracted more than 1.0% in both absolute and relative performance, due to a single stock pick (Horizon Therapeutics – discussed below). Second, emerging market stocks, particularly China healthcare (a key strategic overweight) was particularly volatile in the financial year. That said, China detracted over 1.6% in both absolute and relative performance, due to a single stock pick (Shanghai Bio-heart Biological Technology – discussed further on page 19). # UNQUOTED During the financial year ended on 31 March 2023, the Company strategically refrained from making new investments in unquoted companies, as we cautiously navigated the challenging public offering market for small and mid-capitalisation therapeutic firms. Encouragingly, however, one of the existing unquoted investments, DingDang Health Technology Group, completed its initial public offering (IPO) in mid-September, despite a subsequent share price decline (described below). With the recent encouraging signs of improvement in the capital market funding landscape, we are optimistic about the potential for more unquoted investments to achieve listings in the current financial year. As of 31 March 2023, unquoted company investments made up 6.7% of the Company's net assets, only slightly down from 7.1% on 31 March 2022. The existing unquoted portfolio demonstrates a diverse and forward-looking approach. Geographically, around 60% is exposed to emerging markets and the remainder is invested in North American companies. On a sector basis, half of the unquoted investments are in healthcare services, with additional allocations to life sciences tools, biotechnology, and medtech. For the year ended 31 March 2023, the Company's unquoted strategy encountered a few challenges, resulting in a loss of £17.3 million and an implied return of -10.3%, which somewhat offset the substantial gain of £42.5 million in the financial year ended 31 March 2022. The decline was primarily driven by a post-listing decrease in DingDang Health Technology Group (£7.5 million) and net write-downs in the remaining unquoted portfolio of £9.8 million. Nevertheless, given the emerging positive trends in the market and our strategic approach, we remain confident in the future performance of our unquoted investments, echoing the successes of prior years. 18 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 PORTFOLIO MANAGER’S REVIEW CONTINUED MAJOR CONTRIBUTORS TO PERFORMANCE agreement that will see Pfizer acquire the company for $229 per share, a premium of more than 100% to the The top six contributors to absolute performance were a company’s 52-week low. Seagen is a pioneer in “antibody combination of therapeutic and non-therapeutic stocks, drug conjugate” (ADC) technology, with four of the twelve but the impact of M&A in the biopharmaceutical sector total U.S. Food & Drug Administration (FDA)-approved on performance was the distinguishing feature of positive and marketed ADCs using its technology industry-wide. performance in the year. ADCs are a transformative modality that is emerging as a M&A IMPACT ON PERFORMANCE powerful tool across a broad range of cancers designed to 3 OF THE TOP 5 CONTRIBUTORS WERE preferentially kill cancer cells and limit off-target toxicities. BIOTECHNOLOGY TAKE-OUTS. ENHERTU 3RD GENERATION ANTIBODY DRUG CONJUGATE Discovered by: Overexpression of HER2 Enhertu leads to cancer First FDA Approval: Dec '19 Co-marketed & Co-Developed by: >100% >100% >$40 Metastatic Breast Cancer Additional Indications | premium | premium | billion | | HIGH HER2+ EXPRESSION | • Gastric | | --- | --- | --- | --- | --- | --- | | | | | | EFFICACY SUPERIOR TO KADCYLA | • Colon | | | | | Mega-Blockbuster | Risk of Death by 72% | • Lung | | | | | | LOW HER2+ EXPRESSION | • Earlier lines of therapy | with peak sales The largest contributor in the period was Global ESTABLISHED NEW STANDARD OF CARE potential in excess Unprecedented Risk of Death by 50% Blood Therapeutics. The California based small-mid- of $15 billion Efficacy capitalisation biotechnology company focuses on clinical medicines used to treat blood-based disorders, such as The Japanese pharmaceutical interest, Daiichi-Sankyo, sickle cell disease (SCD). The company was acquired has emerged as the other leader in ADC technology and by Pfizer in an announced transaction in August 2022. is a pioneer in creating “3rd generation” ADCs that are The agreed upon price was for a total enterprise value more potent and safer than ever before. Their first offering, of U.S.$5.4 billion, a 100% premium to the unaffected Enhertu (trastuzumab deruxtecan), for the treatment of share price. In addition to an already marketed product specific forms of metastatic breast cancer, has already for the treatment of SCD, Oxbryta (voxelotor), Pfizer also become a blockbuster product. The share price re-rated gained important pipeline assets, including GBT601, an multiple times in the fiscal year as the company disclosed oral, once-daily, next-generation sickle haemoglobin new data sets (low HER2+ expression), new approvals (HbS) polymerization inhibitor in the Phase 2 portion of (high HER2+ expression), and sales above expectations a Phase 2/3 clinical study. GBT601 has the potential to consistently through the year (sales >$1 billion in the first be a best-in-class agent targeting improvement in both nine months). One of the most interesting data disclosures haemolysis and frequency of vaso-occlusive crisis (VOC). occurred in June 2022 at the American Society of Clinical Another promising pipeline asset is inclacumab, a fully Oncology meeting in Chicago where Enhertu was shown to human monoclonal antibody targeting P-selectin which is double the length of survival in women with “low HER2+” being evaluated in two Phase 3 clinical trials as a potential expression. The data was so impressive, the thousands of quarterly treatment to reduce the frequency of VOCs and oncologists in attendance collectively rose in a standing to reduce hospital readmission rates due to VOCs. The ovation. The stock has also appreciated ahead of the transaction officially closed in early October 2022. first pivotal data for the company’s next ADC offering, datopotamab deruxtecan (Dato-DXd) for the treatment of In addition to the above, Pfizer also executed on the specific lung cancer, which “could be bigger than Enhertu”, largest M&A healthcare transaction of the year, acquiring as per the company’s partner, AstraZeneca. Seattle-based oncology player, Seagen. Pfizer announced its intention in March 2023. In a U.S.$43 billion deal “to battle cancer”, the two companies entered into a definitive WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 19 # PORTFOLIO MANAGER'S REVIEW CONTINUED **BioMarin Pharmaceutical** is another California based small-mid-capitalisation biotechnology company that was a material contributor to performance. The company is well known for developing and commercialising therapeutic enzyme products but has more recently added efforts in gene therapy. Their lead asset, Roctavian (valoctocogene roxaparvovec), is the first gene therapy for the treatment of severe haemophilia A. An approval for Roctavian in Europe (August 2022) and an imminent approval by the FDA (expected in June 2023) helped push the share price higher in the reported period, despite some profit taking late in the year. Additionally, the company's new product launch for achondroplasia, Voxzogo (vosoritide), has been very successful. Multiple upward sales revisions for Voxzogo through 2022 were also an important tailwind for the share price. The Cambridge, Massachusetts biotechnology company, **Sarepta Therapeutics**, has evolved into a rare disease company with expertise in the treatment of Duchenne Muscular Dystrophy (DMD), a severe type of muscle wasting found in young males. More recently, the company has acquired and developed a platform technology in gene therapy which they have applied to DMD patients. This development programme had moved into pivotal stages and the data had looked promising as a potential cure for these patients. The stock moved higher as a result, and moved higher still after the company was granted an accelerated approval path by the FDA for their lead gene therapy asset (delandistrogene moxaparvovec). Some share price volatility of note closed the end of the financial year due to some internal disagreement within the FDA about the approvability of delandistrogene, which was ultimately resolved with a positive recommendation for approval by an external advisory committee meeting in May 2023. Finally, yet another California based small-mid-capitalisation biotechnology company was a significant contributor to performance via its acquisition during the fiscal year. **Turning Point Therapeutics** was acquired by **Bristol-Myers Squibb** for a total equity value of U.S.$4.1 billion, representing a +125% premium to the previous closing share price. The deal was announced in June 2022 and closed August 2022. **Turning Point Therapeutics** is a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the most common mutations associated with oncogenesis. Their lead asset, repotrectinib, is a next generation, potential best-in-class tyrosine kinase inhibitor, targeting the ROS1 and NTRK oncogenic drivers of non-small cell lung cancer (NSCLC) and other advanced solid tumours. Repotrectinib is expected to be approved in the U.S. in the second half of 2023 and become a new standard of care for patients with ROS1-positive NSCLC in the first-line setting. # MAJOR DETRACTORS FROM PERFORMANCE Investments that experienced negative returns were very diverse in nature, whether it be geographically (U.S., Europe, and China) or sector (biotechnology, pharmaceuticals, and medical technology). The one common thread each of the stocks faced was a unique individual event, such as a clinical trial failure, a commercial sales slowdown, or even de-risking ahead of a catalyst, which subsequently triggered a fall in share price. The main detractor in the year was **Shanghai Bio-heart Biological Technology** the China-based medical technology company is a leader in interventional cardiovascular devices. The company has enjoyed enormous success since its IPO in late 2021, with returns in excess of 250% of its original listing price. However, the stock inexplicably began to sell off, even falling in November on no obvious news. We speculated that some profit taking took place ahead of an important data disclosure for the company's novel renal denervation device for uncontrolled hypertension, expected early in 2023. This was partially confirmed when the competitor data (from Medtronic) failed to prove that its renal denervation system reduced patients' ambulatory systolic blood pressure. Additionally, the share price was pressured as some investors may have sold ahead of the lock-up expiration for private investors in December 2022. **Mirati Therapeutics** is a California-based biotechnology company developing novel small molecule drugs to treat cancer. In particular, their lead program is a targeted oncology therapy intended to treat patients with lung cancer that harbours a specific mutation in the KRAS gene. Shares rose in late 2022 amid rumours that the company might be acquired; however, they ultimately fell in December 2022 following the presentation of disappointing clinical trial data. The data suggested that their lead programme might not be superior to the standard of care therapy in first line lung cancers 20 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # PORTFOLIO MANAGER'S REVIEW CONTINUED harbouring a KRAS mutation. Instead, the drug may be used in more advanced lung cancer patients where the market opportunity is smaller. **Horizon Therapeutics** is a U.S. based specialty pharmaceutical company that presided over one of the most successful drug launches ever in 2020. Tepezza (teprotumumab) was developed by the company to treat "TED" or thyroid eye disease, a painful, disfiguring, and debilitating disorder of the musculature of the eye. Launched in January 2020, the drug was well on its way to blockbuster status despite the commercial headwinds of the COVID-19 pandemic. Despite a temporary government-mandated shutdown in the manufacturing of Tepezza due to the prioritisation of COVID-19 vaccine production in early 2021, the re-launch of the product in April 2021 exceeded expectations. Whilst this success continued into early 2022, the sales growth for Tepezza then began to unexpectedly flatten, and the company reported second quarter sales that were disappointing and full year sales guidance was lowered. Additionally, investors learned that a key study (Tepezza usage in chronic patients) was delayed into 2023. As a result, the stock fell. We exited the position as the company pondered new marketing initiatives and increased spend to reinvigorate Tepezza sales in 2023, whilst awaiting trial results for the chronic indication. We were no longer invested in the company when Amgen announced its intention to acquire the company in December 2022. Investing in healthcare necessarily brings with it clinical risk. For Swiss pharmaceutical giant, **Roche**, the bad news came in threes during 2022. First, the company started the financial year off on the wrong foot when in April 2022 they confirmed that their investigative oral hormonal therapy, giredestrant, a "SERD" (selective estrogen receptor degrader), failed to show a benefit in advanced breast cancer. Then in May 2022, Roche confirmed that their "anti-TIGIT" antibody, tiragolumab, failed on an interim look in the treatment of lung cancer. And finally in November 2022, **Roche** confirmed that their high risk / high reward antibody, gantenerumab, failed delaying the progression in mild-to-moderate Alzheimer's patients. This string of unfortunate clinical trial failures coupled with declines in profits due to the dwindling effects of COVID-related sales (particularly in the company's diagnostics unit), led to share price declines in the period. The medical technology company, **Edwards Lifesciences**, is a developer of tissue replacement heart valves, and more specifically transcatheter heart valves (THV). The company's current valve portfolio is largely comprised of transcatheter aortic heart valves (TAVR), a market which has been growing solidly in the double-digit range but experienced some disruption in the second half of 2022 due to hospital staffing shortages across the U.S. This has fuelled investor concerns that the market is maturing and is one of the primary reasons for prolonged weakness in the share price during the reported period. Other headwinds facing the stock were mostly macro in nature, including the negative sentiment for growth stocks and rising interest rates. However, there is evidence that staffing shortages and other hospital difficulties have eased so far in 2023, which should benefit all medtech companies and especially those most exposed to inpatient procedure volumes, such as **Edwards**. Moreover, the company is the process of launching a key new product cycle in the transcatheter mitral heart valve (TMVR) market, which has the potential to accelerate top line growth in 2023 and more fully in 2024. # DERIVATIVE STRATEGY The Company has the ability to utilise equity swaps and options as part of its financial strategy. Throughout the financial year, the Company leveraged single stock equity swaps to access Chinese and Indian investments in emerging markets, which would otherwise be inaccessible through more traditional investment methods. Despite detracting £22.8 million from performance in the financial year ended 31 March 2023, we remain confident in the long-term prospects of emerging market securities, particularly those trading locally in mainland China. Additionally, the Company strategically invested in two customised tactical basket swaps, targeting growth opportunities in undervalued small and mid-capitalisation therapeutic companies. These baskets were constructed to capitalise on two prevailing themes that we anticipate will deliver strong returns in current financial year: 1) investment opportunities possessing considerable potential as attractive acquisition targets for larger corporations, and 2) those exhibiting a favourable risk/reward profile in light of upcoming clinical catalysts. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 21 PORTFOLIO MANAGER’S REVIEW CONTINUED LEVERAGE STRATEGY A significant number of complete response letters and extended user fee dates had been issued by the agency Historically, the typical range of leverage level employed due to the inability to complete the inspections, so this by the Company has been between high single digits to is a welcome relief for the industry. More importantly, mid-teens. Considering the market conditions over the despite some delays, the past six years have been the past three financial years, we have, more recently, used most productive in industry history, with almost 300 new leverage in a more tactical fashion. Examples include the product approvals during that span. The FDA has kept volatility around the original emergence of the pandemic pace so far in 2023, with 13 additional approvals in the in March 2020 and the U.S. Presidential election in first three months of the calendar year (source: fda.gov). November 2020 and the subsequent U.S. Senate run-off in January2021. Perhaps the largest sector development that has occurred during this period is new legislation that was approved More recently, we increased leverage back into the low-to- by the U.S. Senate and signed into law in July 2022 double digits, a reflection of our overall bullishness on the – the Inflation Reduction Act of 2022 (“IRA”) – which portfolio, a turn in biotechnology stocks, and the relative settled concerns about prescription drug price reform. outlook for healthcare ahead of a potential recession. The threat of drug price reform in the U.S. has been a One caveat that keeps us from extending leverage even persistent source of uncertainty and negative sentiment, further, is the volatile and uncertain macro backdrop, an overhang for the biopharmaceutical sector for decades, either economic in nature or even further geopolitical but particularly over the past two years since President unsettlement in the east. Biden took office. The IRA was modest in scope and SECTOR DEVELOPMENTS AND OUTLOOK included a mix of positive and negative factors for the biopharmaceutical industry. Overall, we view the IRA as Whilst healthcare stocks in general may have struggled very manageable for the biopharmaceutical sector, with this year given the see-saw of macro headwinds, there limited impact on profits into the end of the decade, and were a number of positive sector developments to perhaps the issue of drug price reform can now begin to highlight. First, some investors expressed angst over a dissipate as an overhang on the sector. slowdown of new drug approvals at the FDA. However, entering 2023, disrupted work schedules because of the coronavirus have dwindled and most recently, FDA inspectors returned to China for the first time in years which is encouraging (source: Washington Analysis). U.S. DRUG PRICE REFORM IMPACT: MIXED BUT MANAGEABLE Three Main Components to the IRA 2022 re: Drug Price Reform INFLATION REDUCTION ACT - OF 2022 NEUTRAL Requires drug companies • Price is no longer a revenue driver for pharma to pay rebates to Medicare Drug Price Inflation Cap • LIST prices do rise today, but < levels of inflation if they increase drug prices • NET prices are cut even further due to rebating faster than inflation • Curbs bad actors = positive for industry image POSITIVE | | Removes the “donut hole” | • Lowers out of pocket expenses | | --- | --- | --- | | | and replaces it with an | • Increases affordability of medicines | | Medicare Part D Redesign | “out-of-pocket cap” of | • Increases adherence / treatment duration of times | | | $2,000 per patient | • Increases patient access | • Should result in increased volumes NEGATIVE but MANAGEABLE Enables Health & Human • Not in effect until 2026 Services to set the prices of • Only 10 drugs per year are negotiated Medicare Price Negotiations certain costly drugs within • Targets medicines that are near the end of their life the Medicare program cycles but do not yet have generic competition (9 yrs - small molecules / 13 yrs - biologics) • Only a potential $40 billion incremental hit to U.S. Rx revenues to 2032 (out of $660 billion) 22 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 PORTFOLIO MANAGER’S REVIEW CONTINUED LARGE CAP PHARMACEUTICALS: LOOMING PATENT CLIFF | | US Loss of | | 2021 | | --- | --- | --- | --- | | | Exclusivity | Global Sales | | | $60 | (Projected)Drug Name | | ($bn)Company | $50 $40 $30 $20 $10 $0 SOURCE: Evaluate, “The Patent Winter is Coming”, May 25, 2022; S &P Global report, data as of February 17, 2022. The Company has taken advantage of accelerating M&A BIOTECH M&A: YEAR-OVER-YEAR ACCELERATION activity within the biotechnology space and we expect that trend to continue. With the insatiable need for large # of Deals $ Value of Deals capitalisation companies to continue to fill their pipelines and replace revenues lost to patent expirations, this is a logical ### FY 2021 17 $31 billion view. In fact, the pharmaceutical industry appears to be facing ### another “patent cliff”, starting in 2023 and inflecting in 2025. A FY 2022 30 $113 billion number of major blockbusters will be losing their exclusivity Sales at Risk ($bn) ### and sales will erode substantially, leaving major gaps in YOY +76% +265% revenues and earnings for a number of companies. With the historic small-mid-capitalisation biotechnology stock sell-off and large capitalisation executives talking up the need to execute deals, a plethora of transactions Periods ending March 31. SOURCE: FactSet, Company Websites began in earnest, inflecting in June 2022. The result for We expect this accelerated M&A pace to continue. the financial year was a near doubling in the number of Why? The pace of innovation within the biotechnology biotechnology transactions to 30 and near quadrupling of industry remains impressive and is the number one the value of deals, to U.S.$113billion. This has been a real value driver in the industry. The patent cliff keeps the rallying point for the industry, especially in biotechnology, appetite of large capitalisation companies for additional and as we have seen in the past, M&A can move the entire new pipelines and products very high. Additionally, sector higher and we have finally seen these stocks move historically low biotechnology valuations will continue to off the bottom after experiencing the largest and longest fuel biotechnology acquisitions. Over 200 life sciences drawdown in the history of the “XBI” (the biotech ETF). companies continue to trade at negative enterprise values (i.e., market capitalisations below net cash). As shown in the following chart, revenue multiples for the sector are also bouncing off bear market recessionary lows. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 23 # PORTFOLIO MANAGER'S REVIEW CONTINUED # BIOTECHNOLOGY TRADING AT HISTORICALLY LOW REVENUE MULTIPLES ![img-6.jpeg](img-6.jpeg) Another important phenomenon that typically follows an acceleration of M&A is the rekindling of clinical and regulatory catalysts as key stock moving events. After an inflection of M&A, typically there is a renewed appreciation of the catalyst strategy as investors are reminded of why companies are being bought for 100 to 200% premiums – innovation. And in 2023, we expect investor focus to return to such catalysts, across such examples as gene therapy, a highly scrutinised new therapeutic technology that was left for dead in 2022 due to emerging safety concerns, but is now on the precipice of three new product launches. And there are many more, across oncology, nephrology, neurology, and so on. The commercial opportunities that are eventually created are significant. The top 15 new product opportunities in biotechnology today could create over U.S.$60 billion in cumulative sales by the next decade (source: Jefferies). # 15 NOVEL BIOTECH-SOURCED LAUNCHES WITH >U.S.$60 BILLION IN CUMULATIVE REVENUES ![img-7.jpeg](img-7.jpeg) Finally, a word on emerging markets. China's re-emergence from its zero-COVID policy provides an important new growth driver for global healthcare companies. Major Chinese cities have gone from lockdowns to traffic jams in just a few months. The principle here is simple – as China re-opens from its zero-COVID policy, the economy and the local equity market should follow. The Hong Kong healthcare index hit all-time lows in October 2022, after ill-founded investor fears about government and political interference - both from China and the U.S. - created a market dislocation. A rebound into calendar year-end ensued in anticipation of an economic re-opening. And whilst geopolitical tensions created some volatility early in 2023, we are optimistic about China going forward as this oversold situation should reverse. **Sven H. Borho and Trevor M. Polischuk** OrbiMed Capital LLC Portfolio Manager 6 June 2023 24 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # CONTRIBUTION BY INVESTMENT ## ABSOLUTE CONTRIBUTION BY INVESTMENT FOR THE YEAR ENDED 31 MARCH 2023 Principal contributors to and detractors from net asset value performance | Top five contributors | Country | Sector | Contribution £'000 | Contribution per share* £ | | --- | --- | --- | --- | --- | | Global Blood Therapeutics** | USA | Biotechnology | 30,805 | 0.5 | | Seagen** | USA | Biotechnology | 28,289 | 0.4 | | Daiichi Sankyo | Japan | Pharmaceutical | 23,488 | 0.4 | | BioMarin Pharmaceutical | USA | Biotechnology | 21,598 | 0.3 | | Sarepta Therapeutics | USA | Biotechnology | 20,665 | 0.3 | ### Top five detractors | Edwards Lifesciences | USA | Healthcare Equipment & Supplies | (18,551) | (0.3) | | --- | --- | --- | --- | --- | | Roche | Switzerland | Pharmaceutical | (24,481) | (0.4) | | Horizon Therapeutics** | USA | Biotechnology | (29,324) | (0.5) | | Mirati Therapeutics | USA | Biotechnology | (33,332) | (0.5) | | Shanghai Bio-heart Biological Technology | China | Healthcare Equipment & Supplies | (42,324) | (0.7) | * Calculation based on 64,474,422 shares being the weighted average number of shares in issue during the year ended 31 March 2023 ** Not held at 31 March 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 25 ## ENVIRONMENTAL, SOCIAL AND GOVERNANCE ## AND CLIMATE CHANGE The Company’s Portfolio Manager, OrbiMed, is guided by from the third-party service providers are integrated its Responsible Investing Policy in its approach to ESG with OrbiMed’s own analysis onto a proprietary business (Environmental, Social and Governance). They seek to intelligence platform for regular monitoring. invest in innovative healthcare companies that are working OrbiMed also generally engages on a regular basis with its towards addressing significant unmet medical needs, portfolio companies through meetings with management, across biopharmaceuticals, medical devices, diagnostics, proxy voting, and in some cases, through board and healthcare services sectors, globally. representation. OrbiMed believes that there is a high congruence between OrbiMed’s analysts regularly track ESG information companies that seek to act responsibly and those that on safety of clinical trials, drug/product safety, ethical succeed in building long-term shareholder value. They seek marketing, call-backs and other materially relevant factors. to integrate ESG into the overall investment process, with In addition, OrbiMed is taking the initiative in leading the objective of maximising investment returns. OrbiMed meaningful ESG engagement in the healthcare sector. As has recruited a senior executive who has the responsibility part of these efforts, OrbiMed engages with companies of overseeing this project. Investment decisions are directly or through brokers, and facilitates dialogue and an based on a variety of financial and non-financial company exchange of best practice among investors, companies, factors, including environmental, social, and governance and other relevant experts on ESG in the healthcare sector. information. Some examples of engagement include: As a responsible investor, OrbiMed negatively screens • Engagement with large capitalisation pharmaceutical potential investments and business sectors that may companies on reporting, environmental sustainability, objectively lead to negative impacts on public health or access, product pricing, supplier engagement and well-being. They consider healthcare sector-specific targets on ESG through an investor conference and guidance from the Sustainability Accounting Standards broker-led ESG road shows; Board (SASB) to determine material ESG factors as part of their investment research. Social factors such as • Participation in an ESG conference where a mid- affordability, pricing, access, and safety dominate the capitalisation biotechnology company disclosed its ESG financially material ESG issues for the pharmaceutical, governance, and discussed key programmes including biotechnology, and medical devices sub-sectors, followed increasing diversity in clinical trials, employee diversity by governance factors. Environmental factors such as and talent-building initiatives, and other community greenhouse gas (GHG) emissions are not featured as initiatives; and material. Energy and waste management appear as • As part of the ‘Industry Investor Connect’, OrbiMed material factors for healthcare delivery, and drug retailer participated in an ESG roundtable discussion with a sub-sectors, where the physical footprint of the companies large capitalisation medical devices company and a is large. The healthcare and life sciences sector is highly pharmaceutical company, alongside 10 other investors. regulated, globally. Environmental regulation, along with Topics discussed included drugs and product safety, quality-related regulation is well-established across both litigation, and access to medicines. developed and emerging markets. To that end, OrbiMed OrbiMed also participated in the Goldman Sachs considers compliance with local laws and regulations as Sustainability Conference in September 2022 and the one of the factors in its investment evaluation. Depending Jefferies London Healthcare Conference in November 2022, on the investment, all or a subset of the ESG factors that alongside several healthcare companies and investors, to are financially material and relevant are considered in allow further dissemination and discussion of leading ESG OrbiMed’s research. practices in the healthcare sector. MONITORING AND ENGAGEMENT Between April 1, 2022, and March 31, 2023, a total of 776 OrbiMed utilises ESG scores for public equity holdings proposals came to vote within the Company’s portfolio. from third-party service providers. To supplement the Of these, 759 were management proposals and 17 were information from these providers, OrbiMed also conducts shareholder proposals. proprietary analysis of ESG performance. The scores 26 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ENVIRONMENTAL, SOCIAL AND GOVERNANCE AND CLIMATE CHANGE CONTINUED Number of votes against management’s Total number Voted Votes proposed Proposed by of proposals Voted for against abstained response Management 759 667 92 0 88 Shareholder 17 2 15 0 2 There was one management proposal referring to an ESG greenwashing rules will take effect immediately and will report and two shareholder proposals regarding product be applicable to all regulated firms in the UK. Labelling and pricing. ‘Affordability and pricing’ is one of the material ESG classification rules come into effect a year later, and the topics listed in the Sustainability Accounting Standards disclosure rules will follow after a further year. Board guidance for the Biotechnology and Pharmaceuticals In May 2022, the U.S. Securities and Exchange Commission sub-sector. (SEC) proposed amendments to rules and reporting forms OrbiMed provides a quarterly update on ESG to the Board to promote disclosures for investors concerning funds’ of the Company. This provides updates on the evolving and advisers’ incorporation of ESG. Following this, in regulatory landscape as well as details of monitoring, 2023, the Division of Examinations of the SEC announced engagement and its proxy voting activity. ESG reporting the publication of its 2023 examination priorities, which by companies within the portfolio is also examined in the include a focus on ESG-related advisory services and fund quarterly report. offerings, to evaluate labelling and practices with respect to stated policies and processes, in the United States. CLIMATE CHANGE International coherence on ESG between regimes is yet As per the guidance from SASB, climate change in relation to be achieved. The changing regulatory landscape is to the Company’s own operations is not a material ESG continuously being monitored by OrbiMed. consideration for the biotechnology and pharmaceutical, medical equipment and supplies, and managed care sectors. However, Energy management is noted as a Sven H. Borho and Trevor M. Polischuk material ESG concern for the healthcare delivery sector. OrbiMed Capital LLC To that end, OrbiMed includes the scores on energy Portfolio Manager management for the relevant sectors in its overall ESG 6 June 2023 monitoring. REGULATORY UPDATE ON ESG In October 2022, the UK Financial Conduct Authority (FCA) published the Consultation Paper on UK-specific Sustainability Disclosure Requirements (SDR). The proposed SDR is focused on asset managers and their UK- based fund products and portfolio management services. The Consultation Paper’s core elements are labelling and classification; disclosure; and naming and marketing rules. The FCA has concluded the Consultation on the draft Rules. The final rules which were expected to be published in June 2023, are now expected to be published in the third quarter of 2023. Upon the release of the Final Rules, anti- WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 27 ## BUSINESS REVIEW The Strategic Report, on pages1to 40, contains a review The Company is an investment company within the meaning of the Company’s business model and strategy, an analysis of Section 833 of the Companies Act 2006 and has been of its performance during the financial year and its future approved by HM Revenue & Customs as an investment trust developments and details of the principal risks and (for the purposes of Section 1158 of the Corporation Tax Act challenges it faces. Its purpose is to inform shareholders 2010). As a result the Company is not liable for taxation on in the Company and help them to assess how the Directors capital gains. The Directors have no reason to believe that have performed their duty to promote the success of the approval will not continue to be retained. The Company is not Company. a close company for taxation purposes. The Strategic Report contains certain forward-looking The Board is responsible for all aspects of the Company’s statements. These statements are made by the Directors in affairs, including the setting of parameters for and the good faith based on the information available to them up to monitoring of the investment strategy a s well as the the date of this report. Such statements should be treated review of investment performance and policy. It also has with caution due to the inherent uncertainties, including both responsibility for all strategic issues, the dividend policy, economic and business risk factors, underlying such forward- the share issuance and buy-back policy, gearing, share looking information. price and discount/premium monitoring and corporate governance matters. BUSINESS MODEL Worldwide Healthcare Trust PLC is an externally managed CONTINUATION OF THE COMPANY investment trust and its shares are listed on the premium A resolution was passed at the Annual General Meeting segment of the Official List and traded on the main market held in 2019 that the Company continues as an investment of the London Stock Exchange. Its investment objective and trust for a further five year period. In accordance with the policy are set out on pages 8 and 9. Company’s Articles of Association, shareholders will have an opportunity to vote on the continuation of the Company The purpose of the Company is to achieve a high level of at the Annual General Meeting to be held in 2024 and every capital growth for its shareholders by providing a vehicle for five years thereafter. investors to gain, through a single investment, exposure to the global healthcare sector through a diversified portfolio THE BOARD of shares in pharmaceutical and biotechnology companies The Board of the Company comprises Doug McCutcheon and related securities. (Chair), Sarah Bates, Sven Borho, Dr Bina Rawal, The Company’s strategy is to create value for shareholders Humphrey van der Klugt, Tim Livett and Jo Parfrey. All of by addressing its investment objective. these Directors, with the exception of Tim Livett and Jo Parfrey served throughout the year. All are independent As an externally managed investment trust, all of the non-executive Directors with the exception of Sven Borho Company’s day-to-day managements and administrative who is not considered to be independent by the Board. functions are outsourced to service providers. As a result, the Company has no executive directors, employees or Further information on the Directors can be found on internal operations. The Company employs Frostrow pages41 to 43. Capital LLP (Frostrow) as its Alternative Investment Fund All Directors, with the exception of Sarah Bates, are seeking Manager (AIFM), OrbiMed Capital LLC (OrbiMed) as its election or re-election by shareholders at this year’s Annual Portfolio Manager, J.P. Morgan Europe Limited as its General Meeting. Depositary and J.P. Morgan Securities LLC as its Custodian and Prime Broker. Further details about their appointments DIVIDEND POLICY can be found in the Business Review on pages 28 and 29. It is the Company’s policy to pay out dividends to shareholders at least to the extent required to maintain investment trust status for each financial year. Such dividends will typically be paid twice a year by means of an interim dividend and a final dividend. 28 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # BUSINESS REVIEW CONTINUED # KEY PERFORMANCE INDICATORS ('KPIs') The Board assesses the Company's performance in meeting its objectives against KPI's as follows. The KPI's have not changed from the previous year: - Net asset value ('NAV') per share total return against the Benchmark; - Discount/premium of share price to NAV per share; and - Ongoing charges ratio. - Alternative Performance Measure (See Glossary beginning on page 98) Information on the Company's performance is provided in the Statement from the Chair and the Portfolio Manager's Review and a record of these measures is shown on pages 1, 2 and 3. Further information can be found in the Glossary beginning on page 97. # NAV per share total return against the Benchmark The Directors regard the Company's NAV per share total return as being the overall measure of value delivered to shareholders over the long term. This reflects both net asset value growth of the Company and dividends paid to shareholders. The Board considers the most important comparator, against which to assess the NAV per share total return performance, to be the MSCI World Health Care Index measured on a net total return, sterling adjusted basis (the 'Benchmark'). As noted on pages 8 and 9, OrbiMed has flexibility in managing the investments and are not limited by the make up of the Benchmark. As a result, investment decisions are made that differentiate the Company from the Benchmark and therefore the Company's performance may also be different to that of the Benchmark. A full description of performance during the year under review is contained in the Portfolio Manager's Review beginning on page 14 of this Annual Report. # Share price discount/premium to NAV per share The share price discount/premium to the NAV per share is considered a key indicator of performance as it impacts the share price total return of shareholders and can provide an indication of how investors view the Company's performance and its Investment Objective. # Ongoing charges ratio The Board continues to be conscious of expenses and works hard to maintain a balance between good quality service and costs. # PRINCIPAL SERVICE PROVIDERS The principal service providers to the Company are the AIFM, Frostrow, the Portfolio Manager, OrbiMed, the Custodian and Prime Broker J.P. Morgan Securities LLC, and the Depositary, J.P. Morgan Europe Limited. Details of their key responsibilities follow and further information on their contractual arrangements with the Company are included in the Report of the Directors beginning on page 44. # Alternative investment fund manager ('AIFM') Frostrow under the terms of its AIFM agreement with the Company provides, inter alia, the following services: - oversight of the portfolio management function delegated to OrbiMed Capital LLC; - portfolio administration and valuation; - risk management services; - marketing and shareholder services; - share price discount and premium management; - administrative and secretarial services; - advice and guidance in respect of corporate governance requirements; - maintenance of the Company's accounting records; - maintenance of the Company's website; - preparation and dispatch of annual and half-year reports (as applicable) and monthly fact sheets; and - ensuring compliance with applicable legal and regulatory requirements. During the year, under the terms of the AIFM Agreement, Frostrow received a fee as follows: On market capitalisation up to £150 million: 0.3%; in the range £150 million to £500 million: 0.2%; in the range £500 million to £1 billion: 0.15%; in the range £1 billion to £1.5 billion: 0.125%; over £1.5 billion: 0.075%. In addition, Frostrow receives a fixed fee per annum of £57,500. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 29 BUSINESS REVIEW CONTINUED Portfolio manager AIFM AND PORTFOLIO MANAGER EVALUATION OrbiMed under the terms of its portfolio management AND RE-APPOINTMENT agreement with the AIFM and the Company provides, The performance of the AIFM and the Portfolio Manager is interalia, the following services: reviewed continuously by the Board and the Management Engagement & Remuneration Committee (the “Committee”) • the seeking out and evaluating of investment with a formal evaluation being undertaken each year.As opportunities; part of this process, the Committee monitors theservices • recommending the manner by which monies should be provided by the AIFM and the Portfolio Managerand invested, disinvested, retained or realised; receives regular reports and views from them. TheCommittee also receives comprehensive performance • advising on how rights conferred by the investments measurement reports to enable it to determine whether should be exercised; or not the performance objectives set by the Board have • analysing the performance of investments made; and been met. The Committee reviewed the appropriateness of • advising the Company in relation to trends, market the appointment of the AIFM and the Portfolio Manager in movements and other matters which may affect the March 2023 with a positive recommendation being made to investment objective and policy of the Company. the Board. OrbiMed receives a base fee of 0.65% of NAV and a The Board believes the continuing appointment of the AIFM performance fee of 15% of outperformance against the and the Portfolio Manager, under the terms described on Benchmark as detailed on page 44. pages 28 and 29, is in the interests of shareholders as a whole. In coming to this decision, it took into consideration, Depositary, custodian and prime broker interalia, the following: J.P. Morgan Europe Limited acts as the Company’s Depositary and J.P. Morgan Securities LLC as its Custodian • the quality of the service provided and the depth of and Prime Broker. experience of the company management, company secretarial, administrative and marketing team that the J.P. Morgan Europe Limited, as Depositary, must take AIFM allocates to the management of the Company; and reasonable care to ensure that the Company is managed in accordance with the Financial Conduct Authority’s Investment • the quality of the service provided and the quality and Funds Sourcebook, the AIFMD and the Company’s Articles of depth of experience allocated by the Portfolio Manager Association. The Depositary must in the context of this role to the management of the portfolio and the long-term act honestly, fairly, professionally, independently and in the performance of the portfolio in absolute terms and by interests of the Company and its shareholders. reference to the Benchmark. The Depositary receives a variable fee based on the size of RISK MANAGEMENT the Company as set out on pages 44 and 45. The Board is responsible for the management of risks J.P. Morgan Europe Limited has discharged certain of its faced by the Company. Through delegation to the Audit liabilities as Depositary to J.P. Morgan Securities LLC. & Risk Committee, the Board has established procedures Further details of this arrangement are set out on page 45. to manage risk, to review the Company’s internal control J.P. Morgan Securities LLC, as Custodian and Prime Broker, framework and establish the level and nature of the provides the following services under its agreement with principal risks the Company is prepared to accept in order the Company: to achieve its long-term strategic objective. At least twice a year the Audit & Risk Committee carries out a robust • safekeeping and custody of the Company’s investments assessment of the principal risks and uncertainties with the and cash; assistance of Frostrow (the Company’s AIFM) identifying • processing of transactions; the principal risks faced by the Company. These principal • provision of an overdraft facility. Assets up to 140% of risks and the ways they are managed or mitigated are the value of the outstanding overdraft can be taken as detailed on the following pages. collateral. See page 93 for further details; and • foreign exchange services. 30 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation Market risks By the nature of its activities and Investment To manage these risks the Board and the AIFM have appointed OrbiMed to Objective, the Company’s portfolio is exposed to manage the portfolio within the remit of the investment objective and policy, fluctuations in market prices (from both individual and imposed various limits and guidelines, set out on pages 8 and 9. These security prices and foreign exchange rates) and limits ensure that the portfolio is diversified, reducing the risks associated due to exposure to the global healthcare sector, it with individual stocks, and that the maximum exposure (through derivatives is expected to have higher volatility than the wider and an overdraft facility) is limited. The compliance with those limits and market. As such investors should be aware that guidelines is monitored daily by Frostrow and OrbiMed and reported to the by investing in the Company they are exposing Board monthly. themselves to market risks and those additional In addition, OrbiMed reports at each Board meeting on the performance of the risks specific to the sectors in which the Company’s portfolio, which encompasses the rationale for stock selection Company invests, such as political interference in decisions, the make-up of the portfolio, potential new holdings and, derivative drug pricing. activity and strategy (further details on derivatives can be found in note 16 In addition, OrbiMed’s approach is expected to beginning on page 89). lead to performance that will deviate from that The Company does not currently hedge its currency exposure. of comparators, including both market indices and other investment companies investing in healthcare. The Company also uses leverage (both through derivatives and gearing) the effect of which is to amplify the gains or losses the Company experiences. Geopolitical/regulatory and macro economic risk While such events are outside the control of the Company the Board reviews Macro events may have an adverse impact regularly, and discusses with the Portfolio Manager, the wider economic and on the Company’s performance by causing political environment, along with the portfolio exposure and the execution of exchange rate volatility, changes in tax or the investment policy against the long-term objectives of the Company. The regulatory environments, and/or a fall in market ongoing tensions in the Asia Pacific Region and also the instability caused prices. Emerging markets, which a portion of the by the war in the Ukraine have featured in these discussions. The Portfolio portfolio is exposed to, can be subject to greater Manager’s risk team perform systematic risk analysis, including country and political uncertainty and price volatility than industry specific risk monitoring. developed markets. The Board monitors regulatory developments but relies on the services of its external advisers to ensure compliance with applicable law and regulations. The Board has appointed a specialist investment trust AIFM and Company Secretary who provides industry and regulatory updates at each Board meeting. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 31 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation Unquoted investment risk The Company’s risk could be increased by its To mitigate this risk the Board and AIFM have set a limit of 10% of the investment in unquoted companies. These portfolio, calculated at the time of investment, that can be held in unquoted investments may be more difficult to buy, sell investments and have established a robust and consistent valuation policy or value, so changes in their valuations may be and process as set out in Note 1(b) on page 80, which is in line with UK GAAP greater than for listed assets. The valuation of requirements and the International Private Equity and Venture Capital (IPEV) unquoted investments requires considerable Guidelines. TheBoard also monitors the performance of these investments judgement as explained in Note1(a) beginning compared to the additional risks involved. on page 79 and as such realisations may be materially lower than the value as estimated by the Company. Particular events, outside the control of the Company, may also have a significant impact on the valuation and considerable uncertainty may exist around the potential future outcomes for each investment. Investment management key person risk There is a risk that the individuals responsible The Board manage this risk by: for managing the Company’s portfolio may leave • appointing OrbiMed, who operate a team environment such that the loss their employment or may be prevented from of any individual should not impact on service levels; undertaking their duties. • receiving reports from OrbiMed at each Board meeting, such report includes any significant changes in the make-up of the team supporting the Company; • meeting the wider team, outside the designated lead managers, at OrbiMed’s offices and encouraging the participation of the wider OrbiMed team in investor updates; and • delegating to the Management Engagement & Remuneration Committee, responsibility to perform an annual review of the service received from OrbiMed, including, interalia, the team supporting the lead managers and succession planning. 32 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation Counterparty risk In addition to market and foreign currency risks, This risk is managed by the Board through: discussed above, the Company is exposed to • reviews of the arrangements with, and services provided by, the risk arising from the use of counterparties. If a Depositary and the Custodian and Prime Broker to ensure that the counterparty were to fail, the Company could security of the Company’s assets is being maintained. Legal opinions are be adversely affected through either delay in sought, where appropriate, as part of this review. Also, the Board regularly settlement or loss of assets. monitors the credit rating of the Company’s Custodian and Prime Broker; The most significant counterparty the Company • monitoring of the assets taken as collateral (further details can be found is exposed to is J.P. Morgan Securities LLC in note 16 beginning on page 89); which is responsible for the safekeeping of the Company’s assets and provides the • reviews of OrbiMed’s approved list of counterparties, the Company’s use overdraft facility to the Company. As part of of those counterparties and OrbiMed’s process for monitoring, and adding the arrangements with J.P. Morgan Securities to, the approved counterparty list; LLC they may take assets, up to 140% of the • monitoring of counterparties, including reviews of internal control reports value of the drawn overdraft, as collateral and credit ratings, as appropriate; and have first priority security interest or lien over all of the Company’s assets. Such assets • by primarily investing in markets that operate DVP (Delivery Versus taken as collateral may be used, loaned, sold, Payment) settlement. The process of DVP mitigates the risk of losing the rehypothecated or transferred by J.P. Morgan principal of a trade during the settlement process; and Securities LLC. Although the Company maintains • J.P. Morgan Securities LLC is subject to regular monitoring by J.P.Morgan the economic benefit from the ownership of Europe Limited, the Company’s Depositary, and the Board receives regular those assets it does not hold any of the rights reports from J.P. Morgan Europe Limited. associated with those assets. Any of the Company’s assets taken as collateral are not covered by the custody arrangements provided by J.P. Morgan Securities LLC. The Company is, however, afforded protection in accordance with SEC rules and U.S. legislation equal to the value of the assets that have been rehypothecated. Service provider risk The Company is reliant on the systems of the its To manage these risks the Board: service providers and as such disruption to, or a • receives a monthly compliance report from Frostrow, which includes, failure of, those systems (including, for example, interalia, details of compliance with applicable laws and regulations; as a result of cyber-crime or a ‘black-swan’ event) could lead to a failure to comply with law • reviews internal control reports, key policies, including measures taken to and regulations leading to reputational damage combat cyber security issues, and also the disaster recovery procedures and/ or financial loss. of its service providers; • maintains a risk matrix with details of risks the Company is exposed to, the controls relied on to manage those risks and the frequency of the controls operation; • receives updates on pending changes to the regulatory and legal environment and progress towards the Company’s compliance with these; and • has considered the increased risk of cyber-attacks and received reports and assurance at meetings with its service providers where the information security controls in place were reviewed. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 33 BUSINESS REVIEW CONTINUED Principal risks and uncertainties Mitigation ESG related risks Both the Board and the Portfolio Manager The Portfolio Manager provides ESG reports at each Board meeting, recognise the importance of having a coherent highlighting examples where ESG issues influenced investment decisions and/ ESG policy. There is a risk that investing in or led to engagement with an investee company. The Portfolio Manager also companies that disregard ESG factors will have a produces a quarterly ESG update. negative impact on investment returns and also The Board ensures that the Portfolio Manager’s ESG approach is in line with that the Company itself may become unattractive standards elsewhere and the Board’s expectations. A summary of the Portfolio to investors if ESG is not appropriately considered Manager’s approach to Responsible Investing can be found on pages 25 and 26. in the Portfolio Manager’s decision making process. Shareholder relations and share price performance risk The Company is also exposed to the risk, In managing this risk the Board: particularly if the investment strategy and • reviews the Company’s Investment Objective in relation to market, and approach are unsuccessful, that the Company economic, conditions and the operation of the Company’s peers; may underperform resulting in the Company • discusses at each Board meeting the Company’s future development and becoming unattractive to investors and a strategy; widening of the share price discount to NAV per share. Also, falls in stock markets and the risk of • reviews the shareholder register at each Board meeting; a global recession, are likely to adversely affect • actively seeks to promote the Company to current and potential investors; and the performance of the Company’s shares. • has implemented a discount/premium control mechanism. The Board undertakes a regular review of the Company’s share price compared to the NAV per share. Further information can be found on page 34. Company promotional activities have been delegated to Frostrow, whoreport to the Board at each Board meeting on these activities. Emerging risks COMPANY PROMOTION The Company has carried out a robust assessment of The Company has appointed Frostrow to provide marketing the Company’s emerging and principal risks and the and investor relations services, in the belief that a procedures in place to identify emerging risks are described well-marketed investment company is more likely to grow below. The International Risk Governance Council definition over time, have a more diverse and stable shareholder of an ‘emerging’ risk is one that is new, or is a familiar register and will trade at a superior rating to its peers. risk in a new or unfamiliar context or under new context Frostrow actively promotes the Company in the following conditions (re-emerging). Failure to identify emerging risks ways: may cause reactive actions rather than being proactive and, in worst case, could cause the Company to become Engaging regularly with institutional investors, unviable or otherwise fail or force the Company to change discretionary wealth managers and a range of its structure, objective or strategy. execution-only platforms: Frostrow regularly talks and meets with institutional investors, discretionary wealth The Audit & Risk Committee reviews a risk map at its half- managers and execution-only platform providers to discuss yearly meetings. Emerging risks are discussed in detail as the Company’s strategy and to understand any issues part of this process and also throughout the year to try to and concerns, covering both investment and corporate ensure that emerging (as well as known) risks are identified governance matters; and, sofar as practicable, mitigated. There are currently no emerging risks being monitored by the Audit & Risk Making Company information more accessible: Frostrow Committee. works to raise the profile of the Company by targeting key groups within the investment community, holding annual investment seminars, overseeing PR output and managing the Company’s website and wider digital offering, including Portfolio Manager videos and social media; 34 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED Disseminating key Company information: Frostrow SOCIAL, HUMAN RIGHTS AND performs the Investor Relations function on behalf of the ENVIRONMENTAL MATTERS Company and manages the investor database. Frostrow The Directors, through the Company’s Portfolio Manager, produces all key corporate documents, distributes monthly encourage companies in which investments are made Fact Sheets, Annual Reports and updates from OrbiMed on to adhere to best practice with regard to corporate portfolio and market developments; and governance. In light of the nature of the Company’s Monitoring market activity, acting as a link between the business there are no relevant human rights issues and the Company, shareholders and other stakeholders: Frostrow Company does not have a human rights policy. maintains regular contact with sector broker analysts and The Company recognises that social and environmental other research and data providers, and conducts periodic issues can have an effect on some of its investee investor perception surveys, liaising with the Board to companies. provide up-to-date and accurate information on the latest The Company is an investment trust and so its shareholder and market developments. own direct environmental impact is minimal. As an DISCOUNT/PREMIUM CONTROL externally- managed investment trust, the Company does not have any employees or maintain any premises, nor does The Board undertakes a regular review of the level of it undertake any manufacturing or other physical operations discount/premium and consideration is given to ways in itself. All its operational functions are outsourced to third which share price performance may be enhanced, including party service providers. Therefore, the Company has no the effectiveness of marketing, share issuance and share material, direct impact on the environment or any particular buybacks, where appropriate. community and the Company itself has no environmental, It is the Board’s policy to buy back the Company’s shares human rights, social or community policies. The Board if the share price discount to the net asset value per share of Directors consists of seven Directors, five of whom exceeds 6% on an ongoing basis. Shares repurchased are resident in the UK, one in Canada and one in theU.S. are held as treasury shares. Treasury shares can be sold TheBoard holds the majority of its regular meetings in the back to the market at a later date at a premium to the U.K., with usually one meeting held each year in NewYork, cum-income net asset value per share (See Glossary and has a policy that travel, as far as possible, is minimal, beginning on page 97). Shareholders should note, however, thereby minimising the Company’s greenhouse gas that it remains very possible for the discount to be greater emissions. Further details concerning greenhouse gas than 6% for extended periods of time particularly when emissions can be found within the Report of the Directors sentiment towards the Company, the sector and to on page 48. Video conferencing has proved to be a very investment trusts generally remains poor. effective way of holding meetings, and this medium continues to be used alongside in person meetings. While buy backs may prove unable to prevent the discount from widening, they also enhance the net asset value per The Portfolio Manager engages with the Company’s share for remaining shareholders and go some way to underlying investee companies in relation to their corporate dampening discount volatility which can adversely affect governance practices and the development of their policies investors’ risk adjusted returns. on social, community and environmental matters. At times when there are unsatisfied buying orders for the INTEGRITY AND BUSINESS ETHICS Company’s shares in the market, the Company has the The Company is committed to carrying out business in an ability to issue new shares or to re-issue treasury shares honest and fair manner with a zero-tolerance approach to at a small premium to the cum income net asset value bribery, tax evasion and corruption. As such, policies and per share. This acts as an effective share price premium procedures are in place to prevent this. In carrying out its management tool. activities, the Company aims to conduct itself responsibly, Details of share issuance and share buybacks are set out ethically and fairly, including in relation to social and human on page 46. rights issues. The Company believes that high standards of ESG make good business sense and have the potential to protect WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 35 BUSINESS REVIEW CONTINUED and enhance investment returns. The Portfolio Manager’s STAKEHOLDER INTERESTS AND BOARD investment criteria provide that ESG and ethical issues are DECISION-MAKING (SECTION 172 OF THE taken into account and best practice is encouraged by the COMPANIES ACT 2006) Board. The Board’s expectations are that its principal service The Directors are required to explain more fully how they providers have appropriate governance policies in place. have discharged their duty under s172 of the Companies Act 2006 in promoting the success of the Company for the TASKFORCE FOR CLIMATE-RELATED benefit of the members as a whole. This includes the likely FINANCIAL DISCLOSURES (“TCFD”) consequences of the Directors’ decisions in the long-term The Company notes the TCFD recommendations on and how they have taken wider stakeholders’ needs into climate-related financial disclosures. The Company is an account. investment trust with no employees, internal operations or property and, as such, it is exempt from the Listing Rules The Directors aim to act fairly between the Company’s requirement to report against the TCFD framework. stakeholders. The Board’s approach to shareholder relations is summarised in the Corporate Governance LONGER-TERM VIABILITY Report beginning on page 50. The Statement from the The Board has carried out a robust assessment of the Chair beginning on page 4 provides an explanation of principal risks facing the Company including those that would actions taken by the Directors during the year to achieve threaten its business model, future performance, solvency or the Board’s long-term aim of ensuring that the Company’s liquidity. The Board has drawn up a matrix of risks facing the shares trade at a price close to the NAV per share. Company and has put in place a schedule of investment limits As an externally managed investment trust, the Company and restrictions, appropriate to the Company’s investment has no employees, customers, operations or premises. objective and policy, in order to mitigate these risks as far as Therefore, the Company’s key stakeholders (other practicable. The principal risks and uncertainties which have than its shareholders) are considered to be its service been identified, and the steps taken by the Board to mitigate providers. The need to foster business relationships with these as far as possible, are shown on pages 29 to 33. the service providers and maintain a reputation for high The Board believes it is appropriate to assess the standards of business conduct are central to the Directors’ Company’s viability over a five year period. This period is decision-making as the Board of an externally managed also deemed appropriate due to our Portfolio Manager’s investment trust. The Directors believe that fostering long-term investment horizon and also what it believes to constructive and collaborative relationships with the be investors’ horizons, taking account of the Company’s Company’s service providers will assist in their promotion current position and the potential impact of the principal of the success of the Company for the benefit of all risks and uncertainties as shown on pages 29 to 33. The shareholders. Directors also took into account the liquidity of the portfolio The Board engages with representatives from its and the expectation that the Company will pass the next service providers throughout the year. Representatives continuation vote in 2024 when considering the viability of from OrbiMed and Frostrow are in attendance at each the Company over the next five years and its ability to meet Board meeting. As the Portfolio Manager and the AIFM liabilities as they fall due. respectively, the services they provide are fundamental The Directors do not expect there to be any significant to the long-term success and smooth running of the change in the principal risks that have been identified or Company. The Statement from the Chair and the Business the adequacy of the mitigating controls in place, and do Review on pages 4 to 7 and also on page 29, describe not envisage any change in strategy or objectives or any relevant decisions taken during the year relating to OrbiMed events that would prevent the Company from continuing to and Frostrow. Further details about the matters discussed operate over that period as the Company’s assets are liquid, in Board meetings and the relationship between OrbiMed its commitments are limited and the Company intends to and the Board are set out in the Corporate Governance continue to operate as an investment trust. Report beginning on page 50. Based on this assessment, the Directors have a reasonable Representatives from other service providers are asked to expectation that the Company will be able to continue in attend Board meetings when deemed appropriate. operation and meet its liabilities as they fall due over the Further details are set out overleaf. next five-year period. 36 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED Who? Why? How? Stakeholder The benefits of engagement with the How the board, the portfolio manager and the AIFM group company's stakeholders have engaged with the company’s stakeholders Investors The Portfolio Manager and Frostrow, on behalf Clear communication of the Company’s strategy of the Board, complete a programme of investor and the performance against the Company’s relations throughout the year. In addition, the objective can help the share price trade at a Chairman met with a number of the Company’s narrower discount or a premium to its net asset larger shareholders during the year. value per share which benefits shareholders. An analysis of the Company’s shareholder New shares can be issued to meet demand register is provided to the Directors at each Board without net asset value per share dilution to meeting along with marketing reports from existing shareholders. Increasing the size of the Frostrow. The Board reviews and considers the Company can benefit liquidity as well as spread marketing plans on a regular basis. Reports from costs. the Company’s broker are submitted to the Board Share buy backs are undertaken at the discretion on investor sentiment and industry issues. of the Directors. Key mechanisms of engagement include: • The Annual General Meeting, where the Portfolio Manager provides an update on the Company’s performance and strategy. This is followed by a question and answer section. • The Company’s website which hosts reports, articles and insights, and monthly fact sheets. • One-on-one and group investor meetings. • Should any significant votes be cast against a resolution proposed at the Annual General Meeting the Board will engage with shareholders. • The Board will explain in its announcement of the results of the Annual General Meeting any actions it intends to take to consult shareholders in order to understand the reasons behind significant votes against. • Following any consultation, an update would be published no later than six months after the Annual General Meeting and the Annual Report will detail the impact shareholder feedback has had on any decisions the Board has taken and any actions or resolutions proposed. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 37 BUSINESS REVIEW CONTINUED What? Outcomes and actions What were the key areas of engagement? What actions were taken, including main decisions? Key areas of engagement with investors • The Portfolio Manager and Frostrow meet regularly with shareholders and potential investors to discuss • Ongoing dialogue with shareholders concerning the the Company’s strategy, performance and portfolio. strategy of the Company, performance and the portfolio. TheChairman also met with key shareholders during the year to discuss the Company’s investment strategy including ESG. Frostrow and the Portfolio Manager engage with retail investors through a number of different channels: (i) The Company’s website, which is maintained by Frostrow, contains articles, webinars and quarterly updates; (ii) A distribution list of shareholders (retail and professional) which is maintained by Frostrow and is used to communicate with investors on a regular basis; (iii) The Portfolio Manager provides annual presentations online – (webcasts) and offline (Annual General Meeting), which shareholders are able to attend and participate in; and (iv) Frostrow ensures that the Company is available through a wide range of leading execution only platforms. 38 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED Who? Why? How? Stakeholder group The benefits of engagement with the How the board, the portfolio manager and the AIFM company's stakeholders have engaged with the company’s stakeholders Portfolio Manager Engagement with the Company’s Portfolio The Board met regularly with the Company’s Manager is necessary to evaluate their Portfolio Manager throughout the year. The performance against the Company’s stated Board also receives monthly performance and strategy and to understand any risks or compliance reporting. opportunities this may present. The Board The Portfolio Manager’s attendance at each Board ensures that the Portfolio Manager’s meeting provides the opportunity for the Portfolio environmental, social and governance (“ESG”) Manager and Board to further reinforce their approach is in line with standards elsewhere and mutual understanding of what is expected from the Board’s expectations. both parties. Engagement also helps ensure that the Portfolio The Board encourages the Company’s Portfolio Manager’s fees are closely monitored and remain Manager to engage with companies and in competitive. doing so expects ESG issues to be an important Gaining a deeper understanding of the portfolio consideration. companies and their strategies as well as The Board receives an update on Frostrow’s incorporating consideration of ESG factors into engagement activities by way of a dedicated the investment process assists in understanding report at Board meetings and at other times and mitigating risks of an investment as well as during the year as required. identifying future potential opportunities. Service Providers The Company contracts with third parties for The Board and Frostrow, acting in its capacity other services including: custody, company as AIFM, engage regularly with other service secretarial, accounting & administration and providers both in one-to-one meetings and via registrar. The Company ensures that the regular written reporting. This regular interaction third parties to whom the services have been provides an environment where topics, issues and outsourced complete their roles in line with their business development needs can be dealt with service level agreements thereby supporting the efficiently and collegiately. Company in its success and ensuring compliance The Board together with Frostrow also carried with its obligations. out a review of the service providers’ business continuity plans and additional cyber security provisions. The review of the performance of the Portfolio Manager and Frostrow is a continuous process carried out by the Board and the Management Engagement & Remuneration Committee with a formal evaluation being undertaken annually. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 STRATEGIC REPORT 39 BUSINESS REVIEW CONTINUED What? Outcomes and actions What were the key areas of engagement? What actions were taken, including main decisions? Key areas of engagement with the Portfolio Manager on an ongoing basis are portfolio composition, performance, outlook and business updates. • Regular review of the performance and make up of the • The Board engaged with the Portfolio Management team investment portfolio. to discuss the Company’s overall performance as well as developments in individual portfolio companies and wider macroeconomic developments. • The integration of ESG factors into the Portfolio Manager’s • The Portfolio Manager reports on ESG issues at each Board investment processes. meeting. Key areas of engagement with Service Providers • The Directors have frequent engagement with the • No specific action required as the reviews of the Company’s Company’s other service providers through the annual cycle service providers, have been positive and the Directors of reporting. This engagement is completed with the aim of believe their continued appointment is in the best interests maintaining an effective working relationship and oversight of the Company. of the services provided. Key areas of engagement with the broker • Throughout the year the Board closely monitored the • The Board is cognisant that the trading of the Company‘s Company’s discount/premium to NAV per share and shares at a persistent and significant discount or premium received regular updates from the broker. 2,836,483 shares to the prevailing NAV per share is not in the interests of were bought back during the year, and a further 1,299,037 shareholders. shares were bought back since the year-end to 5 June 2023. Nonew shares were issued during the year, nor following the year-end to 5 June 2023. (Please see the Statement from the Chair on page 5 for further information.) 40 STRATEGIC REPORT WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BUSINESS REVIEW CONTINUED PERFORMANCE AND FUTURE DEVELOPMENTS ALTERNATIVE PERFORMANCE MEASURES A review of the Company’s year, its performance and The Financial Statements (on pages 75 to 95) set out the the outlook for the Company can be found in the Chair’s required statutory reporting measures of the Company’s Statement on pages 4 to 7 and in the Portfolio Manager’s financial performance. In addition, the Board assesses the Review on pages 14 to 23. Company’s performance against a range of criteria which are viewed as particularly relevant for investment trusts, The Company’s overall strategy remains unchanged. which are explained in greater detail in the Strategic Report, LOOKING TO THE FUTURE under the heading ‘Key Performance Indicators’ on page 28. The Board concentrates its attention on the Company’s investment performance and OrbiMed’s investment By order of the Board approach and on factors that may have an effect on this approach. Marketing reports are given to the Board at each board meeting by the AIFM which include how the Company will be promoted and details of planned Frostrow Capital LLP communications with existing and potential shareholders. Company Secretary The Board is regularly updated by the AIFM on wider 6 June 2023 investment trust industry issues and discussions are held at each Board meeting concerning the Company’s future development and strategy. A review of the Company’s year, its performance since the year-end and the outlook for the Company can be found in the Chair’s Statement on pages 4 to 7 and in the Portfolio Manager’s Review on pages 14 to 23. It is expected that the Company’s Strategy will remain unchanged in the coming year. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 41 ## BOARD OF DIRECTORS DOUG MCCUTCHEON SARAH BATES SVEN BORHO Independent Non-Executive Chair Independent Non-Executive Director Non-Executive Director Joined the Board in 2012 and became Chair Joined the Board in 2013 Joined the Board in 2018 on 6 July 2022 Annual Remuneration Year Ended 2023: Annual Remuneration Year Ended 2023: Nil Annual Remuneration Year Ended 2023: £36,007 Committee Membership £47,894 Committee Membership Sven is not a member of any of the Committee Membership Sarah is Chair of the Nominations Company’s Committees. Doug attends the Audit & Risk Committee Committee and is the Senior Independent Shareholding in the Company by invitation and is a member of Director. Sarah is also a member of the 10,000 the Nominations and Management Audit & Risk and Management Engagement Engagement & Remuneration Committees. & Remuneration Committees. Skills and Experience Sven H. Borho, CFA, is a founder and Shareholding in the Company Shareholding in the Company Managing Partner of OrbiMed. Sven heads 20,000 7,200 the public equity team and he is the portfolio | Skills and Experience | Skills and Experience | manager for OrbiMed’s public equity and | | --- | --- | --- | | Doug is the President of Longview Asset | Sarah is a past Chair of the Association | hedge funds. He has been a portfolio | | Management Ltd., an independent | of Investment Companies and has been | manager for the firm’s funds since 1993 and | | investment firm that manages the capital of | involved in the UK savings and investment | has played an integral role in the growth of | | families, charities and endowments. Prior | industry in different roles for over 35 years. | OrbiMed’s asset management activities. | to this, Doug was an investment banker Sarah is a fellow of CFA UK. He started his career in 1991 when he for 25 years at UBS and its predecessor joined OrbiMed’s predecessor firm as firm, S.G. Warburg, where, most recently, Other Appointments a Senior Analyst covering European he was the head of Healthcare Investment Sarah is a non-executive Director and the pharmaceutical firms and biotechnology Banking for Europe, the Middle East, Africa Senior Independent Director of Alliance companies worldwide. Sven studied and Asia- Pacific. Doug is involved in Trust PLC. Sarah is also Chair of The business administration at Bayreuth philanthropic organisations with a focus John Lewis Partnership Pensions Trust, University in Germany and received a M.Sc. on healthcare and education. He attended of BBC Pension Investments Limited (Econs.), Accounting and Finance, from The Queen’s University, Canada. and of the Universities Superannuation London School of Economics. Fund Investment Management Limited. Other Appointments Sarah is a member of the BBC Pension Other Appointments Doug is a non-executive Director of Scheme Investment Committee and is an Sven is a Managing Partner of OrbiMed and Labrador Iron Ore Royalty Corporation listed Ambassador for Chapter Zero, a mentor does not have any other appointments. on the Toronto Stock Exchange. for Chairmen Mentors International and a Standing for re-election: Yes Standing for re-election: Yes senior adviser to Lansons PR. Standing for re-election: No 42 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 BOARD OF DIRECTORS CONTINUED HUMPHREY VAN DER KLUGT, FCA TIM LIVETT | Independent Non-Executive Director | Independent Non-Executive Director | | --- | --- | | Joined the Board in 2016 | Joined the Board on 1 September 2022 | | Annual Remuneration Year Ended 2023: £40,503* | Annual Remuneration Year Ended 2023: £20,124* | | Committee Membership | Committee Membership | | A Chartered Accountant, Humphrey is a member of the Audit | A qualified accountant, Tim is Chair of the Audit & Risk | | & Risk, the Management Engagement & Remuneration and the | Committee and is a member of the Management Engagement & | | Nominations Committees. | Remuneration and Nominations Committees. | | Shareholding in the Company | Shareholding in the Company | | 3,000 | 2,175 | | Skills and Experience | Skills and Experience | | Humphrey was formerly Chairman of Fidelity European Values | Tim was formerly Chief Financial Officer at Wellcome Trust, the | | PLC and a Director of Murray Income Trust PLC, BlackRock | global charitable foundation focused on health research, and at | | Commodities Income Investment Trust plc and J P Morgan | Virgin Atlantic Limited. He has an extensive and broad financial | | Claverhouse Investment Trust plc. Prior to this Humphrey was a | background. Tim studied chemistry at Oxford University. | fund manager and Director of Schroder Investment Management Other Appointments Limited and in a 22 year career was a member of their Group Tim is the Chief Financial Officer at Caledonia Investments PLC. Investment and Asset Allocation Committees. Prior to joining He is also a non-executive Director of Premier Marinas Group Schroders, he was with Peat Marwick Mitchell & Co (now KPMG) and a member of the Valuation and Audit & Risk Committees at where he qualified as a Chartered Accountant in 1979. OxfordUniversity Endowment Management. Other Appointments Standing for election: Yes Humphrey is a non-executive Director of Allianz Technology Trust PLC. *Tim Livett succeeded Humphrey van der Klugt as Chair of the Audit & Risk Committee on 1 March 2023. Standing for re-election: Yes WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 43 BOARD OF DIRECTORS CONTINUED JO PARFREY DR BINA RAWAL | | | Independent Non-Executive Director | Independent Non-Executive Director | | | --- | --- | --- | --- | --- | | | | Joined the Board on 1 September 2022 | Joined the Board in 2019 | | | Parfrey_Jo-0154 | Parfrey_Jo-0155 | | Annual Remuneration Year Ended 2023: £33,573 | Parfrey_Jo-0156 | Annual Remuneration Year Ended 2023: £19,584 Committee Membership Committee Membership Jo is Chair of the Management Engagement & Remuneration Dr Rawal is a member of the Audit & Risk, Management Committee and is a member of the Audit & Risk and Engagement & Remuneration and Nominations Committees. Nominations Committees Shareholding in the Company Shareholding in the Company 2,606 2,000 Skills and Experience Skills and Experience Dr Rawal, a physician scientist with 25 years’ experience in Jo was formerly a non-executive Director of Guy’s and St Thomas’ Research and Development, has held senior executive roles Enterprises Limited and of LGV Capital Partners Limited. A in drug development and scientific evaluation in four global Chartered Accountant, Jo has extensive experience of both global pharmaceutical companies. She has also worked in senior roles investment trusts and healthcare, including life sciences. Jo studied with two medical research funding organisations: Wellcome Trust chemistry at OxfordUniversity. and Cancer Research UK. Other Appointments Other Appointments Jo is non-executive Director and Chair of the Audit Committee of Dr Rawal is a non-executive Director of the Central London Henderson International Income Trust plc, and a non-executive Community Healthcare NHS Trust and of Vann Limited. Dr Rawal Director of Octopus AIM VCT. She is also a non-executive Director is also a Trustee on the Board of the Social Mobility Foundation. and Chair of the Audit Committee of Start Codon Limited and IESO Standing for re-election: Yes Digital Health Limited and the non-executive Chair of Babraham Research Campus Limited. Standing for election: Yes ## Parfrey_Jo-0159 Parfrey_Jo-0161 Parfrey_Jo-0162 ## Parfrey_Jo-0163 Parfrey_Jo-0165 Parfrey_Jo-0167 ## Parfrey_Jo-0168 Parfrey_Jo-0169 Parfrey_Jo-0173 44 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # REPORT OF THE DIRECTORS The Directors present their Annual Report on the affairs of the Company together with the audited financial statements and the Independent Auditors' Report for the year ended 31 March 2023. ## SIGNIFICANT AGREEMENTS Details of the services provided under these agreements are included in the Strategic Report on pages 28 and 29. ### Alternative investment fund management agreement Frostrow is the designated AIFM for the Company on the terms and subject to the conditions of the alternative investment fund management agreement between the Company and Frostrow (the "AIFM Agreement"). The notice period on the AIFM Agreement with Frostrow is 12 months, termination can be initiated by either party. Details of the fee payable to Frostrow can be found on page 28. ### Portfolio management agreement Under the AIFM Agreement Frostrow has delegated the portfolio management function to OrbiMed, under a portfolio management agreement between it, the Company and Frostrow (the "Portfolio Management Agreement"). OrbiMed receives a periodic fee equal to 0.65% p.a. of the Company's NAV and a performance fee as set out in the Performance Fee section below. Its agreement with the Company may be terminated by either party giving notice of not less than 12 months. ### Performance fee Dependent on the level of long-term outperformance of the Company, OrbiMed is entitled to a performance fee. The performance fee is calculated by reference to the amount by which the Company's NAV performance has outperformed the Benchmark (see inside front cover for details of the Benchmark). The fee is calculated quarterly by comparing the cumulative performance of the Company's NAV with the cumulative performance of the Benchmark since the launch of the Company in 1995. The performance fee amounts to 15.0% of any outperformance over the Benchmark. Provision is made within the daily NAV per share calculation as required and in accordance with generally accepted accounting standards. In order to ensure that only sustained outperformance is rewarded, at each quarterly calculation date any performance fee payable is based on the lower of: - (i) The cumulative outperformance of the portfolio over the Benchmark as at the quarter end date; and - (ii) The cumulative outperformance of the portfolio over the Benchmark as at the corresponding quarter end date in the previous year less any cumulative outperformance on which a performance fee has already been paid. The effect of this is that outperformance has to be maintained for a twelve month period before it is paid. In 2022, due to underperformance against the Benchmark, a reversal of prior period performance fee provisions totalling £18.9 million occurred. As at 31 March 2023 no performance fees were accrued or payable (31 March 2022: ENIL). ### Depositary agreement The Company appointed J.P. Morgan Europe Limited (the "Depositary") as its Depositary in accordance with the AIFMD on the terms and subject to the conditions of the Depositary agreement between the Company, Frostrow and the Depositary (the "Depositary Agreement"). Under the terms of the Depositary Agreement the Company has agreed to pay the Depositary a fee calculated at 1.75bp on net assets up to £150 million, 1.50 bps on net assets between £150 million and £300 million, 1.00bps on net assets between £300 million and £500 million and 0.50bps on net assets above £500 million. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 45 REPORT OF THE DIRECTORS CONTINUED The Depositary has delegated the custody and safekeeping Prime brokerage agreement of the Company’s assets to J.P. Morgan Securities LLC (the The Company appointed J.P. Morgan Securities LLC on “Custodian and Prime Broker”) pursuant to a delegation the terms and subject to the conditions of the prime agreement between the Company, Frostrow, the Depositary and brokerage agreement between the Company, Frostrow the Custodian and Prime Broker (the “Delegation Agreement”). and the Depositary (the “Prime Brokerage Agreement”). TheCustodian and Prime Broker receives interest on the The Delegation Agreement transfers the Depositary’s drawn overdraft as detailed in note 12 on page 88. liability for the loss of the Company’s financial instruments held in custody by the Custodian and Prime Broker to the The Custodian and Prime Broker is a registered Custodian and Prime Broker as permitted by the AIFMD. broker-dealer and is regulated by the United States The Company has consented to the transfer and reuse Securities and Exchange Commission. of its assets by the Custodian and Prime Broker (known RESULTS AND DIVIDENDS as “rehypothecation”) in accordance with the terms of an institutional account agreement between the Company, the The results attributable to shareholders for the year and the Custodian and Prime Broker and certain other J.P. Morgan transfer to reserves are shown on pages 75 and 76. Details entities (as defined therein). See page 29 for further details. of the Company’s dividend record can be found on page 3. Substantial interests in share capital The Company was aware of the following substantial interests in the voting rights of the Company as at 30 April 2023, the latest practicable date before publication of the Annual Report: 30 April 2023 31 March 2023 | | | | % of issued | | | | % of issued | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Number of | | | share | Number of | | | share | | Shareholder | | shares | | capital | | shares | | capital | | Rathbone Brothers plc | 5,337,704 8.6 5,397,419 8.6 | | | | | | | | | Investec Wealth & Investment Limited | 4,813,077 7.8 4,834,049 7.7 | | | | | | | | | Interactive Investor | 4,022,116 6.5 4,043,897 6.5 | | | | | | | | | Hargreaves Lansdown plc | 3,629,237 5.9 3,664,664 5.8 | | | | | | | | | Forsyth Barr | 3,123,010 5.0 3,236,119 5.2 | | | | | | | | | Charles Stanley & Co Limited | 2,968,048 4.8 2,969,340 4.7 | | | | | | | | | Quilter Cheviot Investment Management | 2,224,071 3.6 2,233,656 3.6 | | | | | | | | | Brewin Dolphin | 2,178,985 3.5 2,188,383 3.5 | | | | | | | | | Craigs Investment Partners | 2,135,474 3.5 2,136,181 3.4 | | | | | | | | | Embark Investment Services | 1,978,362 3.2 2,011,799 3.2 | | | | | | | | | Evelyn Partners | 1,970,589 3.2 1,953,965 3.1 | | | | | | | | As at 31 March 2023 the Company had 62,620,763 shares in issue (excluding 2,438,015 shares held in treasury). As at 30April 2023 there were 61,933,349 shares in issue (excluding 3,125,429 shares held in treasury). 46 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 # REPORT OF THE DIRECTORS CONTINUED ## CAPITAL STRUCTURE The Company's capital structure comprises solely ordinary shares. During the year, and to 5 June 2023, no new shares were issued. A total of 2,836,483 shares were repurchased during the year at an average discount of 8.8% to the prevailing cum income NAV per share. These shares are held in treasury. Following the year-end, to 5 June 2023, the latest practicable date prior to the publication of this Annual Report, a further 1,299,037 shares were repurchased at an average discount of 10.0% to the cum income NAV per share. These shares are also held in treasury. As at 5 June 2023 3,737,052 shares were held in treasury (2022: 80,509). ### Voting rights in the Company's shares Details of the voting rights in the Company's shares at the date of this Annual Report are given in note 9 to the Notice of Annual General Meeting on page 104. Each shareholder is entitled to one vote on a show of hands and, on a poll, one vote for every share held. ### Share split The price of the Company's ordinary shares of 25p each ("Ordinary Shares") has increased substantially over the last 10 years and as at 5 June 2023 (being the latest practicable date prior to publication of this document), the closing mid market share price was 3,275.0p. To assist monthly savers and those who reinvest their dividends or are looking to invest smaller amounts the Directors believe that it is appropriate to propose the sub-division of each Ordinary Share into 10 new ordinary shares of 2.5p each ("New Ordinary Shares"). The Directors believe that the sub-division (the "Share Split") may also improve the liquidity in and marketability of the Company's shares which would benefit all shareholders. Following the Share Split, each shareholder will hold 10 New Ordinary Shares for each Ordinary Share that they held immediately prior to the Share Split. Whilst the Share Split will increase the number of ordinary shares the Company has in issue, upon the Share Split becoming effective the net asset value, share price and dividend per share can be expected to become one-tenth of their respective values immediately preceding the Share Split. A holding of New Ordinary Shares following the Share Split will represent the same proportion of the issued ordinary share capital of the Company as the corresponding holding of Ordinary Shares immediately prior to the Share Split. The Share Split will not affect, therefore, the overall value of a shareholder's holding in the Company. By way of example, taking the net asset value (including current year revenue) and mid market share price as at 5 June 2023 of 3,646.3p and 3,275.0p respectively per Ordinary Share, if the Share Split had become effective as at that date, each holder of one Ordinary Share would receive 10 New Ordinary Shares with an aggregate net asset value and share price of 364.6p and 327.5p (figures rounded to one decimal place), respectively immediately following the Share Split. The New Ordinary Shares will rank pari passu with each other and will carry the same rights and be subject to the same restrictions as the Ordinary Shares, including the same rights to participate in dividends paid by the Company. The ex-dividend date and the payment date for the final dividend payable per share in 2023 are before the date of the Share Split and so the dividend payable on 26 July 2023 will not be affected. In future years, dividends per share will be one-tenth of the level that they would otherwise have been but a shareholder who neither buys nor sell shares will continue to receive the same amount in dividends as they would otherwise receive. Communication preferences and mandates and other instructions for the payment of dividends via CREST or in paper form will, unless and until revised, continue to apply to the New Ordinary Shares. The Share Split will not itself give rise to any liability to UK income tax (or corporation tax on income) for shareholders. For the purposes of UK capital gains tax and corporation tax on chargeable gains, the receipt of the New Ordinary Shares will be treated as the same asset as the shareholder's holding of Ordinary Shares and as having been acquired at the same time, and for the same consideration, as the shareholder's holding of Ordinary Shares. The Share Split requires the approval of shareholders and, accordingly, Resolution 13 at this year's AGM seeks such approval. The Share Split is conditional on the New Ordinary Shares being admitted to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange's main market for listed securities. Application for such admissions will be made and, if they are accepted, it is proposed that the last day of dealings in the Ordinary Shares will be 26 July 2023 (with the record date for the Share Split being 6.00 p.m. on that date) and that dealings in the New Ordinary Shares will commence on 27 July 2023. If Resolution 13 is passed, the Share Split will become effective on admission of the New Ordinary shares to the Official List, which is expected to be at 8.00 a.m. on 27 July 2023. The WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 47 ## REPORT OF THE DIRECTORS CONTINUED aggregate nominal value of the Company's issued share capital as at 5 June 2023 was £16,264,694.50 and comprised 61,321,726 ordinary shares of 25p each (a further 3,737,052 ordinary shares were held in treasury). If the Share Split is applied to the issued share capital as at 27 July 2023, the total aggregate nominal value of the share capital will remain at £16,264,694.50 but will comprise 613,217,260 ordinary shares of 2.5p each in issue and a further 37,370,520 ordinary shares in treasury. The New Ordinary Shares may be held in uncertificated or certificated form. Following the Share Split becoming effective, share certificates in respect of the Ordinary shares will cease to be valid and will be cancelled. New certificates in respect of the New Ordinary Shares will be issued to those shareholders who hold their Ordinary Shares in certificated form and are expected to be dispatched not later than 4 August 2023. No temporary documents of title will be issued. Transfers of New Ordinary Shares between 27 July 2023 and the dispatch of new certificates will be certified against the Company's register of members held by the Company's Registrars. It is expected that the ISIN (GB0003385308) of the Ordinary Shares will be disabled in CREST at the close of business on 26 July 2023 and the New Ordinary Shares will be credited to CREST accounts on 27 July 2023. ### DIRECTORS' & OFFICERS' LIABILITY INSURANCE COVER Directors' & officers' liability insurance cover was maintained by the Company during the year ended 31 March 2023 and to the date of this report. It is intended that this policy will continue for the year ending 31 March 2024 and subsequent years. ### DIRECTORS' INDEMNITIES During the year under review and to the date of this report, indemnities were in force between the Company and each of its Directors under which the Company has agreed to indemnify each Director, to the extent permitted by law, in respect of certain liabilities incurred as a result of carrying out his or her role as a Director of the Company. The Directors are also indemnified against the costs of defending any criminal or civil proceedings or any claim by the Company or a regulator as they are incurred provided that where the defence is unsuccessful the Director must repay those defence costs to the Company. The indemnities are qualifying third party indemnity provisions for the purposes of the Companies Act 2006. A copy of each deed of indemnity is available for inspection at the Company's registered office during normal business hours and will be available for inspection at the Annual General Meeting. Please refer to the Chairman's Statement on pages 4 to 7 for details of this year's Annual General Meeting arrangements. ### POLITICAL AND CHARITABLE DONATIONS The Company has not in the past and does not intend in the future to make political or charitable donations. ### MODERN SLAVERY ACT 2015 The Company does not provide goods or services in the normal course of business, and as a financial investment vehicle does not have customers. The Directors do not therefore consider that the Company is required to make a statement under the Modern Slavery Act 2015 in relation to slavery or human trafficking. ### ANTI-BRIBERY AND CORRUPTION POLICY The Board has adopted a zero tolerance approach to instances of bribery and corruption. Accordingly it expressly prohibits any Director or associated persons when acting on behalf of the Company, from accepting, soliciting, paying, offering or promising to pay or authorise any payment, public or private in the UK or abroad to secure any improper benefit for themselves or for the Company. The Board ensures that its service providers apply the same standards in their activities for the Company. A copy of the Company's Anti Bribery and Corruption Policy can be found on its website at www.worldwidewh.com. The policy is reviewed regularly by the Audit & Risk Committee. ### CRIMINAL FINANCES ACT 2017 The Company has a commitment to zero tolerance towards the criminal facilitation of tax evasion. ### GLOBAL GREENHOUSE GAS EMISSIONS The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Reports and Directors' Reports) Regulations 2013 or the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, including those within the Company's underlying investment portfolio. Consequently, the Company consumed less than 40,000 kWh of energy during the year in respect of which the Report of the Directors is prepared and 48 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 REPORT OF THE DIRECTORS CONTINUED therefore is exempt from the disclosures required under the that, accordingly, it is appropriate to continue to adopt the Streamlined Energy and Carbon Reporting criteria. going concern basis in preparing the financial statements. COMMON REPORTING STANDARD (‘CRS’) ARTICLES OF ASSOCIATION CRS is a global standard for the automatic exchange of Amendments of the Company’s Articles of Association information commissioned by the Organisation for Economic requires a special resolution to be passed by shareholders. Cooperation and Development and incorporated into UK law REQUIREMENTS OF THE LISTING RULES by the International Tax Compliance Regulations 2015. CRS requires the Company to provide certain additional details Listing Rule 9.8.4 requires the Company to include certain to HMRC in relation to certain shareholders. The reporting information in a single identifiable section of the Annual obligation began in 2016 and is an annual requirement. The Report or a cross reference table indicating where the Registrars, Link Group, have been engaged to collate such information is set out. The Directors confirm that there are information and file the reports with HMRC on behalf of the no disclosures to be made under Listing Rule 9.8.4. Company. UK SANCTIONS CORPORATE GOVERNANCE The Board has made due diligence enquiries of the service The Corporate Governance Report is set out on providers that process the Company’s shareholder data, to pages50 to 57. ensure the Company’s compliance with the UK sanctions regime. The relevant service providers have confirmed that GOING CONCERN they check the Company’s shareholder data against the UK The financial statements have been prepared on a going sanctions list on a daily basis. At the date of this report, no concern basis. The Directors consider this is the appropriate sanctioned individuals had been identified on the Company’s basis as the Company has adequate resources to continue shareholder register. The Board notes that stockbrokers in operational existence for the foreseeable future, and execution-only platforms also carry out their own being taken as 12 months after approval of the financial duediligence. statements. The Company’s shareholders are asked every By order of the Board five years to vote for the continuation of the Company, this will next be put to shareholders at the Annual General Meeting to be held in 2024. The content of the Company’s Frostrow Capital LLP portfolio, trading activity, the Company’s cash balances and Company Secretary revenue forecasts, and the trends and factors likely to affect the Company’s performance are reviewed and discussed at 6 June 2023 each Board meeting. The Board has considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due, including stress and liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity, on the Company’s net asset value, its cash flows and its expenses. Further information is provided in the Audit & Risk Committee Report beginning on page 58. Based on the information available to the Directors at the date of this report, including the results of these stress tests, the conclusions drawn in the Viability Statement on page34, the Company’s cash balances, and the liquidity of the Company’s listed investments, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months and WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 49 ## STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors are responsible for preparing the Annual have occurred to the financial statements since they Report and the Financial Statements in accordance with were initially presented on these websites. Visitors to the applicable law and regulations. In preparing these financial websites need to be aware that legislation in the United statements, the Directors are required to: Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in their • select suitable accounting policies and apply them jurisdiction. consistently; DISCLOSURE OF INFORMATION TO THE • make judgements and estimates that are reasonable AUDITORS and prudent; So far as the Directors are aware, there is no relevant • follow applicable UK accounting standards comprising information of which the Auditors are unaware. The FRS 102; Directors have taken all steps they ought to have taken to • prepare the financial statements on a going concern make themselves aware of any relevant audit information basis unless it is inappropriate to presume that the and to establish that the Auditors are aware of such Company will continue in business; and information. • prepare a director’s report, a strategic report and a RESPONSIBILITY STATEMENT OF THE director’s remuneration report which comply with the DIRECTORS IN RESPECT OF THE ANNUAL requirements of the Companies Act 2006. FINANCIAL REPORT The Directors are responsible for keeping adequate The Directors confirm to the best of their knowledge that: accounting records that are sufficient to show and explain • the Annual Report and the Financial Statements the Company’s transactions and disclose with reasonable have been prepared in accordance with applicable accuracy at any time the financial position of the Company accounting standards, give a true and fair view of the and enable them to ensure that the financial statements assets, liabilities, financial position and the return for the and the Directors’ Remuneration Report comply with year ended 31 March 2023; the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for • the Chairman’s Statement, Strategic Report and the taking reasonable steps for the prevention and detection of Report of the Directors include a fair review of the fraud and other irregularities. information required by 4.1.8R to 4.1.11R of the FCA’s Disclosure Guidance and Transparency Rules; and The Directors are responsible for ensuring that the Report of the Directors and other information included in the • the Annual Report and the Financial Statements, Annual Report is prepared in accordance with company includes a fair review of the development and law in the United Kingdom. They are also responsible for performance of the Company and of its financial ensuring that the Annual Report includes information position, together with a description of the principal required by the Listing Rules of the FCA. risks and uncertainties it faces. Also, that taken as a whole they are fair, balanced and understandable The Directors are also responsible for ensuring that the and provide the information necessary to assess the Annual Report and the Financial Statements are made Company’s performance, business model and strategy. available on a website. The Annual Report and the Financial Statements are published on the Company’s website at On behalf of the Board www.worldwidewh.com and via Frostrow’s website at www.frostrow.com. The maintenance and integrity of these websites, so far as it relates to the Company, is the responsibility of Frostrow. The work carried out by the Doug McCutcheon Auditors does not involve consideration of the maintenance Chair and integrity of these websites and, accordingly, the 6 June 2023 Auditors accept no responsibility for any changes that 50 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## CORPORATE GOVERNANCE THE BOARD AND COMMITTEES Responsibility for effective governance lies with the Board. The governance framework of the Company reflects the fact that as an investment company it has no employees and outsources portfolio management to OrbiMed and risk management, company management, company secretarial, administrative and marketing services to Frostrow. THE BOARD Chair – Doug McCutcheon Senior Independent Director – Sarah Bates Five additional non-executive Directors, all considered independent, except for Sven Borho (see page 41 for further information). Key responsibilities: • to provide leadership and set strategy, values and standards within a framework of prudent effective controls which enable risk to be assessed and managed; • to ensure that a robust corporate governance framework is implemented; and • to challenge constructively and scrutinise performance of all outsourced activities. Management Engagement & Audit & Risk Committee Nominations Committee Remuneration Committee Chair Chair Chair Jo Parfrey Tim Livett* Sarah Bates All Independent Directors All Independent Directors All Independent Directors (excluding the Chair, Key responsibilities: Key responsibilities: Doug McCutcheon) • to review regularly the • to review regularly the Board’s contracts, the performance and Key responsibilities: structure and composition; and remuneration of the Company’s • to review the Company’s financial • to make recommendations principal service providers; reports; for any changes or new • to set the Directors’ • to oversee the risk and control appointments. Remuneration Policy; and environment and financial reporting; and • to review the terms and conditions of the Directors’ • to have primary responsibility appointments. for the relationship with the Company’s external Auditors, to review their independence and performance, and to determine their remuneration. * The Board believes that Tim Livett has the necessary recent and relevant financial experience to Chair the Company’s Audit & Risk Committee. Copies of the full terms of reference, which clearly define the responsibilities of each Committee, can be obtained from the Company Secretary and can be found at the Company’s website at www.worldwidewh.com. Copies will also be available for inspection on the day of the Annual General Meeting. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 51 CORPORATE GOVERNANCE CONTINUED CORPORATE GOVERNANCE STATEMENT providers. No member of the Board is a Director of another investment company managed by OrbiMed, nor has any The Board is committed to maintaining and demonstrating Board member (with the exception of Sven Borho) been high standards of corporate governance. The Board has an employee of OrbiMed or any of the Company’s service considered the principles and recommendations of the AIC providers. Further details regarding the Directors can be Code of Corporate Governance published in February 2019 found on pages 41 to 43. (‘AIC Code’). The AIC Code addresses all the principles set out in the UK Corporate Governance Code (the ‘UK Code’), The Board carefully considers the various guidelines for as well as setting out additional provisions on issues that determining the independence of non-executive Directors, are of specific relevance to the Company. placing particular weight on the view that independence is evidenced by an individual being independent of mind, The Financial Reporting Council has confirmed that by character and judgement. All Directors retire at the following the AIC Code boards of investment companies AGM each year and, if appropriate, seek election or re- will meet their obligations in relation to the UK Code and election. Each Director has signed a letter of appointment paragraph 9.8.6 of the UK Listing Rules. to formalise the terms of their engagement as a The Board considers that reporting in accordance with the non-executive Director, copies of which are available on principles and recommendations of the AIC Code (which request at Frostrow’s offices. has been endorsed by the Financial Reporting Council) provides more relevant and comprehensive information BOARD CULTURE to shareholders. By reporting against the AIC Code, the The Board aims to consider and discuss differences Company meets its obligations under the UK Code (and of opinion, unique vantage points and to exploit fully associated disclosure requirements under paragraph areas of expertise. The Chair encourages open debate 9.8.6 of the Listing Rules) and as such does not need to to foster a supportive and co-operative approach for all report further on issues contained in the UK Code which participants. Strategic decisions are discussed openly and are irrelevant to the Company as an externally-managed constructively. The Board aims to be open and transparent investment company, including the provisions relating with shareholders and other stakeholders and for the to the role of the chief executive, executive directors’ Company to conduct itself responsibly, ethically and fairly remuneration and the internal audit function. in its relationships with service providers. The Company has complied with the principles and The Board has gained assurance on whistleblowing recommendations of the AIC Code. procedures at the Company’s principal service providers to ensure employees at those companies are supported in The AIC Code can be viewed at www.theaic.co.uk and the speaking up and raising concerns. No concerns relating to UK Code can be viewed on the Financial Reporting Council the Company were raised during the year. website at www.frc.org.uk. The Corporate Governance Report on pages 50 to 57, forms part of the Report of the Shareholder relations Directors on pages 44 to 48. The Company has appointed Frostrow to provide marketing and investor relations services, in the belief that a well BOARD LEADERSHIP AND PURPOSE marketed investment company is more likely to grow over Purpose and strategy time, have a more diverse, stable list of shareholders and The purpose and strategy of the Company are described in its shares will trade at close to net asset value per share the Strategic Report. over the long run. Frostrow actively promotes the Company as set out on pages 33 and 34. THE BOARD The Board is responsible for the effective Stewardship of Shareholder communications the Company’s affairs. Strategy issues and all operational The Board, the AIFM and the Portfolio Manager consider matters of a material nature are considered at its meetings. maintaining good communications with shareholders and engaging with larger shareholders through meetings The Board consists of seven non-executive Directors, and presentations a key priority. Shareholders are being each of whom, with the exception of Sven Borho, is informed by the publication of annual and half-year independent of OrbiMed and the Company’s other service 52 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 CORPORATE GOVERNANCE CONTINUED reports which include financial statements. These reports investment or in any one investment, and the Company’s are supplemented by the daily release of the net asset share issuance and share buyback policies. value per share to the London Stock Exchange and the The Board, at its regular meetings, undertakes reviews of publication of monthly fact sheets. All this information, key investment and financial data, revenue projections and including interviews with the Portfolio Manager, is available expenses, analyses of asset allocation, transactions and on the Company’s website at www.worldwidewh.com. performance comparisons, share price and net asset value The Board monitors the share register of the Company; performance, marketing and shareholder communication it also reviews correspondence from shareholders at strategies, the risks associated with pursuing the each meeting and maintains regular contact with major investment strategy, peer group information and industry shareholders. Shareholders who wish to raise matters with issues. a Director may do so by writing to them at the registered The Chair is responsible for ensuring that the Board office of the Company. receives accurate, timely and clear information. The Board supports the principle that the Annual General Representatives of OrbiMed and Frostrow Capital LLP Meeting be used to communicate with private investors, in report regularly to the Board on issues affecting the particular. Shareholders are encouraged to attend the AGM, Company. where they are given the opportunity to question the Chair, The Board is responsible for strategy and has established the Board and representatives of the Portfolio Manager. In an annual programme of agenda items under which it addition, the Portfolio Manager makes a presentation to reviews the objectives and strategy for the Company at shareholders covering the investment performance and each meeting. strategy of the Company at the AGM. Voting at the AGM is conducted on a poll and details of the proxy votes received CONFLICTS OF INTEREST in respect of each resolution will be made available on the Company Directors have a statutory obligation to avoid a Company’s website. situation in which they (and connected persons) have, or can have, a direct or indirect interest that conflicts, or may Significant holdings and voting rights possibly conflict, with the interests of the Company. The Details of the shareholders with substantial interests in the Board has in place procedures for managing any actual or Company’s shares, the Directors’ authorities to issue and potential conflicts of interest. No conflicts of interest arose repurchase the Company’s shares, and the voting rights of during the year under review. the shares are set out in the Directors’ Report. BOARD FOCUS AND RESPONSIBILITIES BOARD MEETINGS With the day to day management of the Company The Board meets formally at least four times each outsourced to service providers the Board’s primary year. A representative of OrbiMed attends all meetings; focus at each Board meeting is reviewing the investment representatives from Frostrow are also in attendance at performance and associated matters, such as, inter alia, each Board meeting. The Independent Directors also meet future outlook and strategy, gearing, asset allocation, before each formal Board meeting without representatives investor relations, marketing, and industry issues. from Frostrow and OrbiMed being present. The Chair encourages open debate to foster a supportive and In line with its primary focus, the Board retains co-operative approach for all participants. responsibility for all the key elements of the Company’s strategy and business model, including: The Board has agreed a schedule of matters specifically reserved for decision by the Board. This includes • the Investment Objective, Policy and Benchmark, establishing the investment objectives, strategy and incorporating the investment and derivative guidelines the Benchmark, the permitted types or categories of and limits, and changes to these; investments, the markets in which transactions may • the maximum level of gearing and leverage the be undertaken, the amount or proportion of the assets Company may employ; that may be invested in any geography or category of • a review of performance against the Company’s KPIs; WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 53 CORPORATE GOVERNANCE CONTINUED • a review of the performance and continuing independent after appointment, while being consistent with appointment of service providers; and the need for regular refreshment and diversity. • the maintenance of an effective system of oversight, The Board has been refreshing its membership and risk management and corporate governance. will continue to do so over time. It may be the case that Directors serve for longer than nine years to ensure that The Investment Objective, Policy, and Benchmark, including any changes made are done so in an orderly and structured the related limits and guidelines, are set out on pages 8 manner. All Directors seek election or re-election every year. and 9, along with details of the gearing and leverage levels Further details regarding the refreshment process can be allowed. found in the Chair’s Statement on pages 4 to 7. Details of the principal KPIs and further information on the The Board subscribes to the view that long serving principal service providers, their performance and continuing Directors should not necessarily be prevented from forming appointment, along with details of the principal risks, and part of an independent majority. The Board considers that how they are managed, are set out in the Strategic Report. a Director’s tenure does not necessarily reduce his or her The Corporate Governance Report, on pages 50 to 57, ability to act independently and will continue to assess includes a statement of compliance with corporate each Director’s independence annually, through a formal governance codes and best practice, and the Business performance evaluation. Please see page 55 for further Review (pages 26 to 41) includes details of the internal information. control and risk management framework within which the Appointments to the board Board operates. The Nominations Committee considers annually the skills BOARD COMPOSITION AND SUCCESSION possessed by the Board and identifies any skill shortages Succession planning to be filled by new Directors. The Board regularly considers its structure and recognises The rules governing the appointment and replacement the need for progressive refreshment. (Please see the of Directors are set out in the Company’s articles Statement from the Chair on page 6 for further information). of association and the aforementioned succession planning policy. Where the Board appoints a new Director The Board has an approved succession planning policy to during the year, that Director will stand for election by ensure that (i) there is a formal, rigorous and transparent shareholders at the next AGM. Subject to there being procedure for the appointment of new Directors; and (ii) the no conflict of interest, all Directors are entitled to vote Board is comprised of members who collectively display on candidates for the appointment of new Directors the necessary balance of professional skills, experience, and on the recommendation for shareholders’ approval length of service and industry/Company knowledge. for the Directors seeking re-election at the AGM. When During the year, the Board reviewed the policy on Directors’ considering new appointments, the Board endeavours to tenure and considered the overall length of service of the ensure that it has the capabilities required to be effective Board as a whole. and oversee the Company’s strategic priorities. This will include an appropriate range, balance and diversity of skills, Policy on the tenure of the chair and other experience and knowledge. The Company is committed to non-executive directors ensuring that any vacancies arising are filled by the most The tenure of each non-executive Director, including the qualified candidates. Chair, is not ordinarily expected to exceed nine years. However, the Board has agreed that the tenure of the Diversity policy Chair may be extended for an agreed time provided such The Board supports the principle of Boardroom diversity, an extension is conducive to the Board’s overall orderly of which gender and ethnicity are two important aspects. succession. The Board believes that this more flexible The Company’s policy is that the Board and its committees approach to the tenure of the Chair is appropriate in the should be comprised of directors with a diverse range of context of the regulatory rules that apply to investment skills, knowledge and experience and that appointments companies, which ensure that the Chair remains 54 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 CORPORATE GOVERNANCE CONTINUED should be made on merit against objective criteria, The Board will continue to give due regard to the new including diversity in its broadest sense. diversity targets in the Listing Rules as follows: The objective of the policy is to have a broad range of a) At least 40% of individuals on the board are women; approaches, backgrounds, skills, knowledge and experience b) At least one of the senior board positions is held by a represented on the Board. To this end, achieving a diversity woman; and of perspectives and backgrounds on the Board will be a key consideration in any director search process. The Board c) At least one individual on the board is from a minority encourages any recruitment agencies it engages to find a ethnic background. diverse range of candidates that meet the criteria agreed for In accordance with the Listing Rules, the Board has each appointment and, from the shortlist, aims to ensure provided the following information in relation to its diversity that a diverse range of candidates is brought forward for as at the year end. interview. Number of | | Number of | | | | | | senior | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Board | | Percentage of | | positions on | | | | Members | | | | the Board | the Board* | | | Men | | | 4 57% 2 | | | | | | Women | | | 3 43% 1 | | | | | | Not specified/prefer not to say | | | – – – | | | | | Number of | | Number of | | | | | | senior | | --- | --- | --- | --- | --- | --- | --- | --- | | | | Board | | Percentage of | | positions on | | | | Members | | | | the Board | the Board* | | | White British or other White (including minority-white groups) | | | 6 86% 3 | | | | | | Mixed/Multiple Ethnic Groups | | | – – – | | | | | | Asian/Asian British | | | 1 14% – | | | | | Black/African/Caribbean/Black British – – – Other ethnic group, including Arab – – – Not specified/ prefer not to say – – – *The format of the above tables is prescribed in the Listing Rules which define ‘senior positions on the Board’ as ‘CEO, CFO, SID and Chair’. However, as an externally managed investment trust, the Company has no executive management functions, including the roles of CEO and CFO, and the Company has therefore excluded columns relating to executive management. In the absence of the aforementioned roles, the Board considers the Chair of the Audit & Risk Committee to be a senior position and therefore the Company has defined the ‘senior positions on the Board’ as Chair, Senior Independent Director and Chair of the Audit & Risk Committee. The information above was obtained by asking the Directors to indicate on an anonymous form, how they should be categorised for the purposes of the Listing Rules disclosures. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 55 CORPORATE GOVERNANCE CONTINUED MEETING ATTENDANCE The number of meetings held during the year of the Board and its Committees, and each Director’s attendance level, is shown below: Management Engagement & | | | | Audit & Risk | | Nominations | | Remuneration | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Board | | Committee | | Committee | | | Committee | | | Type and number of meetings held in 2022/23 | | (6) | | (2) | | (1) | | | (1) | | Sir Martin Smith^ | | 3 – 0 0 | | | | | | | | | Sarah Bates | | 6 2 1 1 | | | | | | | | | Sven Borho* | | 5 – – – | | | | | | | | | Tim Livett+ | | 2 1 1 1 | | | | | | | | | Humphrey van der Klugt | | 5 2 1 1 | | | | | | | | | Doug McCutcheon~ | | 6 1 1 1 | | | | | | | | | Jo Parfrey** | | 2 1 1 1 | | | | | | | | | Dr Bina Rawal | | 6 2 1 1 | | | | | | | | ^ Sir Martin Smith was not a member of the Audit & Risk Committee. He retired from the Board on 6 July 2022 * Sven Borho does not sit on any of the Company’s Committees + Tim Livett joined the Board on 1 September 2022 ~Doug McCutcheon become the Chair of the Company on 6July 2022. He ceased to be a member of the Audit & Risk Committee on that day ** Jo Parfrey joined the Board on 1 September 2022 All of the serving Directors with the exception of Humphrey van der Klugt, attended the Annual General Meeting held on 6July 2022. Humphrey was unable to attend the Annual General Meeting and also a Board Meeting as he was unwell. Sven Borho was unable to attend one Board Meeting due to a prior long-standing commitment. BOARD EVALUATION date of this year’s AGM) at the forthcoming AGM for the following reasons: During the year the performance of the Board, its committees and individual Directors (including each Doug McCutcheon joined the Board in November 2012 Director’s independence) was evaluated through a formal and became Chair in July 2022. Doug was an investment assessment led by the Senior Independent Director. The banker at S.G. Warburg and then UBS for 25 years, most performance of the Chair was also evaluated by the Senior recently as the head of Healthcare Investment Banking for Independent Director. The review concluded that the Board Europe, the Middle East, Africa and Asia-Pacific. It is noted was working well. The Board is satisfied that the structure, that Doug has been a Director of the Company for more mix of skills and operation of the Board continue to be than nine years. The Board has agreed to this period of effective and relevant for the Company. longer service to ensure an orderly succession. The Senior Independent Director conducted a preliminary evaluation of As an independent external review of the Board was the Chair shortly after his appointment with no issues being undertaken in 2021 the next such review will be held in 2024. raised. The Board continues to believe that Doug remains The Board pays close attention to the capacity of individual independent in thought and judgement. Directors to carry out their work on behalf of the Company. Sven Borho joined the Board in June 2018. Sven is a In recommending individual Directors to shareholders for founder and Managing Partner of OrbiMed and heads re-election, it considered their other Board positions and their public Equity team and is the portfolio Manager for their time commitments and is satisfied that each Director OrbiMed’s public equity and hedge funds. has the capacity to be fully engaged with the Company’s business. The Board has considered the position of all of Humphrey van der Klugt joined the Board in February 2016. the Directors as part of the evaluation process, and believes A former fund manager and Director of Schroder Investment that it would be in the Company’s best interests to propose Management Limited, Humphrey has extensive experience of them for election and/or re-election (with the exception the investment trust sector. He is a Chartered Accountant. of Sarah Bates who will be retiring from the Board on the 56 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 CORPORATE GOVERNANCE CONTINUED Tim Livett joined the Board on 1 September 2022. Directors are encouraged to participate in training courses where appropriate. A qualified accountant, Tim is Chair of the Audit & Risk Committee. The Directors have access to the advice and services of a Company Secretary through its appointed representative Tim is the Chief Financial Officer at Caledonia Investments which is responsible to the Board for ensuring that Board PLC, and is also a member of the Valuation and Audit & Risk procedures are followed and that applicable rules and Committees at Oxford University Endowment Management. regulations are complied with. The Company Secretary He was formerly Chief Financial Officer at Wellcome Trust, is also responsible for ensuring good information flows the global charitable foundation focused on health research. between all parties. He has an extensive and broad financial background. There is an agreed procedure for Directors, in the Tim studied chemistry at Oxford University. furtherance of their duties, to take independent professional Jo Parfrey joined the Board on 1 September 2022. advice if necessary at the Company’s expense. Jo is Chair of the Management Engagement & RISK MANAGEMENT AND INTERNAL Remuneration Committee. She is a non-executive CONTROLS Director and Chair of the Audit Committee of Henderson The Board has overall responsibility for the Company’s International Income Trust plc, and a non-executive Director risk management and internal control systems and for of Octopus AIM VCT. She is also a non-executive Director reviewing their effectiveness. The Company applies the and Chair of the Audit Committee of Start Codon Limited guidance published by the Financial Reporting Council on and IESO Digital Health Limited and the non-executive internal controls. Internal control systems are designed to Chair of Babraham Research Campus Limited. A Chartered manage, rather than eliminate, the risk of failure to achieve Accountant, Jo has extensive experience of both global the business objective and can provide only reasonable investment trusts and healthcare, including life services. and not absolute assurance against material misstatement Jo studied chemistry at Oxford University. or loss. These controls aim to ensure that the assets of the Company are safeguarded, that proper accounting Dr Bina Rawal joined the Board on November 2019. A records are maintained and that the Company’s financial physician with 25 years’ experience in life sciences research information is reliable. The Directors have a robust process and development, she has held senior executive roles in for identifying, evaluating and managing the significant drug development and scientific evaluation in four global risks faced by the Company, which are recorded in a risk pharmaceutical companies. matrix. The Audit & Risk Committee, on behalf of the Board, The Chair is pleased to report that following a formal considers each risk as well as reviewing the mitigating performance evaluation, the Directors’ performance controls in place. Each risk is rated for its “likelihood” and continues to be effective and they continue to demonstrate “impact” and the resultant numerical rating determines its commitment to the role. ranking into ‘Principal/Key’, ‘Significant’ or ’Minor’. This process was in operation during the year and continues in TRAINING AND ADVICE place up to the date of this report. The process also involves New appointees to the Board are provided with a full the Audit & Risk Committee receiving and examining regular induction programme. The programme covers the reports from the Company’s principal service providers. The Company’s investment strategy, policies and practices. Board then receives a detailed report from the Audit & Risk The Directors are also given key information on the Committee on its findings. The Directors have not identified Company’s regulatory and statutory requirements as they any significant failures or weaknesses in respect of the arise including information on the role of the Board, matters Company’s internal control systems. reserved for its decision, the terms of reference of the Board Committees, the Company’s corporate governance practices and procedures and the latest financial information. It is the Chair’s responsibility to ensure that the Directors have sufficient knowledge to fulfil their role and WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 57 CORPORATE GOVERNANCE CONTINUED BENEFICIAL OWNERS OF SHARES – Resolution 17 Authority to buy-back shares INFORMATION RIGHTS Resolution 18 Authority to hold General Meetings (other Beneficial owners of shares who have been nominated by than the Annual General Meeting) on at the registered holder of those shares to receive information least 14 clear days’ notice rights under section 146 of the Companies Act 2006 are Resolutions 13 and 14 will be proposed as Ordinary required to direct all communications to the registered Resolutions and resolutions 15 to 18 will be proposed as holder of their shares rather than to the Company’s Special Resolutions. registrar, Link Group, or to the Company directly. The full text of the resolutions can be found in the Notice of The Company has adopted a nominee share code which is Annual General Meeting on pages 101 to 105. Explanatory set out on the following page. notes regarding the resolutions can be found on pages 106 The annual and half-year financial reports, and a monthly and 107. fact sheet are available to all shareholders. The Board, with EXERCISE OF VOTING POWERS the advice of Frostrow, reviews the format of the annual and half-year financial reports so as to ensure they are The Board and the AIFM have delegated authority to useful to all shareholders and others taking an interest in the OrbiMed to vote the shares owned by the Company. The Company. In accordance with best practice, the annual report, Board has instructed that OrbiMed submit votes for such including the Notice of the Annual General Meeting, is sent shares wherever possible. This accords with current best to shareholders at least 20 working days before the meeting. practice whilst maintaining a primary focus on financial Separate resolutions are proposed for substantive issues. returns. OrbiMed may refer to the Board on any matters of a contentious nature. The Board has reviewed OrbiMed’s ANNUAL GENERAL MEETING Voting Guidelines and is satisfied with their approach. The following information to be considered at the The Company does not retain voting rights on any shares forthcoming annual general meeting is important that are held as collateral in connection with the overdraft and requires your immediate attention. facility provided by J.P. Morgan Securities LLC. If you are in any doubt about the action you should take, you should seek advice from your stock broker, bank NOMINEE SHARE CODE manager, solicitor, accountant or other financial adviser Where shares are held in a nominee company name, the authorised under the Financial Services and Markets Company undertakes: Act2000 (as amended). If you have sold or transferred all of your ordinary shares in the Company, you should pass • to provide the nominee company with multiple copies of this document, together with any other accompanying shareholder communications, so long as an indication documents, including the form of proxy, at once to the of quantities has been provided in advance; and purchaser or transferee, or to the stock broker, bank or other agent through whom the sale or transfer was effected, for • to allow investors holding shares through a nominee onward transmission to the purchaser or transferee company to attend general meetings, provided the correct authority from the nominee company is The Company’s Annual General Meeting will be held at available. Saddlers’ Hall, 40 Gutter Lane, London EC2V 6BR on Tuesday, 18 July 2023 from 12.30 p.m. Please refer to the Nominee companies are encouraged to provide the Chair’s Statement beginning on page 4 for details of this necessary authority to underlying shareholders to attend year’s arrangements. the Company’s general meetings. In particular, resolutions relating to the following items will By order of the Board be proposed at the forthcoming Annual General Meeting. Resolution 13 Proposed share split Frostrow Capital LLP Resolution 14 Authority to allot shares Company Secretary Resolution 15 Authority to disapply pre-emption rights 6 June 2023 Resolution 16 Authority to sell shares held in treasury on a non pre-emptive basis 58 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## AUDIT & RISK COMMITTEE REPORT INTRODUCTION FROM THE CHAIRMAN the selection process of the external Auditors (including the leadership of an audit tender process) and to have I am pleased to present my first formal report to primary responsibility for the Company’s relationship shareholders as Chair of the Audit & Risk Committee, for the with the external Auditors. year ended 31 March 2023. 4. To review the effectiveness of the external audit and the COMPOSITION AND MEETINGS process. The Committee comprises those Directors considered to 5. To review the independence and objectivity of the be independent by the Board. The Chair of the Company external Auditors. is not a member of the Committee but attends meetings by invitation. The Committee met twice during the year 6. To consider any non-audit work to be carried out by the and attendance by each Director is shown in the table on Auditors. The Committee reviews the need for non-audit page55. The Board has taken note of the requirements services to be provided by the Auditors and authorises that the Committee as a whole should have competence such on a case by case basis, having consideration relevant to the sector in which the Company operates and to the cost effectiveness of the services and the that at least one member of the Committee should have independence and objectivity of the Auditors. recent and relevant financial experience. The Committee 7. To consider the need for an internal audit function. is satisfied that it is properly constituted in both respects. I Since the Company delegates its day-to-day operations was appointed Chair of the Committee on 1 March 2023, to third parties and has no employees, the Committee I succeeded Humphrey van der Klugt in this role. has determined there is no requirement for such a Humphrey remains a member of the Committee. I am function. a qualified accountant and have been a member of a 8. To assess the going concern and viability of the number of Audit& Risk Committees over many years. Company, including the assumptions used. The other Committee members have a combination of financial, investment and other relevant experience gained 9. To report its findings to the Board. throughout their careers. A comprehensive description of the Committee’s role, its The experience of the Committee members can be duties and responsibilities, can be found in its terms of | assessed from the Directors’ biographies set out on pages | reference which are available for review on the Company’s | | --- | --- | | 41 to 43. | website at www.worldwidewh.com. | | RESPONSIBILITIES | WORK OF THE AUDIT & RISK COMMITTEE | DURING THE YEAR The Committee’s main responsibilities during the year were: Annual Report and Financial Statements 1. To review the Company’s Half-Year and Annual Report. In particular, the Committee considered and advised the The production of the Company’s Annual Report (including Board on whether the Annual Report and the Financial the audit by the Company’s external Auditors) is a thorough Statements, taken as a whole, is fair, balanced and process involving input from a number of different areas. understandable, allowing shareholders to more easily In order to be able to confirm that the Annual Report is fair, assess the Company’s strategy, investment policy, balanced and understandable, the Board has requested that business model and financial performance. the Committee advise on whether it considers these criteria 2. To review the risk management and internal control have been satisfied. As part of this process the Committee processes of the Company and its key service providers. has considered the following: Further details of the Committee’s review are included in • the procedures followed in the production of the Annual the Principal Risks section beginning on page 29. Report, including the processes in place to assure the 3. To develop and implement a policy for the engagement accuracy of the factual content; of the external Auditors and agreeing the scope of its work and its remuneration. Also, to be responsible for WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 59 AUDIT & RISK COMMITTEE REPORT CONTINUED • the extensive levels of review that were undertaken in • gaining an overall understanding of the performance of the production process, by the Company’s AIFM and the the portfolio both in capital and revenue terms through Committee; and comparison to the Benchmark; and • the internal control environment as operated by the • conducting a review of how the Company’s derivative Portfolio Manager, AIFM and other service providers. positions were monitored. As a result of the work undertaken by the Committee, it In addition, the Committee considered the valuation of has confirmed to the Board that the Annual Report and the unquoted investments. The Company has the ability Financial Statements for the year ended 31 March 2023, to make unquoted investments within its investment taken as a whole, is fair, balanced and understandable portfolio, up to a limit of 10% of the portfolio at the time of and provides the information necessary for shareholders acquisition. Both the Company’s Directors and the AIFM to assess the Company’s financial position, performance, need to ensure that an appropriate value is placed on business model and strategy. such investments within the Company’s net asset value. The Committee has worked with the Company’s Portfolio The Committee addressed the overall accuracy of Manager and the AIFM to establish clear guidelines for the the annual report by considering the draft Annual valuation of unquoted investments, including the use of Report, a letter from Frostrow in support of the letter of valuations produced by independent external valuers, where representation made by the Board to the Auditors and the appropriate. Auditors’ Report to the Committee. Calculation of AIFM, portfolio management and The committee also considered a number of key reporting performance fees matters which are outlined in the following sections. The AIFM, Portfolio Management and Performance fees Valuation and ownership of the Company’s are calculated in accordance with the AIFM and Portfolio investments and derivatives, including unquoted Management Agreements. The Auditors perform agreed investments upon procedures over any performance fee payable to The Committee dealt with this matter by: the Portfolio Manager prior to payment. The Auditors also recalculate the AIFM and Portfolio Management fee as part • ensuring that all investment holdings and cash/ of the audit. deposit balances had been agreed to an independent confirmation from the Custodian and Prime Broker Investment trust status or relevant counterparty. In addition, receiving and The Committee approached and dealt with ensuring reviewing details of the internal control procedures compliance with Section 1158 of the Corporation Tax in place at the Portfolio Manager, the AIFM and the Custodian and Prime Broker and also regular reports Act 2010, by seeking confirmation from Frostrow that the from both the Custodian and Prime Broker and also Company continues to meet the eligibility conditions on a the Depositary (whose role it is to ensure that the monthly basis. Company’s assets are safeguarded and to verify their Withholding Tax valuation); The Committee monitored the reclamation of withholding • reconfirming its understanding of the processes in tax, receiving regular updates from Frostrow on the process place to record investment transactions and income, and the appointment of specialist local agents. and to value both the quoted and unquoted holdings in the portfolio; Investment performance The Committee gained an overall understanding of the • reviewing and amending, where necessary, the performance of the investment portfolio both in capital and Company’s register of key risks in light of changes to revenue terms through ongoing discussions and analysis the portfolio and the investment environment; with the Company’s Portfolio Manager and also with comparison to suitable key performance indicators (see page 28). 60 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 AUDIT & RISK COMMITTEE REPORT CONTINUED Accounting policies The results demonstrated the impact on the Company’s NAV, its expenses, its cash flows and its ability to meet During the year the Committee ensured that the accounting its liabilities. In even the most stressed scenario, the policies, as set out on pages 79 to 83, were applied Company was shown to have sufficient cash, or to be able consistently throughout the year. In light of there being to liquidate a sufficient portion of its listed holdings, in order no unusual transactions during the year or other possible to be able to meet its liabilities as they fall due. Based on reasons, the Committee agreed that there was no reason to the information available to the Directors at the time, the change the policies. Committee therefore concluded it was reasonable for the Half year report and financial statements Board to expect that the Company will be able to continue The Committee reviewed the Half Year Report and Financial in operation and meet its liabilities as they fall due over the Statements, which are not audited or reviewed by the next five financial years. The Committee expects that the external Auditors, to ensure that the accounting policies Company will continue to exist for the foreseeable future used in the Annual Financial Statements were also used at and at least for the period of the assessment. the half-year stage and that they portrayed a fair balanced Internal controls and risk management and understandable picture of the period in question. As set out on page 29 the Board is responsible for the risk Going concern and viability statement assessment and review of internal controls of the Company, Having reviewed the Company’s financial position and undertaken in the context of the overall investment liabilities, the Committee is satisfied that it is appropriate for objective. the Board to prepare the financial statements on the going The review covers the key business, operational, concern basis. Further detail is provided on page 48. The compliance and financial risks facing the Company. In Committee’s review of the Company’s financial position arriving at its judgement of what risks the Company faces, included consideration of the cash and cash equivalent the Board has considered the Company’s operations in the position of the Company; the diversification of the portfolio; light of the following factors: and the analysis of portfolio liquidity, which estimated a • the nature of the Company, with all management liquidation of c.84.5% of the portfolio within 10 trading days functions outsourced to third party service providers; (based on current market volumes). • the nature and extent of risks which it regards as The Committee also considered the longer-term viability of acceptable for the Company to bear within its overall the Company in connection with the Board’s statement in investment objective; the Strategic Report on page 35. The Committee reviewed the Company’s financial position (including its cash flows • the threat of such risks becoming a reality; and and liquidity position), the principal risks and uncertainties, • the Company’s ability to reduce the incidence and the expectation that the Company will pass the next impact of risk on its performance. continuation vote in 2024, and the results of stress tests and scenarios which considered the impact of severe stock Against this background, a risk matrix has been developed market volatility on shareholders’ funds. This included which covers key risks the Company faces, the likelihood of modelling substantial market falls, and significantly reduced their occurrence and their potential impact, how these risks market liquidity. The scenarios assumed that there would are monitored and mitigating controls in place. The Board be no recovery in asset prices and that listed portfolio has delegated to the Committee the responsibility for the companies which have cut or cancelled any dividends due review and maintenance of the risk matrix and it reviews, since the coronavirus outbreak would not reinstate them. in detail, the risk matrix each time it meets, bearing in mind any changes to the Company, its environment or service providers since the last review. Any significant changes to the risk matrix are discussed with the whole Board. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 61 AUDIT & RISK COMMITTEE REPORT CONTINUED Principal service providers Auditors’ reappointment In addition to reviewing the systems of internal control in PwC have indicated their willingness to continue to act as place at the Company’s principal service providers, the Auditors to the Company for the forthcoming year and a Committee also reviewed the cyber security strategies resolution for their re-appointment will be proposed at the adopted by them. AGM. Depositary The Committee reviews the scope and effectiveness of the audit process, including agreeing the Auditors’ assessment During the year, the Committee reviewed reports from the of materiality and monitors the Auditors’ independence and Depositary on their regulatory oversight and due diligence objectivity. It conducted a review of the performance of the duties. Nothing material was brought to the attention of the Auditors during the year and concluded that performance Committee. was satisfactory and there were no grounds for change. Internal audit Meetings The Committee considered whether there was a need for This year the nature and scope of the audit together with the Company to have an internal audit function. As the PwC’s audit plan were considered by the Committee on Company delegates its day-to-day operations to third 3 November 2022. I, as Chair of the Committee, had a parties and has no employees, the Committee concluded separate meeting with them specifically to discuss the audit that there was no such need. and any issues that arose. The Committee then met PwC EXTERNAL AUDIT on 23 May 2023 via video conference to review formally the outcome of the audit and to discuss the limited issues Appointment and tenure that arose. The Committee also discussed the presentation PricewaterhouseCoopers LLP (“PwC”) were the Auditors of the Annual Report with the Auditors and sought their for the financial year and this was their ninth audit of the perspective. Company. They were appointed on 14 July 2014 following a formal tender process and this appointment has been Independence and effectiveness renewed at each subsequent AGM. In order to fulfil the Committee’s responsibility regarding the independence of the Auditors, the Committee reviewed: As a public company listed on the London Stock Exchange, the Company is subject to mandatory auditor rotation • the senior audit personnel in the audit plan for the year, requirements. The Company will put the external audit out • the Auditors’ arrangements concerning any conflicts of to tender at least every 10 years, and change auditor at interest, least every 20 years. In addition, the Committee continues to consider annually the need to go to tender for audit • the extent of any non-audit services, and quality, remuneration or independence reasons. It is • the statement by the Auditors that they remain expected that the next audit tender will take place in the independent within the meaning of the regulations and autumn of this year, in order that the successful candidate’s their professional standards. appointment or re-appointment can be approved by shareholders at the AGM to be held in 2024. A range of The Committee also reviews the outcomes of the FRC’s audit firms will be considered not just those who are annual Audit Quality Reviews and discusses the findings considered to be part of the “Big Four” group of audit firms. with the Auditors. The Committee will be mindful of any potential conflicts of interest. Any firms providing services to the Company within a two-year period of the date of the audit tender will be unable to participate. The Committee has adopted formal audit tender guidelines to govern the audit tender process. 62 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 AUDIT & RISK COMMITTEE REPORT CONTINUED Remuneration AUDIT & RISK COMMITTEE CONFIRMATION The Committee approved a fee of £53,900 for the audit The Audit & Risk Committee confirms that it has carried for the year ended 31 March 2023 (2022: £46,725). While out a review of the effectiveness of the system of internal this represents an increase on the previous year’s fee, the financial control and risk management during the year, as Committee believes that the fee is in line with general audit set out above and that: fees payable for the investment trust sector and is reflective (a) An ongoing procedure for identifying, evaluating and of the level of work required to audit a listed company. managing significant risks faced by the Company was Non-audit services policy in place for the year under review and up to 6 June 2023. This procedure is regularly reviewed by the Board; The Company operates on the basis whereby the provision and of all non-audit services by the Auditors has to be pre- approved by the Committee. Such services are only (b) It is responsible (on behalf of the Board) for the permissible where no conflicts of interest arise, the service Company’s system of internal controls and for reviewing is not expressly prohibited by audit legislation, where the its effectiveness and that it is designed to manage the independence of the Auditors is not likely to be impinged risk of failure to achieve business objectives. This can by undertaking the work and the quality and the objectivity only provide reasonable not absolute assurance against of both the non-audit work and audit work will not be material misstatement or loss. compromised. The Committee will monitor the need for non-audit work to be performed by the Auditors, if any, in accordance with the Company’s non-audit services policy. Tim Livett A copy of the Company’s non-audit services policy can be found on the Company’s website at Chair of the Audit & Risk Committee www.worldwidewh.com. 6 June 2023 No non-audit fees were paid to the Auditors during the year (2022: £5,000 in respect of agreed upon procedures in relation to their review of the Company’s performance fee payment). The Committee has considered the extent and nature of non-audit work performed by the Auditors and is satisfied that this did not impinge on their independence and is a cost effective way for the Company to operate. PERFORMANCE EVALUATION The Committee’s performance over the past year was reviewed and discussed as part of the annual Board evaluation. The evaluation considered the composition of the Committee and the efficacy of Committee meetings, as well as assessing the Committee’s role in monitoring and overseeing the Company’s financial reporting and accounting, risk management and internal controls, compliance with corporate governance regulations and also the assessment of the external audit. I am pleased to confirm that the evaluation result was positive and no matters of concern or requirements for change were highlighted. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 63 # DIRECTORS' REMUNERATION REPORT ## INTRODUCTION FROM THE CHAIR This report has been prepared in accordance with Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulation 2013, the requirements of Section 421 of the Companies Act 2006 and the Enterprise and Regulatory Reform Act 2013. The Directors' Remuneration Report is subject to an annual advisory vote and therefore an Ordinary Resolution for the approval of this report will be put to shareholders at the Company's forthcoming AGM. The law requires the Company's Auditors to audit certain of the disclosures provided in this report. Where disclosures have been audited, they are indicated as such and the Auditors' audit opinion is included in its report to shareholders on pages 68 to 74. The Management Engagement & Remuneration Committee (the "Committee") considers the framework for the remuneration of the Directors on an annual basis. It reviews the ongoing appropriateness of the Directors' Remuneration Policy and the individual remuneration of Directors by reference to the activities and particular complexities of the Company and comparison with other companies of a similar structure and size. This is in-line with the AIC Code. An Ordinary Resolution proposing the adoption of the Directors' Remuneration Report was put to shareholders at the Annual General Meeting of the Company held on 6 July 2022, and was passed with 99.9% of the votes cast by shareholders voting in favour of the Resolution. As noted in the Strategic Report, all of the Directors are non-executive and therefore there is no Chief Executive Officer. The Company does not have any employees. There is therefore no Chief Executive Officer or employee information to disclose. ### Directors' remuneration policy The Directors' Remuneration Policy provides that fees payable to the Directors should reflect the time spent by the Board on the Company's affairs and the responsibilities borne by the Directors and should be sufficient to enable candidates of high calibre to be recruited. Directors are remunerated in the form of fees payable monthly in arrears, paid to the Director personally or to a specified third party. There are no long-term incentive schemes, share option schemes, pension arrangements, bonuses, or other benefits in place and fees are not specifically related to the Directors' performance, either individually or collectively. The remuneration for the non-executive Directors is determined within the limits set out in the Company's Articles of Association. The present limit is £350,000 in aggregate per annum. The amount paid in aggregate to the Directors in 2023 is set out in the table on the following page. A binding resolution to approve the Directors' Remuneration Policy was put to shareholders at the Annual General Meeting held in 2020, and was passed with 99.8% of shareholders voting in favour of the Resolution. The aforementioned Directors' Remuneration Policy provisions apply until the next time that they are put to shareholders for the renewal of that approval, which must be at intervals of not more than three years, or if the Directors' Remuneration Policy is varied. As approval of this policy was last granted by shareholders at the Annual General Meeting held in July 2020, shareholder approval will again be sought at the Annual General Meeting to be held this year. ### Directors' appointment None of the Directors has a service contract. The terms of their appointment provide that Directors shall retire and be subject to election at the first Annual General Meeting after their appointment and to re-election annually thereafter. The terms also provide that a Director may be removed without notice and that compensation will not be due on leaving office. ### Directors' fees During the year, the Committee agreed that each Director's fees should be increased by 2.0% with effect from 1 April 2023. The Committee noted that the fees had not been increased the previous year and the prevailing high level of inflation. The table overleaf shows the level of fees paid to Directors and the percentage increase from the prior year. With the exception of Tim Livett and Jo Parfrey, all of the Directors, as at the date of this report, served throughout the year. The table overleaf excludes any employer's national insurance contributions, if applicable. The Directors are entitled to be reimbursed for reasonable expenses incurred by them in connection with the performance of their duties and attendance at Directors' and shareholder meetings. 64 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 DIRECTORS’ REMUNERATION REPORT CONTINUED | | | | Year Ending | | | | | Year Ended | | | | | Year Ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 31 March 2024 | | | | | 31 March 2023 | | | | | 31 March 2022 | | | | | | Fee Level | | | % | | Fee Level | | | % | | Fee Level | | | % | | Director | (per annum) | | | Change | | (per annum) | | | Change | | (per annum) | | | Change | | | Chair | | £54,213 2.0 | | | | | £53,150 – £53,150 4.0 | | | | | | | | | | Audit & Risk Committee Chair | | £41,956 2.0 | | | | | £41,133 – £41,133 4.0 | | | | | | | | | | Senior Independent Director | | £36,727 2.0 | | | | | £36,007 – £36,007 4.0 | | | | | | | | | | Director | | £34,244 2.0 | | | | | £33,573 – £33,573 4.0 | | | | | | | | | Sums paid to third parties None of the fees referred to in the below table were paid to any third party in respect of the services provided by any of the Directors. Directors’ emoluments for the year (audited) | | | | | Taxable | | | | | | Taxable | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Date of | Fixed fees | | Expenses | | | | Fixed fees | | Expenses | | | | | Appointment | | | (£) | | (£)† | Total (£) | | | (£) | | (£)† | Total (£) | | | to the Board | | | 2023 | | 2023 | | 2023 | | 2022 | | 2022 | | 2022 | Sir Martin Smith* 8 November 2007 14,105 – 14,105 53,150 865 54,015 Humphrey van der Klugt 15 February 2016 40,503 – 40,503 41,133 – 41,133 Sarah Bates# 22 May 2013 36,007 – 36,007 35,389 – 35,389 Dr David Holbrook^ 8 November 2007 – – – 9,833 – 9,833 Tim Livett** 1 September 2022 20,124 – 20,124 – – – Doug McCutcheon 7 November 2012 47,894 – 47,894 33,573 – 33,573 Jo Parfrey** 1 September 2022 19,584 – 19,584 Sven Borho+ 7 June 2018 – – – – – – Dr Bina Rawal 1 November 2019 33,573 – 33,573 33,573 – 33,573 Total 211,790 – 211,790 206,651 865 207,516 † Taxable expenses primarily comprise travel and associated expenses incurred by the Directors in attending Board and Committee meetings in London. These are reimbursed by the Company and, under HMRC Rules, are subject to tax and National Insurance and therefore are treated as a benefit in kind within this table. * Sir Martin Smith retired from the Board on 6 July 2022. # Sarah Bates was appointed as the Senior Independent Director with effect from 8 July 2021. ^ Dr David Holbrook retired from the Board on 8 July 2021. ** Tim Livett and Jo Parfrey joined the Board on 1 September 2022. + Sven Borho has waived his Director’s fee. Tim Livett succeeded Humphrey van der Klugt as Chair of the Audit & Risk Committee with effect from 1 March 2023. In certain circumstances, under HMRC rules travel and other out of pocket expenses reimbursed to the Directors may be considered as taxable benefits. Where expenses are classed as taxable under HMRC guidance, they are shown in the taxable expenses column of the Directors’ remuneration table along with the associated tax liability. No communications have been received from shareholders regarding Directors’ remuneration. Directors’ interests in the Company’s shares (audited) Ordinary Shares of 25p each 31 March 31 March 2023 2022 Sir Martin Smith – 11,871 – Trustee – 2,725 Sarah Bates 7,200 7,200 Sven Borho 10,000 10,000 Humphrey van der Klugt 3,000 3,000 Tim Livett 2,175 – Doug McCutcheon 20,000 20,000 Jo Parfrey 2,000 – Dr Bina Rawal 2,606 1,810 46,981 56,606 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 65 DIRECTORS’ REMUNERATION REPORT CONTINUED Share price total return Annual statement The chart below illustrates the total shareholder return On behalf of the Board, I confirm that the Directors’ for a holding in the Company’s shares as compared to Remuneration Policy, set out on page 63 of this Annual the Benchmark, which the Board has adopted as the key Report, and Directors’ Remuneration Report set out on measure of the Company’s performance. page 63 to 65 summarise, as applicable, for the year to 31March2023: TOTAL SHAREHOLDER RETURN FOR THE TEN YEARS TO 31 MARCH 2023 (a) the major decisions on Directors’ remuneration; (b) any substantial changes relating to Directors’ remuneration made during the year; and (c) the context in which the changes occurred and decisions have been taken. Jo Parfrey 0 Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Chair of the Management Engagement & Remuneration 13 14 15 16 17 18 19 20 21 22 23 Committee WWH Share Price (total return) (236.9%) Benchmark (total return) (229.9%) 6 June 2023 Rebased to 100 as at 31 March 2013 Source: Morningstar Relative cost of directors’ remuneration The bar chart below shows the comparative cost of Directors’ fees compared with the level of dividend distribution and ongoing charges for 2022 and 2023.             | 'LUHFWRUV̵ | 'LYLGHQGV | 2QJRLQJ | 'LUHFWRUV̵ | 'LYLGHQGV | 2QJRLQJ | | --- | --- | --- | --- | --- | --- | | )HHV |  | &KDUJHV | )HHV |  | &KDUJHV | |  | |  |  | |  | % 500 JH 400 eP 300 200 100 $OWHUQDWLYH3HUIRUPDQFH0HDVXUHVHH*ORVVDU\EHJLQQLQJRQSD 66 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ## WORLDWIDE HEALTHCARE TRUST PLC REPORT ON THE AUDIT OF THE FINANCIAL Independence STATEMENTS We remained independent of the Company in accordance with the ethical requirements that are relevant to our Opinion audit of the financial statements in the UK, which includes In our opinion, Worldwide Healthcare Trust PLC’s financial the FRC’s Ethical Standard, as applicable to listed public statements: interest entities, and we have fulfilled our other ethical • give a true and fair view of the state of the Company’s responsibilities in accordance with these requirements. affairs as at 31 March 2023 and of its loss and cash To the best of our knowledge and belief, we declare that flows for the year then ended; non-audit services prohibited by the FRC’s Ethical Standard • have been properly prepared in accordance with United were not provided. Kingdom Generally Accepted Accounting Practice We have provided no non-audit services to the Company in (United Kingdom Accounting Standards, including FRS the period under audit. 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and Our audit approach • have been prepared in accordance with the Overview requirements of the Companies Act 2006. Audit scope • The Company is a standalone Investment Trust We have audited the financial statements, included Company and engages Frostrow Capital LLP within the Annual Report, which comprise: the Statement (the“AIFM”) to manage its assets. of Financial Position as at 31 March 2023; the Income Statement, the Statement of Changes in Equity and the • We conducted our audit of the financial statements Statement of Cash Flows for the year then ended; and using information from the AIFM and J.P.Morgan the notes to the financial statements, which include a Europe Limited with whom the AIFM have engaged to description of the significant accounting policies. provide certain administrative functions. Our opinion is consistent with our reporting to the Audit & • We tailored the scope of our audit taking into account Risk Committee. the types of investments within the Company, the involvement of the third parties referred to above, the Basis for opinion accounting processes and controls, and the industry in We conducted our audit in accordance with International which the Company operates. Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described • We obtained an understanding of the control in the Auditors’ responsibilities for the audit of the financial environment in place at the AIFM and adopted a fully statements section of our report. We believe that the audit substantive testing approach using reports obtained evidence we have obtained is sufficient and appropriate to from the AIFM and service providers. provide a basis for our opinion. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 67 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Key audit matters Key audit matters • Income from investments. Key audit matters are those matters that, in the auditors’ • Valuation and existence of investments. professional judgement, were of most significance in the audit of the financial statements of the current period and Materiality include the most significant assessed risks of material • Overall materiality: £21,500,000 (2022: £22,682,000) misstatement (whether or not due to fraud) identified by based on approximately 1% of net assets. the auditors, including those which had the greatest effect • Performance materiality: £16,125,000 (2022: on: the overall audit strategy; the allocation of resources £17,011,000). in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the The scope of our audit results of our procedures thereon, were addressed in the As part of designing our audit, we determined materiality context of our audit of the financial statements as a whole, and assessed the risks of material misstatement in the and in forming our opinion thereon, and we do not provide a financial statements. separate opinion on these matters. This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. . 68 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Key audit matter How our audit addressed the key audit matter Income from investments Refer to the Audit & Risk Committee Report, We assessed the accounting policy for income recognition for Accounting Policies and Notes to the Financial compliance with accounting standards and the AIC SORP and Statements. performed testing to confirm that income had been accounted for in accordance with this stated accounting policy. ISAs (UK) presume there is a risk of fraud in income recognition because of the pressure management We found that the accounting policies implemented were in may feel to achieve a certain objective. In this accordance with accounting standards and the AIC SORP, and instance, we consider that ‘income’ refers to all the that income has been accounted for in accordance with the Company’s income streams, both revenue and capital stated accounting policy. (including gains and losses on investments). We understood and assessed the design and implementation of As the Company has a capital objective, there key controls surrounding income recognition. might be an incentive to overstate income in that The gains/losses on investments held at fair value comprise category if capital is particularly underperforming. realised and unrealised gains/losses. For unrealised gains/ As such, we focussed this risk on the existence/ losses, we sample tested the valuation of the portfolio at the occurrence of gains/losses on investments and year-end (see below), together with testing the reconciliation of completeness of dividend income recognition and its opening and closing investments. For realised gains/losses, we presentation in the Income Statement as set out in tested a sample of disposal proceeds by agreeing the proceeds the requirements of The Association of Investment to bank statements and we re-performed the calculation of a Companies’ Statement of Recommended Practice sample of realised gains/losses. (the “AICSORP”). In addition, we tested a sample of dividend receipts by agreeing the dividend rates from all investments to independent third party sources. To test for completeness, we tested that the appropriate dividends had been received in the year by reference to independent data of dividends declared for all listed investments during the year. Our testing did not identify any unrecorded dividends. We tested the allocation and presentation of dividend income between the revenue and capital return columns of the Income Statement in line with the requirements set out in the AIC SORP. We did not find any special dividends that were not treated in accordance with the AIC SORP. No material misstatements were identified from this testing. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 69 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Refer to the Audit & Risk Committee Report, We tested the valuation of all listed investments by agreeing the Accounting Policies and Notes to the Financial prices used in the valuation to independent third party sources. Statements. We tested the existence of all listed investments by agreeing the The investment portfolio at 31 March 2023 principally holdings of each investment to an independent confirmation comprised of listed equity investments and unquoted from the Custodian and Prime Broker, J.P. Morgan Securities equity investments and totalled £2,186,417,000. We LLC, as at 31 March 2023. focused on the valuation and existence of investments For unquoted investments we understood and evaluated the because investments represent the principal element valuation methodology applied, by reference to the International of the net asset value as disclosed in the Statement of Private Equity and Venture Capital Valuation guidelines Financial Position in the financial statements. (IPEV),and tested the techniques used by the Directors in determining the fair value of unquoted investments. Our testing, performed on a sample basis, included: • assessing the appropriateness of the valuation models used; • testing the inputs either through validation to appropriate third party sources, or where relevant, assessing the reasonableness of significant estimates and judgements used; • assessing the potential impact of climate change on the valuation of the unquoted investments; and • assessing the ongoing impact of geopolitical events on the valuation of investments. We found that the Directors’ valuations of unquoted investments were materially consistent with the IPEV guidelines and that the assumptions used to derive the valuations within the financial statements were reasonable based on the investee’s circumstances or consistent with appropriate third party sources. No material misstatements were identified fromthis testing. We tested the existence of the unquoted investment portfolio by agreeing a sample of the holdings to independently obtained third party confirmations as at 31 March 2023. No variances were identified from this testing. 70 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which it operates. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. The impact of climate risk on our audit As part of our audit we made enquiries of management to understand the process management adopted to assess the extent of the potential impact of climate risk on the Company’s financial statements and support the disclosures made within the Company’s financial statements. The Directors and the AIFM concluded that there was no material impact on the financial statements. Our evaluation of this included assessing how the Directors had incorporated climate risk factors into the key area of judgement and estimation in the financial statements, being in relation to the process of valuation of unquoted investments. We also considered the consistency of the climate change disclosures included in the Strategic Report with the financial statements and our knowledge from our audit. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Overall Company materiality £21,500,000 (2022: £22,682,000). How we determined it Approximately 1% of net assets. Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark for investment trust Company audits. This benchmark provides an appropriate and consistent year on year basis for our audit. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £16,125,000 (2022: £17,011,000) for the Company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £1,075,000 (2022: £1,134,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 71 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Conclusions relating to going concern Reporting on other information Our evaluation of the Directors’ assessment of the The other information comprises all of the information in Company’s ability to continue to adopt the going concern the Annual Report other than the financial statements and basis of accounting included: our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial • evaluating the Directors’ updated risk assessment statements does not cover the other information and, and considering whether it addressed relevant threats, accordingly, we do not express an audit opinion or, except including the heightened economic uncertainty as a to the extent otherwise explicitly stated in this report, any result of recent global events; form of assurance thereon. • evaluating the Directors’ assessment of potential In connection with our audit of the financial statements, operational impacts, considering their consistency with our responsibility is to read the other information and, other available information and our understanding of in doing so, consider whether the other information is the business and assessed the potential impact on the materially inconsistent with the financial statements or our financial statements; knowledge obtained in the audit, or otherwise appears to • reviewing the Directors’ assessment of the Company’s be materially misstated. If we identify an apparent material financial position in the context of its ability to inconsistency or material misstatement, we are required meet future expected operating expenses and debt to perform procedures to conclude whether there is a repayments, their assessment of liquidity as well as material misstatement of the financial statements or a their review of the operational resilience of the Company material misstatement of the other information. If, based and oversight of key third-party service providers; and on the work we have performed, we conclude that there is a material misstatement of this other information, we are • assessing the implication of significant reductions in required to report that fact. We have nothing to report based NAV as a result of market performance on the ongoing on these responsibilities. ability of the Company to operate. With respect to the Strategic report and the Report of the Based on the work we have performed, we have not Directors, we also considered whether the disclosures identified any material uncertainties relating to events required by the UK Companies Act 2006 have been or conditions that, individually or collectively, may cast included. significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from Based on our work undertaken in the course of the audit, when the financial statements are authorised for issue. the Companies Act 2006 requires us also to report certain opinions and matters as described below. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of Strategic report and the Report of the Directors accounting in the preparation of the financial statements is In our opinion, based on the work undertaken in the appropriate. course of the audit, the information given in the Strategic report and the Report of the Directors for the year ended However, because not all future events or conditions can 31March 2023 is consistent with the financial statements be predicted, this conclusion is not a guarantee as to the and has been prepared in accordance with applicable legal Company’s ability to continue as a going concern. requirements. In relation to the Directors’ reporting on how they have In light of the knowledge and understanding of the applied the UK Corporate Governance Code, we have Company and its environment obtained in the course of the nothing material to add or draw attention to in relation to audit, we did not identify any material misstatements in the the Directors’ statement in the financial statements about Strategic Report and the Report of the Directors. whether the Directors considered it appropriate to adopt the going concern basis of accounting. Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Our responsibilities and the responsibilities of the Directors Report to be audited has been properly prepared in with respect to going concern are described in the relevant accordance with the Companies Act 2006. sections of this report. 72 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Corporate governance statement Code; and considering whether the statement is consistent with the financial statements and our knowledge and The Listing Rules require us to review the Directors’ understanding of the Company and its environment statements in relation to going concern, longer-term obtained in the course of the audit. viability and that part of the corporate governance statement relating to the Company’s compliance with the In addition, based on the work undertaken as part of provisions of the UK Corporate Governance Code specified our audit, we have concluded that each of the following for our review. Our additional responsibilities with respect to elements of the corporate governance statement is the corporate governance statement as other information materially consistent with the financial statements and our are described in the Reporting on other information section knowledge obtained during the audit: of this report. • The Directors’ statement that they consider the Based on the work undertaken as part of our audit, we Annual Report, taken as a whole, is fair, balanced and have concluded that each of the following elements of the understandable, and provides the information necessary corporate governance statement is materially consistent for the members to assess the Company’s position, with the financial statements and our knowledge obtained performance, business model and strategy; during the audit, and we have nothing material to add or • The section of the Annual Report that describes the draw attention to in relation to: review of effectiveness of risk management and internal • The Directors’ confirmation that they have carried out a control systems; and robust assessment of the emerging and principal risks; • The section of the Annual Report describing the work of • The disclosures in the Annual Report that describe the Audit & Risk Committee. those principal risks, what procedures are in place to We have nothing to report in respect of our responsibility identify emerging risks and an explanation of how these to report when the Directors’ statement relating to the are being managed or mitigated; Company’s compliance with the Code does not properly • The Directors’ statement in the financial statements disclose a departure from a relevant provision of the Code about whether they considered it appropriate to specified under the Listing Rules for review by the auditors. adopt the going concern basis of accounting in Responsibilities for the financial statements and preparing them, and their identification of any material the audit uncertainties to the Company’s ability to continue to do Responsibilities of the Directors for the financial so over a period of at least twelve months from the date statements of approval of the financial statements; As explained more fully in the Statement of Directors’ • The Directors’ explanation as to their assessment of Responsibilities, the Directors are responsible for the the Company’s prospects, the period this assessment preparation of the financial statements in accordance with covers and why the period is appropriate; and the applicable framework and for being satisfied that they • The Directors’ statement as to whether they have a give a true and fair view. The Directors are also responsible reasonable expectation that the Company will be able for such internal control as they determine is necessary to to continue in operation and meet its liabilities as they enable the preparation of financial statements that are free fall due over the period of its assessment, including any from material misstatement, whether due to fraud or error. related disclosures drawing attention to any necessary In preparing the financial statements, the Directors are qualifications or assumptions. responsible for assessing the Company’s ability to continue Our review of the Directors’ statement regarding the longer- as a going concern, disclosing, as applicable, matters term viability of the Company was substantially less in related to going concern and using the going concern basis scope than an audit and only consisted of making inquiries of accounting unless the Directors either intend to liquidate and considering the Directors’ process supporting their the Company or to cease operations, or have no realistic statement; checking that the statement is in alignment with alternative but to do so. the relevant provisions of the UK Corporate Governance WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 GOVERNANCE 73 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Auditors’ responsibilities for the audit of the financial • challenging assumptions and judgements made by statements management in their significant accounting estimates, Our objectives are to obtain reasonable assurance about in particular in relation to the valuation of unquoted whether the financial statements as a whole are free from investments (see related key audit matter above); material misstatement, whether due to fraud or error, • identifying and testing journal entries, in particular and to issue an auditors’ report that includes our opinion. any material or revenue-impacting manual journal Reasonable assurance is a high level of assurance, but is entries posted as part of the Annual Report preparation not a guarantee that an audit conducted in accordance process; and with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or • designing audit procedures to incorporate error and are considered material if, individually or in the unpredictability around the nature, timing or extent of aggregate, they could reasonably be expected to influence our testing. the economic decisions of users taken on the basis of these There are inherent limitations in the audit procedures financial statements. described above. We are less likely to become aware of Irregularities, including fraud, are instances of non- instances of non-compliance with laws and regulations that compliance with laws and regulations. We design are not closely related to events and transactions reflected procedures in line with our responsibilities, outlined above, in the financial statements. Also, the risk of not detecting to detect material misstatements in respect of irregularities, a material misstatement due to fraud is higher than the including fraud. The extent to which our procedures are risk of not detecting one resulting from error, as fraud may capable of detecting irregularities, including fraud, is involve deliberate concealment by, for example, forgery or detailed below. intentional misrepresentations, or through collusion. Based on our understanding of the Company and industry, Our audit testing might include testing complete we identified that the principal risks of non-compliance populations of certain transactions and balances, possibly with laws and regulations related to breaches of section using data auditing techniques. However, it typically 1158 of the Corporation Tax Act 2010, and we considered involves selecting a limited number of items for testing, the extent to which non-compliance might have a rather than testing complete populations. We will often material effect on the financial statements. We evaluated seek to target particular items for testing based on their management’s incentives and opportunities for fraudulent size or risk characteristics. In other cases, we will use audit manipulation of the financial statements (including the risk sampling to enable us to draw a conclusion about the of override of controls), and determined that the principal population from which the sample is selected. risks were related to posting inappropriate journal entries A further description of our responsibilities for the audit of to increase revenue (investment income and capital gains) the financial statements is located on the FRC’s website at: or to increase net asset value, and management bias in www.frc.org.uk/auditorsresponsibilities. This description accounting estimates. Audit procedures performed by the forms part of our auditors’ report. engagement team included: Use of this report • discussions with the AIFM and the Audit & Risk This report, including the opinions, has been prepared Committee, including consideration of known or for and only for the Company’s members as a body in suspected instances of non-compliance with laws and accordance with Chapter 3 of Part 16 of the Companies regulation and fraud; Act 2006 and for no other purpose. We do not, in giving • reviewing relevant meeting minutes, including those of these opinions, accept or assume responsibility for any the Audit & Risk Committee; other purpose or to any other person to whom this report is shown or into whose hands it may come save where • assessment of the Company’s compliance with the expressly agreed by our prior consent in writing. requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; 74 GOVERNANCE WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WORLDWIDE HEALTHCARE TRUST PLC CONTINUED Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of Directors’ remuneration specified by law are not made; or • the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit & Risk Committee, we were appointed by the members on 14July 2014 to audit the financial statements for the year ended 31March 2015 and subsequent financial periods. The period of total uninterrupted engagement is 9 years, covering the years ended 31 March 2015 to 31 March 2023. Allan McGrath (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 6 June 2023 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 75 ## INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2023 2023 2022 | | | Revenue | | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Notes | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | Gains/(Losses) on investments 9 | | | | – 10,388 10,388 – (152,475) (152,475) | | | | | | | Exchange losses on currency – (18,302) (18,302) – (6,342) (6,342) balances Income from investments 2 23,945 – 23,945 23,471 – 23,471 AIFM, portfolio management and performance fees 3 (877) (16,657) (17,534) (938) 1,061 123 Other expenses 4 (1,142) (22) (1,164) (1,305) (529) (1,834) Net return/(loss) before finance 21,926 (24,593) (2,667) 21,228 (158,285) (137,057) charges and taxation | Finance costs | 5 (193) (3,658) (3,851) (40) (761) (801) | | | --- | --- | --- | | Net return/(loss) before taxation | | 21,733 (28,251) (6,518) 21,188 (159,046) (137,858) | | Taxation | 6 (2,021) (248) (2,269) (3,668) – (3,668) | | Net return/(loss) after taxation 19,712 (28,499) (8,787) 17,520 (159,046) (141,526) Return/(loss) per share 7 30.6p (44.2) (13.6) 26.8p (243.5) (216.7) The “Total” column of this statement is the Income Statement of the Company. The “Revenue” and “Capital” columns are supplementary to this and are prepared under guidance published by The Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. The Company has no recognised gains and losses other than those shown above and therefore no separate Statement of Total Comprehensive Income has been presented. The accompanying notes are an integral part of these statements. 76 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2023 | | | | | Capital | | Share | | | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | | redemption | | premium | | Capital | Revenue | | shareholders’ | | | | capital | | | reserve | account | | reserve | reserve | | | funds | | | £’000 | | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | | At 1 April 2022 | 16,385 8,221 841,599 1,381,038 20,990 2,268,233 | | | | | | | | | | | | Net (loss)/return after taxation | | – – – (28,499) 19,712 (8,787) | | | | | | | | | | Final dividend paid in respect of year ended – – – - (12,721) (12,721) 31 March 2022 Interim dividend paid in respect of year ended – – – - (4,490) (4,490) 31 March 2023 | Shares purchased for treasury | | – – – (91,514) – (91,514) | | --- | --- | --- | | Shares cancelled from treasury | (120) 120 – – – – | | | At 31 March 2023 | 16,265 8,341 841,599 1,261,025 23,491 2,150,721 | | FOR THE YEAR ENDED 31 MARCH 2022 | | | | | Capital | | Share | | | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | | redemption | | premium | | Capital | Revenue | | shareholders’ | | | | capital | | | reserve | account | | reserve | reserve | | | funds | | | £’000 | | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | | At 1 April 2021 | 16,078 8,221 796,357 1,542,628 18,141 2,381,425 | | | | | | | | | | | | Net (loss)/return after taxation | | – – – (159,046) 17,520 (141,526) | | | | | | | | | | Final dividend paid in respect of year ended – – – – (10,085) (10,085) 31 March 2021 Interim dividend paid in respect of year ended – – – – (4,586) (4,586) 31 March 2022 | New shares issued | | 307 – 45,242 – – 45,549 | | --- | --- | --- | | Shares purchased for treasury | | – – – (2,544) – (2,544) | | At 31 March 2022 | 16,385 8,221 841,599 1,381,038 20,990 2,268,233 | | WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 77 ## STATEMENT OF FINANCIAL POSITION As at 31 March 2023 2023 2022 Notes £’000 £’000 Fixed assets Investments 9 2,186,417 2,379,848 Derivative – OTC swaps 9 & 10 209 283 2,186,626 2,380,131 Current assets Debtors 11 4,376 14,724 Cash 58,925 26,594 63,301 41,318 Current liabilities Creditors: amounts falling due within one year 12 (72,105) (147,804) Derivative – OTC swaps 9 & 10 (27,101) (5,412) (99,206) (153,216) Net current liabilities (35,905) (111,898) Total net assets 2,150,721 2,268,233 Capital and reserves | Share capital | 13 16,265 16,385 | | | | --- | --- | --- | --- | | Capital redemption reserve | | | 8,341 8,221 | | Share premium account | | 841,599 841,599 | | | Capital reserve | 17 1,261,025 1,381,038 | | | | Revenue reserve | | 23,491 20,990 | | | Total shareholders' funds | | 2,150,721 2,268,233 | | | Net asset value per share | 14 3,434.5p 3,465.2p | | | The financial statements on pages 75 to 95 were approved by the Board of Directors and authorised for issue on 6 June 2023 and were signed on its behalf by: Doug McCutcheon Chair The accompanying notes are an integral part of this statement. Worldwide Healthcare Trust PLC – Company Registration Number 3023689 (Registered in England) 78 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023 | | | | | 2023 | 2022 | | --- | --- | --- | --- | --- | --- | | | Notes | | | £’000 | £’000 | | Net cash inflow/(outflow) from operating activities | | 18 5,394 (13,329) | | | | | Purchases of investments and derivatives | | (1,189,133) (1,330,279) | | | | | Sales of investments and derivatives | | | 1,404,617 1,253,138 | | | | Realised (loss)/gain on foreign exchange transactions | | | | (18,240) (5,541) | | | Net cash inflow/(outflow) from investing activities | | | 197,244 (82,682) | | | | Issue of shares | | 13 – 48,126 | | | | | Shares repurchased | | 13 (91,514) (2,544) | | | | | Equity dividends paid | | (17,211) (14,671) | | | | | Interest paid | | | | (3,851) (801) | | | Net cash (outflow)/inflow from financing activities | | | (112,576) 30,110 | | | | Decrease/(Increase) in net cash/(debt) | | | | 90,062 (65,901) | | Cash flows from operating activities include interest received of £2,301,000 (2022: £968,000) and dividends received of £20,507,000 (2022:£23,853,000). RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT IN NET CASH/(DEBT) | | 2023 | 2022 | | --- | --- | --- | | | £’000 | £’000 | | Decrease/(Increase) in net cash/(debt) resulting from cashflows | 90,062 (65,901) | | | Losses on foreign currency cash and cash equivalents | (62) (801) | | | Movement in net cash/(debt) in the year | 90,000 (66,702) | | | Net debt at 1 April | (87,003) (20,301) | | | Net cash/(debt) at 31 March | 2,997 (87,003) | | Net cash/(debt) includes the bank overdraft of £55,928,000 (2022: £113,597,000) (see note 12) and cash as per the balance sheet of £58,925,000 (2022: £26,594,000). The accompanying notes are an integral part of this statement. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 79 ## NOTES TO THE FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The principal accounting policies, all of which have been applied consistently throughout the year in the preparation of these financial statements, are set out below: (A) Basis of preparation These financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 ‘The Financial Reporting Standard applicable in the UK and Ireland’ (‘UK GAAP’) and the guidelines set out in the Statement of Recommended Practice (‘SORP’), published in February 2021, for Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies (‘AIC’), the historical cost convention, as modified by the valuation of investments and derivatives at fair value. The Board has considered a detailed assessment of the Company’s ability to meet its liabilities as they fall due, including stress and liquidity tests which modelled the effects of substantial falls in markets and significant reductions in market liquidity (including further stressing the current economic conditions) on the Company’s financial position and cash flows. Theresults of the tests showed that the Company would have sufficient cash, or the ability to liquidate a sufficient proportion of its listed holdings, to meet its liabilities as they fall due. Based on the information available to the Directors at the time of this report, including the results of the stress tests, the Company’s cash balances, and the liquidity of the Company’s listed investments, the Directors are satisfied that the Company has adequate financial resources to continue in operation for at least the next 12 months from the date of approval of these financial statements and that, accordingly, it is appropriate to adopt the going concern basis in preparing these financial statements. The Company’s financial statements are presented in sterling, being the functional and presentational currency of the Company. Allvalues are rounded to the nearest thousand pounds (£’000) except where otherwise indicated. In addition, investments and derivatives held at fair value are categorised into a fair value hierarchy based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: • Level 1 – Quoted prices in active markets. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data), either directly or indirectly. • Level 3 – Inputs are unobservable (i.e. for which market data is unavailable). Presentation of the Income Statement In order to reflect better the activities of an investment trust company and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in Sections 1158 and 1159 of the Corporation Tax Act 2010. Critical Accounting Judgements and Key Sources of Estimation Uncertainty Critical accounting judgements and key sources of estimation uncertainty used in preparing the financial information are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. The resulting estimates will, by definition, seldom equal the related actual results. 80 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. ACCOUNTING POLICIES continued In the course of preparing the financial statements, the only key source of estimation uncertainty in the process of applying the Company’s accounting policies, is in relation to the valuation of the unquoted (Level 3) investments. The nature of estimation means that the actual outcomes could differ from those estimates, possibly significantly. The estimates relate to the investments where there is no appropriate market price i.e. the private investments. Whilst the board considers the methodologies and assumptions adopted in the valuation are supportable, reasonable and robust, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investment existed. As at 31 March 2023, there is no single key assumption used in the valuation of the unquoted investments, or other key source of estimation uncertainty, that, in the Directors’ opinion has a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year. Unquoted investments are all valued in line with the accounting policy set out below. (B) Investments Investments are measured under FRS 102 and are measured initially, and at subsequent reporting dates, at fair value. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned. Changes in fair value and gains or losses on disposal are included in the Income Statement as a capital item. For quoted securities fair value is either bid price or last traded price, depending on the convention of the exchange on which the investment is listed. Fair value is the price for which an asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction. In estimating the fair value of unquoted investments, the AIFM and Board apply valuation techniques which are appropriate in light of the nature, facts and circumstances of the investment, and use reasonable current market data and inputs combined with judgement and assumptions and apply these consistently. The following principles used in determining the valuation of unquoted investments, are consistent with the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines. The assumptions and estimates made in determining the fair value of each unquoted investment are considered at least each six months or sooner if there is a triggering event. An example of where a valuation would be considered out of the six-month cycle is the success or failure of a drug under development to meet an anticipated outcome of its trial, announcement of the company undergoing an initial public offering, or other performance against tangible development milestones. The primary valuation method applied in the valuation of the unquoted investments is the probability-weighted expected return method (PWERM), which considers on a probability weighted basis the future outcomes for the investment. When using the PWERM method significant judgements are made in estimating the various inputs into the model and recognising the sensitivity of such estimates. Examples of the factors where significant judgement is made include, but are not limited to, the probability assigned to potential future outcomes; discount rates; and, the likely exit scenarios for the investor company, for example, IPO or trade sale. Where the investment being valued was itself made recently, or there has been a third party transaction in the investment, the price of the transaction may provide a good indication of fair value. Using the Price of Recent Investment technique is not a default and at each reporting date the fair value of recent investments is estimated to assess whether changes or events subsequent to the relevant transaction would imply a material change in the investment’s fair value. When using the price of a recent transaction in the valuations the Company looks to ‘re-calibrate’ this price at each valuation point by reviewing progress within the investment, comparing against the initial investment thesis, assessing if there are any significant events or milestones that would indicate the value of the investment value has changed materially and considering whether an alternative methodology would be more appropriate. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 81 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. ACCOUNTING POLICIES continued (C) Derivative financial instruments The Company uses derivative financial instruments (namely put and call options and equity swaps). All derivative instruments are valued initially, and at subsequent reporting dates, at fair value in the Statement of Financial Position. The equity swaps are accounted for as Fixed Assets or Current Liabilities. All gains and losses on over-the-counter (OTC) equity swaps are accounted for as gains or losses on investments. Where there has been a re-positioning of the swap, gains and losses are accounted for on a realised basis. All such gains and losses have been debited or credited to the capital column of the Income Statement. Cash collateral held by counterparties is included within cash, except where there is a right of offset against the overdraft facility. (D) Investment income Dividends receivable are recognised on the ex-dividend date. Where no ex-dividend date is quoted, dividends are recognised when the Company’s right to receive payment is established. Foreign dividends are grossed up at the appropriate rate of withholding tax, with the withholding tax recognised in the taxation charge. Income from fixed interest securities is recognised on a time apportionment basis so as to reflect the effective interest rate. Deposit interest is accounted for on an accruals basis. (E) Expenses All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Income Statement except as follows: • expenses which are incidental to the acquisition or disposal of an investment are charged to the capital column of the Income Statement; and • expenses are charged to the capital column of the Income Statement where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the portfolio management and AIFM fees have been charged to the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio. As a result 5% of the portfolio management and AIFM fees are charged to the revenue column of the Income Statement and 95% are charged to the capital column of the Income Statement. Any performance fee is charged in full to the capital column of the Income Statement. (F) Finance costs Finance costs are accounted for on an accruals basis. Finance costs are charged to the Income Statement in line with the Board’s expected long-term split of returns, in the form of capital gains and income, from the Company’s portfolio. As a result 5% of the finance costs are charged to the revenue column of the Income Statement and 95% are charged to the capital column of the Income Statement. Finance charges are accounted for on an accruals basis in the Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 82 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. ACCOUNTING POLICIES continued (G) Taxation The tax effect of different items of expenditure is allocated between capital and revenue using the marginal basis. Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial Position date other than those differences regarded as permanent. This is subject to deferred tax assets only being recognised when it is probable that there will be suitable profits from which the reversal of timing differences can be deducted. Any liability to deferred tax is provided for at the rate of tax enacted or substantially enacted. (H) Foreign currency Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the exchange rates ruling at that date. Exchange gains/losses on foreign currency balances Any gains or losses on the translation of foreign currency balances, including the foreign currency overdraft, whether realised or unrealised, are taken to the capital or the revenue column of the Income Statement, depending on whether the gain or loss is of a capital or revenue nature. (I) Capital redemption reserve This reserve arose when ordinary shares were redeemed by the Company and subsequently cancelled. When ordinary shares are redeemed by the Company and subsequently cancelled, an amount equal to the par value of the ordinary share capital is transferred from the ordinary share capital to the capital redemption reserve. (J) Capital reserve The following are transferred to this reserve: • gains and losses on the disposal of investments; • exchange differences of a capital nature, including the effects of changes in exchange rates on foreign currency borrowings; • expenses, together with the related taxation effect, in accordance with the above policies; and • changes in the fair value of investments and derivatives. This reserve can be used to distribute realised capital profits by way of dividend or share buy backs. Any gains in the fair value of investments that are not readily convertible to cash are treated as unrealised gains in the capital reserve. Distributions are only payable out of the capital reserve if capital reserves are greater than the proposed distribution and positive on the date of distribution. (K) Revenue reserve The revenue reserve is distributable by way of dividend. Dividends are only payable out of the revenue reserve if revenue reserves are greater than the proposed dividend and positive on the date of distribution. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 83 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 1. ACCOUNTING POLICIES continued (L) Dividend payments Dividends paid by the Company on its shares are recognised in the financial statements in the year in which they become payable and are shown in the Statement of Changes in Equity. (M) Cash and cash equivalents Cash comprises cash at bank and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Bank overdrafts are considered as a component of cash and cash equivalents as they are repayable on demand and form an integral part of the Company’s cash management. 2. INCOME FROM INVESTMENTS 2023 2022 £’000 £’000 Income from investments | Overseas dividends | 18,431 19,678 | | | --- | --- | --- | | Fixed interest income | | 184 772 | | UK dividends | | 3,212 2,825 | 21,827 23,275 Other income | Derivatives | | 79 151 | | --- | --- | --- | | Deposit interest | 2,039 45 | | | Total income from investments | 23,945 23,471 | | Total income comprises: Dividends 21,643 22,503 Interest 2,302 968 23,945 23,471 3. AIFM, PORTFOLIO MANAGEMENT AND PERFORMANCE FEES 2023 2022 | | Revenue | | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | AIFM fee | | 151 2,862 3,013 160 3,046 3,206 | | | | | | | | | Portfolio management fee | | 726 13,795 14,521 778 14,781 15,559 | | | | | | | | | Performance fee (reversal)* | | | – – – – (18,888) (18,888) | | | | | | | 877 16,657 17,534 938 (1,061) (123) * During the year ended 31 March 2022, due to underperformance against the Benchmark, a reversal of prior period performance fee provisions totalling £18,888,000occurred. See page 44 for further information on the performance fee. Further details on the above fees are set out in the Strategic Report on pages 28 and 29 and in the Report of the Directors on page 44. 84 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 4. OTHER EXPENSES | | 2023 | | 2022 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Directors’ remuneration | | 212 207 | | | Employer’s NIC on Directors’ remuneration | | 18 20 | | | Auditors’ remuneration for the audit of the Company’s financial statements | | 54 47 | | | Auditors’ remuneration for non-audit services | | – 5 | | | Depositary and custody fees | | 208 213 | | | Listing fees | | 85 77 | | | Registrar fees | | 45 63 | | | Legal and professional costs | | 181 255 | | | Broker fees | | (15) 117 | | | Other costs | | 354 301 | | 1,142 1,305 Professional fees (Capital)^ 22 529 1,164 1,834 Details of the amounts paid to Directors are included in the Directors’ Remuneration Report on page 64. ^ Professional fees in respect of acquisition of unquoted investments. These fees do not form part of the ongoing charge ratio. 5. FINANCE COSTS 2023 2022 | | Revenue | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | | Finance costs | | 193 3,658 3,851 40 761 801 | | | | | | | 6. TAXATION (A) Analysis of charge in year 2023 2022 | | Revenue | | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | Corporation tax at 19% (2022: 19%) | | | – – – – – – | | | | | | | | Overseas taxation | | 2,021 248 2,021 3,668 – 3,668 | | | | | | | | 2,021 248 2,269 3,668 – 3,668 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 85 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 6. TAXATION continued (B) Factors affecting the tax charge for the year Approved investment trusts are exempt from tax on capital gains made within the Company. The tax charged for the year is higher (2022: higher) than the standard rate of corporation tax of 19% (2022: 19%). Thedifference is explained below. 2023 2022 | | Revenue | | | Capital | Total | Revenue | | Capital | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 | | £’000 | £’000 | | £’000 | £’000 | £’000 | | Net return before taxation | | 21,733 (28,251) (6,518) 21,188 (159,046) (137,858) | | | | | | | | | Corporation tax at 19% (2022: 19%) | | 4,129 (5,415) (1,286) 4,026 (30,219) (26,193) | | | | | | | | | Non-taxable gains on investments | | | – 1,551 1,551 – 30,175 30,175 | | | | | | | | Overseas withholding taxation | | 2,021 – 2,021 3,668 – 3,668 | | | | | | | | | Overseas capital gains tax | | | – 248 248 – – – | | | | | | | | Non taxable dividends | | (4,112) – (4,112) (4,276) – (4,276) | | | | | | | | | Excess management expenses | | | (17) 3,864 3,847 250 44 294 | | | | | | | | Total tax charge | | 2,021 248 2,269 3,668 – 3,668 | | | | | | | | (C) Provision for deferred tax No provision for deferred taxation has been made in the current or prior year. The Company has not provided for deferred tax on capital profits and losses arising on the revaluation or disposal of investments, as it is exempt from tax on these items because of its status as an investment trust company. The Company has not recognised a deferred tax asset of £49,985,000 (25% tax rate) (2022: £45,055,000 (25% tax rate)) as a result of excess management expenses and overdraft expenses. It is not anticipated that these excess expenses will be utilised in the foreseeable future. 7. RETURN/(LOSS) PER SHARE 2023 2022 £’000 £’000 The return/(loss) per share is based on the following figures: Revenue return 19,712 17,520 Capital (loss) (28,499) (159,046) (8,787) (141,526) | Weighted average number of ordinary shares in issue during the year | 64,474,422 65,307,132 | | | --- | --- | --- | | Revenue return per ordinary share | | 30.6p 26.8p | | Capital (loss) per ordinary share | | (44.2p) (243.5p) | (13.6p) (216.7p) The calculation of the total, revenue and capital (loss)/return per ordinary share is carried out in accordance with IAS 33, “Earnings per Share”, in accordance with the requirements of FRS 102. 86 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 8. DIVIDENDS Under UK Company Law, final dividends are not recognised until they are approved by shareholders and interim dividends are not recognised until they are paid. They are also debited directly from reserves. Amounts recognised as distributable in these financial statements were as follows: | | 2023 | | 2022 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Final dividend in respect of the year ended 31 March 2022 | 12,721 – | | | | Interim dividend in respect of the year ended 31 March 2023 | 4,490 – | | | | Final dividend in respect of the year ended 31 March 2021 | | – 10,085 | | | Interim dividend in respect of the year ended 31 March 2022 | | – 4,586 | | 17,211 14,671 In respect of the year ended 31 March 2023, an interim dividend of 7.0p per share was paid on 11 January 2023. A final dividend of 24.0p will be payable, subject to shareholder approval, on 26 July 2023, the associated ex dividend date will be 8 June 2023. The total dividends payable in respect of the year ended 31 March 2023 amount to 31.0p per share (2022:26.5pper share). The aggregate cost of the final dividend, based on the number of shares in issue (excluding shares held in treasury) at 5 June 2023, will be £14,717,000. In accordance with FRS 102 dividends will be reflected in the financial statements for the year in which they become payable. Total dividends in respect of the financial year, which is the basis on which the requirements of s1158 of the Corporation Tax Act 2010 are considered, are set out below. | | 2023 | | 2022 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Revenue available for distribution by way of dividend for the year | 19,712 17,520 | | | | Interim dividend in respect of the year ended 31 March 2022 | | – (4,586) | | | Final dividend in respect of the year ended 31 March 2022 | | – (12,721) | | | Interim dividend in respect of the year ended 31 March 2023 | (4,490) – | | | | Final dividend in respect of the year ended 31 March 2023* | (14,717) – | | | | Net retained revenue | 505 213 | | | * based on 61,321,726 shares in issue (excluding shares held in treasury) as at 5 June 2023. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 87 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 9. INVESTMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS Derivative Financial | | | Quoted | Unquoted | | Instruments - | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Investments | | Investments | | | Net | Total | | | | £’000 | | £’000 | | £’000 | £’000 | | Cost at 1 April 2022 | | 1,952,701 136,760 – 2,089,461 | | | | | | | Investment holdings gains/(losses) at 1 April 2022 | | 254,674 35,713 (5,129) 285,258 | | | | | | | Valuation at 1 April 2022 | 2,207,375 172,473 (5,129) 2,374,719 | | | | | | | Movement in the year: | Purchases at cost | 1,168,434 – – 1,168,434 | | | --- | --- | --- | | Sales - proceeds | (1,390,864) (4,332) 1,072 (1,394,124) | | | Transfer between levels* | | 14,019 (14,019) – – | | Net movement in investment holding gains/(losses) | | 42,283 (8,952) (22,835) 10,496 | | Valuation at 31 March 2023 | 2,041,247 145,170 (26,892) 2,159,525 | | | Cost at 31 March 2023 | 1,828,139 122,597 – 1,950,736 | | | Investment holding gains/(losses) at 31 March 2023 | | 213,108 22,573 (26,892) 208,789 | | Valuation at 31 March 2023 | 2,041,247 145,170 (26,892) 2,159,525 | | * See Note 16. The Company received £1,393,875,000 (2022: £1,253,317,000) from investments and derivatives sold in the year. The book cost of these was £1,307,159,000 (2022: £1,278,065,000). These investments and derivatives have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. | | 2023 | 2022 | | --- | --- | --- | | | £’000 | £’000 | | Net movement in investment holding gains/(losses) in the year | 33,331 (130,139) | | | Net movement in derivative holding (losses)/gains in the year | (22,835) (21,985) | | | Effective interest rate amortisation | (108) (351) | | | Gains/(Losses) on investments | 10,388 (152,475) | | Purchase transaction costs were £1,660,000 (2022: £1,668,000). Sales transaction costs were £1,266,000 (2022: £1,244,000). These comprise mainly commission and stamp duty. 10. DERIVATIVE FINANCIAL INSTRUMENTS | | 2023 | 2022 | | --- | --- | --- | | | £’000 | £’000 | | Fair value of OTC equity swaps (asset) | 209 283 | | | Fair value of OTC equity swaps (liability) | (27,101) (5,412) | | (26,892) (5,129) See note 9 above for movements during the year. 88 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 11. DEBTORS | | 2023 | | 2022 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Amounts due from brokers | | 88 10,581 | | | Withholding taxation recoverable | 2,882 2,587 | | | | VAT recoverable | | – – | | | Prepayments and accrued income | 1,406 1,556 | | | 4,376 14,724 12. CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR | | 2023 | 2022 | | --- | --- | --- | | | £’000 | £’000 | | Amounts due to brokers | 9,432 30,131 | | | Overdraft drawn* | 55,928 113,597 | | | Other creditors and accruals | 6,745 4,076 | | 72,105 147,804 * The Company’s borrowing requirements are met through the utilisation of an overdraft facility provided by J.P. Morgan Securities LLC. The overdraft is drawn down in U.S. dollars. Interest on the drawn overdraft is charged at the United States Overnight Bank Funding Rate plus 45 basis points. As described on page 93, J.P. Morgan Securities LLC may take investments up to 140% of the value of the overdrawn balance as collateral and has been granted a first priority security interest or lien over the Company’s assets. 13. SHARE CAPITAL Total | | | | | Treasury | | shares | | --- | --- | --- | --- | --- | --- | --- | | | | Shares | | | shares | in issue | | | | number | | number | | number | | Issued and fully paid at 1 April 2022 | 65,457,246 80,509 65,537,755 | | | | | | | Shares purchased for treasury | (2,836,483) 2,836,483 – | | | | | | | Shares cancelled from treasury | | | – (478,977) (478,977) | | | | | At 31 March 2023 | 62,620,763 2,438,015 65,058,778 | | | | | | | | | | | | 2023 | 2022 | | | | | | | £’000 | £’000 | Issued and fully paid: Ordinary Shares of 25p 16,265 16,385 During the year ended 31 March 2023 no new shares were issued, 2,836,483 shares were repurchased into treasury at a cost of £91,514,000 (2022: 1,227,500 shares were issued raising £45,549,000 and 80,509 shares were repurchased for treasury at a cost of £2,544,000). WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 89 NOTES TO THE FINANCIAL STATEMENTS CONTINUED # 14. NET ASSET VALUE PER SHARE | | 2023 | 2022 | | --- | --- | --- | | Net asset value per share | 3,434.5p | 3,465.2p | The net asset value per share is based on the assets attributable to equity shareholders of £2,150,721,000 (2022: £2,268,233,000) and on the number of shares in issue at the year end (excluding those shares held in treasury) of 62,620,763 (2022: 65,457,246). # 15. RELATED PARTIES The following are considered to be related parties: - Frostrow Capital LLP (the Company's AIFM, a related party under the Listing Rules only) - OrbiMed Capital LLC (the Company's Portfolio Manager) - The Directors of the Company Sven Borho is a Managing Partner at OrbiMed and has waived his Director's fee of £33,573 (2022: £33,573). Details of fees paid to OrbiMed by the Company can be found in note 3 on page 83. All material related party transactions have been disclosed in notes 3 and 4 on pages 83 and 84. Details of the remuneration of all Directors can be found on page 65. Details of the Directors' interests in the capital of the Company can also be found on page 64. Three current and two former partners at OrbiMed have a minority financial interest totalling 20% in Frostrow, the Company's AIFM. Details of the fees paid to Frostrow by the Company can be found in note 3 on page 83. # 16. FINANCIAL INSTRUMENTS # Risk management policies and procedures The Company's financial instruments comprise securities and other investments, derivative instruments, cash balances, overdrafts and debtors and creditors that arise directly from its operations. As an investment trust, the Company invests in equities and other investments for the long term so as to secure its investment objective. In pursuing its investment objective, the Company is exposed to a variety of risks that could result in a reduction in the Company's net assets. The main risks that the Company faces arising from its financial instruments are: (i) market risk (including foreign currency risk, interest rate risk and other price risk) (ii) liquidity risk (iii) credit risk These risks, with the exception of liquidity risk, and the Directors' approach to the management of them have not changed from the previous accounting year. The AIFM, in close co-operation with the Board and the Portfolio Manager, co-ordinates the Company's risk management. 90 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued Use of derivatives Equity swaps are used within the Company’s portfolio. OTC equity swaps The Company uses OTC equity swap positions to gain access to the Indian and Chinese markets when it is more cost effective to gain access via swaps or to gain exposure to thematic baskets of stocks. Offsetting disclosure Swap trades and OTC derivatives are traded under ISDA† Master Agreements. The Company currently has such agreements in place with Goldman Sachs and JP Morgan. These agreements create a right of set-off that becomes enforceable only following a specified event of default, or in other circumstances not expected to arise in the normal course of business. As the right of set-off is not unconditional, for financial reporting purposes, the Company does not offset derivative assets and derivative liabilities. †International Swap Dealers Association Inc. (i) Other price risk In pursuance of the Company’s Investment Objective the Company’s portfolio, including its derivatives, is exposed to the risk of fluctuations in market prices and foreign exchange rates. The Board manage these risks through the use of limits and guidelines, monthly compliance reports from Frostrow and reports from Frostrow and OrbiMed presented at each Board meeting. Other price risk exposure The Company’s gross exposure to other price risk is represented by the fair value of the investments and the underlying exposure through the derivative investments held at the year end as shown in the table below. 2023 2022 | | | | | | Notional* | | | | | Notional* | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Assets | | Liabilities | | exposure | | Assets | Liabilities | | exposure | | | | £’000 | | | £’000 | | £’000 | £’000 | | £’000 | | £’000 | | Investments | 2,186,417 – 2,186,417 2,379,848 – 2,379,848 | | | | | | | | | | | | OTC equity swaps | | 209 (27,101) 190,704 283 (5,412) 135,018 | | | | | | | | | | 2,186,626 (27,101) 2,377,121 2,380,131 (5,412) 2,514,866 * The notional exposure is calculated in accordance with the AIFMD requirements for calculating exposure via derivatives. See glossary beginning on page 97. Other price risk sensitivity If market prices of all of the Company’s financial instruments including the derivatives at the Statement of Financial Position date had been 25% higher or lower (2022: 25% higher or lower) while all other variables remained constant: the revenue return would have decreased/increased by £0.2 million (2022: £0.2 million); the capital return would have increased/decreased by £596.6 million (2022: £625.4 million); and, the return on equity would have increased/decreased by £594.6 million (2022: £625.2million). The calculations are based on the portfolio as at the respective Statement of Financial Position dates and are not representative of the year as a whole. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 91 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued (ii) Foreign currency risk A significant proportion of the Company’s portfolio and derivative positions are denominated in currencies other than sterling (the Company’s functional currency, and the currency in which it reports its results). As a result, movements in exchange rates can significantly affect the sterling value of those items. Foreign currency exposure The fair values of the Company’s monetary assets and liabilities that are denominated in foreign currencies are shown below. 2023 2022 | | Current | | Current | | | Current | Current | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | assets | | liabilities | Investments | | assets | liabilities | Investments | | | | £’000 | | £’000 | | £’000 | £’000 | £’000 | | £’000 | | U.S. dollar | 115,823 (124,286) 1,488,321 64,264 (169,551) 1,821,239 | | | | | | | | | | Swiss franc | | 2,466 – 84,999 2,202 – 113,899 | | | | | | | | | Japanese yen | | 793 – 135,398 332 114 83,225 | | | | | | | | | Hong Kong dollar | | – – 109,170 851 (851) 190,260 | | | | | | | | | Other | | 194 – 201,798 155 – 30,803 | | | | | | | | 119,276 (124,286) 2,019,686 67,804 (170,288) 2,239,426 Foreign currency sensitivity The following table details the sensitivity of the Company’s net return for the year and shareholders’ funds to a 10% increase and decrease in sterling against the relevant currency (2022: 10% increase and decrease). These percentages have been determined based on market volatility in exchange rates over the previous 12 months. The sensitivity analysis is based on the Company’s significant foreign currency exposures at each Statement of Financial Position date. 2023 2022 | | | USD | YEN | CHF | HKD | USD | YEN | CHF | HKD | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | | Sterling depreciates | 188,606 15,132 9,718 12,130 206,233 9,297 12,900 21,140 | | | | | | | | | | Sterling appreciates | (154,314) (12,381) (7,951) (9,925) (168,736) (7,606) (10,555) (17,296) | | | | | | | | | (iii) Interest rate risk Interest rate changes may affect: – the interest payable on the Company’s variable rate borrowings; – the level of income receivable from floating and fixed rate securities and cash at bank and on deposit; – the fair value of investments in fixed interest securities. Interest rate exposure The Company’s main exposure to interest rate risks is through its overdraft facility with J.P. Morgan Securities LLC, which is repayable on demand, and its holding in fixed interest securities. The exposure of financial assets and liabilities to fixed and floating interest rates, is shown below. 92 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued At 31 March 2023, the Company held no investments in securitised debt (2022: 0.4% of the portfolio). The exposure is shown in the table below. 2023 2022 | Weighted | | | | | | | | Weighted | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | average | Weighted | | | | | | average | | Weighted | | | | | | | | period | average | | | | | | | period | average | | | | | | | for which | | | fixed | | | | | for which | | | fixed | | | | | | | rate is | interest | | | Fixed | Floating | | | rate is | interest | | | Fixed | Floating | | | | fixed | | rate | | rate | | rate | | fixed | | rate | | rate | | rate | | | Years | | | % | £’000 | | £’000 | | Years | | | % | £’000 | | £’000 | Unquoted debt – – – – 2.9 2.6 5,024 – investments Cash – – – 100,366 – 56,336 Overdraft facility – – – (97,369) – (143,339) Financed swap – – – (217,596) – (140,147) positions – (214,599) 5,024 (227,150) All interest rate exposures are held in U.S. dollars. Cash of £100.4 million (2022: £56.3 million) was held as collateral against the financed swap positions, of which £41.4million (2022: £29.7 million) was offset against the overdraft position. Interest rate sensitivity If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s net return for the year ended 31 March 2023 and the net assets would increase/decrease by £2.1 million (2022: increase/decrease by £2.3 million). (iv) Liquidity risk This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Management of the risk Liquidity risk is not considered significant as the majority of the Company’s assets are investments in quoted securities that are readily realisable within one week, in normal market conditions. There maybe circumstances where market liquidity is lower than normal. Stress tests have been performed to understand how long the portfolio would take to realise in such situations. The Board is comfortable that in such a situation the Company would be able to meet its liabilities as they fall due. Liquidity exposure and maturity Contractual maturities of the financial liability exposures as at 31 March 2023, based on the earliest date on which payment can be required, are as follows: 2023 2022 | | 3 to 12 | | 3 months | | 3 to 12 | 3 months | | | --- | --- | --- | --- | --- | --- | --- | --- | | | months | | | or less | months | | or less | | | £’000 | | | £’000 | £’000 | | £’000 | | Overdraft facility | | – 97,369 – 143,339 | | | | | | Amounts due to brokers and accruals – 16,177 – 30,131 OTC equity swaps 27,101 – 5,412 – 27,101 113,546 5,412 173,470 WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 93 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued £41.4 million of cash held as collateral is offset against the overdraft facility in the Statement of Financial Position, as set out in Note 16(iii) above. (v) Credit risk Credit risk is the risk of failure of a counterparty to discharge its obligations resulting in the Company suffering a financial loss. The carrying amounts of financial assets best represent the maximum credit risk at the Statement of Financial Position date. The Company’s quoted securities are held on its behalf by J.P. Morgan Securities LLC acting as the Company’s Custodian and Prime Broker. As noted on page 32, certain of the Company’s assets can be held by J.P. Morgan Securities LLC as collateral against the overdraft provided by them to the Company. As at 31 March 2023 such assets held by J.P. Morgan Securities LLC are available for rehypothecation (see Glossary on page 99). As at 31 March 2023, assets with a total market value of £134.7 million (2022: £203.1 million) were available to J.P. Morgan Securities LLC to be used as collateral against the overdraft facility which equates to 140% of the overdrawn position (calculated on a settled basis). CREDIT RISK EXPOSURE | | 2023 | | 2022 | | --- | --- | --- | --- | | | £’000 | | £’000 | | Unquoted debt investments | | – 5,024 | | | Derivative – OTC equity swaps | 209 283 | | | Current assets: Other receivables (amounts due from brokers, dividends and interest receivable) 4,376 14,724 Cash 58,925 26,594 (vi) Fair value of financial assets and financial liabilities Financial assets and financial liabilities are either carried in the Statement of Financial Position at their fair value (investments and derivatives) or the Statement of Financial Position amount is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accrual, cash at bank, and the overdraft). (vii) Hierarchy of investments The Company has classified its financial assets designated at fair value through profit or loss and the fair value of derivative financial instruments using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurements. The hierarchy has the following levels: • Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 – inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and • Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). 94 FINANCIAL STATEMENTS WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 16. FINANCIAL INSTRUMENTS continued | | | Level 1 | | Level 2 | Level 3 | Total | | --- | --- | --- | --- | --- | --- | --- | | As of 31 March 2023 | | £’000 | | £’000 | £’000 | £’000 | | Investments held at fair value through profit or loss | 2,041,247 – 145,170 2,186,417 | | | | | | | Derivatives: OTC swaps (assets) | | | – 209 – 209 | | | | | Derivatives: OTC swaps (liabilities) | | | – (27,101) – (27,101) | | | | | Financial instruments measured at fair value | 2,041,247 (26,892) 145,170 2,159,525 | | | | | | As at 31 March 2023, ten equity investments and a deferred consideration investment have been classified as level 3. All level 3 positions have been valued in accordance with the accounting policy set out in Note 1(b). During 2023 one unquoted investment was transferred to Level 1 following their initial public offerings. | | | Level 1 | | Level 2 | Level 3 | Total | | --- | --- | --- | --- | --- | --- | --- | | As of 31 March 2022 | | £’000 | | £’000 | £’000 | £’000 | | Investments held at fair value through profit or loss | 2,207,375 – 172,473 2,379,848 | | | | | | | Derivatives: OTC swaps (assets) | | | – 283 – 283 | | | | | Derivatives: OTC swaps (liabilities) | | | – (5,412) – (5,412) | | | | | Financial instruments measured at fair value | 2,207,375 (5,129) 172,473 2,374,719 | | | | | | As at 31 March 2022, one debt, twelve equity and a deferred consideration investment have been classified as Level 3. All level 3 positions have been valued using an independent third party pricing source or using the price of a recent transaction. During 2022 four unquoted investments were transferred to Level 1 following their initial public offerings. (viii) Capital management policies and procedures The Company’s capital management objectives are to ensure that it will be able to continue as a going concern and to maximise the income and capital return to its equity shareholders through an appropriate level of gearing or leverage. The Board’s policy on gearing and leverage is set out on page 9. As at 31 March 2023, the Company had a net leverage percentage of 10.5% (2022: 10.9%). The capital structure of the Company consists of the equity share capital, retained earnings and other reserves as shown in the Statement of Financial Position on page 77. The Board, with the assistance of the AIFM and the Portfolio Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This includes a review of: – the planned level of gearing, which takes into account the Portfolio Manager’s view of the market; – the need to buy back equity shares, either for cancellation or to hold in treasury, in light of any share price discount to net asset value per share in accordance with the Company’s share buy-back policy; – the need for new issues of equity shares, including issues from treasury; and – the extent to which revenue in excess of that which is required to be distributed should be retained. The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting year. WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 FINANCIAL STATEMENTS 95 NOTES TO THE FINANCIAL STATEMENTS CONTINUED 17. CAPITAL RESERVE Capital Reserves Investment Holding | | Other | Gains* | Total | | --- | --- | --- | --- | | | £’000 | £’000 | £’000 | | At 1 April 2022 | 932,497 448,541 1,381,038 | | | | Net gains/(losses) on investments | 86,857 (76,469) 10,388 | | | | Expenses and taxation charged to capital | (20,585) – (20,585) | | | | Exchange loss on currency balances | (18,302) – (18,302) | | | | Shares repurchased for Treasury | (91,514) – (91,514) | | | | At 31 March 2023 | 888,953 372,072 1,261,025 | | | * Investment holding gains relate to the revaluation of investments and derivatives held at the reporting date. (See note 9 beginning on page 87 for further details). Under the Company’s Articles of Association, sums within “capital reserves – other” are also available for distribution. 18. RECONCILIATION OF OPERATING (LOSS)/RETURN TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES | | 2023 | 2022 | | --- | --- | --- | | | £’000 | £’000 | | Loss before finance charges and taxation | (2,667) (137,057) | | | Add: capital loss before finance charges and taxation | 24,593 158,285 | | | Revenue return before finance charges and taxation | 21,926 21,228 | | | Expenses charged to capital | (16,679) 532 | | | Decrease in other debtors | 150 1,342 | | | Increase/(Decrease) in provisions, and other creditors and accruals | 2,669 (32,120) | | | Net taxation suffered on investment income | (2,564) (3,960) | | | Amortisation | (108) (351) | | | Net cash inflow/(outflow) from operating activities | 5,394 (13,329) | | 96 FURTHER INFORMATION WORLDWIDE HEALTHCARE TRUST PLC Annual Report for the year ended 31 March 2023 ## SHAREHOLDER INFORMATION FINANCIAL CALENDAR Share prices 31 March Financial Year End The Company’s shares are listed on the London Stock Exchange under ‘Investment Companies’. The price is given May Final Results Announced daily in the Financial Times and other newspapers. July Annual General Meeting 30 September Half Year End Change of address November Half Year Results Announced Communications with shareholders are mailed to the address held on the share register. In the event of a change January/July Dividends Payable of address or other amendment this should be notified to Annual general meeting the Company’s Registrars, Link Group, under the signature The Annual General Meeting of Worldwide Healthcare Trust of the registered holder. PLC will be held at Saddlers’ Hall, 40 Gutter Lane, London Daily net asset value EC2V 6BR on Tuesday, 18 July 2023 from 12.30 p.m. Please The daily net asset value of the Company’s shares can be refer to the Statement from the Chair on pages 4 to 7 for obtained on the Company’s website at www.worldwidewh.com details of this year’s arrangements. and is published daily via the London Stock Exchange. Dividends The Company pays an interim and a final dividend in January and July each year. Shareholders who wish to have dividends paid directly into a bank account, rather than by cheque to their registered address, can complete a mandate form for the purpose. Mandates may be obtained from the Company’s Registrars, Link Group, on request. Seepage 110 for their contact details. Profile of the company’s ownership % of Ordinary Shares held at 31 March. 5WN[FYJ