Unaudited Half Year Results for the six months ended
30 September 2023
Worldwide Healthcare Trust PLC
Unaudited Half Year Results for the six months ended
30 September 2023
This Announcement is not the Company’s Half Year Report & Accounts. It is an abridged version of the Company’s full Half Year Report & Accounts for the six months ended 30 September 2023. The full Half Year Report & Accounts, together with a copy of this announcement, will also shortly be available on the Company’s website: www.worldwidewh.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.
The Company´s Half Year Report & Accounts for the six months ended 30 September 2023 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact: Mark Pope, Frostrow Capital LLP 020 3008 4913.
PERFORMANCE
| Six months to | One year to | |
| 30 September | 31 March | |
| 2023 | 2023 | |
| Net asset value per share (total return)* # | (0.6%) | (0.1%) |
| Share price (total return)* # | 0.1% | (4.1%) |
| Benchmark (total return)^ # | 0.8% | 2.5% |
| 30 September | 31 March | Six months | |
| 2023 | 2023 | change | |
| Net asset value per share1 | 339.3p | 343.5p | (1.2%) |
| Share price1 | 309.5p | 311.5p | (0.6%) |
| Discount of share price to the net asset value per share* | 8.8% | 9.3% | |
| Leverage* | 14.6% | 10.5% | |
| Ongoing charges* | 0.8% | 0.8% | |
| Ongoing charges (including performance fees crystallised during the period)* | 0.8% | 0.8% |
# Source – Morningstar.
^ Benchmark – MSCI World Health Care Index on a net total return, sterling adjusted basis (see Glossary).
* Alternative Performance Measure. Leverage calculated under the Commitment Method (see Glossary).
1 Comparative figures restated to reflect the ten for one share split during the period.
STATEMENT FROM THE CHAIR
DOUG MCCUTCHEON
PERFORMANCE
The first half of the Company’s financial year was a volatile period for markets, and the Company was not immune to this. External events continued to exert their influence, with geopolitics and macroeconomic conditions at the forefront of investors’ minds. The MSCI World and the FTSE All-Share Indices produced sterling based total returns of +4.5% and +1.4%, respectively. The Company’s Benchmark, the MSCI World Healthcare Index, measured on a net total return, sterling adjusted basis rose by 0.8%.
Against this backdrop, the Company’s net asset value per share total return was -0.6%, underperforming the Benchmark during the period. The Company’s share price total return was slightly better at +0.1%, which reflected a narrowing of the discount of the Company’s share price to its net asset value per share to 8.8% at the end of the half year (from 9.3% at the beginning). During the period, in absolute terms, net asset value performance was helped by the weakness of sterling, as sterling depreciated by 1.3% against the U.S. dollar, the currency in which the majority of the Company’s investments are denominated.
The Company’s investment performance has been disappointing in recent periods. The Board continues to monitor our performance closely and will further report on it in the full year results.
Looking at specific names in the portfolio, the largest contributions during the reporting period came from the large capitalisation pharmaceutical companies Novo Nordisk and Eli Lilly, both of which benefitted from their exposure to the rapidly growing GLP-1 agonist anti-obesity therapy market. The principal detractors from performance were the large capitalisation pharmaceutical company Bristol Myers Squibb and biotechnology company UniQure. Further information regarding the Company’s investments and performance can be found in the Review of Investments.
The Company had, on average, leverage of 14.7% during the period, which detracted 0.1% from performance. As at the half year-end, leverage stood at 14.6%, compared to 10.5% at the beginning of the period. Our Portfolio Manager continues to adopt both a pragmatic and a tactical approach to the use of leverage, which adds to performance in periods of rising portfolio share prices and has benefitted the Company over time.
The Company is able to invest up to 10% of the portfolio, at the time of acquisition, in unquoted securities. Our Portfolio Manager, through its extensive private equity research capabilities, continues to identify unquoted opportunities although, in the period under review, no new unquoted investments were made. Exposure to unquoted equities accounted for 6.5% of the total portfolio at the half year-end, and these holdings made a negative contribution of -0.3% to the Company’s performance during the period under review.
SHARE SPLIT
In the Company’s annual report published on 6 June 2023, the Board set out its plans to undertake a share split of each of the Company’s shares of 25p each into 10 shares of 2.5p each. The share split proposal was approved by shareholders at the Company’s Annual General Meeting held on 18 July 2023 and the new shares began trading on 27 July 2023. For every share held immediately prior to the transaction, shareholders received nine additional shares. Shareholders should note that the split did not affect the value of your investment in the Company, nor your shareholder rights.
PERFORMANCE FEE
No performance fee was accrued as at 30 September 2023 and no performance fee can become payable within the next year. The performance fee arrangements are described in detail in the Company’s Annual Report.
CAPITAL
Challenging stock market conditions and investor sentiment 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.15.2%*.
* 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%, 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. Therefore, the Company’s share buy-back policy remains unchanged.
During the period under review, the Company regularly repurchased shares. A total of 42,028,574 shares were repurchased for treasury at a cost of £133.4m and at an average discount of 9.3%. The total number of shares shown to have been repurchased during the period has been adjusted to reflect the share split which took effect from 27 July 2023.
At the period end, there were 584,179,056 shares in issue (excluding the 17,486,144 shares held in treasury). Since the period end to 21 November 2023, a further 11,923,082 shares have been bought back for treasury, at a cost of £35.8m and at the time of writing, the share price discount stands at 10.7%.
In line with the Company’s stated policy, I confirm that 4,892,258 shares held in treasury following the date of the Company’s Annual General Meeting in July 2022, were cancelled. The cancellation took place prior to the share split. The Company currently holds 29,409,226 shares in treasury.
DIVIDENDS
The Board has declared an interim dividend of 0.7p per share, for the year to 31 March 2024, which will be payable on 11 January 2024 to shareholders on the register of members on 24 November 2023. The associated ex dividend date is 23 November 2023. Last year the Company paid an interim dividend of 7.0p per share. The level of this year’s interim dividend per share is the same level as last year taking account of the share split which became effective on 27 July 2023.
I remind shareholders that it remains the Company’s policy to pay out dividends at least to the extent required to maintain investment trust status. These dividend payments are paid out of the Company’s net revenue for the year and, in accordance with investment trust rules, a maximum of 15% of income can be retained by the Company in any financial year.
It is the Board’s continuing belief that it is in shareholders’ best interests to see the Company’s capital deployed in its investment portfolio rather than paid out as dividends to achieve a particular target yield.
COMPOSITION OF THE BOARD
Having joined the Company’s Board in 2016, Humphrey van der Klugt has expressed his intention to retire as a Director at the conclusion of next year’s Annual General Meeting, to be held on 10 July 2024. Humphrey became Chair of the Audit & Risk Committee in September 2016, handing over this role to Tim Livett in March of this year. Humphrey’s accounting and investment management experience, as well as his leadership, wisdom and probing questions, have been very valuable to the Board’s deliberations – he will be missed. The process of finding a new Director has begun and the Board will keep shareholders informed of the progress made.
OUTLOOK
Macroeconomic conditions continue to be difficult. Against a backdrop of high interest rates and volatile markets, equity investment remains challenging. This includes investing in the healthcare sector. However, the fundamentals of the healthcare sector remain strong.
As our Portfolio Manager sets out in their report, they are positive about the outlook for the healthcare sector. At some point, investment fundamentals will again reassert themselves over the macro environment. Our Portfolio Manager expects the currently elevated level of merger and acquisition activity to continue, supported by attractive valuations, healthy balance sheets and, within the larger pharmaceutical and biotechnology sub-sectors, a need to address future patent expirations. In addition, the pace of scientific and technological development within the healthcare sector more broadly will remain unchecked, with clinical and technological catalysts providing a regular flow of significant share price moving events.
As an indication of the continued strong demand for healthcare investment opportunities amongst professional investors, it is encouraging that in recent weeks our Portfolio Manager has been successful in raising three new funds totalling in excess of U.S$4.3bn to invest in venture capital, royalties and Asian healthcare companies.
Doug McCutcheon
Chair
22 November 2023
PORTFOLIO
AS AT 30 SEPTEMBER 2023
| Market value | % of | |||
| Investments | Sector | Country | £’000 | investments |
| Novo Nordisk | Pharmaceuticals | Denmark | 133,917 | 6.3 |
| AstraZeneca | Pharmaceuticals | Britain | 124,043 | 5.9 |
| Boston Scientific | Health Care Equipment & Supplies | United States | 111,522 | 5.3 |
| Humana | Health Care Providers & Services | United States | 103,638 | 4.9 |
| Intuitive Surgical | Health Care Equipment & Supplies | United States | 93,422 | 4.4 |
| Merck | Pharmaceuticals | United States | 72,989 | 3.4 |
| Eli Lilly | Pharmaceuticals | United States | 71,276 | 3.4 |
| BioMarin Pharmaceutical | Biotechnology | United States | 70,085 | 3.3 |
| Daiichi Sankyo | Pharmaceuticals | Japan | 70,032 | 3.3 |
| Sanofi | Pharmaceuticals | France | 69,665 | 3.3 |
| Top 10 investments | 920,588 | 43.4 | ||
| Roche | Pharmaceuticals | Switzerland | 66,336 | 3.1 |
| Eisai | Pharmaceuticals | Japan | 60,173 | 2.8 |
| Biogen | Biotechnology | United States | 59,855 | 2.8 |
| Tenet Healthcare | Health Care Providers & Services | United States | 51,933 | 2.4 |
| Stryker | Health Care Equipment & Supplies | United States | 49,959 | 2.4 |
| Baxter International | Health Care Equipment & Supplies | United States | 48,558 | 2.3 |
| Thermo Fisher Scientific | Life Sciences Tools & Services | United States | 46,882 | 2.2 |
| Ionis Pharmaceuticals | Biotechnology | United States | 46,721 | 2.2 |
| Caris Life Sciences* | Life Sciences Tools & Services | United States | 45,531 | 2.1 |
| Evolent Health | Health Care Providers & Services | United States | 44,400 | 2.1 |