How To Avoid Bank Fees Overdraft Protection

WORLDWIDE HEALTHCARE TRUST PLC – Annual Financial Report.

                         WORLDWIDE HEALTHCARE TRUST PLC
               Audited Results for the Year Ended 31 March 2013
                                 NEWS RELEASE
                             For immediate release
                                  6 June 2013
                               To: City Editors
  Worldwide Healthcare Trust PLC today announces audited results for the
year
                              ended 31 March 2013 Financial Highlights
                                                  As at       As at
                                               31 March    31 March
%
                                                   2013        2012
Change Share price                                     1009.0p
795.0p       +26.9 Net asset value per share - diluted
1089.6p      871.0p       +25.1 (dilution for subscription shares) Net
asset value per share - basic               1110.2p      909.4p
+22.1 Discount of share price to the diluted net         7.4%
8.7%         n/a asset value per share
                                             Year ended  Year ended
                                               31 March    31 March
                                                   2013        2012
Share price (total return)*^                     +30.9%      +18.2% Net
asset value per share (total return)*+^      +30.3%      +14.4%
Benchmark index (total return)*                  +31.4%      +13.4%
Dividends per share                               16.5p       17.5p
*Source - Morningstar. +The net asset value per share has been diluted
for both subscription shares and treasury shares. ^Includes the 2012
interim dividend of 17.5p per share which had an ex dividend date of 6
June 2012 and also the 2013 first interim dividend of 7.0p per share
which had an ex dividend date of 12 December 2012. Chairman's
Statement "I am delighted to report that during the year ended 31
March 2013, the Company's net asset value per share total return
was 30.3% and the share price total return was 30.9%..." REVIEW OF
THE YEAR AND PERFORMANCE I am delighted to report that during the year
ended 31 March 2013, the Company's net asset value per share total
return was 30.3% and the share price total return was 30.9%, both
closely tracking the Company's benchmark, the MSCI World Health
Care Index on a net total return, sterling adjusted basis, which rose by
31.4%. I should point out that the share price and the net asset value
total return generated during the year were enhanced by the change in
the Company's dividend payment policy whereby a first interim
dividend of 7.0p per share was paid in January 2013. This
"extra" dividend payment enhanced performance in total return
terms by approximately 1.0%. The Company has continued to benefit from
strong performance from biopharmaceutical companies such as Gilead
Sciences and Onyx Pharmaceuticals, and also from large capitalisation
pharmaceutical companies such as Roche Holdings, Pfizer and Sanofi.
Further information on the Company's investments can be found in
the Review of Investments beginning on page 5 of this Annual Report.
Since the Company's inception in 1995, the total return of the
Company's net asset value per share is 1,250.4%, equivalent to a
compound annual return of 15.1%. This compares to a cumulative
"blended" benchmark return of 693.8%, equivalent to a compound
annual return of 11.4%. During this period the Company's net asset
value total return ranked second out of the approximately 250 UK Listed
Investment Companies (Source: Winterflood Securities Limited and Thomson
Reuters). At 31 March 2013, the discount of the Company's share
price to the diluted net asset value was 7.4% (31 March 2012: 8.7%).
However, as a result of continued strong performance, at the time of
writing the discount has narrowed to 1.3% The average discount of the
share price to the diluted net asset value per share during the year was
6.0% which compares to 7.1% during the previous year. CAPITAL In
implementing our policy of actively managing the share price discount we
repurchased a total of 2,411,340 ordinary shares for treasury during the
year, at a discount greater than 6.0% to the prevailing diluted net
asset value per share, at a cost of [pounds sterling]19.2 million
(including expenses). In line with the Board's policy, a total of
2,941,518 shares held in treasury at 18 July 2012, the date of last
year's Annual General Meeting, were cancelled. I am pleased to
report that, during the year and to the date of this report, we have
been able to reissue all of the 378,408 shares bought back into treasury
since the 2012 Annual General Meeting at prices representing no more
than a 4.9% discount to the prevailing fully diluted cum income net
asset value per share, raising [pounds sterling]4.0 million of new funds
for the Company. Shareholder approval to renew the authority to buy-back
both ordinary shares and subscription shares will be sought at the
Annual General Meeting. The execution and timing of any share buy-back
will continue to be at the absolute discretion of the Board. I would
like to remind shareholders that any shares held in treasury on 17 July
2013, the date of this year's Annual General Meeting, will be
cancelled. The next exercise date for the Company's subscription
shares is 31 July 2013 and the exercise price is 699p, where it will
remain until the expiry date of the subscription shares on 31 July 2014.
As a result of holders of subscription shares exercising their
subscription rights during the year and to the date of this report) a
total of 4,764,682 new shares were issued, raising [pounds sterling]30.5
million of additional funds for the Company. REVENUE AND DIVIDEND I
reminded shareholders last year that it remained the Company's
policy to pursue capital growth for shareholders and to pay dividends to
the extent required to maintain investment trust status, I also
confirmed that the Company would in future declare two interim dividends
per year. A first interim dividend of 7.0p per share, for the year ended
31 March 2013, was paid on 11 January 2013 to ordinary shareholders on
the register on 14 December 2012. The Company's net revenue return
for the year as a whole has fallen slightly to [pounds sterling] 7.6
million (2012: [pounds sterling]9.5 million) due to a reduction in the
overall yield from portfolio investments. The Board has declared a
second interim dividend of 9.5p per share which, together with the first
interim dividend already paid, makes a total dividend for the year of
16.5p (2012: 17.5p per share) which is sufficient to ensure that the
Company maintains its investment trust status. Based on the current
mid-market share price of 1052.0p the total dividend payment for the
year represents a yield of 1.6%. The second interim dividend will be
payable on 5 July 2013 to ordinary shareholders on the register of
members on 7 June 2013. The associated ex-dividend date was 5 June 2013.
GEARING The Company's borrowing requirements are met through a loan
facility, negotiated on competitive terms, which is repayable on demand,
provided by the custodian Goldman Sachs & Co New York. As at 31
March 2013 a total of [pounds sterling] 31.4 million of this facility
was drawn down, representing 6.2% of the Company's net assets. Your
Company has utilised gearing over many years and the Board believes that
the availability of a meaningful gearing facility is very useful for a
closed end investment company such as ours. The Company's gearing
policy is to borrow up to the lower of [pounds sterling]120 million or
20% of the Company's net asset value. THE BOARD Anthony Townsend,
who has been a Director of the Company since its launch in 1995, will be
retiring from the Board at the conclusion of this year's Annual
General Meeting. Anthony was instrumental in ensuring the launch of the
Company and I would like to thank him for his hard work during his time
on the Board. His experience and wise counsel will be greatly missed. Jo
Dixon will be succeeding him as the Senior Independent Director. I am
delighted to welcome Sarah Bates onto the Board. Sarah brings with her a
wealth of experience, both as a former Chairman of the Association of
Investment Companies and also as a non-executive Director of a number of
public companies including JPMorgan American Investment Trust plc, where
she is Chairman, and also New India Investment Trust PLC, Polar Capital
Technology Trust plc and Witan Pacific Investment Trust plc. THE
ALTERNATIVE INVESTMENT FUND MANAGERS DIRECTIVE (AIFMD) The AIFMD is
European legislation which will create a European-wide framework for
regulating managers of 'alternative investment funds', which
includes investment trusts. It came into force in July 2011 with the
intention that it be implemented into national legislation by July 2013.
Your Board is currently in the process of complying with this
legislation and will keep shareholders informed of developments. OUTLOOK
While the prospects for global economic growth remain mixed, with a
further year of recession and continued political uncertainty expected
in the Eurozone, and the Chinese economy struggling with high energy
costs and a deteriorating trade balance. However, there is better news
in Japan and also in the US where, despite automatic budgetary cuts, the
US economy is still expected to grow at 2% this year. Our Investment
Manager continues to believe that the outlook for the healthcare sector
is positive and that there is potential for continued out performance of
the wider market over the long term. In particular, they believe that
the portfolio is well positioned to benefit from such factors as low
valuations, a rise in the prospects for emerging markets, attractive
growth potential for large capitalisation pharmaceutical and
biotechnology companies as a result of new product launches and
continued merger and acquisition activity. Our focus continues to be on
the selection of stocks with strong prospects and we continue to believe
that investors committed to the sector will be well rewarded. ANNUAL
GENERAL MEETING This year, the Annual General Meeting of the Company
will be held at the Carpenters' Hall, Throgmorton Avenue, London
EC2N 2JJ on Wednesday, 17 July 2013 at 12 noon, and we hope as many
shareholders as possible will attend. This will be an opportunity to
meet the Board and to receive a presentation from our Investment
Manager. Sir Martin Smith Chairman 6 June 2013 OrbiMed Capital LLC -
Investment Manager OrbiMed was born in 1989 and has evolved over time to
be the largest dedicated healthcare investment firm in the world.
OrbiMed has managed the portfolio since the Company's launch in
1995. Exceptional returns and recipient of many investment awards
signifies the aggregate talents of this exceptional team. OrbiMed had
over U.S.$7 billion in assets under management as of 31 March 2013,
across a range of funds, including investment trusts, hedge funds,
mutual funds, and private equity funds. THE TEAM The OrbiMed Public
Equity Investment Team continues to expand. Led by founding partner,
Samuel D. Isaly, now over 60 investment professionals cover all aspects
of research, trading, finance, and compliance. This includes over 20
degree holders with MD and/or PhD credentials, healthcare industry
veterans, and finance professionals with over 20 years of experience.
The firm has a global investment horizon and the OrbiMed footprint now
spans 3 continents with offices in New York, San Francisco, Tel Aviv,
Shanghai, and Mumbai. INVESTMENT STRATEGY AND PROCESS The Team works
constantly to identify sources of alpha generation 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 clinical trial data is a prominent example and
historically has been the largest source of share price volatility.
Regulatory events, such as new drug approvals by U.S., European, or
Japanese regulatory authorities are also stock moving events. Subsequent
new product launches are carefully tracked and forecasted. Other sources
include legal events and, of course, M&A activity. The Team has a
global focus with a universe of coverage that covers the entire spectrum
of companies, from early stage companies with pre-clinical assets to
full integrated bio-pharmaceutical companies. The universe of actively
covered companies is approaching 1,000. OrbiMed emphasises investments
in companies with underappreciated 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 rigorous risk management process to moderate
portfolio volatility. Review of Investments ".... healthcare
outperformance in the period was both immediate and sustained."
PERFORMANCE REVIEW The year ended 31 March 2013 was marked by periods of
volatility, but primarily was a bullish period for the global equity
markets. Early returns were negative in the period, but a turn in the
markets in May 2012 marked the beginning of a bull run that bore witness
to a nearly 30% swing in the MSCI World Index measured in sterling terms
on a net total return basis. Ultimately the MSCI World Index finished up
an impressive 17.7% for the year. Despite such strong returns, global
healthcare equities outperformed the broader market during the year.
Although following a similar pattern, healthcare outperformance in the
period was both immediate and sustained. The MSCI World Healthcare Index
rose by 31.4% on a net total return, sterling adjusted basis during the
year. This compares to the Company's net asset value per share
total return of 30.3% and the share price total return of 30.9% in the
same period. While currency movements have been volatile in recent
times, including some precipitous swings in 2012 and early in 2013, the
currency impact was modest during the year. A significant majority of
the portfolio holdings are denominated in U.S. dollars, but the net move
in sterling versus the dollar was approximately 5% in the period.
CONTRIBUTION TO PERFORMANCE Large capitalisation therapeutic stocks were
the hallmark of 2013 performance. Dusting off the doldrums with renewed
positive fundamentals, these stocks shook off historically low
valuations and re-rated to better reflect a new era of productivity and
growth. This led to the largest contributions during the year. Gilead
Sciences, is a good example of this phenomenon. Worldwide leaders in
virology, the company maintained its leadership in HIV and grabbed the
mantle in hepatitis C, as well. During the period, the company was able
to gain regulatory approval for the next generation of anti-viral
combination therapy for HIV. Known as Stribild (elvitegravir,
cobicistat, emtricitabine, tenofovir), the product launch was solid.
Moreover, Gilead's next generation anti-viral combination therapy
for hepatitis C began to usher in a new era for the treatment of this
chronic liver disease. The novel, all-oral therapy will likely set a new
standard in efficacy, safety, and tolerability for this unmet medical
need. The regimen is in late stage clinical trials and we expect it to
be available to patients in 2015. In recognition of such impressive
productivity, the stock doubled during the year. This performance led to
Gilead being the top contributor to performance in the period. Roche
Holdings is another example of a large capitalisation bio-pharmaceutical
company that demonstrated continued leadership in product development,
in this case, in cancer. Roche is the worldwide leader in oncology and
sells the three largest cancer drugs in the world (Avastin, Rituxan,
Herceptin). Over the past twelve months, the company made important
strides in maintaining that leadership with extensive life cycle
management and pipeline developments to protect its oncology franchise.
Two drugs were approved for breast cancer, Perjeta (pertuzumab) and
Kadcyla (ado-trastuzumab), raising the efficacy and safety bar first
established by Herceptin. Most notably was the approval of Kadcyla, the
first antibody-drug conjugate (ADC) for the treatment of metastatic
breast cancer. This type of therapy, pioneered by Roche, helped the
stock outpace the NYSE Arca Pharmaceutical Index by over 50% in the
period. Shares of the specialty biotechnology company, Onyx
Pharmaceuticals, increased sharply due to the approval and launch of
Kyprolis (carfilzomib) for treatment of multiple myeloma (a type of bone
marrow cancer). Entering 2012, there was significant doubt that the
regulatory package submitted to the U.S. Food and Drug Administration
("FDA") would be sufficient for approval, as it was based on a
phase II trial rather than a large, randomised phase III trial. However,
because of the high unmet medical need represented by refractory
myeloma, the drug received a positive review by an advisory committee
and accelerated approval from the FDA. The initial launch of the product
has gone well, providing further support for the stock. Future approval
in Europe is expected. Additionally during the year under review,
approval was received for Stivarga (regorafenib) for the treatment of
colorectal cancer by Bayer, from which Onyx receives a meaningful
royalty. Another large capitalisation stock, Pfizer, utilised a host of
levers to produce outperformance in the period. The company successfully
divested its Infant Nutritionals business to Nestle for U.S.$11.9
billion. The company also successfully spun off (partially) its Animal
Health business in a U.S.$2.2 billion initial-public-offering. The
company continued to return this cash to shareholders in the forms of
increasing dividends and an industry leading share buyback programme.
Moreover, the company participated in two of the most important drug
approvals in recent memory. First, Pfizer was able to obtain U.S. FDA
approval for Xeljanz (tofacitinib), the first ever oral, disease
modifying agent for the treatment of rheumatoid arthritis. Second, the
company, along with partner Bristol-Myers Squibb, launched what we
believe is the most important therapy ever approved for the prevention
of stroke in patients with atrial fibrillation. Known globally as
Eliquis (apixaban), this drug has shown to be more efficacious at
reducing strokes with less bleeding than the long time gold standard,
Coumadin (warfarin). We expect both Xeljanz and Eliquis to reach
"mega-blockbuster" status. The Paris-based bio-pharmaceutical
giant, Sanofi, entered the year in the midst of one of the largest
patent cliffs in the industry. However, while revenues and earnings
suffered with the loss of patent protection for its U.S.$10 billion
franchise for blood thinner Plavix (clopidogrel), the company was able
to align a host of additional growth platforms to drive above average
growth in the future. Sanofi has shown leadership in diabetes, vaccines,
and consumer healthcare. The acquisition of Genzyme in 2011 also puts
Sanofi in the forefront of the biotechnology space, in particular for
rare orphan diseases and multiple sclerosis. The market was able to look
past the headwind of generics and the stock outpaced the NYSE Arca
Pharmaceutical Index by over 50% in the period. Thus, Sanofi was another
top contributor to performance. For stocks that were the largest
detractors in the period, a common thread is more difficult to identify
but one recurring theme that hurt many stocks in the portfolio was
disappointing new product launches for small and mid-capitalisation
companies. Dendreon is a typical example. The company received approval
in 2010 for their novel vaccine for the treatment of prostate cancer.
While expectations did reset lower, the combination of high price,
difficult procurement logistics (for both the patient and physician),
and new competitor entries continued a long string of quarterly sales
disappointments. Further exacerbating the move down was decreasing
likelihood of the company being acquired and thus the valuation
compressed further. Overall, the stock fell over 50% in the period.
OraSure Technologies is a leading diagnostics company that significantly
underperformed the broader market during the year. The stock lagged due
to a muted over-the-counter HIV test launch coupled with deteriorating
legacy diagnostics business caused by a difficult public health funding
environment. OraSure's over-the-counter HIV test received its FDA
approval in July 2012 on the heels of a unanimous recommendation from
the FDA advisory panel in May 2012. The initial enthusiasm of the first
FDA cleared over-the-counter HIV test became short-lived soon after
initial data tracking the launch started coming in below stock market
expectations. Public health funding environment also provided a
difficult backdrop for OraSure's core diagnostics business causing
the company to provide lacklustre future guidance for two consecutive
quarters putting additional downward pressure on the stock. VIVUS, is a
specialty pharmaceutical player that was the first company in the U.S.
to launch a new drug for the treatment of obesity in over a decade. The
drug, known as Qsymia (phentermine and topiramate), was approved in July
2012 and the company's share price reached a 10-year high shortly
thereafter. However, the small company with less than 150 employees took
a "go-it-alone" alone strategy and launched the product
without the marketing know-how of an established partner. The result was
woeful physician and patient awareness about the new weight loss drug.
An FDA mandated Risk Evaluation and Mitigation Strategy turned into
another obstacle for patients trying to get on therapy. The net result
was a spectacularly failed launch and a precipitous decline in share
price. This stock is no longer held in the portfolio. Humana is a
managed care company in the United States. The company reported poor
quarters in the first half of 2012 when it became apparent they had
underpriced premiums for the core "Medicare Advantage"
product, a privately offered health insurance programme that provides an
eligible person with the U.S. Medicare benefits. The shares partially
rebounded later in the year as the prospects improved for the Romney
Presidential candidacy on the hopes that a Republican administration
would provide a more favourable operating environment for managed care
companies and Medicare Advantage plans. This enthusiasm was reversed on
Election Day when President Obama was re-elected. More recently, there
has been more volatility in Humana shares due to pressures on Medicare
rates. Questcor Pharmaceuticals, a specialty pharmaceuticals company
based in California, was a notable detractor during the year. The
position was initially predicated on our belief that robust utilisation
of their key drug Acthar (corticotrophin) -particularly in the
nephrology setting - could drive exceptionally strong revenue and
earnings growth for the company for several years. In addition, we
viewed the stock as attractively valued in light of anticipated growth.
Questcor was a solid performer during the first half of the calendar
year 2012, underpinned by strong prescription demand for Acthar.
However, in September, a broker's "short report"
highlighted a reimbursement policy change at an insurance carrier and
the company disclosed a government investigation into marketing
practices for Acthar. The back-to-back events triggered a massive
sell-off with the stock falling more than 60% in only four trading days.
Although a sell-off of that magnitude was unwarranted, we exited our
Questcor position as the stock no longer traded on fundamentals.
Questcor Pharmaceuticals is no longer held in the portfolio. Finally, a
comment on derivatives and impact on performance. The Company uses
derivatives to enhance the capital return of the portfolio, facilitate
the management of portfolio volatility and improve the risk-return
profile of the Company relative to the benchmark. For year ended 31
March 2013, the option overlay strategy added 1.1% to performance.
SECTOR UPDATE The calendar year of 2012 represented a clear inflection
point in the pharmaceutical and biotechnology industries. Evidence of
resurgence in research and development ("R&D")
productivity was the key. More positive late stage clinical trial read
outs and product approvals were the hallmark metrics. A total of 40 new
products were approved by the FDA in 2012, 10 more than in 2011. This is
the most new approvals since 2004. Certainly, the FDA has continued its
upswing in "industry friendliness" that commenced in 2010.
Tellingly, many of the new product reviews were completed on the
"first cycle", or without delay. This represents a dramatic
improvement over as little as two years ago when "complete response
letters" (implicit rejections) were as common as approvals.
Additionally, 2012 was witness to multiple approvals that occurred
before the mandated-by-law action dates for the FDA. This phenomenon was
previously unheard of. Finally, the FDA has commenced a new
"breakthrough therapy" designation for investigational
compounds in early stage development. This enables sponsor companies to
gain better access to FDA staffers to obtain important input in
designing and expediting pivotal trial programmes. A significant number
of compounds received this designation in the first four months of 2013.
On the political front, a plethora of uncertainty existed in the first
half of the year with the constitutionality of "Obamacare"
(The Affordable Care Act or ACA) debated at the Supreme Court of the
United States (SCOTUS), followed by the U.S. Presidential Election later
in the year. June brought resolution to the ACA as SCOTUS upheld the law
in a close 5-4 vote. Thus, there will be no repeal of the new Medical
Device tax that commenced in 2013 and, moreover, we will see Health
Insurance Market reforms beginning in 2014 as the rate of health
insurance for Americans will increase significantly. Specifically,
Medicaid eligibility will be expanded effective 1 January 2014. Health
insurance exchanges will be established on a state level for people to
participate, with subsides for insurance premiums available to
individuals who buy a plan from an exchange and have a household income
between 133% and 400% of the poverty line. PHARMACEUTICALS Our new found
bullishness for large capitalisation pharmaceutical stocks continued
this year. Despite the well-chronicled "patent cliff" reaching
its nadir in 2012, the overall fundamentals of the group have improved
dramatically. A number of metrics have impacted the group, but none more
important than increased R&D productivity and new product launches.
The "new normal" for pharmaceutical companies is that
pipelines are delivering new and innovative medicines that are being
approved by the FDA. While valuations have moved up to reflect this
thinking, the re-rating of the sector is far from complete given that
the stocks still trade in the bottom quartile of their historical range
and only at a modest premium to the S&P 500. The outlook for the
group is one of accelerating sales and earnings, in particular off of
the patent cliff trough, fueled by new product launches. Emerging
markets reached critical mass from a global sales perspective earlier
this decade. Now, for many companies, emerging markets are a critical
growth driver going forward. Visibility into these markets has grown as
well, and we are better able to assess this component of a
company's sales and income statements. While our enthusiasm for the
group has increased, we remain cautious on some companies that comprise
the universe. Patent expirations will prove to be cyclical over time,
and while the majority of them for the industry have passed, some
companies still have significant generic headwinds in front of them.
Further, R&D productivity is not created equal amongst this peer
group. We have highlighted some companies as leaders in bringing new
drugs to market, but some are relatively thin on late stage pipeline
opportunities. Finally, we remain very much focused on catalysts, in
particular clinical and regulatory catalysts. Short term shifts in
sentiment can follow unexpected positive or negative events.
Fundamentals are most critical, but we are mindful of trading
opportunities. BIOTECHNOLOGY Our bullishness for the outlook of the
biotechnology sector is perhaps at an all-time high, in particular for
large capitalisation stocks. These stocks are trading at multiples that
are comparable to their pharmaceutical counterparts despite superior
growth profiles. The combination of robust, future growth and still
depressed valuations has created a rare investment opportunity in this
space. Once again, R&D is a key component of the strategy. The
number of drugs in clinical development has been increasing over the
past decade. With decreased attrition and higher approval rates, more
drugs are being approved now than previously observed. Moreover, six of
the top ten current bestselling drugs worldwide were originally
developed by biotechnology companies and a host of recently launched or
soon-to-launch biotechnology drugs have "blockbuster"
potential. Biotechnology companies are also incrementally more astute at
targeting "hot" therapeutic categories - ones in which there
is a high unmet medical need, in specialist categories which do not
require large sales and marketing infrastructures, and pricing
flexibility remains high. Such categories include immunology, oncology
and orphan diseases. The topic of "biosimilars" (generic
alternatives to large molecule drugs) has been a hotly debated one for
most of this century. However, most recent observations suggest that
generic companies attempting to develop, manufacture, and sell
biosimilars are finding the regulatory and cost barriers much higher
than originally expected. Compared to small molecule generics, we expect
fewer entrants, smaller share gains, lower pricing discounts, lower
prospects for interchangeability, and higher manufacturing hurdles. We
continue to believe that biosimilars of some sort are inevitable, but do
not believe that they will materially effect the biotechnology industry.
Therefore the patent cliff outlook for biotechnology versus
pharmaceutical remains decidedly in favour of the biotechnology
industry. GLOBAL GENERICS Market conditions for generic drug
manufacturers are improving across the globe. In the U.S., pricing
stability and a favourable patent cycle make the world's largest
generic market amongst the most attractive. In Europe, austerity
measures have nudged generic utilisation markedly higher, overwhelming
pricing erosion in many major markets. Throughout Asia, economic
expansion, favourable demographics, supportive governmental policies and
other contributing factors have boosted generic utilisation in some
regions to unprecedented levels. Although we are encouraged by these
positive dynamics, increased regulatory scrutiny, especially
manufacturing-related, and reimbursement uncertainties have become
global issues worth monitoring. In-line with our positive views, we
favour many of the mid-sized and large global generic players,
especially those with emerging branded franchises. We believe these
companies are best positioned to realise both near-term and longer-term
growth opportunities. Japan possesses the fastest growing generic drug
market in the world and 2013 promises to be the most dynamic in history.
In India, we favour companies with geographic and product
diversification with strong management teams in place. SPECIALTY
PHARMACEUTICALS We look at this sub-sector on a number of levels. On one
hand, we continually search for high-growth companies with attractive,
growth-adjusted valuations. On the other, we seek out
"contrarian" stocks with underappreciated businesses often
trading at depressed valuations. In Europe, we remain very selective, as
we find conditions in several major markets to be unfavourable for many
specialty pharmaceutical companies. Finally, merger and acquisition
activity is always a consideration and we continually look for companies
that could become acquisition targets. MEDICAL DEVICES We remain
cautious on the Medical Device sector, an industry that has
underperformed due to multi-year head winds. Innovation and pricing go
hand-in-hand and this sector has been devoid of both. Uncertain economic
times have led to lower utilisation and decreased demand, clearly a
headwind for these companies. An inflection is possible if not
inevitable, so we continuously monitor utilisation trends across the
healthcare sector. These metrics are critical in considering the large
capitalisation medical device stocks. For small and mid-capitalisation
companies, we look for undervalued quality and misunderstood product
cycles that allow for opportunistic buys. HEALTHCARE SERVICES It remains
a dynamic time in history for the hospitals and managed care companies
in the U.S., the so-called "HMOs" or Health Maintenance
Organisations. For the next several years, the key variable for the
services sector is the implementation of healthcare reform emanating
from the ACA. The expansion of insurance coverage should improve the
profitability of hospitals which previously were uncompensated for care
provided to uninsured patients. For the HMOs, privatisation of
Medicare/Medicaid/Dual eligibles is an area of growth as stretched
government budgets encourage shifting these individuals to a managed
care platform. The HMOs have been able to maintain premiums by assuming
a recovery in utilisation; however utilisation is unlikely to recover
until the broader macro and employment environment improves. With
attractive valuations, we are positive on the group. LIFE SCIENCES TOOLS
AND DIAGNOSTICS We continue to favour the Life Sciences Tools &
Diagnostics sub-sectors as we enter 2013. The sector is beginning to
rebound from depressed multiples of the last few years as visibility in
organic growth improves, fueled by innovations in genomic research. The
industry consolidation theme has been driving sector-wide multiples
expansion as large bell-weather conglomerates begin to show explicit
interests in acquiring smaller companies in growth areas. Recovery in
the macro economy, coupled with foreseeable resolution to sequestration
in the U.S., should continue to support outperformance in the group
especially as we head into second half of 2013. Within the sub-sectors
of Life Sciences Tools & Diagnostics, we favour companies with new
innovative products in genomic research over the traditional life
sciences names with more cyclical industrial markets exposures. We
continue to believe in the large market potential of next-generation
sequencing, as it moves from research markets into clinical applications
still in nascent stages. EMERGING MARKETS We substantially increased our
exposure to emerging market stocks after the 2011 sell-off. The
increased exposure was through a combination of either direct holdings
of companies in the local geographies such as China and India, and
indirectly through our global large capitalisation holdings. The size of
our direct holdings in individual stocks in countries such as China and
India, further increased from more than 8% at the end of fiscal year
2011 to roughly 11% through 2012. In particular, it is noteworthy that
we have ventured into the Chinese "A" share market via the
Qualified Foreign Institutional Investor (QFII) programme which allows
licensed foreign investors to buy and sell yuan-denominated
"A" shares in China's mainland stock exchanges. Emerging
market revenues for large capitalisation pharmaceutical stocks range up
to 34% of total sales for these companies. For the period ending with
the 2013 fiscal year, we estimate that this contributed an additional
10% of exposure to emerging markets. Samuel D. Isaly OrbiMed Capital LLC
Investment Manager 6 June 2013 CONTRIBUTION BY INVESTMENT Principal
contributors to and detractors from net asset value performance over the
year to 31 March 2013
                                                   Contribution
Contribution
                                                for the year to
per share
                                                  31 March 2013
(pence)* Top Five Contributors
[pounds sterling]'000 Gilead Sciences
13,923           31.07 Roche Holdings
13,405           29.91 Onyx Pharmaceuticals
8,249           18.41 Pfizer
6,573           14.67 Sanofi
6,139           13.70
                                                                         107.76 Top Five Detractors Dendreon
(2,688)          (6.00) Orsure Technologies
(2,446)          (5.46) VIVUS
(2,285)          (5.10) Humana
(1,846)          (4.12) Questcor Pharmaceuticals
(1,750)          (3.90)
                                                                        (24.58) *based on 44,819,199 being the weighted average number of shares
in issue during the year ended 31 March 2013. Source: Frostrow Capital
LLP Historic Performance
                                                                       %
Change
                                                                        for the
                                                                           year
                                                                          ended
                            31      31      31      31      31      31
31
                         March   March   March   March   March   March
March
                          2008    2009    2010    2011    2012    2013
2013 Net asset value per     482.4p  600.5p  752.7p  773.5p  871.0p
1089.6p    +25.1 share - diluted (dilution for warrants /subscription
shares) Net asset value per     486.6p  635.9p  780.8p  799.2p  909.4p
1110.2p    +22.1 share - basic Share price             457.0p  550.5p
701.5p  686.0p  795.0p 1009.0p    +26.9 Warrant/subscription     27.5p
62.0p   98.0p   84.5p  133.5p  307.5p   +130.3 share price Discount of
share       (5.3%)  (8.3%)  (6.8%) (11.3%)  (8.7%)  (7.4%)      n/a
price to diluted net asset value per share Average month end
(6.4%)  (7.5%)  (7.1%)  (7.6%)  (7.1%)  (6.0%)      n/a discount of
share price to diluted net asset value per share Gearing **
1.8%   15.3%   10.4%   13.3%   16.4%    9.8%      n/a Ongoing charges **
1.3%    1.2%    1.0%    1.0%    1.1%    1.0%      n/a Ongoing charges
1.3%    1.2%    1.0%    1.8%    1.3%    1.2%      n/a (including
performance fees crystallised during the period)** **See glossary on
page 72. Champions of Innovation INDUSTRY LEADING INVESTMENTS IN THE
PORTFOLIO DURING THE YEAR ROCHE HOLDINGS (Large Capitalisation
Bio-pharmaceutical) The worldwide leaders in oncology, Roche Holdings,
are not resting on their past laurels. Rather, the company continues to
push the frontiers of science in developing novel therapies for the
treatment of cancer. Antibody Drug Conjugates (or ADC's) are a new
type of targeted therapy which consist of antibody linked to a cytotoxic
drug (chemotherapy). The antibody will seek and bind to the specific
tumor cells, be internalised, and release the cytotoxin to kill the host
cell. Roche was the first company to get FDA approval for an ADC. Known
as Kadcyla (ado-trastuzumab), adding the drug to current treatment
regimens has increased the survival of metastatic breast cancer patients
(who are HER2+) by almost 300% over chemotherapy alone. Roche also has a
follow- on drug to the "mega-blockbuster" cancer product,
Rituxan (rituximab), for blood cancers. Referred to as obinutuzumab (GA-
101), filing with regulatory authorities should occur late 2013. Roche
is also involved in a new class of cancer therapies - immunotherapy -
with first data available later in 2013. But Roche is not only a cancer
company, with important pipeline projects in neuroscience,
Alzheimer's, and cardiovascular that could further their reputation
as leaders in innovative medicines. GILEAD SCIENCES (Large
Capitalisation Biotechnology) Founded in 1987, the biotechnology company
Gilead Sciences, has become a category leader in virology, in particular
the treatment of human immunodeficiency virus (HIV). In 2012, the
company posted global sales of U.S.$8 billion for HIV therapies alone.
In 2013, the company launched is what will probably be the next gold
standard therapy for HIV, the four drug combination product known as
Stribild (elvitegravir, cobicistat, emtricitabine, tenofovir). We expect
Stribild to reach well over U.S.$3 billion in peak global sales. Gilead
has also attempted to become category leaders in another virology
category, specifically hepatitis C. Once again through astute R&D
and M&A, Gilead is on the cusp of redefining the treatment of
hepatitis C with a 2-3 month all-oral therapy (versus the current gold
standard treatment regimen which includes weekly injections for a
minimum of 6 months). The Gilead approach not only simplifies the
regimen into a single, once daily pill, but also avoids the very
difficult side effects of today's regimen which causes many
patients to discontinue therapy. But most noteworthy is that
Gilead's therapy will also lead to a cure in the vast majority of
patients with hepatitis C. We expect the drug cocktail to be available
to patients in 2015 and take the majority share of what we expect to be
a U.S.$10 billion market. INSULET CORPORATION (Medical Devices) Insulet
Corporation develops, manufactures, and markets a tubeless insulin patch
pump, called the OmniPod, to treat people with insulin-dependent
diabetes. The patch pump offers the patient freedom from tubes, ease of
training and a more payer-friendly pay-as-you-go plan. The Company has
recently launched a next generation pump that is smaller and lighter
with lower cost of manufacture. Insulet should benefit from greater
demand and higher gross margins. Going forward, Insulet may also
eventually incorporate a continuous glucose monitoring capability and is
working with pharmaceutical partners to use the patch pump technology to
deliver other drugs. JIANGSU HENGRUI MEDICINE (Chinese Pharmaceutical)
We view Jiangsu Hengrui Medicine as the most established innovative
pharmaceutical company in China. While we acknowledge that drug
development in China has very much lagged behind the developed
countries, we like the tremendous market potential and growth trajectory
the market offers. Jiangsu Hengrui is the largest oncology drug
developer and marketer in China, and is rapidly expanding its franchise
into surgical anesthetic, autoimmune, and diabetes drugs. Hengrui has
one of the most solid drug pipelines among all Chinese pharmaceutical
companies. Among 60 plus drug applications filed with the State Food and
Drug Administration, some noteworthy examples include apatinib (a VEGFR
2 tyrosine kinase inhibitor for gastric cancer), sunitinib (inhibitor
for multiple receptor tyrosine kinases for renal cell cancer),
long-lasting G-CSF (for neutropenia), and a DDP-4 inhibitor (for
diabetes), among others. In addition, Jiangsu Hengrui also has one of
the most established and best managed sales and marketing channels in
China. Portfolio as at 31 March 2013
                                                       Market value
% of Investments                                    Country
[pounds sterling]'000 investments Roche Holdings
Switzerland       49,995         9.0 Gilead Sciences
USA       25,579         4.6 Pfizer
USA       24,786         4.5 Sanofi
France       23,456         4.2 HCA
USA       20,769         3.8 Bristol-Myers Squibb
USA       18,274         3.3 Amgen
USA       16,741         3.0 Mylan
USA       16,652         3.0 Merck & Co.
USA       15,049         2.7 Incyte Corp +
USA       13,649         2.5 Top 10 Investments
224,950        40.6 Ono Pharmaceutical
Japan       12,491         2.3 AbbVie
USA       11,317         2.0 Celgene
USA       10,796         1.9 GlaxoSmithKline
UK       10,539         1.9 Express Scripts
USA       10,206         1.8 Novartis
Switzerland        9,844         1.8 Abbott Laboratories
USA        9,808         1.8 Actavis
USA        9,581         1.7 Mitsubishi Tanabe Pharma
Japan        9,562         1.7 Onyx Pharmaceuticals
USA        9,066         1.6 Top 20 Investments
328,160        59.1 Illumina
USA        8,537         1.5 Sawai Pharmaceutical
Japan        8,237         1.5 Infinity Pharmaceuticals
USA        8,218         1.5 Insulet
USA        7,754         1.4 Actelion
Switzerland        7,207         1.3 Wellpoint
USA        7,190         1.3 Biogen Idec
USA        6,987         1.3 Mako
USA        6,525         1.2 UnitedHealth
USA        6,476         1.2 Zimmer
USA        6,437         1.2 Top 30 Investments
401,728        72.5 +includes Incyte 4.75% 01/10/15 (Conv) equating to
1.6% of investments
                                                       Market value
% of Investments                                    Country
[pounds sterling]'000 investments Towa Pharmaceutical
Japan        6,285         1.1 Nichi-Iko Pharmaceutical
Japan        6,218         1.1 Dendreon ^
USA        6,132         1.1 Allergan
USA        5,807         1.0 Life Technologies
USA        5,787         1.0 Vocera Communications
USA        5,680         1.0 Baxter International
USA        5,549         1.0 Medivation
USA        5,544         1.0 BioMarin Pharmaceutical
USA        5,494         1.0 Biosensors International
Singapore        5,088         0.9 Top 40 Investments
459,312        82.7 Fluidigm
USA        4,956         0.9 Thermo Fisher Scientific
USA        4,835         0.9 Shandong Weigao Group
China        4,573         0.8 Impax Laboratories
USA        3,741         0.7 3SBio
China        3,654         0.7 Aetna
USA        3,367         0.6 Exact Sciences
USA        3,333         0.6 Elan
Ireland        3,232         0.6 Neurocrine Biosciences
USA        3,138         0.6 China Shineway Pharmaceutical
China        3,066         0.6 Top 50 Investments
497,207        89.7 ^includes Dendreon 2.875% 15/01/16 (Conv) equating
to 0.6% of investments
                                                       Market value
% of Investments                                    Country
[pounds sterling]'000 investments Affymetrix 4% 01/07/19 (Conv)
USA        2,833         0.5 CIGNA
USA        2,546         0.5 Given Imaging
Israel        2,529         0.5 Orasure Technologies
USA        2,520         0.5 Curis
USA        2,444         0.4 Sequenom
USA        2,069         0.4 Humana
USA        1,502         0.3 Sino Biopharmaceuticals
China          934         0.2 InterMune
USA          745         0.1 Total equities and fixed interest
investments               515,329        93.1 OrbiMed Emerging Market
Basket                               18,031         3.2 Jiangsu Hengrui
      6,411         1.2 Lupin
4,760         0.9 Strides Arcolab
2,642         0.5 China Resources
2,526         0.4 Aurobindo
1,618         0.3 Total OTC Swaps
35,988         6.5 Options - (Put & Call)
2,442         0.4 Total investments including OTC Swaps and Options
553,759       100.0 SUMMARY
                                                       Market value
% of as at 31 March 2013
[pounds sterling]'000 investments Equities (including options &
swaps)                        538,744        97.3 Convertibles
15,015         2.7 Total of all investments
553,759       100.0 Your Board The Board of Directors, all of whom are
non-executive, supervise the management of Worldwide Healthcare Trust
PLC and look after the interests of shareholders. SIR MARTIN SMITH*+
(CHAIRMAN) Sir Martin Smith, aged 70, joined the Board in 2007. After
acting as Head of Corporate Finance for Citibank in Europe, and Chairman
of Bankers Trust International, he became a founder of Phoenix
Securities, a private investment banking firm. Following the acquisition
of Phoenix in 1997 by Donaldson Lufkin and Jenrette ("DLJ"),
he chaired DLJ's European Investment Banking Group. He subsequently
became a founder and Vice Chairman of New Star Asset Management Group
PLC. He is a Director of a number of private companies. He attended
Oxford University and has an MBA from Stanford University. SARAH BATES*+
Sarah Bates, aged 54, joined the Board in May 2013. A former Chairman of
the Association of Investment Companies, she is currently Chairman of
JPMorgan American Investment Trust plc and a non-executive Director of
New India Investment Trust PLC, Polar Capital Technology Trust plc, St
James's Place plc, Witan Pacific Investment Trust plc and
Development Securities plc. She is also Chairman of Rutley Russia
Property Fund Limited and of Stena Line (UK) Pension Scheme Trustees
Limited. In addition, she is Chairman of, or a member of Charitable and
pension fund investment committees including that of the East Riding
Pension Fund and is Chairman of the Kings Corner Project. She attended
Cambridge University and has an MBA from London Business School. JO
DIXON*+ Jo Dixon, aged 53, joined the Board in 2004 and is Chairman of
the Audit Committee. She is currently a non-executive Director and
Chairman of the Audit Committee of Standard Life Equity Income Trust PLC
and Baring Emerging Europe PLC. Jo is a graduate Chartered Accountant
having trained with Touche Ross in London. Her career has spanned
strategic development, finance and commercial management at a number of
companies including The Eden Project, Cornwall, Serco Group plc and
Newcastle United PLC and also within the Investment Bank of NatWest
Group. DR DAVID HOLBROOK*+ Dr David Holbrook, aged 53, joined the Board
in 2007. He is a qualified physician and a Director of MTI Partners
Limited, a leading technology venture capital investor. He attended
London and Oxford Universities, and has an MBA from Harvard Business
School. He has held senior positions in a number of blue chip
biopharmaceutical organisations including GlaxoSmithKline and Roche.
SAMUEL D. ISALY Sam Isaly, aged 68, joined the Board at launch in 1995.
Sam is Managing Partner of OrbiMed Capital LLC, the Company's
Investment Manager, and has been an international pharmaceutical
investment specialist for more than 20 years having worked in New York
and Europe with Chase Manhattan, Societe Generale, Credit Suisse and UBS
Warburg. DOUG McCUTCHEON*+ Doug McCutcheon, aged 48, joined the Board in
2012. Based in Toronto, Canada, Doug is both a Canadian and UK citizen.
Doug is the President of Gormley Limited, an investment company focused
on investing in private companies, and is also on the Board of Longview
Asset Management. Doug is involved in several philanthropic
organisations, with a focus on healthcare and education. Until 2012,
Doug was at UBS, where he was the former head of UBS Healthcare
Investment Banking for Europe, the Middle East, Africa and Asia-Pacific,
with over 25 years' experience as an investment banker. ANTHONY
TOWNSEND*+ Anthony Townsend, aged 65, joined the Board at launch in
1995. Anthony has spent over 40 years working in the City and was
Chairman of The Association of Investment Companies from 2001 to 2003.
Anthony is Chairman of Baronsmead VCT 3 plc, British & American
Investment Trust PLC, F&C Global Smaller Companies PLC, Finsbury
Growth & Income Trust PLC and Miton Worldwide Growth Investment
Trust Plc. Other than those stated above, none of the Directors has any
other connections with the Investment Manager and is not employed by any
of the companies in which the Company holds an investment. *Member of
the Audit Committee +Member of the Nominations and Management Engagement
and Remuneration Committees Report of the Directors Incorporating the
Business Review In accordance with the requirements of the Companies Act
2006 (the 'Act') and the UK Listing and Transparency Rules,
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 2013. INTRODUCTION The
Report of the Directors includes the Business Review and Corporate
Governance Statement. The Business Review contains a review of the
Company's business, the principal risks and uncertainties it faces
and an analysis of its performance during the financial period and the
position at the period end and the future business plans of the Company.
To aid understanding of these areas the Board has included an analysis
using appropriate Key Performance Indicators. The Business Review should
be read in conjunction with the Chairman's Statement on pages 2 and
3, the Review of Investments on pages 5 to 10 and the analyses on pages
11 to 17. BUSINESS AND STATUS OF THE COMPANY The Company is registered
as a public limited company and is an investment company within the
terms of Section 833 of the Companies Act 2006 (the 'Act').
Its shares are listed on the Official List of the UK Listing Authority
and traded on the main market of the London Stock Exchange, which is a
regulated market as defined in Section 1173 of the Act. The Company has
received approval from HM Revenue & Customs as an authorised
investment trust under Sections 1158 and 1159 of the Corporation Tax Act
2010 ("CTA 2010") for the year ended 31 March 2012. This
approval is subject to there being no subsequent enquiry under
corporation tax self-assessment. In the opinion of the Directors, the
Company continues to direct its affairs so as to enable it to qualify
for such approval. In accordance with recent changes to CTA 2010, the
Company has obtained ongoing approval from HM Revenue & Customs for
all accounting periods commencing on 1 April 2012. CONTINUATION OF THE
COMPANY A resolution was passed at the Annual General Meeting held in
2009 that the Company continues as an investment trust for a further
five year period. In accordance with the Company's Articles of
Association, shareholders will have an opportunity to vote on the
continuation of the Company at the Annual General Meeting in 2014 and
every five years thereafter. INVESTMENT OBJECTIVE AND BENCHMARK The
Company invests worldwide in pharmaceutical and biotechnology companies
and related securities in the healthcare sector with the objective of
achieving a high level of capital growth. With effect from 1 October
2010, the Company's performance has been measured against the MSCI
World Health Care Index (total return, sterling adjusted). Prior to this
date, performance was measured against the Datastream World
Pharmaceutical & Biotechnology Index (total return, sterling
adjusted). INVESTMENT POLICY In order to achieve its investment
objective, the Company invests in a diversified portfolio of shares in
pharmaceutical and biotechnology companies and related securities in the
healthcare sector on a worldwide basis. It uses gearing and derivative
transactions to mitigate risk and also to enhance capital returns.
Investment Limitations and Guidelines The Board seeks to manage the
Company's risk by imposing various investment limits and
restrictions: -- The Company will not invest more than 10% of its gross
assets in other closed ended investment companies (including investment
trusts) listed on the London Stock Exchange, except where the investment
companies themselves have stated investment policies to invest no more
than 15% of their gross assets in other closed ended investment
companies (including investment trusts) listed on the London Stock
Exchange. -- The Company will not invest more than 15% of the portfolio
in any one individual stock at the time of acquisition; -- At least 60%
of the portfolio will normally be invested in larger companies (i.e.
with a market capitalisation of at least U.S.$5bn); -- At least 20% of
the portfolio will normally be invested in smaller companies (i.e. with
a market capitalisation of less than U.S.$5bn); -- Investment in
unquoted securities will not exceed 10% of the portfolio at the time of
acquisition; -- A maximum of 5% of the portfolio, at the time of
acquisition, may be invested in each of debt instruments, convertibles
and royalty bonds issued by pharmaceutical and biotechnology companies;
-- A maximum of 15% of the portfolio, at the time acquisition, of may be
invested in companies in each of the following sectors: - healthcare
equipment - healthcare technology - providers of healthcare and related
services -- The Company's gearing policy is to borrow up to the
lower of [pounds sterling]120 million or 20% of the Company's net
asset value; -- Derivative transactions can be used to mitigate risk
and/or enhance capital returns and will be restricted to 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 is restricted to 8% of the gross assets of the Company at the
time of acquisition. Compliance with the Board's investment
limitations and guidelines is monitored continuously by Frostrow Capital
LLP ("Frostrow" or the "Manager") and OrbiMed
Capital LLC ("OrbiMed" or the "Investment Manager")
and is reported to the Board on a monthly basis. PERFORMANCE In the year
to 31 March 2013, the Company's net asset value total return was
30.3% compared to a rise of 31.4% in the Company's benchmark, the
MSCI World Health Care Index (net total return, sterling adjusted). The
Company's share price total return was 30.9% during the year. Both
the share price and the net asset value total return generated during
the year were enhanced by virtue of the change in the Company's
dividend payment policy whereby a first interim dividend of 7.0p per
share was paid in January 2013. This "extra" dividend payment
enhanced performance in total return terms by approximately 1.0%. The
Review of Investments on pages 5 to 10 includes a review of the
principal developments during the year, together with information on
investment activity within the Company's portfolio. RESULTS AND
DIVIDEND The results attributable to shareholders for the year and the
transfer to reserves are shown on page 41. In order to maintain
investment trust status the Directors have declared two interim
dividends for the year totaling 16.5p per share (2012: a single interim
dividend of 17.5p) the second of which will be payable on 5 July 2013.
KEY PERFORMANCE INDICATORS ('KPIs') At each Board meeting the
Board assesses the Company's performance in meeting its investment
objective and against the following key performance indicators: -- Net
asset value total return (see pages 1 and 11) -- Share price total
return (see pages 1, 11 and 38) -- Stock contribution analysis (see page
10) -- Share price premium/discount to net asset value per share (see
page 11) -- Ongoing charges (see page 11) -- Benchmark performance (see
pages 1, 11 and 38) -- Issue of new shares/repurchase of own shares (see
pages 22 and 52) The management of the portfolio is conducted by the
Investment Manager and the management of the Company's affairs,
including marketing, administration and company secretarial matters is
conducted by the Manager. Each provider is responsible to the Board
which is ultimately responsible to the shareholders for performing
against, inter alia, the above KPIs within the terms of their respective
agreements by utilising the capabilities of the experienced
professionals within each firm. PRINCIPAL RISKS AND THEIR MITIGATION The
Company's assets consist principally of listed equities; its main
area of risk is therefore stockmarket-related. The specific key risks
faced by the Company, together with the Board's mitigation
approach, are as follows: Investment Activity and Strategy The Board
regularly reviews the Company's investment mandate and its
long-term investment strategy in relation to market and economic
conditions, and the operation of the Company's peers, thereby
monitoring whether the Company should continue in its present form. An
inappropriate investment strategy, for example asset allocation or the
level of gearing, may lead to underperformance against the
Company's benchmark index and peer companies, resulting in the
Company's shares trading on a wider discount. The Board manages
these risks by diversification of investments through its investment
restrictions and guidelines which are monitored and reported on by the
Manager. Each month the Board receives a monthly review report, which
monitors the Company's investment performance (both on an absolute
basis and against the benchmark and peer group) and its compliance with
the investment guidelines. Additional reports and presentations are
regularly presented to investors by the Company's Manager,
Investment Manager and also by Winterflood Securities, the
Company's Corporate Stockbroker. The Board undertakes a regular
review of the level of discount/premium and consideration is given to
ways in which share price performance may be enhanced, including the
effectiveness of marketing and share buy-backs, where appropriate. The
Board has implemented a discount control mechanism intended to establish
a target level of no more than a 6% discount of share price to the
diluted net asset value per share. Shareholders should note, however,
that it remains possible for the share price discount to net asset value
per share to be greater than 6% on any one day and is due to the fact
that the share price continues to be influenced by overall supply and
demand for the Company's shares in the secondary market. The
volatility of the net asset value per share in an asset class such as
healthcare is another factor over which the Board has no control. The
average month end share price discount during the year was 6%. The
making and timing of any share buy-backs is at the absolute discretion
of the Board. A significant proportion of the Company's assets are,
and will continue to be, invested in securities denominated in foreign
currencies, in particular U.S. dollars. As the Company's shares are
denominated and traded in sterling, the return to shareholders will be
affected by changes in the value of sterling relative to those foreign
currencies. The Board has made clear the Company's position with
regard to currency fluctuation, which is that it does not currently
hedge against currency exposure. Shareholder Relations and Corporate
Governance The Board regularly reviews investment performance against
the benchmark and against peer group. The Board also receives regular
reports that show an analysis of performance compared with other
relevant indices. The Investment Manager provides an explanation of
stock selection decisions and an overall rationale for the make-up of
the portfolio. The Investment Manager discusses current and potential
investment holdings with the Board on a regular basis in addition to new
initiatives, which may enhance shareholder returns. Operational
Disruption to, or failure of accounting, dealing or payments systems or
the custodian's records could prevent accurate reporting and
monitoring of the Company's financial position. The Board reviews
both the internal control and the disaster recovery procedures put in
place by its principal service providers on a regular basis. Financial
Industry risk exists in all specialist industries. Risks are inherent in
pharmaceutical companies with, for example, the potential for drug
withdrawals from the market or failures after launch and lack of
expected profit growth. The Board meets on a quarterly basis during the
year and on an ad hoc basis if necessary. At each meeting they consider
the asset allocation of the portfolio. The Investment Manager has
responsibility for selecting investments in accordance with the
Company's investment objective and seeks to ensure that individual
stocks meet an acceptable risk-reward profile. The Company's assets
comprise mainly readily realisable liquid securities, which can be sold
to meet funding requirements if necessary. The Company's assets can
be held by Goldman Sachs & Co. New York as collateral for the loan
provided by them to the Company. Such assets taken as collateral may be
used, loaned, sold, rehypothecated or transferred by Goldman Sachs &
Co. New York, although the Company maintains the economic benefits from
ownership of those assets. Goldman Sachs & Co. New York may take up
to 140% of the value of the outstanding loan as collateral. The Company
is afforded protection under both the SEC rules and U.S. legislation
equal to the value of the net assets held by Goldman Sachs & Co. New
York (also see glossary). Assets held by Goldman Sachs & Co. New
York, as custodian, that are not used as collateral, are held in
segregated client accounts. Further information on financial instruments
and risk, as required by FRS 29, can be found in note 18 to the
financial statements beginning on page 54. The Company is also exposed
to the risk that the custodian and/or counterparties may fail and that
title to stocks does not survive an ensuing liquidation. The
Company's Investment Manager is responsible for undertaking reviews
of the credit worthiness of the counterparties that it uses. The Board
regularly reviews the Investment Manager's approved list of
counterparties. Accounting, Legal and Regulatory In order to qualify as
an investment trust, the Company must comply with Section 1158 of the
Corporation Tax Act 2010 ("Section 1158"). Were the Company to
breach Section 1158, it might lose investment trust status and, as a
consequence, gains within the Company's portfolio could be subject
to Capital Gains Tax. The Section 1158 qualification criteria are
continually monitored by the Manager and the results reported to the
Board each month. The Company must also comply with the provisions of
the London Stock Exchange, the UKLA Listing Rules and Disclosure &
Transparency Rules ('DTRs'). A breach of the Companies Act
could result in the Company and/or the Directors being fined or subject
to criminal proceedings. Breach of the UKLA Listing Rules or DTRs could
result in the Company's shares being suspended in listing which in
turn would breach Section 1158. The Board relies on the services of its
Manager to ensure compliance with The Companies Act and The UKLA Listing
Rules. LOAN FACILITY The Company's borrowing requirements are met
through the utilisation of a loan facility, repayable on demand,
provided by Goldman Sachs & Co. New York. At the year end total
borrowings amounted to the equivalent of [pounds sterling]31.4 million
representing 6.2% of net assets. Further details can be found in note 11
on page 52 and in note 18 beginning on page 54. SHARE CAPITAL On 4
September 2009, the Company made a bonus issue of subscription shares on
the basis of one subscription share for every five ordinary shares held
at that date. The subscription shares have quarterly subscription dates
and the following shares were allotted by the Company as a result of
holders of the subscription shares exercising their subscription rights
during the year: 2,213,584 shares were allotted on 2 May 2012 raising
[pounds sterling]14,123,000. 2,457,096 shares were allotted on 1 August
2012 raising [pounds sterling]15,676,000. 960 shares were allotted on 14
August 2012 raising [pounds sterling]6,000. 9,946 shares were allotted
on 1 November 2012 raising [pounds sterling]70,000. 33,336 shares were
allotted on 1 February 2013 raising [pounds sterling]233,000. Subsequent
to the year-end 49,760 shares were allotted on 2 May 2013 raising
[pounds sterling] 348,000. During the year under review the Company
re-purchased a total of 2,411,340 shares to be held in treasury, at a
cost of [pounds sterling]19.2 million (including expenses). Since the
year end and to 6 June 2013 no further shares have been repurchased by
the Company. In aggregate, to 28 May 2013, the shares re-purchased
equate to a total of 5.6% of the issued share capital (excluding shares
held in treasury) at the beginning of the year. As indicated in the
Chairman's Statement, the Board has agreed that any treasury shares
remaining on 17 July 2013, the date of the Annual General Meeting, will
be cancelled. A total of 2,941,518 shares held in treasury were
cancelled on 17 July 2012. During the year to date all of the 378,408
shares bought back into treasury since the 2012 Annual General Meeting
were reissued at prices representing no more than a 4.9% discount to the
prevailing fully diluted cum income net asset value per share, raising
[pounds sterling]4.0 million of new funds for the Company. No
Subscription Shares were re-purchased for cancellation during the year.
PROSPECTS The Company's Investment Manager continues to believe
that the outlook for the healthcare sector is positive and that there is
potential for continued outperformance of the wider markets over the
long term. INVESTMENT MANAGEMENT Investment Management Agreement: The
Investment Manager receives a periodic fee equal to 0.65% p.a. of the
Company's net asset value. The Investment Management Agreement may
be terminated by either party giving notice of not less than 12 months.
The Investment Manager under the terms of the agreement provides, inter
alia, the following services: -- seeking out and evaluating investment
opportunities; -- recommending the manner by which monies should be
invested, disinvested, retained or realised; -- advising on how rights
conferred by the investments should be exercised; -- analysing the
performance of investments made; and -- advising the Company in relation
to trends, market movements and other matters which may affect the
investment policy of the Company. MANAGEMENT Company Management, Company
Secretarial and Administrative Services Agreement: The Manager, receives
a periodic fee equal to 0.30% per annum of the Company's market
capitalisation up to [pounds sterling]150 million, 0.20% per annum of
the market capitalisation in excess of [pounds sterling]150 million and
up to [pounds sterling]500 million, and 0.125% per annum of the market
capitalisation in excess of [pounds sterling]500 million, plus a fixed
amount equal to [pounds sterling]57,500 per annum. The notice period on
the Company Management, Company Secretarial and Administration Agreement
with Frostrow is 12 months, termination can be initiated by either
party. The Manager, under the terms of the agreement provides, inter
alia, the following services: -- marketing and shareholder services; --
administrative services; -- advice and guidance in respect of corporate
governance requirements; -- maintaining the books of account and record
in respect of Company dealing, investments, transactions, dividends and
other income, the income account, balance sheet and cash books and
statements; -- preparation and despatch of the audited annual and
unaudited interim report and accounts and interim management statements;
and -- attending to general tax affairs where necessary. Performance
Fee: Dependent on the level of long term outperformance of the Company,
the Investment Manager and the Manager are entitled to the payment of a
performance fee. The performance fee is calculated by reference to the
amount by which the Company's net asset value ('NAV')
performance has outperformed the benchmark index. (See page 1 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 16.5% of any outperformance over the
benchmark, the investment manager receiving 15% and the manager
receiving 1.5% respectively. Provision is also 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 is based on the lower of: i) The cumulative
out-performance of the investment portfolio over the benchmark as at the
quarter end date; and ii) The cumulative out-performance of the
investment portfolio over the benchmark as at the corresponding quarter
end date in the previous year. In addition, a performance fee only
becomes payable to the extent that the cumulative outperformance gives
rise to a total fee greater than the total of all performance fees paid
to date. During the year performance fees totaling [pounds
sterling]643,000 crystallised (year ended 31 March 2012: [pounds
sterling]909,000) in relation to maintained outperformance of which
[pounds sterling] 268,000 was payable at 31 March 2013 (see note 3 on
page 48 for further details). CONTINUING APPOINTMENT OF THE MANAGER AND
INVESTMENT MANAGER The Board has concluded that it is in
shareholders' interests that the Manager and the Investment Manager
continue in their roles. The review undertaken by the Board considered
the Company's investment performance over both the short and longer
terms, together with the quality and adequacy of other services
provided. The Board also reviewed the appropriateness of the terms of
the Investment Management and Management Agreements, in particular the
length of notice period and the fee structures. GOING CONCERN The
Company's business activities together with the factors likely to
affect its future development, performance and position are set out in
the Report of the Directors on pages 19 to 28. The financial position of
the Company, its liquidity position and its borrowing facility are set
out in the notes to the financial statements beginning on page 45. In
addition, the Corporate Governance Report, the Financial Statements and
the associated notes give details of the Company's objectives,
policies and processes, its financial risk management objectives and its
exposure to risks. The Company has considerable financial resources and
a good spread of investments across different geographical areas. The
majority of the Company's investments are listed on recognised
stock exchanges and are readily realisable. Having considered the
Company's prospects, the Directors believe that it is appropriate
to adopt the going concern basis in preparing the financial statements
as the assets of the Company consist mainly of securities that are
readily realisable and, accordingly, the Company has adequate financial
resources to continue in operational existence for the foreseeable
future. CREDITORS PAYMENT POLICY Terms of payment are negotiated with
suppliers when agreeing settlement details for transactions. While the
Company does not follow a formal code, it is the Company's
continuing policy to pay amounts due to creditors as and when they
become due. As at 31 March 2013, the Company did not have any trade
creditors (2012: nil). CHARITABLE AND POLITICAL DONATIONS The Company
has not in the past and does not intend in future to make any
charitable or political donations. ENVIRONMENTAL AND ETHICAL POLICY The
Company's primary objective is to achieve a high level of capital
growth by investment in pharmaceutical and biotechnology companies and
the Board recognises that this should be done in an environmentally
responsible way. The Directors support the action being taken by the
major pharmaceutical companies to make products more affordable to
patients in developing countries. The Directors believe that the Company
would be in breach of its fiduciary duties to shareholders if investment
decisions were based solely on ethical or environmental considerations.
The Company encourages a positive approach to corporate governance and
engagements with investee companies. INDIVIDUAL SAVINGS ACCOUNTS The
Company's shares are eligible to be held in the stocks and shares
component of an ISA or Junior ISA, subject to applicable annual
subscription limits ([pounds sterling] 11,520 for an ISA and [pounds
sterling]3,600 for a Junior ISA for the 2013/2014 tax year). Investments
held in ISAs or Junior ISAs will be free of UK tax on both capital gains
and income. The opportunity to invest in Ordinary Shares through an ISA
is restricted to certain UK resident individuals aged 18 or over. Junior
ISAs are available for UK resident children aged under 18 and born
before 1 September 2002 or after 2 January 2011. Sums received by a
shareholder on a disposal of Ordinary Shares held within an ISA or
Junior ISA will not count towards the shareholder's annual limit.
Individuals wishing to invest in Ordinary Shares through an ISA should
contact their professional advisers regarding their eligibility as
should individuals wishing to invest through a Junior ISA for children
under 18 years old. DIRECTORS The Directors of the Company, all of whom
served throughout the year, except as noted, are all non-executive and
are listed below. Their biographies can be found on page 18. Sir Martin
Smith (Chairman) Sarah Bates (appointed on 22 May 2013) Jo Dixon
Professor Duncan Geddes (retired on 17 July 2012) Dr David Holbrook
Samuel D. Isaly Doug McCutcheon (appointed on 7 November 2012) Anthony
Townsend DIRECTORS' INTERESTS The beneficial interests of the
Directors and their families in the Company were as set out below:
                                     Shares of 25p each    Subscription
Shares
                                     31 March    1 April    31 March
1 April
                                         2013       2012        2013
2012 Sir Martin Smith                        5,859      5,859
400        400 Sarah Bates (appointed 22 May           7,200          -
-          - 2013) Jo Dixon                                3,000
3,000         600        600 Dr David Holbrook
1,094          -           -          - Samuel D. Isaly
353,600    353,600         720    100,720 Doug McCutcheon (appointed 7
15,000          -           -          - November 2012) Anthony Townsend
21,619     21,619      25,793     25,793 As at 6 June 2013 there had
been no changes in the above details. Samuel D. Isaly is a partner in
OrbiMed Capital LLC which is party to the Investment Management
Agreement with the Company and receives fees as described on pages 22
and 23. A number of the partners at OrbiMed Capital LLC have a minority
financial interest totalling 20% in Frostrow Capital LLP, the
Company's Manager. DIRECTORS' & OFFICERS' LIABILITY
INSURANCE COVER Directors' & officers' liability insurance
cover was maintained by the Company during the year ended 31 March 2013.
It is intended that this policy will continue for the year ending 31
March 2014 and subsequent years. DIRECTORS' INDEMNITIES As at the
date of this report, indemnities are 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. SUBSTANTIAL SHARE INTERESTS
The Company was aware of the following substantial interests in the
voting rights of the Company:
                                         30 April 2013*        31 March
2013 Beneficial             Registered      Number of       % of Number
of      % of shareholder            holder             shares     issued
shares    issued
                                                      share
share
                                                    capital
capital Investec Wealth &      Various         4,315,131       9.43
4,216,604      9.21 Investment             Nominees Alliance Trust
Savings Alliance Trust  2,401,636       5.25 2,370,495      5.18
                       Savings
                       Nominees Smith & Williamson     Various
2,069,159       4.52 2,113,833      4.62
                       Nominees Brewin Dolphin         Various
2,020,827       4.42 2,058,011      4.49
                       Nominees Henderson Global       Various
1,944,188       4.25 2,149,188      4.70 Investors              Nominees
Charles Stanley,       Various         1,820,180       3.98 1,783,132
3.90 Stockbrokers           Nominees Newton Investment      Various
1,728,842       3.78 1,764,947      3.86 Management             Nominees
Speirs & Jeffrey,      Various         1,507,516       3.39
1,537,031      3.36 Stockbrokers           Nominees Legal & General
Various         1,446,387       3.16 1,446,387      3.16 Investment
Management  Nominees As at 31 March 2013 the Company had 45,434,746
shares in issue. As at 30 April 2013 the Company had 45,504,746 shares
in issue. *30 April being the latest practicable date before publication
of the Annual Report. INDEPENDENT AUDITORS Ernst & Young LLP have
indicated their willingness to continue to act as Independent Auditors
to the Company and a resolution for their re-appointment will be
proposed at the forthcoming Annual General Meeting. Ernst & Young
LLP have been in post for over 18 years and the Board, after
consideration, has agreed that a tender process for the post of Auditor
to the Company should take place in early 2014. As part of its
deliberations, the Board has noted that the audit partners responsible
for the audit are rotated at least every five years, in accordance with
professional and regulatory standards, in order to protect independence
and objectivity and also to provide fresh challenge to the business, but
the Board still believes that the holding of a tender process is
appropriate. The results of the tender will be published in next
year's Annual Report and Accounts and will be voted on by
shareholders at next year's Annual General Meeting. AUDIT
INFORMATION The Directors who held office at the date of approval of
this Directors' Report confirm that, so far as they are aware,
there is no relevant audit information of which the Auditors are
unaware; and that each Director has taken all steps they ought to have
taken as a Director to make themselves aware of any relevant audit
information and to establish that the auditors are aware of such
information. SECTION 992 OF THE COMPANIES ACT 2006 The following
disclosures are made in accordance with Section 992 of the Companies Act
2006. Capital Structure The Company's capital structure is
summarised in note 13. 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. BENEFICIAL OWNERS OF SHARES - INFORMATION RIGHTS Beneficial
owners of shares who have been nominated by the registered holder of
those shares to receive information rights under section 146 of the
Companies Act 2006 are required to direct all communications to the
registered holder of their shares rather than to the Company's
registrar, Capita Registrars, or to the Company directly. NOTICE PERIOD
FOR GENERAL MEETINGS Recent amendments made to the Company's
Articles of Association included a provision allowing general meetings
of the Company to be called on the minimum notice period provided for in
the Companies Act 2006. For meetings other than annual general meetings
this is currently a period of 14 clear days. A Special Resolution was
passed by shareholders at last year's Annual General Meeting
approving this. The Board is proposing Resolution 15 as a Special
Resolution to renew this approval for a further year. The notice period
for annual general meetings will remain 21 clear days. ANNUAL GENERAL
MEETING Resolutions relating to the following items of special business
will be proposed at the forthcoming Annual General Meeting: Issue of
Shares Ordinary Resolution 10 in the Notice of Annual General Meeting
gives authority to the Directors to allot the unissued share capital up
to an aggregate nominal amount of [pounds sterling]1,145,323 (equivalent
to 4,581,291 shares, or 10% of the Company's existing issued share
capital on 6 June 2013, being the nearest practicable date prior to the
signing of this Report). Such authority will expire on the date of the
next Annual General Meeting or after a period of 15 months from the date
of the passing of the resolution, whichever is earlier. This means that
the authority will be renewed at the next Annual General Meeting. When
shares are to be allotted for cash, Section 551 of the Companies Act
2006 (the "Act") provides that existing shareholders have
pre-emption rights and that the new shares must be offered first to such
shareholders in proportion to their existing holding of shares. However,
shareholders can, by special resolution, authorise the Directors to
allot shares otherwise than by a pro rata issue to existing
shareholders. Special Resolution 10 will, if passed, give the Directors
power to allot for cash equity securities up to 10% of the
Company's existing share capital on 6 June 2013 (reduced by any
treasury shares sold by the Company pursuant to Special Resolution 12,
as described below), as if Section 551 of the Act does not apply. This
is the same nominal amount of share capital which the Directors are
seeking the authority to allot pursuant to Resolution 11. This authority
will also expire on the date of the next Annual General Meeting or after
a period of 15 months, whichever is earlier. This authority will not be
used in connection with a rights issue by the Company. Under the
Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003
(as amended) (the "Treasury Share Regulations") the Company is
permitted to buy back and hold shares in treasury and then sell them at
a later date for cash, rather than cancelling them. The Treasury Share
Regulations require such sale to be on a pre-emptive, pro rata, basis to
existing shareholders unless shareholders agree by special resolution to
disapply such pre-emption rights. Accordingly, in addition to giving the
Directors power to allot unissued share capital on a non pre-emptive
basis pursuant to Resolution 11, Resolution 12, if passed, will give the
Directors authority to sell shares held in treasury on a non pre-emptive
basis. No dividends may be paid on any shares held in treasury and no
voting rights will attach to such shares. The benefit of the ability to
hold treasury shares is that such shares may be resold. This should give
the Company greater flexibility in managing its share capital, and
improve liquidity in its shares. It is the intention of the Board that
any re-sale of treasury shares would only take place at a narrower
discount to the net asset value per share than that at which they had
been bought into treasury, and in any event at a discount no greater
than 5% to the prevailing net asset value per share, and this is
reflected in the text of Resolution 12. It is also the intention of the
Board that sales from treasury would only take place when the Board
believes that to do so would assist in the provision of liquidity to the
market. The number of treasury shares which may be sold pursuant to this
authority is limited to 10% of the Company's existing share capital
on 6 June 2013 (reduced by any equity securities allotted for cash on a
non-pro rata basis pursuant to Resolution 11, as described above). This
authority will also expire on the date of the next Annual General
Meeting or after a period of 15 months, whichever is earlier. The
Directors intend to use the authority given by Resolutions 10, 11 and 12
to allot shares and disapply preemption rights only in circumstances
where this will be clearly beneficial to shareholders as a whole. The
issue proceeds would be available for investment in line with the
Company's investment policy. No issue of shares will be made which
would effectively alter the control of the Company without the prior
approval of shareholders in General Meeting. Authority for the Company
to purchase its own shares The Company's Articles of Association
permit the purchase by the Company of its own Ordinary and Subscription
shares subject to shareholders' prior approval being obtained.
Resolutions 13 and 14, if passed, would authorise the Company to buy
back up to 6,867,356 Ordinary shares and 350,791 Subscription shares,
which represents approximately 14.99% of the Company's issued
ordinary share capital (excluding shares held in treasury) and 14.99% of
the Company's Subscription shares as at 6 June 2013 respectively.
If given, these authorities will expire at the conclusion of the next
AGM of the Company after the passing of the resolution or, if earlier,
15 months from the date of the passing of the resolution. The Directors
intend to seek a renewal of such powers at each AGM. The resolutions
specify the maximum and minimum prices at which shares may be bought,
reflecting the requirements of the Companies Act 2006 and the Listing
Rules. Any buy back would only be made on the London Stock Exchange. Any
purchases of Ordinary shares will be made within guidelines established
from time to time by the Directors, but they will only exercise the
authority if, in their opinion, it would be in the interests of the
Company to do so and would result in an increase in net asset value per
Ordinary share for the remaining shareholders and if it is in the best
interests of shareholders generally. Such purchases will only be made at
prices below the prevailing net asset value per Ordinary share and
within the price constraints set out in paragraphs (b) and (c) of the
resolution. Under the Companies Act 2006, the Company is allowed to hold
its own Ordinary shares in treasury following a buy back, instead of
cancelling them. This gives the Company the ability to reissue treasury
shares quickly and cost-effectively and provides the Company with
additional flexibility in the management of its capital base. Shares
held in treasury may be resold for cash but all rights attaching to them
including voting rights and any right to receive dividends, are
suspended while they are held in treasury. If the Directors exercise the
authority conferred by resolution 13, the Company will have the option
of either holding in treasury or of cancelling any of its own shares
purchased pursuant to the authority and will decide at the time of
purchase which option to pursue. The Directors will have regard to any
guidelines issued by investor groups at the time of any such purchase,
holding or re-sale of treasury shares. Purchases of Subscription shares
will only be made through the market at prices where the Directors
believe such purchases will enhance Ordinary shareholder value and
within the price constraints set out in paragraphs (b) and (c) of the
resolution. Any Subscription shares repurchased by the Company will be
cancelled and will not be held in treasury for reissue or resale.
General Meetings Special Resolution 15 seeks shareholder approval for
the Company to hold General Meetings (other than Annual General
Meetings) at 14 clear days' notice. The authorities being sought
under Resolutions 10, 11, 12, 13, 14 and 15 will last until the
conclusion of the next Annual General Meeting or, if less, a period of
15 months. Amendment to Articles of Association It is proposed to make
certain changes to the Company's Articles of Association in order
to (i) take advantage of HM Government's reform of the tax and
company law rules affecting investment trusts by removing the
prohibition on distributing capital profits, which the Company is no
longer required to include (the Board is, however, not currently
proposing any change to the Company's dividend policy); (ii) remove
the upper limit of the Company's share capital, which is no longer
required pursuant to the Companies Act 2006; (iii) delete provisions
that were formerly contained within the Company's memorandum of
association; (iv) clarify the procedure for dealing with Subscription
Shares, once the Subscription Share Rights attaching to them have
lapsed; and (v) make other technical amendments so that the Articles of
Association conform to the Companies Act 2006 and other legislation
applicable to companies in its current form and current best practice.
Accordingly, Special Resolution 16 will be put to the Annual General
Meeting to be held on 17 July 2013. Subscription Shareholder Class
Meeting As the proposed amendments to the Company's Articles of
Association vary the rights attached to the Subscription Shares, the
passing of Special Resolution 16 at the Annual General Meeting is
conditional on the approval of the Subscription Shareholders in a
separate class meeting. If adopted, the new Articles of Association will
not affect the rights attached to the Ordinary Shares, and therefore a
separate class meeting of the Ordinary Shareholders is not necessary and
will not be held. Only Subscription Shareholders are entitled to attend
and vote at this class meeting. The quorum for the Class Meeting is not
less than two persons present (in person or by proxy) holding at least
one-third of the nominal amount paid up on the Subscription Shares in
issue. If a quorum is not present at the time and place for which the
class Meeting has been convened, the Class Meeting will be adjourned
until Monday, 29 July 2013 when one person holding Subscription Shares
(whatever the number of shares held) who is present in person or by
proxy will constitute a quorum". Recommendation The Board considers
that the resolutions set out above are, in the Board's opinion, in
the best interests of shareholders as a whole. Accordingly, the Board
unanimously recommends to shareholders that they vote in favour of the
above resolutions to be proposed at the forthcoming Annual General
Meeting as the Directors intend to do in respect of their own beneficial
holdings totaling 407,372 Shares. By order of the Board Frostrow Capital
LLP Company Secretary 6 June 2013 Statement of Directors'
Responsibilities The Directors are responsible for preparing the annual
report and the financial statements in accordance with applicable United
Kingdom law and regulations. Company law in the United Kingdom requires
the Directors to prepare financial statements for each financial year.
Under this law the Directors have elected to prepare the financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice, (United Kingdom standards and applicable law).
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Company and the profit and loss of the
Company for that period. In preparing these financial statements, the
Directors are required to: -- select suitable accounting policies and
applied them consistently; -- make judgments and estimates that are
reasonable and prudent; and -- state whether applicable UK Accounting
Standards have been followed, subject to any material departures
disclosed and explained in the financial statements. The Directors are
responsible for keeping adequate accounting records that are sufficient
to show and explain the Company's transactions and which disclose
with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding
the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities. Under
applicable law and regulation, the Directors are also responsible for
preparing a Report of the Directors, including a formal statement on
Corporate Governance and a Directors' Remuneration Report that
comply with such law and regulations. The financial statements are
published on the Company's website (website address:
www.worldwidewh.com), which is a website maintained by the Manager. The
maintenance and integrity of the website is, so far as it relates to the
Company, the responsibility of the Manager. The work carried out by the
Auditors does not involve consideration of the maintenance and integrity
of this website and accordingly, the Auditors accept no responsibility
for any changes that have occurred to the financial statements since
they were initially presented on the website. Visitors to the website
need to be aware that legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may differ
from legislation in their jurisdiction. The Directors, whose details can
be found on page 18, each confirm that to the best of their knowledge
the financial statements, within the Annual Report, have been prepared
in accordance with applicable accounting standards, give a true and fair
view of the assets, liabilities, financial position and the profit for
the year ended 31 March 2013, and that the Chairman's Statement,
Review of Investments and the Report of the Directors include a fair
review of the information required by 4.1.8R to 4.1.11R of the FSAs
Disclosure and Transparency Rules. On behalf of the Board Sir Martin
Smith Chairman 6 June 2013 Corporate Governance This Corporate
Governance Statement forms part of the Report of the Directors.
COMPLIANCE The Board has considered the principles and recommendations
of the Association of Investment Companies ("AIC") Code of
Corporate Governance ("AIC Code") by reference to the AIC
Corporate Governance Guide for Investment Companies ("AIC
Guide"), both of which can be found on the AIC website
www.theaic.co.uk. The AIC Code, as explained by the AIC Guide, addresses
all the principles set out in the UK Corporate Governance Code (the
"UK Governance Code") as well as setting out additional
principles and recommendations on issues that are of specific relevance
to the Company. The Board considers that reporting against the
principles and recommendations of the AIC Code, and by reference to the
AIC Guide (which incorporates the UK Governance Code), provides better
information to shareholders. A copy of the UK Governance Code can be
found at www.frc.org.uk. The Board has noted the recommendations of the
UK Corporate Governance Code published in October 2012 (applicable for
financial years beginning after 1 October 2012) and will duly report on
these recommendations in the Company's 2014 Annual Report. The
Board considers that it has managed its affairs throughout the year
ended 31 March 2013 in compliance with the recommendations of the AIC
Code and the relevant provisions of the UK Governance Code, except as
set out below: -- the role of the chief executive; -- executive
directors' remuneration; -- the need for an internal audit
function; and -- the Chairman of the Company acting as Chairman of the
Management Engagement and Remuneration Committee. For the reasons set
out in the AIC Guide, and in the preamble to the AIC Code, the Board
considers the first three provisions mentioned above are not relevant to
the position of the Company, being an externally managed investment
trust. The Company has therefore not reported further in respect of
these provisions. With regard to the Chairman of the Company acting as
the Chairman of the Management Engagement and Remuneration Committee,
the Board considers this to be appropriate in light of the remit of the
Committee. Further details covering the Committee can be found on page
32. In view of its non-executive nature, the Board considers that it is
not appropriate for the Directors to be appointed for a specified term
as recommended by provision B.7.1 of the UK Corporate Governance Code
and principle 3 of the AIC Code. The Board has agreed that all Directors
of the Company will seek re-election annually. Mr Anthony Townsend,
however, will not be seeking re-election at this years' Annual
General Meeting. INTERNAL AUDIT As the Company delegates its day-to-day
operations to third parties and has no employees, the Board has
determined that there are no requirements for an internal audit
function. The Board reviews annually whether a function equivalent to an
internal audit is needed and it will continue to monitor its systems of
internal controls in order to provide assurance that they operate as
intended. BOARD INDEPENDENCE, COMPOSITION AND TENURE Sir Martin Smith as
Chairman is responsible for leadership of the Board and for ensuring its
effectiveness in all aspects of its role, currently consists of seven
non-executive Directors. The Directors' biographical details, set
out on page 18, demonstrate a breadth of investment, commercial and
professional experience. Mr Anthony Townsend has been designated as the
Senior Independent Director who can act as a sounding board for the
Chairman and also acts as an intermediary for the other Directors when
necessary. Mr Townsend will not be seeking re-election at this
year's Annual General Meeting. He will be succeeded as the Senior
Independent Director by Jo Dixon. The Directors review their
independence annually. Samuel D. Isaly is Managing Partner of OrbiMed,
the Company's Investment Manager, and has also served on the Board
for over nine years. Mr Isaly is therefore not considered to be an
Independent Director. Ms Jo Dixon and Mr Townsend have also served on
the Board for nine years. The Board subscribes to the view expressed
within the AIC Code that long-serving Directors should not be prevented
from forming part of an independent majority. It does not consider that
a Director's tenure necessarily reduces his or her ability to act
independently and, following formal performance evaluations, believes
that, with the exception of Samuel D. Isaly, each of the Directors is
independent in character and judgment and that there are no
relationships or circumstances which are likely to effect their
judgment. Sir Martin Smith and Dr David Holbrook joined the Board in
2007 and are both considered by the Board to be independent. The Board
has considered the position of Ms Dixon, Sir Martin Smith, Mr Isaly and
Dr Holbrook as part of the evaluation process, and believes that it
would be in the Company's best interests to propose them for
reelection at the forthcoming Annual General Meeting. Mrs Sarah Bates
and Mr Doug McCutcheon were appointed directors with effect from 22 May
2013 and 7 November 2012 respectively and they will be seeking election
at this year's Annual General Meeting. They are both considered to
be independent by the Board. In line with the Company's strong
commitment to its corporate governance responsibilities, the Board
regularly reviews its performance and composition to ensure it has the
correct mix of relevant skills and experience for the good conduct of
the Company's business. As part of this process the Board has
agreed a programme of refreshment, which will see its membership change
as current Directors retire in an orderly manner, and new Directors are
appointed. None of the Directors has a service contract with the
Company. New Directors are appointed with the expectation that they will
serve for a minimum period of three years. Any Director may resign in
writing to the Board at any time. The terms of their appointment are
detailed in a letter sent to them when they join the Board. These
letters are available for inspection at the offices of the
Company's Manager and will be available at the Annual General
Meeting. When a new Director is appointed to the Board, they are
provided with all relevant information regarding the Company and their
duties and responsibilities as a Director. In addition, a new Director
will also spend time with representatives of the Manager and Investment
Manager in order to learn more about their processes and procedures. The
Chairman also regularly reviews the training and development needs of
each Director. The Board receives regular briefings from, amongst
others, the Auditors and the Company Secretary regarding any proposed
developments or changes in laws or regulations that could affect the
Company and/or the Directors. THE BOARD'S RESPONSIBILITIES The
Board is responsible for efficient and effective leadership of the
Company and regularly reviews the schedule of matters reserved for its
decision. The Board meets at least on a quarterly basis and at other
times as necessary. The Board is responsible for all aspects of the
Company's affairs, including the setting of parameters for and the
monitoring of investment strategy, the review of investment performance
(including peer group performance) and investment policy. It also has
responsibility for all corporate strategy issues, dividend policy, share
issuance and buy-back policy, gearing, share price and discount/ premium
monitoring and corporate governance matters. To enable them to discharge
their responsibilities, prior to each meeting the Directors are
provided, in a timely manner, with a comprehensive set of papers giving
detailed information on the Company's transactions, financial
position and performance. Representatives of the Manager and Investment
Manager attend each Board meeting, enabling the Directors to seek
clarification on specific issues or to probe further on matters of
concern; a full written report is also received from the Manager and
Investment Manager at each quarterly meeting. In light of these reports,
the Board gives direction to the Investment Manager with regard to the
Company's investment objectives and guidelines. Within these
established guidelines, the Investment Manager takes decisions as to the
purchase and sale of individual investments. There is an agreed
procedure for Directors, in the furtherance of their duties, to take
independent professional advice, if necessary, at the Company's
expense. The Directors have access to the advice and services of the
Company Secretary, through its appointed representative, who is
responsible to the Board for ensuring that Board procedures are
followed. BOARD EVALUATION During the year under review, the performance
of the Board, Committees and individual Directors was evaluated through
a formal assessment process led by Mr Anthony Townsend, as the Senior
Independent Director. The review concluded that the Board worked in a
collegiate, efficient and effective manner. The results of the external
independent evaluation process, conducted by Board Alpha, were presented
to and discussed by the Board in March 2012 and, as a result, it was
agreed that the current Directors contributed effectively and that all
had the skills and experience which are relevant to the leadership and
direction of the Company. It has been agreed that an external
independent evaluation of the Board will be held every three years.
CONFLICT OF INTEREST It is a statutory requirement that a Director must
avoid a situation in which he or she has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict, with the
Company's interests (a "situational conflict"). The
Company's Articles of Association have been amended to give the
Directors authority to approve such situations, where appropriate. It is
the responsibility of each individual Director to avoid an unauthorised
conflict situation arising. He or she must request authorisation from
the Board as soon as he or she becomes aware of the possibility of a
situational conflict arising. The Board is responsible for considering
Directors' requests for authorisation of situational conflicts and
for deciding whether they should be authorised. The factors to be
considered will include whether the situational conflict could prevent
the Director from performing his or her duties, whether it has, or could
have, any impact on the Company and whether it could be regarded as
likely to affect the judgment and/or actions of the Director in
question. When the Board is deciding whether to authorise a conflict or
potential conflict, only Directors who have no interest in the matter
being considered are able to take the relevant decision, and in taking
the decision the Directors must act in a way they consider, in good
faith, will be most likely to promote the Company's success. The
Directors are able to impose limits or conditions when giving
authorisation if they think this is appropriate in the circumstances. A
register of conflicts is maintained by the Company Secretary and is
reviewed at quarterly Board meetings, to ensure that any authorised
conflicts remain appropriate. Directors are required to confirm at these
meetings whether there has been any change to their position. The
Directors must also comply with the statutory rules requiring company
directors to declare any interest in an actual or proposed transaction
or arrangement with the Company. COMMITTEES OF THE BOARD During the year
the Board delegated certain responsibilities and functions to
committees. Copies of the full terms of reference, which clearly define
the responsibilities of each Committee, can be obtained from the Company
Secretary, will be available for inspection at the Annual General
Meeting, and can be found at the Company's website at
www.worldwidewh.com. The membership of the Company's committees
comprises those Directors considered independent by the Board. The
Nominations Committee is chaired by Anthony Townsend, the Management
Engagement and Remuneration Committee by the Chairman of the Company,
Sir Martin Smith, and the Audit Committee by Jo Dixon. The table
overleaf details the number of Board and Committee meetings attended by
each Director. During the year there were four Board meetings, two Audit
Committee meetings, one meeting of the Nominations Committee and one
meeting of the Management Engagement and Remuneration Committee.
NOMINATIONS COMMITTEE The Nominations Committee is responsible for the
Board appraisal process and for making recommendations to the Board on
the appointment of new Directors. Where appropriate, each Director is
invited to submit nominations and external advisers may be used to
identify potential candidates. MANAGEMENT ENGAGEMENT AND REMUNERATION
COMMITTEE The level of Directors' fees is reviewed on a regular
basis relative to other comparable investment companies and in the light
of Directors' responsibilities. Neither the Chairman nor individual
Directors participate in discussions involving personal remuneration.
Details of the fees paid to the Directors in the year under review are
detailed in the Directors' Remuneration Report on pages 37 and 38.
This committee also reviews the terms of engagement of the Investment
Manager, the Manager and the Company's other service providers.
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: Type and number of meetings           Board     Audit
Nominations    Management held in 2012/13                         (4)
Committee   Committee    Engagement
                                                  (2)         (1)
and
                                                                   Remuneration
                                                                      Committee
                                                                            (1) Sir Martin Smith**                         4         2
1             1 Sarah Bates (appointed on 22 May          -         -
-             - 2013) Jo Dixon                                  4
2           1             1 Professor Duncan Geddes (retired on       1
0           -             - 17 July 2012) Dr David Holbrook
4         2           1             1 Samuel D. Isaly*
4         -           -             - Doug McCutcheon (appointed on 7
2         1           1             1 November 2012) Anthony Townsend
4         2           1             1 All of the serving Directors
attended the Annual General Meeting held on 17 July 2012. *Mr Isaly is
not a member of the Audit, Management Engagement & Remuneration and
Nominations Committees. **Sir Martin Smith was appointed as a member of
the Audit Committee on 17 July 2012. AUDIT COMMITTEE The Audit Committee
meets at least twice a year and is responsible for the review of the
interim and annual financial statements, the nature and scope of the
external audit and the findings therefrom and the terms of appointment
of the Auditors, including their remuneration and the provision of any
non-audit services by them. The Audit Committee meets representatives of
the Manager and Investment Manager and their Compliance Officers who
report as to the proper conduct of business in accordance with the
regulatory environment in which the Company, Manager and Investment
Manager operate. The Company's external Auditors also attend
meetings of this Committee at its request and report on their work
procedures and their findings in relation to the Company's
statutory audit. They also have the opportunity to meet with the
Committee without representatives of the Manager or the Investment
Manager being present. The Audit Committee reviews the need for
non-audit services to be provided by the auditor and authorises such on
a case by case basis, having consideration to the cost effectiveness of
the services and the independence and objectivity of the Auditors.
Non-audit fees of [pounds sterling]8,000 were paid to Ernst & Young
LLP during the year for agreed upon procedures in relation to the
Company's option positions, performance fee review and tax
services. The Board has concluded, on the recommendation of the Audit
Committee, that the Auditors continued to be independent and that their
reappointment be proposed at the Annual General Meeting. THE BRIBERY ACT
2010 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 applies
the same Standards to its service providers 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. BOARD DIVERSITY The
Company welcomes the objectives of the Davies Report to improve the
performance of Corporate boards by encouraging the appointment of the
best people from a range of differing perspectives and backgrounds. The
Company recognises the benefits of diversity on the board, including
gender, and takes this into account in its board appointments. The
Company is committed to ensuring that any Director search processes
actively seek persons with the right qualifications so that appointments
can be made, on the basis of merit, against objective criteria from a
diverse selection of candidates. To this end the Board will continue to
dedicate time to consider diversity during any director search process.
INTERNAL CONTROLS The Directors are responsible for the Company's
system of internal control which is designed to safeguard the
Company's assets, maintain proper accounting records and ensure
that financial information used within the business, or published, is
reliable. However, such a system can only be designed to manage rather
than eliminate the risk of failure to achieve business objectives and
therefore can only provide reasonable, but not absolute, assurance
against fraud, material misstatement or loss. Risk assessment and the
review of internal controls are undertaken by the Board in the context
of the Company's overall investment objective. The review covers
the key business, operational, compliance and financial risks facing the
Company. In arriving at its judgment of what risks the Company faces,
the Board has considered the Company's operations in the light of
the following factors: -- the nature and extent of risks which it
regards as acceptable for the Company to bear within its overall
business objective; -- the threat of such risks becoming a reality; and
-- the Company's ability to reduce the incidence and impact of risk
on its performance. Against this background, the Board has split the
review of risk and associated controls into five sections reflecting the
nature of the risks being addressed. These sections are as follows: --
corporate strategy; -- investment activity; -- published information,
compliance with laws and regulations; -- service providers; and --
financial activity. The Company has appointed Frostrow Capital LLP to
provide Company management, Company secretarial and administrative
services to the Company. The Company has obtained from its various
service providers assurances and information relating to their internal
systems and controls to enable the Board to make an appropriate risk and
control assessment, including the following: -- details of the control
environment in operation; -- identification and evaluation of risks and
control objectives; -- review of communication methods and procedures;
and -- assessment of the control procedures. The key procedures which
have been established to provide internal financial controls are as
follows: -- investment management is provided by OrbiMed Capital LLC.
The Board is responsible for setting the overall investment policy and
monitors the actions of the Investment Manager at regular Board meeting;
-- administration, company secretarial and marketing duties for the
Company are performed by Frostrow Capital LLP; -- custody of assets is
undertaken by Goldman Sachs & Co. New York; -- the Board clearly
defines the duties and responsibilities of their agents and advisers.
The appointment of agents and advisers to the Company is conducted by
the Board after consideration of the quality of the parties involved;
the Board monitors their ongoing performance and contractual
arrangements; -- mandates for authorisation of investment transactions
and expense payments are set by the Board; and -- the Board reviews
financial information produced by the Investment Manager and the Manager
in detail on a regular basis. All of the Company's management
functions are performed by third parties whose internal controls are
reviewed by the Board or on its behalf by Frostrow Capital LLP. In
accordance with guidance issued to directors of listed companies,
("the Turnbull Guidance") the Directors confirm that they have
carried out a review of the effectiveness of the system of internal
financial control during the year and up to the date of approval of the
financial statements, as set out above. RELATIONS WITH SHAREHOLDERS The
Board reviews the shareholder register at each Board meeting. The
Company has regular contact with its institutional shareholders
particularly through the Manager. The Board supports the principle that
the Annual General Meeting be used to communicate with private
investors. The full Board attends the Annual General Meeting under the
Chairmanship of the Chairman of the Board. Details of proxy votes
received in respect of each resolution are made available to
shareholders at the meeting and are also published on the Company's
website at www.worldwidewh.com. Representatives from the Investment
Manager attend the Annual General Meeting and give a presentation on
investment matters to those present. The Company has adopted a nominee
share code which is set out below. The Board receives marketing and
public relations reports from the Manager to whom the marketing function
has been delegated. The Board reviews and considers the marketing plans
of the Manager on a regular basis. The annual and interim financial
reports, the interim management statements and a monthly fact sheet are
available to all shareholders. The Board considers the format of the
annual and interim financial reports so as to ensure they are useful to
all shareholders and others taking an interest in the Company. In
accordance with best practice, the annual report, including the Notice
of the Annual General Meeting, is sent to shareholders at least 20
working days before the meeting. Separate resolutions are proposed for
substantive issues. EXERCISE OF VOTING POWERS The Board has delegated
authority to the Investment Manager to vote the shares owned by the
Company that are held on its behalf by its custodian, Goldman Sachs
& Co. New York. The Board has instructed that the Investment Manager
submit votes for such shares wherever possible. This accords with
current best practice whilst maintaining a primary focus on financial
returns. The Investment Manager may refer to the Board on any matters of
a contentious nature. The Company does not retain voting rights on any
shares that are subject to rehypothecation in connection with the loan
facility provided by Goldman Sachs & Co. New York. ACCOUNTABILITY
AND AUDIT The Statement of Directors' Responsibilities in respect
of the financial statements is set out on page 29. The report of the
Auditors is set out on pages 39 and 40. The Board has delegated to
external agencies, including the Manager and the Investment Manager, the
management of the portfolio, custodial services (which includes the
safeguarding of the Company's assets), the day to day marketing,
accounting administration, company secretarial requirements and
registration services. Each of these contracts was entered into after
full and proper consideration by the Board of the quality and cost of
the services offered, including the control systems in operation in so
far as they relate to the affairs of the Company. The Board receives and
considers regular reports from the Manager and the Investment Manager
and ad hoc reports and information are supplied to the Board as
required. NOMINEE SHARE CODE Where shares are held in a nominee company
name, the Company undertakes: -- to provide the nominee company with
multiple copies of shareholder communications, so long as an indication
of quantities has been provided in advance; -- to allow investors
holding shares through a nominee company to attend general meetings,
provided the correct authority from the nominee company is available;
and -- that investors in the Alliance Trust Savings Scheme or ISA are
automatically sent shareholder communications, including details of
general meetings, together with a form of direction to facilitate voting
and to seek authority to attend. Nominee companies are encouraged to
provide the necessary authority to underlying shareholders to attend the
Company's general meetings. Directors' Remuneration Report The
Board has prepared this report in accordance with the requirements of
Section 420 to 422 of the Companies Act 2006. An ordinary resolution for
the approval of this report will be put to the members at the
forthcoming Annual General Meeting. The law requires the Company's
auditors to audit certain of the disclosures provided. Where disclosures
have been audited, they are indicated as such. The Auditors'
opinion is included in their report on pages 39 and 40. MANAGEMENT
ENGAGEMENT AND REMUNERATION COMMITTEE The Company has seven
non-executive Directors, six of whom are considered by the Board to be
independent. The whole Board, with the exception of Mr Isaly, fulfills
the function of the Management Engagement and Remuneration Committee.
The Board may utilise the services of the Company Secretary or external
advisers to provide advice when the Directors consider the level of
Directors' fees. The Directors' fees are reviewed annually by
the Management Engagement and Remuneration Committee and such review
will not necessarily result in a change to the rates paid. During the
year, the Management Engagement and Remuneration Committee carried out a
review of the level of Directors' fees in relation both to fees
paid to the boards of other investment trust companies and also to the
Board's corporate governance obligations. The Board decided, on the
advice of the Management Engagement and Remuneration Committee, that the
fees paid to the Directors should be increased with effect from 1 April
2013. The revised fee levels are set out on page 38. POLICY ON
DIRECTORS' FEES The Board's policy is that the remuneration of
Directors should reflect the experience of the Board as a whole, be fair
and comparable to that of other investment trusts that are similar in
size, have a similar capital structure and have a similar investment
objective. It is intended that this policy will continue for the year
ending 31 March 2014 and subsequent years. The fees for the Directors
are determined within the limits set out in the Company's Articles
of Association, the maximum aggregate amount currently being [pounds
sterling]200,000. Directors are not eligible for bonuses, pension
benefits, share options, long-term incentive schemes or other benefits.
The policy is for the Chairman of the Board, Chairman of the Audit
Committee and the Senior Independent Director to be paid higher fees
than the other Directors to reflect their additional responsibilities.
DIRECTORS' SERVICE CONTRACTS It is the Board's policy that
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
re-election annually thereafter. The terms also provide that a Director
may resign by notice in writing to the Board at any time and may be
removed without notice and that compensation will not be due on leaving
office. Up until 31 March 2013 the Company's policy was for the
Directors to be remunerated in the form of fees payable quarterly in
arrears, to the Director personally or to a specified third party. With
effect from 1 April 2013 Directors will be paid monthly in arrears in
accordance with new legislation by HMRC. YOUR COMPANY'S PERFORMANCE
The Regulations require a line graph be included in the Directors'
Remuneration Report comparing, for a period of five years, on a
cumulative basis, the total share price return (assuming all dividends
are reinvested) to shareholders and the total shareholder return on a
notional investment made up of shares of the same kind and number as
those by reference to the Company's stated benchmark. With effect
from 1 October 2010, the performance of the Company has been 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). Therefore, the benchmark return for the year ended
31 March 2013 represented in the graph overleaf consists of a blended
figure containing both indices. DIRECTORS' EMOLUMENTS FOR THE YEAR
(AUDITED) The Directors who served in the year received the following
emoluments in the form of fees:
                                              Level of fees
                                                with effect
                                          from 1 April 2013       Fees
Fees
                                                (unaudited)       2013
2012
                                                      [pounds
sterling]'000      [pounds sterling]'000    [pounds
sterling]'000 Martin Smith (Chairman of the Board)
39.2       38.0     36.5 Sarah Bates (appointed 22 May 2013)
24.8          -        - Jo Dixon (Chairman of the Audit
27.9       27.0     26.0 Committee) Paul Gaunt (retired on 7 July 2011)
-          -      8.0 Professor Duncan Geddes (retired on 17
-        7.0     23.5 July 2012) Dr David Holbrook
24.8       24.0     23.0 Samuel D. Isaly
24.8       24.0     23.0 Doug McCutcheon (appointed on 7 November
24.8       10.0        - 2012) Anthony Townsend (Senior Independent
25.3       24.0     23.0 Director)
                                                                 154.0
163.0 APPROVAL The Directors' Remuneration Report on pages 37 and
38 was approved by the Board of Directors on 6 June 2013 and signed on
its behalf by: Sir Martin Smith Chairman Independent Auditors'
Report to the Members of Worldwide Healthcare Trust PLC We have audited
the financial statements of Worldwide Healthcare Trust PLC for the year
ended 31 March 2013 which comprise the Income Statement, the
Reconciliation of Movements in Shareholders' Funds, the Balance
Sheet, the Cash Flow Statement and the related notes 1 to 19. The
financial reporting framework that has been applied in their preparation
is applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice). This report is made
solely to the company's members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those
matters we are required to state to them in an auditor's report and
for no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company and the
company's members as a body, for our audit work, for this report,
or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF
DIRECTORS AND AUDITORS As explained more fully in the Directors'
Responsibilities Statement set out on page 29, the directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing
Practices Board's Ethical Standards for Auditors. SCOPE OF THE
AUDIT OF THE FINANCIAL STATEMENTS An audit involves obtaining evidence
about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This includes
an assessment of: whether the accounting policies are appropriate to the
company's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting
estimates made by the Directors; and the overall presentation of the
financial statements. In addition, we read all the financial and
non-financial information in the Annual Report to identify material
inconsistencies with the audited financial statements. If we become
aware of any apparent material misstatements or inconsistencies we
consider the implications for our report. OPINION ON FINANCIAL
STATEMENTS In our opinion the financial statements: -- give a true and
fair view of the state of the company's affairs as at 31 March 2013
and of its profit for the year then ended; -- have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and -- have been prepared in accordance with the requirements
of the Companies Act 2006. OPINION ON OTHER MATTERS PRESCRIBED BY THE
COMPANIES ACT 2006 In our opinion: -- the part of the Directors'
Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006; and -- the information given in
the Report of the Directors for the financial year for which the
financial statements are prepared is consistent with the financial
statements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We
have nothing to report in respect of the following: Under the Companies
Act 2006 we are required to report to you if, in our opinion: --
adequate accounting records have not been kept, or returns adequate for
our audit have not been received from branches not visited by us; 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; or -- certain disclosures of
Directors' remuneration specified by law are not made; or -- we
have not received all the information and explanations we require for
our audit. Under the Listing Rules we are required to review: -- the
Directors' Statement, set out on page 23, in relation to going
concern; -- the parts of the Corporate Governance Statement relating to
the Company's Compliance with the nine provisions of the UK
Corporate Governance Code specified for our review; and -- certain
elements of the report of the shareholders by the Board on
Directors' remuneration. Amarjit Singh (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor London 6
June 2013 Income Statement for the year ended 31 March 2013
                                     2013    2013    2013    2012
2012    2012
                                  Revenue Capital   Total Revenue
Capital   Total
                            Notes   [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000 Gains on investments held       9       - 109,322
109,322       -  52,193  52,193 at fair value through profit or loss
Exchange losses on                      - (2,322) (2,322)       -
(535)   (535) currency balances Income from investments         2
9,614       -   9,614  11,653       -  11,653 held at fair value through
profit or loss Investment management,          3   (190) (2,284) (2,474)
(162) (5,953) (6,115) management and performance fees Other expenses
4   (595)       -   (595)   (548)       -   (548) Net return before
finance           8,829 104,716 113,545  10,943  45,705  56,648 charges
and taxation Finance costs                   5     (9)   (177)   (186)
(14)   (272)   (286) Net return before taxation          8,820 104,539
113,359  10,929  45,433  56,362 Taxation on net return on       6
(1,171)      18 (1,153) (1,456)     406 (1,050) ordinary activities Net
return after taxation           7,649 104,557 112,206   9,473  45,839
55,312 Return per share - basic        7   17.1p  233.3p  250.4p   21.8p
105.7p  127.5p Return per share - diluted      7   16.9p  231.1p  248.0p
21.4p  103.7p  125.1p 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 disclosed in the Income Statement and Reconciliation of Movements
in Shareholders' Funds. Accordingly no separate Statement of Total
Recognised Gains and Losses has been presented. No operations were
acquired or discontinued in the year. The accompanying notes are an
integral part of this statement. Reconciliation of Movements in
Shareholders' Funds For the year ended 31 March 2013
                    Ordinary Subscription   Share             Capital
                       share        share premium  Capital redemption
Revenue
                     capital      capital account  reserve    reserve
reserve    Total
                       [pounds sterling]'000        [pounds
sterling]'000   [pounds sterling]'000    [pounds
sterling]'000      [pounds sterling]'000   [pounds
sterling]'000    [pounds sterling]'000 At 31 March 2012
10,997           71 186,300  174,230      7,068  13,131  391,797 Net
return from            -            -       -  104,557          -
7,649  112,206 ordinary activities after taxation Dividend paid in
-            -       -        -          - (7,705)  (7,705) respect of
year ended 31 March 2012 First interim              -            -
-        -          - (3,175)  (3,175) dividend paid in respect of year
ended 31 March 2013 Subscription shares    1,179         (47)  28,929
47          -       -   30,108 exercised for ordinary shares Shares
purchased to    (735)            -       - (19,239)        735       -
(19,239) be held in treasury and treasury shares cancelled Shares issued
from         -            -       8      415          -       -      423
treasury At 31 March 2013      11,441           24 215,237  260,010
7,803   9,900  504,415 For the year ended 31 March 2012
                     Ordinary Subscription   Share            Capital
                        share        share premium Capital redemption
Revenue
                      capital      capital account reserve    reserve
reserve   Total
                        [pounds sterling]'000        [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000      [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000 At 31 March 2011
10,875           82 181,395 135,319      6,978  10,132 344,781 Net
return from             -            -       -  45,839          -
9,473  55,312 ordinary activities after taxation Dividend paid in
-            -       -       -          - (6,474) (6,474) respect of
year ended 31 March 2011 Subscription shares       212          (9)
5,199       9          -       -   5,411 exercised for ordinary shares
Shares purchased to      (90)            -       - (6,939)         90
- (6,939) be held in treasury and treasury shares cancelled Subscription
shares         -          (2)   (294)       2          -       -   (294)
repurchased for cancellation At 31 March 2012       10,997           71
186,300 174,230      7,068  13,131 391,797 The accompanying notes are an
integral part of this statement. Balance Sheet as at 31 March 2013
                                                                 2013
2012
                                                      Notes     [pounds
sterling]'000     [pounds sterling]'000 Fixed assets
Investments held at fair value through profit or          9   515,329
454,301 loss Derivative - OTC swaps                               9
& 12    35,988    13,691
                                                              551,317
467,992 Current assets Debtors
10     9,010     2,512 Derivative - financial instruments
9 & 12     2,442       940
                                                               11,452
3,452 Current liabilities Creditors: amounts falling due within one year
11  (58,354)  (79,647)
                                                             (58,354)
(79,647) Net current liabilities
(46,902)  (76,195) Total net assets
504,415   391,797 Capital and reserves Ordinary share capital
13    11,441    10,997 Subscription share capital
13        24        71 Share premium account
215,237   186,300 Capital reserve
19   260,010   174,230 Capital redemption reserve
7,803     7,068 Revenue reserve
9,900    13,131 Total shareholders' funds
504,415   391,797 Net asset value per share - basic
14   1110.2p    909.4p Net asset value per share - diluted for
14   1089.6p    871.0p subscription shares Net asset value per share -
fully diluted for            14   1089.1p    869.7p subscription shares
and treasury shares The financial statements on pages 41 to 60 were
approved by the Board of Directors and authorised for issue on 6 June
2013 and were signed on its behalf by: Sir Martin Smith Chairman The
accompanying notes are an integral part of this statement. Worldwide
Healthcare Trust PLC - Company Registration Number 3023689 (Registered
in England) Cash Flow Statement for the year ended 31 March 2013
                                                                 2013
2012
                                                      Notes     [pounds
sterling]'000     [pounds sterling]'000 Net cash inflow from
operating activities                15     4,202     4,112 Servicing of
finance Interest paid
(186)     (286) Taxation Taxation suffered
(431)     (422) Financial investments Purchases of investments and
derivatives                    (349,759) (301,803) Sales of investments
and derivatives                          381,024   288,756 Net cash
inflow/(outflow) from financial                       31,265  (13,047)
investment Equity dividends paid                                     8
(10,880)   (6,474) Net cash inflow/(outflow) before financing
23,970  (16,117) Financing Repurchase of own shares
13  (19,239)   (7,233) Issue of shares from treasury
13       423         - Subscription shares exercised for ordinary shares
13    30,108     5,411 Net cash inflow/(outflow) from financing
11,292   (1,822) Decrease/(increase) in net debt
16    35,262  (17,939) The accompanying notes are an integral part of
this statement. Notes to the Financial Statements 1. ACCOUNTING POLICIES
The principal accounting policies, all of which have been applied
consistently throughout the year in the preparation of these financial
statements, are set out below: (a) Basis of Preparation The financial
statements have been prepared in accordance with United Kingdom
generally accepted accounting standards (UK GAAP) and with the Statement
of Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' dated January 2009 (the
'SORP'). The Company's financial statements are presented
in sterling. All values are rounded to the nearest thousand pounds
([pounds sterling]'000) except where otherwise indicated. (b)
Investments Held at Fair Value Through Profit or Loss Listed investments
have been designated by the Board as held at fair value through profit
or loss and accordingly are valued at fair value, deemed to be bid
market prices. Unquoted investments are designated by the Board as held
at fair value through profit or loss, and are valued by the Directors
using primary valuation techniques such as earnings multiples, option
pricing models, discounted cash flow analysis and recent transactions.
Changes in the fair value of investments held at fair value through
profit or loss and gains and losses on disposal are recognised in the
Income Statement as 'gains or losses on investments held at fair
value through profit or loss'. Also included within this caption
are transaction costs in relation to the purchase or sale of
investments, including the difference between the purchase price of an
investment and its bid price at the date of purchase. All purchases and
sales are accounted for on a trade date basis. 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). (c)
Investment Income Dividends receivable on equity shares 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. UK dividends are shown net of tax credits and foreign
dividends are grossed up at the appropriate rate of withholding tax.
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. (d) Expenses All
expenses are accounted for on an accruals basis. Expenses are charged
through the revenue column of the Income Statement except as follows:
(i) expenses which are incidental to the acquisition or disposal of an
investment, categorised as fixed assets held at fair value through
profit or loss are charged to the capital column of the Income
Statement; and (ii) 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
investment management and management 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 investment management
and management 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 accrued or paid is charged in full to the
capital column of the Income Statement. (e) 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,
if applicable, including interest payable and premiums on settlement or
redemption, 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. (f) 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
Balance Sheet date other than those differences regarded as permanent.
This is subject to deferred tax assets only being recognised if it is
considered more likely than not 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 average rate of tax expected to
apply. Deferred tax assets and liabilities are not discounted to reflect
the time value of money. (g) Foreign Currency The results and financial
position of the Company are expressed in sterling, which is the
functional and presentational currency of the Company. Sterling is the
functional currency because it is the currency of the primary economic
environment in which the Company operates. 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 Balance Sheet date are translated into
sterling at the exchange rates ruling at that date. Any gains or losses
on the translation of foreign currency balances, 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. (h) Functional and Presentational Currency The financial
information is shown in sterling, being the Company's
presentational currency. In arriving at the functional currency the
Directors have considered the following: (i) the primary economic
environment of the Company; (ii) the currency in which the original
capital was raised; (iii) the currency in which distributions are made;
(iv) the currency in which performance is evaluated; and (v) the
currency in which the capital would be returned to Shareholders on a
break up basis. The Directors are of the opinion that sterling best
represents the Company's functional currency. (i) Derivative
Financial Instruments The Company uses derivative financial instruments
(namely put and call options and equity swaps). The merits and rationale
behind such strategies are to enhance the capital return of the
portfolio, facilitate management of portfolio volatility and improve the
risk-return profile of the Company relative to its benchmark. All
derivative instruments are valued at fair value in the Balance Sheet in
accordance with FRS 26: 'Financial instruments: measurement'.
The equity swaps are accounted for as Fixed Assets in the Balance Sheet
and Options are accounted for as Current Assets and/or Current
Liabilities in the Balance Sheet. Each investment in options is reviewed
on a case-by-case basis and are all deemed to be capital in nature. As
such, all gains and losses on the above strategies have been debited or
credited to the capital column of the Income Statement. All gains and
losses on over-the-counter (OTC) equity swaps, during the swap term, are
accounted for as investment holding 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. (j)
Capital Reserves The following are transferred to this reserve: - gains
and losses on the realisation of investments; - realised and unrealised
exchange differences of a capital nature; - expenses, together with the
related taxation effect, in accordance with the above policies; and -
increases and decreases in the valuation of investments held at the year
end. 2. INCOME FROM INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR
LOSS
                                                              2013
2012
                                                             [pounds
sterling]'000        [pounds sterling]'000 Income from
investments UK listed dividends
507          505 Overseas dividends
8,124        8,863 Fixed interest income
977        2,283
                                                             9,608
11,651 Other income Deposit interest
6            2 Total income from investments held at fair value
9,614       11,653 through profit or loss Total income comprises:
Dividends                                                    8,631
9,368 Interest                                                       983
2,285
                                                             9,614
11,653 3. INVESTMENT MANAGEMENT, MANAGEMENT AND PERFORMANCE FEES
                                 2013    2013    2013    2012    2012
2012
                              Revenue Capital   Total Revenue Capital
Total
                                [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000 Investment Management fee         141   2,674   2,815
119   2,251   2,370 Management fee                     49     943
992      43     817     860 Performance fee (write back)/       -
(1,333) (1,333)       -   2,885   2,885 accrual
                                  190   2,284   2,474     162   5,953
6,115 During the year, performance fees totaling [pounds
sterling]643,000 crystallised (year ended 31 March 2012: [pounds
sterling]909,000). The fees crystallised at the following quarterly
calculation dates:
                                                                          [pounds sterling]'000 30 June 2012
375 30 September 2012
- 31 December 2012                                                              - 31 March 2013 (see note 11)
268 Fees crystallised during year ended 31 March 2013
643 The performance fee amount of [pounds sterling]1,333,000 which was
written back as at 31 March 2013 represents outperformance generated as
at 31 March 2012 which was not maintained for the twelve month period.
In accordance with the performance fee arrangements this amount was
written back as at 31 March 2013. Further details of the performance fee
basis can be found in the Report of the Directors under the heading
'Performance Fee'. 4. OTHER EXPENSES
                                                              2013
2012
                                                           Revenue
Revenue
                                                             [pounds
sterling]'000       [pounds sterling]'000 Directors'
remuneration                                        154         163
Auditors' remuneration for the audit of the Company's
26          26 financial statements Auditors' remuneration for
audit related assurance               8          11 services Marketing
costs                                                 42          44
Registrar fees                                                  63
54 Broker retainer                                                 30
30 Legal and professional costs                                    36
13 Printing                                                        41
35 Stock exchange listing fees                                     35
17 Custody fees                                                     2
3 Other costs                                                    158
152
                                                               595
548 Details of the amounts paid to Directors are included in the
Directors' Remuneration Report. 5. FINANCE CHARGES
                                 2013    2013    2013    2012    2012
2012
                              Revenue Capital   Total Revenue Capital
Total
                                [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000 Finance charges                     9     177     186
14     272     286 6. TAXATION ON ORDINARY ACTIVITIES (a) Analysis of
charge in year:
                                 2013    2013    2013    2012    2012
2012
                              Revenue Capital   Total Revenue Capital
Total
                                [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000   [pounds sterling]'000   [pounds
sterling]'000 UK corporation tax at 24% (2012: 26%) Tax relief to
capital              18    (18)       -     406   (406)       - Overseas
taxation               1,153       -   1,153   1,050       -   1,050
                                1,171    (18)   1,153   1,456   (406)
1,050 (b) Factors affecting current tax charge for the year The tax
charged for the year is lower than the standard rate of corporation tax
in the UK for a large company 24% (2012: 26%). The difference is
explained below.
                                2013     2013     2013    2012     2012
2012
                             Revenue  Capital    Total Revenue  Capital
Total
                               [pounds sterling]'000    [pounds
sterling]'000    [pounds sterling]'000   [pounds
sterling]'000    [pounds sterling]'000    [pounds
sterling]'000 Total return before taxation   8,820  104,539
113,359  10,929   45,433   56,362 Corporation tax at 24%         2,117
25,089   27,206   2,842   11,813   14,655 (2012: 26%) Non-taxable gains
on               - (25,680) (25,680)       - (13,431) (13,431)
investments held at fair value through profit or loss Overseas
withholding           1,153        -    1,153   1,050        -    1,050
taxation Non taxable overseas         (1,977)        -  (1,977) (2,535)
-  (2,535) dividends Non taxable UK dividend        (122)        -
(122)   (131)        -    (131) Expenses charged to capital        -
573      573     (6)    1,212    1,206 available to be utilised Timing
differences on              -        -        -     231        -
231 overseas dividends Disallowed expenses                -        -
-       5        -        5 Current tax charge             1,171
(18)    1,153   1,456    (406)    1,050 (c) Provision for deferred tax
As at 31 March 2013, the Company has not recognised a deferred tax asset
of [pounds sterling] 9,146,000 (23% tax rate) (2012: [pounds
sterling]8,805,000 (24% tax rate)) as a result of unutilised management
expenses and a non-trade loan relationship. It is not anticipated that
this asset will be utilised in the foreseeable future. Deferred tax has
not been provided for in these financial statements, because the Company
meets and intends to continue meeting the conditions for approval as an
investment trust. 7. RETURN PER SHARE
                                                              2013
2012
                                                             [pounds
sterling]'000       [pounds sterling]'000 The return per share
is based on the following figures: Revenue return
7,649       9,473 Capital return
104,557      45,839 Total return
112,206      55,312 Weighted average number of ordinary shares in issue
44,819,199  43,362,962 during the year - basic Revenue return per share
17.1p       21.8p Capital return per share
233.3p      105.7p Total return per share - basic
250.4p      127.5p Weighted average number of shares in issue during the
45,243,785  44,223,263 year - diluted Revenue return per share
16.9p       21.4p Capital return per share
231.1p      103.7p Total return per share - diluted
248.0p      125.1p 8. INTERIM DIVIDEND Under UK GAAP, 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 to ordinary
shareholders for the year ended 31 March 2013 were as follows:
                                                               2013
2012
                                                              [pounds
sterling]'000       [pounds sterling]'000 Interim dividend in
respect of the year ended 31 March            -       6,474 2011 Interim
dividend in respect of the year ended 31 March        7,705           -
2012 First interim dividend in respect of the year ended 31        3,175
- March 2013
                                                             10,880
6,474 In respect of the year ended 31 March 2013, an interim dividend of
7.0p per share was paid on 11 January 2013, with a second interim
dividend of 9.5p payable on 5 July 2013 the associated ex dividend date
was 5 June 2013. The total dividends payable in respect of the year
ended 31 March 2013 is 16.5p per share (2012: 17.5p per share). The
aggregate cost of the second interim dividend based on the number of
shares in issue at 5 June 2013 will be [pounds sterling] 4,352,000. In
accordance with FRS 21 the second interim dividend will be reflected in
the interim accounts for the period ending 30 September 2013. 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:
                                                              2013
2012
                                                             [pounds
sterling]'000       [pounds sterling]'000 Revenue available
for distribution by way of dividend        7,649       9,473 for the
year Interim dividend in respect of year ended 31 March               -
(7,740) 2012 First interim dividend in respect of the year ended 31
(3,175)           - March 2013 Second interim dividend in respect of the
year ended       (4,352)           - 31 March 2013*
                                                               122
1,733 *based on 45,812,914 shares in issue as at 5 June 2013. 9.
INVESTMENTS
                                                         Derivative
                                                Listed    financial
                                           investments  instruments
Total
                                                 [pounds
sterling]'000        [pounds sterling]'000       [pounds
sterling]'000 Cost at 1 April 2012
401,933       13,960     415,893 Investment holdings gains at 1 April
2012       52,368          671      53,039 Valuation at 1 April 2012
454,301       14,631     468,932 Movement in the year: Purchases at cost
280,877       82,039     362,916 Sales - proceeds
(318,815)     (68,596)   (387,411) - realised gains on sales
28,188        4,693      32,881 Net movement in investment holding gains
70,778        5,663      76,441 Valuation at 31 March 2013
515,329       38,430     553,759 Cost at 31 March 2013
392,183       32,096     424,279 Investment holding gains at 31 March
2013      123,146        6,334     129,480 Valuation at 31 March 2013
515,329       38,430     553,759
                                                               2013
2012 Gains on investment
[pounds sterling]'000       [pounds sterling]'000 Realised
gains based on historical cost -                    32,881      33,733
sales Less: amounts recognised as investment holding gains
(27,881)    (13,237) in previous years Realised gains based on carrying
value at previous            5,000      20,496 Balance Sheet date
Movement in investment holding gains in                     104,322
31,697 the year Gains on investments
109,322      52,193 Purchase transaction costs for the year to 31 March
2013 were [pounds sterling]819,000 (year ended 31 March 2012: [pounds
sterling]575,000). These comprise mainly commission and stamp duty.
Sales transaction costs for the year to 31 March 2013 were [pounds
sterling]733,000 (year ended 31 March 2012: [pounds sterling]504,000).
These comprise mainly commission. 10. DEBTORS
                                                                2013
2012
                                                               [pounds
sterling]'000     [pounds sterling]'000 Amounts due from
brokers                                       6,641       254
Withholding taxation recoverable                               1,378
947 VAT recoverable                                                   66
47 Prepayments and accrued income                                   925
1,264
                                                               9,010
2,512 11. CREDITORS
                                                                 2013
2012 Amounts falling due within one year
[pounds sterling]'000     [pounds sterling]'000 Amounts due to
brokers                                         25,605    12,448 Stamp
duty due on repurchase of own shares                          -
5 Bank loan facility*                                            31,419
64,359 Performance fee accrued
268     1,976 Other creditors and accruals
1,062       859
                                                               58,354
79,647 *The Company's borrowing requirements are met through the
utilisation of a loan facility, repayable on demand, provided by Goldman
Sachs & Co. New York ("Goldman Sachs"). Interest on the
facility is charged at the Federal Funds effective rate plus 1 week
LIBOR-OIS Spread** plus 35 basis points. As at 31 March 2013, assets to
the value of approximately 140% of the Company's debt were held by
Goldman Sachs as collateral. **See glossary 12. DERIVATIVE FINANCIAL
INSTRUMENTS
                                                                   2013
2012
                                                                  [pounds sterling]'000        [pounds sterling]'000 Fair value of OTC
equity swaps                                   35,988       13,691 Fair
value of call and put options                                2,442
940
                                                                 38,430
14,631 See note 9 on page 51 for movements during the year. 13. SHARE
CAPITAL
                                                                  Total
Total
                                                               Ordinary
Subscription
                                       Ordinary    Treasury      shares
shares
                                         shares      shares    in issue
in issue
                                         number      number      number
number Issued and fully paid: At 1 April 2012
43,081,164     908,586  43,989,750    7,104,848 Ordinary shares bought
back and     (2,411,340)   2,411,340           -            - held in
treasury Ordinary shares re-issued from           50,000    (50,000)
-            - treasury Treasury shares cancelled following           -
(2,941,518) (2,941,518)            - 2012 AGM Subscription shares
converted to      4,714,922           -   4,714,922  (4,714,922)
Ordinary shares At 31 March 2013                     45,434,746
328,408  45,763,154    2,389,926
                                                                               [pounds sterling]'000 Issued and fully paid: 45,763,154
Ordinary shares of 25p (including 328,408
11,441 ordinary shares held in treasury) 2,389,926 Subscription shares
of 1p                                               24 During the year
ended 31 March 2013 a total of 2,411,340 shares were bought back by the
Company (2012: 908,586) at a cost of [pounds sterling]19,143,000 and
expenses of [pounds sterling] 96,000 (2012: 6,908,000 and [pounds
sterling]31,000). 328,408 shares were held in treasury at 31 March 2013
(2012: 908,586). There were 50,000 shares issued from treasury raising
proceeds of [pounds sterling]423,000 (2012: nil). 4,714,922 new shares
were issued during the year as a result of holders of subscription
shares exercising their subscription rights, raising [pounds
sterling]30,108,000 (2012: 848,139, raising [pounds sterling]5,411,000).
There were no subscription shares bought back for cancellation during
the year (2012: 238,125 shares, at a cost of [pounds sterling]292,000
and expenses of [pounds sterling]2,000). At the year end there were
2,389,926 subscription shares in issue (2012: 7,104,848). 14. NET ASSET
VALUE PER SHARE
                                                                 2013
2012 Net asset value per share - basic
1,110.2p    909.4p Net asset value per share - diluted for subscription
shares  1,089.6p    871.0p Net asset value per share - fully diluted for
subscription   1,089.1p    869.7p shares and treasury shares The net
asset value per share is based on the assets attributable to equity
shareholders of [pounds sterling]504,415,000 (2012: [pounds
sterling]391,797,000) and on the number of shares in issue at the year
end of 45,434,746 (excluding shares held in treasury) (2012:
43,081,164). As at 31 March 2013, there were 2,389,926 subscription
shares in issue (2012: 7,104,848). The net asset value per share diluted
assumes all outstanding subscription shares were exercised at 699p
resulting in assets attributable to equity shareholders of [pounds
sterling]521,121,000 and on 47,824,672 shares (2012: assumed all
outstanding subscription shares were exercised at 638p resulting in
assets attributable to shareholders of [pounds sterling]437,126,000 and
on 50,186,012 shares). The net asset value per share fully diluted for
subscription shares and treasury shares assumes that all outstanding
subscription shares were exercised at 699p and the treasury shares were
sold back to the market at 1,009p resulting in assets attributable to
equity shareholders of [pounds sterling]524,435,000 (2012: [pounds
sterling]444,349,000) and on 48,153,080 shares (2012: 51,094,598). 15.
RECONCILIATION OF OPERATING RETURN TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
                                                                 2013
2012
                                                                [pounds
sterling]'000     [pounds sterling]'000 Gains before finance
costs and taxation                       113,545    56,648 Less: capital
gain before finance costs and taxation        (104,716)  (45,705)
Revenue return before finance costs and taxation                8,829
10,943 Expenses charged to capital
(2,284)   (5,953) Decrease in prepayments and accrued income
339       703 (Increase)/decrease in other debtors
(19)         2 Decrease in creditors and accruals
(1,510)     (533) Net taxation suffered on investment income
(1,153)   (1,050) Net cash inflow from operating activities
4,202     4,112 16. RECONCILIATION OF NET CASH FLOW MOVEMENT TO MOVEMENT
IN NET DEBT
                                                                 2013
2012
                                                                [pounds
sterling]'000     [pounds sterling]'000 Decrease/(increase) in
net debt                                35,262  (17,939) resulting from
cashflows Exchange movements
(2,322)     (535) Movement in net debt in the year
32,940  (18,474) Net debt at start of year
(64,359)  (45,885) Net debt at end of year
(31,419)  (64,359) Represented by:
                                             At 1            Exchange
At 31
                                            April
March
                                             2012      Cash movements
2013
                                                      flows
                                            [pounds sterling]'000
[pounds sterling]'000     [pounds sterling]'000     [pounds
sterling]'000 Net bank overdraft                       (64,359)
35,262   (2,322)  (31,419) 17. RELATED PARTIES Details of the
relationship between the Company and OrbiMed Capital LLC, the
Company's Investment Manager, are disclosed in the Report of the
Directors. Samuel D. Isaly is a Director of the Company, as well as
Managing Partner OrbiMed Capital LLC. During the year ended 31 March
2013, OrbiMed Capital LLC earned [pounds sterling]2,815,000 in respect
of Investment Management fees, of which [pounds sterling]807,000 was
outstanding at the year end. In addition performance fees of [pounds
sterling]341,000 were paid to OrbiMed Capital LLC during the year and
[pounds sterling]244,000 was payable at 31 March 2013. 18. FINANCIAL
INSTRUMENTS' EXPOSURE TO RISK AND RISK MANAGEMENT POLICIES The
Company's financial instruments comprise securities and other
investments, derivative instruments, cash balances, loans, 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 and
the Directors' approach to the management of them, are set out in
the Report of Directors and have not changed from the previous
accounting period. The Investment Manager, in close co-operation with
the Board of Directors, co-ordinates the Company's risk management.
(i) Market risk: The Company's portfolio is exposed to market price
fluctuations which are monitored by the Investment Manager in pursuance
of the investment objective. Management of risk: Derivative instruments
are used to mitigate market price risk, the following option strategies
or a combination of such have been used during the financial year: --
Buy calls: provides leveraged long exposure, facilitates exposure while
minimising capital at risk. -- Buy puts: provides leveraged protection,
facilitates exposure while minimising capital at risk. -- Sell puts:
provides an effective entry price at which to add to an existing
position, or provides an effective entry price at which to initiate a
new position. (a) Foreign currency risk A significant proportion of the
Company's portfolio is 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. Rate of
exchange against sterling at 31 March
                                                                 2013
2012 U.S. dollar                                                     1.518     1.598 Japanese yen
142.765   131.487 Swiss franc
1.438     1.444 Euro
1.183     1.120 Foreign currency exposure and sensitivity The fair
values of the Company's monetary items that are denominated in
foreign currency as at 31 March 2013 are shown below:
                       2013        2013        2013     2012        2012
2012
                    Current     Current Investments  Current     Current
Investments
                     assets liabilities       [pounds sterling]'000
assets liabilities       [pounds sterling]'000
                      [pounds sterling]'000       [pounds
sterling]'000                [pounds sterling]'000
[pounds sterling]'000 U.S. dollar           6,980    (56,689)
396,264      575    (74,797)     345,222 Swiss franc           1,238
-      67,045        -       (596)      45,774 Japanese yen
441       (545)      42,793      351           -      36,508 Euro
117           -      23,457        -           -      17,712 Hong Kong
dollar          -           -       8,573       23       (128)
11,215 Singapore dollar          -           -       5,088        -
(647)       2,901
                      8,776    (57,234)     543,220      949    (76,168)
459,332 Management of risk: The Investment Manager and Manager monitor
the Company's exposure to foreign currencies on a daily basis and
report to the Board on a regular basis. The Investment Manager does not
hedge against foreign currency movements, but takes account of the risk
when making investment decisions. Foreign currency borrowing facilities
are available and are currently being utilised, to limit the
Company's exposure to anticipated future changes in exchange rates,
which might otherwise adversely affect the value of portfolio
investments. Income denominated in foreign currencies is converted into
sterling on receipt. The Company does not use financial instruments to
mitigate the currency exposure in the period between the time that the
income is included in the financial statements and its receipt. Foreign
currency sensitivity The following table details the sensitivity of the
Company's profit or loss after taxation for the year and
shareholders' funds to a 10% increase and decrease in sterling
against the U.S. dollar (2012: 10% increase and decrease), a 10%
increase and decrease in sterling against the Japanese yen (2012: 10%
increase and decrease), and a 10% increase and decrease in sterling
against the Swiss franc (2012: 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 foreign currency financial instruments held at each
Balance Sheet date.
                          2013      2013      2013      2012      2012
2012
                           USD       YEN       CHF       USD       YEN
CHF
                         [pounds sterling]'000     [pounds
sterling]'000     [pounds sterling]'000     [pounds
sterling]'000     [pounds sterling]'000     [pounds
sterling]'000 Sterling depreciates    41,788     4,831     7,857
31,662     4,102     5,213 Sterling appreciates  (32,259)   (3,953)
(6,207)  (25,906)   (3,356)   (4,265) (b) Interest rate risk Interest
rate movement 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 of fixed interest securities. Management of the
risk The possible effects on fair value and cash flows that could arise
as a result of changes in interest rates are taken into account when
making investment decisions and borrowing under the multicurrency loan
facility. The Company, generally, does not hold significant cash
balances (except when required for collateral against the Company's
derivative positions), with short term borrowing being used when
required. Interest rate exposure The Company has a loan facility with
Goldman Sachs which is repayable on demand. [pounds sterling]31.4
million was drawn down under this facility at 31 March 2013. The
exposure of financial assets and liabilities to floating interest rates,
giving cash flow interest rate risk when rates are re-set, is shown
below. Floating rate The floating interest rate exposure of the
financial assets and financial liabilities to interest rate risk at 31
March 2013 in respect of cash was nil (2012: nil). At 31 March 2013
there was an overdraft position at Goldman Sachs of [pounds
sterling]31,419,000 (2012: [pounds sterling]64,359,000). Fixed rate At
31 March, the Company held 2.7% of the portfolio in convertible bonds
(2012: 3.3% of the portfolio). This percentage is deemed not to be
material and accordingly no sensitivity analysis has been presented. (c)
Other price risk Other price risk may affect the value of the
Company's investments. If market prices at the Balance Sheet date
had been 25% higher or lower (2012: 25% higher or lower) while all other
variables remained constant, the revenue return would have
decreased/increased by [pounds sterling]66,000 (2012: [pounds
sterling]49,000), and the capital return would have increased/decreased
by [pounds sterling]137,191,000 (2012: [pounds sterling]116,168,000) and
the return on equity would have increased/decreased by [pounds
sterling]137,125,000. The calculations are based on the portfolio
valuations as at the respective Balance Sheet dates and are not
representative of the year as a whole. (ii) 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 significant as the majority of the Company's assets are
investments in quoted equities and other quoted securities that are
readily realisable. The Company has a loan facility repayable on demand
with Goldman Sachs. Interest on the facility is charged at the Federal
Funds effective rate plus 1 week LIBOR-OIS Spread** plus 35 basis
points. ** See glossary. In order to ensure diversification within the
portfolio, the Board gives guidance to the Investment Manager concerning
exposure limits to individual companies. Geographical and sectoral
exposure are also reviewed regularly by the Directors. Liquidity
exposure Contractual maturities of the financial liabilities as at 31
March 2013, based on the earliest date on which payment can be required
are as follows:
                                                            2013 31
March 2013                                   3 months    Not more
Total
                                                 or less        than
[pounds sterling]'000
                                                   [pounds
sterling]'000    one year
                                                               [pounds
sterling]'000 Current liabilities: Borrowings under the loan
facility                31,419           -     31,419 Amounts due to
brokers and accruals               26,935           -     26,935
                                                  58,354           -
58,354
                                                            2012 31
March 2012                                   3 months    Not more
Total
                                                 or less        than
[pounds sterling]'000
                                                   [pounds
sterling]'000    one year
                                                               [pounds
sterling]'000 Current liabilities: Borrowings under the loan
facility                64,359           -     64,359 Amounts due to
brokers and accruals               15,288           -     15,288
                                                  79,647           -
79,647 (iii) Credit risk The failure of the counterparty to a
transaction to discharge its obligations under that transaction could
result in the Company suffering a loss. The carrying amounts of
financial assets best represent the maximum credit risk at the Balance
Sheet date. The Company's listed investments are held on its behalf
by Goldman Sachs acting as the Company's custodian. Bankruptcy or
insolvency of a custodian may cause the Company's rights with
respect to securities held by that custodian to be delayed, however, the
Board monitors the Company's risk to its custodians by reviewing
continuously their internal control reports and their credit ratings.
Certain of the Company's assets are held by Goldman Sachs as
collateral for the loan provided by them to the Company. Such assets
held by Goldman Sachs are available for rehypothecation**. As at 31
March 2013, assets with a total market value of [pounds sterling]50.1
million (31 March 2012: [pounds sterling]93.9 million) were held as
collateral. In addition [pounds sterling]4.5 million cash was held as
collateral at Goldman Sachs (31 March 2012: [pounds sterling]2.7
million). Management of the risk The risk is not significant, and is
managed as follows: -- by only dealing with brokers which have been
approved by OrbiMed Capital LLC and banks with high credit ratings; --
by setting limits to the maximum exposure to any one counterparty at any
time; and -- by monitoring the assets subject to rehypothecation**. **
See glossary. Credit risk exposure
                                                                 2013
2012
                                                              Balance
Balance
                                                                Sheet
Sheet
                                                                [pounds
sterling]'000     [pounds sterling]'000 Fixed interest and
convertible securities                      15,015    31,574 Derivative
- OTC equity swaps                                  35,988    13,691
Current assets: Other receivables (amounts due from brokers, dividends
and     11,452     3,452 interest receivable and derivative financial
instruments) As of 31 March 2013                       Level 1   Level 2
Level 3     Total
                                            [pounds sterling]'000
[pounds sterling]'000     [pounds sterling]'000     [pounds
sterling]'000 Assets Financial investments designated at
506,475     8,854         -   515,329 fair value through profit or loss
Fair value of derivative financial              -    38,430         -
38,430 instruments Assets measured at fair value             506,475
47,284         -   553,759 As at 31 March 2013, the put and call
options, the equity swaps, and Incyte Corporation 4.75% 01/10/15
convertible bond, have been classified as level two. All of the
remaining investments have been classified as level one. As of 31 March
2012                       Level 1   Level 2   Level 3     Total
                                            [pounds sterling]'000
[pounds sterling]'000     [pounds sterling]'000     [pounds
sterling]'000 Assets Financial investments designated at
454,301         -         -   454,301 fair value through profit or loss
Fair value of derivative financial              -    14,631         -
14,631 instruments Assets measured at fair value             454,301
14,631         -   468,932 Fair value of financial assets and financial
liabilities The fair value of the financial assets and financial
liabilities are either carried in the Balance Sheet at their fair value
(investments and derivatives) or the Balance Sheet amount is a
reasonable approximation of fair value (due from brokers, dividends and
interest receivable, due to brokers, accrual, cash at bank, bank
overdraft and amounts due under the loan facility). 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. The Board's policy is to
limit gearing to the lower of [pounds sterling]90 million or 20% of the
Company's net assets. The capital structure of the Company consists
of the equity share capital, retained earnings and other reserves as
disclosed on the Balance Sheet on page 43. Gearing for this purpose is
defined as net debt as a percentage of shareholders' funds. As at
31 March 2013 the gearing percentage of the Company was 9.8% (2012:
16.4%). The Board with the assistance of the Investment 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 Investment 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 buyback 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 period. The
Company is also subject to several externally imposed capital
requirements and are as follows: - as a public company, the Company has
a minimum share capital of [pounds sterling]50,000; and - in order to be
able to pay dividends out of profits available for distribution, the
Company has to be able to meet one of the two capital restriction tests
imposed on investment companies by company law. These requirements are
unchanged since last year and the Company has complied with them. 19.
CAPITAL RESERVE
                                               Capital        Capital
Total
                                             Reserve -     Reserve* -
[pounds sterling]'000
                                                 Other     Investment
                                                 [pounds
sterling]'000  Holding Gains
                                                                [pounds
sterling]'000 At 31 March 2012
121,191         53,039   174,230 Transfer on disposal of investments
27,881       (27,881)         - Net gains on investments
5,000        104,322   109,322 Expenses charged to capital less tax
(2,443)              -   (2,443) relief thereon Subscription shares
exercised                       47              -        47 Shares
issued from treasury                        415              -       415
Shares purchased including expenses           (19,239)              -
(19,239) Exchange loss on currency balances             (2,322)
-   (2,322) At 31 March 2013                               130,530
129,480   260,010 * Investment holding gains relate to the revaluation
of investments held at the reporting date. (See note 9 for further
details). Explanatory Notes of Principal Changes to the Company's
Articles of Association Set out below is a summary of the main
differences between the current and the proposed new Articles of
Association (the "Articles"). The principal changes in the new
Articles to be adopted at the Annual General Meeting to be held on 17
July 2013 relate to: Distribution of Capital Profits The Company is no
longer required to include a prohibition on distributing capital profits
in its Articles, following HM Government's reform of the tax and
company law rules affecting investment trusts. This prohibition has been
removed in the proposed new Articles. Please note that the Board is not
currently proposing any change to the Company's dividend policy.
Authorised Share Capital The Companies Act 2006 abolished the
requirement for Companies to have an authorised share capital, with
effect from 1 October 2009. The Company is therefore taking the
opportunity to remove the upper limit of the Company's share
capital included in its current Articles. Deletion of Provisions
Formerly in the Memorandum of Association Most of the provisions of the
memorandum of association of a company incorporated before 1 October
2009 are now deemed to form part of its articles of association. Of
these the Company is only required to retain in its articles the
statements that the liability of members is limited and that the
company's registered office is situated in England and Wales. The
Company is therefore taking this opportunity to remove from its Articles
of Association all those provisions formerly in its Memorandum of
Association which it is not required to retain. In particular the clause
setting out the objects of the Company is to be removed so that the
Company's objects will in future be wholly unrestricted.
Subscription Shares The Company is proposing to amend the provisions of
the Articles that relate to the Subscription Shares issued in 2009. The
Directors understand that HM Revenue & Customs has recently
indicated that where the Subscription Rights attached to the
Subscription Shares have lapsed such shares must remain admitted to
trading on a regulated market. While the Company already has authority
to redeem or transfer such shares without further authorisation, the
Board is proposing an amendment to clarify the Articles so that on the
date that the rights attaching to the Subscription Shares lapse, such
Subscription Shares will be converted into Deferred Shares and the
Company may then transfer such Deferred Shares to its nominee without
making any payment to the holders thereof. Following the transfer of
Deferred Shares to its nominee, the Company may cancel and/or purchase
the Deferred Shares without making any payment to or obtaining the
sanction of such nominee or any holder of Deferred Shares or for such
consideration as the Directors may determine. Following the cancellation
or repurchase of such shares, they will cease to exist. Other Changes
Other technical changes have been made so that the Articles of
Association conform to the Companies Act 2006 and other legislation
applicable to companies, as currently in force and current best
practice. A copy of the current Articles and of the proposed new
Articles marked up to show the proposed amendments will be available for
inspection at the offices of Frostrow Capital LLP during normal business
hours and will be available for inspection at the Annual General
Meeting, in each case until conclusion of the meeting. Notice of Annual
General Meeting Notice is hereby given that the Annual General Meeting
of Worldwide Healthcare Trust PLC will be held at the Carpenters'
Hall, Throgmorton Avenue, London EC2W 2JJ on Wednesday, 17 July 2013
from 12 noon for the following purposes: ORDINARY BUSINESS 1. To receive
and, if thought fit, to accept the Audited Accounts and the Report of
the Directors for the year ended 31 March 2013 2. To re-elect Ms Jo
Dixon as a Director of the Company 3. To re-elect Dr David Holbrook as a
Director of the Company 4. To re-elect Mr Samuel D. Isaly as a Director
of the Company 5. To re-elect Sir Martin Smith as a Director of the
Company 6. To elect Mrs Sarah Bates as a Director of the Company 7. To
elect Mr Doug McCutcheon as a Director of the Company 8. To re-appoint
Ernst & Young LLP as the Company's Auditors and to authorise
the Directors to determine their remuneration 9. To approve the
Directors' Remuneration Report for the year ended 31 March 2013
SPECIAL BUSINESS To consider, and if thought fit, pass the following
resolutions of which resolutions 11, 12, 13, 14, 15 and 16 will be
proposed as special resolutions: Authority to Allot Shares 10. THAT in
substitution for all existing authorities the Directors be and are
hereby generally and unconditionally authorised in accordance with
section 551 of the Companies Act 2006 (the "Act") to exercise
all powers of the Company to allot relevant securities (within the
meaning of section 551 of the Act) up to a maximum aggregate nominal
amount of [pounds sterling]1,145,323 (being 10% of the issued share
capital of the Company at 6 June 2013) and representing 4,581,291 shares
of 25 pence each (or, if less, the number representing 10% of the issued
share capital of the Company at the date at which this resolution is
passed), provided that this authority shall expire at the conclusion of
the Annual General Meeting of the Company to be held in 2014 or 15
months from the date of passing this resolution, whichever is the
earlier, unless previously revoked, varied or renewed, by the Company in
General Meeting and provided that the Company shall be entitled to make,
prior to the expiry of such authority, an offer or agreement which would
or might require relevant securities to be allotted after such expiry
and the Directors may allot relevant securities pursuant to such offer
or agreement as if the authority conferred hereby had not expired.
Disapplication of Pre-emption Rights 11. THAT in substitution of all
existing powers (but in addition to any power conferred on them by
resolution 12 set out in the notice convening the Annual General Meeting
at which this resolution is proposed ("Notice of Annual General
Meeting")) the Directors be and are hereby generally empowered
pursuant to Section 570 of the Companies Act 2006 (the "Act")
to allot equity securities (within the meaning of Section 560 of the
Act) for cash pursuant to the authority conferred on them by resolution
10 set out in the Notice of Annual General Meeting or otherwise as if
Section 561(1) of the Act did not apply to any such allotment: (a)
pursuant to an offer of equity securities open for acceptance for a
period fixed by the Directors where the equity securities respectively
attributable to the interests of holders of shares of 25p each in the
capital of the Company ("Shares") are proportionate (as nearly
as may be) to the respective numbers of Shares held by them but subject
to such exclusions or other arrangements in connection with the issue as
the Directors may consider necessary, appropriate or expedient to deal
with equity securities representing fractional entitlements or to deal
with legal or practical problems arising in any overseas territory, the
requirements of any regulatory body or stock exchange, or any other
matter whatsoever; and (b) provided that (otherwise than pursuant to
sub-paragraph (a) above) this power shall be limited to the allotment of
equity securities up to an aggregate nominal value of [pounds
sterling]1,145,323, being 10% of the issued share capital of the Company
as at 6 June 2013 and representing 4,581,291 Shares or, if changed, the
number representing 10% of the issued share capital of the Company at
the date of the meeting at which this resolution is passed, and provided
further that (i) the number of equity securities to which this power
applies shall be reduced from time to time by the number of treasury
shares which are sold pursuant to any power conferred on the Directors
by resolution 12 set out in the Notice of Annual General Meeting and
(ii) no allotment of equity securities shall be made under this power
which would result in Shares being issued at a price which is less than
the net asset value per Share as at the latest practicable date before
such allotment of equity securities as determined by the Directors in
their reasonable discretion, and such power shall expire at the
conclusion of the next Annual General Meeting of the Company after the
passing of this resolution or 15 months from the date of passing this
resolution, whichever is earlier, unless previously revoked, varied or
renewed by the Company in general meeting and provided that the Company
shall be entitled to make, prior to the expiry of such authority, an
offer or agreement which would or might otherwise require equity
securities to be allotted after such expiry and the Directors may allot
equity securities pursuant to such offer or agreement as if the power
conferred hereby had not expired. 12. THAT in substitution of all
existing powers (but in addition to any power conferred on them by
resolution 11 set out in the Notice of Annual General Meeting) the
Directors be and are hereby generally empowered pursuant to Section 570
of the Companies Act 2006 (the "Act") to sell relevant shares
(within the meaning of Section 560 of the Act) if, immediately before
the sale, such shares are held by the Company as treasury shares (as
defined in Section 724 of the Act ("treasury shares")), for
cash as if Section 561(1) of the Act did not apply to any such sale
provided that: (a) where any treasury shares are sold pursuant to this
power at a discount to the then prevailing net asset value of ordinary
shares of 25p each in capital of the Company ("Shares"), such
discount must be (i) lower than the discount to the net asset value per
Share at which the Company acquired the Shares which it then holds in
treasury and (ii) not greater than 5% to the prevailing net asset value
per Share at the latest practicable time before such sale (and for this
purpose the Directors shall be entitled to determine in their reasonable
discretion the discount to their net asset value at which such Shares
were acquired by the Company and the net asset value per Share at the
latest practicable time before such Shares are sold pursuant to this
power); and (b) this power shall be limited to the sale of relevant
shares having an aggregate nominal value of [pounds sterling]1,145,323
being 10% of the issued share capital of the Company as at 6 June 2013
and representing 4,581,291 Shares or, if changed, the number
representing 10% of the issued share capital of the Company at the date
of the meeting at which this resolution is passed, and provided further
that the number of relevant shares to which power applies shall be
reduced from time to time by the number of Shares which are allotted for
cash as if Section 561(1) of the Act did not apply pursuant to the power
conferred on the Directors by resolution 11 set out in the Notice of
Annual General Meeting, and such power shall expire at the conclusion of
the next Annual General Meeting of the Company after the passing of this
resolution or 15 months from the date of passing this resolution,
whichever is earlier, unless previously revoked, varied or renewed by
the Company in General Meeting and provided that the Company shall be
entitled to make, prior to the expiry of such authority, an offer or
agreement which would or might otherwise require treasury shares to be
sold after such expiry and the Directors may sell treasury shares
pursuant to such offer or agreement as if the power conferred hereby had
not expired. Authority to Repurchase Ordinary Shares 13. THAT the
Company be and is hereby generally and unconditionally authorised in
accordance with section 701 of the Companies Act 2006 (the
"Act") to make one or more market purchases (within the
meaning of section 693(4) of the Act) of ordinary shares of 25 pence
each in the capital of the Company ("Shares") (either for
retention as treasury shares for future reissue, resale, transfer or
cancellation), provided that: (a) the maximum aggregate number of Shares
authorised to be purchased is 6,867,356 (representing approximately
14.99% of the issued share capital of the Company at the date of the
notice convening the meeting at which this resolution is proposed); (b)
the minimum price (exclusive of expenses) which may be paid for a Share
is 25 pence; (c) the maximum price (exclusive of expenses) which may be
paid for a Share is an amount equal to the greater of (i) 105% of the
average of the middle market quotations for a Share as derived from the
Daily Official List of the London Stock Exchange for the five business
days immediately preceding the day on which that Share is purchased and
(ii) the higher of the price of the last independent trade and the
highest then current independent bid on the London Stock Exchange as
stipulated in Article 5(1) of Regulation No. 2233/2003 of the European
Commission (Commission Regulation of 22 December 2003 implementing the
Market Abuse Directive as regards exemptions for buyback programmes and
stabilisation of financial instruments); (d) the authority hereby
conferred shall expire at the conclusion of the Annual General Meeting
of the Company to be held in 2014 or, if earlier, on the expiry of 15
months from the date of the passing of this resolution unless such
authority is renewed prior to such time; and (e) the Company may make a
contract to purchase Shares under this authority before the expiry of
such authority which will or may be executed wholly or partly after the
expiration of such authority, and may make a purchase of Shares in
pursuance of any such contract. Authority to Repurchase Subscription
Shares 14. THAT the Company be and is hereby generally and
unconditionally authorised in accordance with section 701 of the
Companies Act 2006 (the "Act") to make one or more market
purchases (within the meaning of section 693(4) of the Act) of
subscription shares of 1p each in the capital of the Company
("Subscription Shares") for cancellation provided that: (a)
the maximum aggregate number of Subscription Shares authorised to be
purchased is 350,791 (representing approximately 14.99% of the issued
Subscription Share capital of the Company at the date of the notice
convening the meeting at which this resolution is proposed; (b) the
minimum price (exclusive of expenses) which may be paid for a
Subscription Share is 1p; (c) the maximum price (exclusive of expenses)
which may be paid for a Subscription Share is an amount equal to the
greater of (i) 105% of the average of the middle market quotations for a
Subscription Share as derived from the Daily Official List of the London
Stock Exchange for the five business days immediately preceding the day
on which that Subscription Share is purchased and (ii) the higher of the
price of the last independent trade and the highest then current
independent bid on the London Stock Exchange as stipulated in Article 5
(1) of Regulation No. 2233/2003 of the European Commission (Commission
Regulation of 22 December 2003 implementing the Market Abuse Directive
as regards exemptions for buyback programmes and stabilisation of
financial instruments); (d) the authority hereby conferred shall expire
at the conclusion of the Annual General Meeting of the Company to be
held in 2014 or, if earlier, on the expiry of 15 months from the date of
the passing of this resolution unless such authority is renewed prior to
such time; and (e) the Company may make a contract to purchase
Subscription Shares under this authority before the expiry of such
authority which will or may be executed wholly or partly after the
expiration of such authority, and may make a purchase of Subscription
Shares in pursuance of any such contract. General Meetings 15. THAT as
permitted by the EU Shareholders' Rights Directive (2007/36/EC) any
General Meeting of the Company (other than the Annual General Meeting of
the Company) shall be called by notice of at least 14 clear days in
accordance with the provisions of the Articles of Association of the
Company provided that the authority shall expire on the conclusion of
the next Annual General Meeting of the Company, or, if earlier, on the
expiry 15 months from the date of the passing of the resolution.
Adoption of New Articles of Association 16. THAT, subject to and
conditional upon the passing of the special resolution set out in the
notice dated 6 June 2013 convening a meeting of the holders of the
subscription shares of 1p each in the capital of the Company: (i) the
Articles of Association of the Company be and are hereby amended by
deleting all the provisions of the Company's Memorandum of
Association which, by virtue of section 28 Companies Act 2006, are to be
treated as provisions of the Company's Articles of Association; and
(ii) the Articles of Association set out in the document produced to
this meeting and signed by the Chairman of the meeting for the purposes
of identification be and are hereby approved and adopted as the Articles
of Association of the Company in substitution for and to the exclusion
of the existing Articles of Association of the Company. Full explanatory
notes of principal changes to the Articles of Association are set out on
page 61 of this Annual Report. By order of the Board
                                                             Registered
Office:
                                                                One Wood
Street
                                                                London
EC2V 7WS Frostrow Capital LLP Company Secretary 6 June 2013 Notes 1.
Members are entitled to appoint a proxy to exercise all or any of their
rights to attend and to speak and vote on their behalf at the meeting. A
shareholder may appoint more than one proxy in relation to the meeting
provided that each proxy is appointed to exercise the rights attached to
a different share or shares held by that shareholder. A proxy need not
be a shareholder of the Company. A proxy form which may be used to make
such appointment and give proxy instructions accompanies this notice. 2.
A vote withheld is not a vote in law, which means that the vote will not
be counted in the calculation of votes for or against the resolutions.
If no voting indication is given, a proxy may vote or abstain from
voting at his/her discretion. A proxy may vote (or abstain from voting)
as he or she thinks fit in relation to any other matter which is put
before the meeting. 3. To be valid any proxy form or other instrument
appointing a proxy must be completed and signed and received by post or
(during normal business hours only) by hand at Capita Registrars, PXS,
34 Beckenham Road, Beckenham, Kent BR3 4TU no later than 12 noon Monday,
15 July 2013. 4. In the case of a member which is a company, the
instrument appointing a proxy must be executed under its seal or signed
on its behalf by a duly authorised officer or attorney or other person
authorised to sign. Any power of attorney or other authority under which
the instrument is signed (or a certified copy of it) must be included
with the instrument. 5. The return of a completed proxy form, other such
instrument or any CREST Proxy Instruction (as described below) will not
prevent a shareholder attending the meeting and voting in person if
he/she wishes to do so. 6. Any person to whom this notice is sent who is
a person nominated under section 146 of the Companies Act 2006 to enjoy
information rights (a "Nominated Person") may, under an
agreement between him/her and the shareholder by whom he /she was
nominated, have a right to be appointed (or have someone else appointed)
as a proxy for the meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may, under any
such agreement, have a right to give instructions to the shareholder as
to the exercise of voting rights. 7. The statement of the rights of
shareholders in relation to the appointment of proxies in paragraphs 1
and 3 above does not apply to Nominated Persons. The rights described in
these paragraphs can only be exercised by shareholders of the Company.
8. Pursuant to regulation 41 of the Uncertificated Securities
Regulations 2001, only shareholders registered on the register of
members of the Company (the "Register of Members") at 5.30
p.m. on Monday, 15 July 2013 (or, in the event of any adjournment, on
the date which is two days before the time of the adjourned meeting)
will be entitled to attend and vote or be represented at the meeting in
respect of shares registered in their name at that time. Changes to the
Register of Members after that time will be disregarded in determining
the rights of any person to attend and vote at the meeting. 9. As at 6
June 2013 (being the last business day prior to the publication of this
notice) the Company's issued share capital consists of 45,812,914
ordinary shares, carrying one vote each. Therefore, the total voting
rights in the Company as at 6 June 2013 are 45,812,914. 10. CREST
members who wish to appoint a proxy or proxies through the CREST
electronic proxy appointment service may do so by using the procedures
described in the CREST Manual. CREST Personal Members or other CREST
sponsored members, and those CREST members who have appointed a service
provider(s), should refer to their CREST sponsor or voting service
provider(s), who will be able to take the appropriate action on their
behalf. 11. In order for a proxy appointment or instruction made using
the CREST service to be valid, the appropriate CREST message (a
"CREST Proxy Instruction") must be properly authenticated in
accordance with the specifications of Euroclear UK and Ireland Limited
("CRESTCo"), and must contain the information required for
such instruction, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or is an
amendment to the instruction given to a previously appointed proxy must,
in order to be valid, be transmitted so as to be received by the
issuer's agent (ID RA10) no later than 48 hours before the time
appointed for holding the meeting. For this purpose, the time of receipt
will be taken to be the time (as determined by the timestamp applied to
the message by the CREST Application Host) from which the issuer's
agent is able to retrieve the message by enquiry to CREST in the manner
prescribed by CREST. After this time any change of instructions to
proxies appointed through CREST should be communicated to the appointee
through other means. 12. CREST members and, where applicable, their
CREST sponsors, or voting service providers should note that CRESTCo
does not make available special procedures in CREST for any particular
message. Normal system timings and limitations will, therefore, apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member, or sponsored member, or has appointed
a voting service provider, to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are
referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings. 13.
The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001. 14. In the case of joint holders, where
more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted.
Seniority is determined by the order in which the names of the joint
holders appear in the Register of Members in respect of the joint
holding (the first named being the most senior). 15. Members who wish to
change their proxy instructions should submit a new proxy appointment
using the methods set out above. Note that the cut-off time for receipt
of proxy appointments (see above) also applies in relation to amended
instructions; any amended proxy appointment received after the relevant
cut-off time will be disregarded. 16. Members who have appointed a proxy
using the hard-copy proxy form and who wish to change the instructions
using another hard-copy form, should contact Capita Registrars on 0871
664 0300 (calls cost 10p per minute plus network extras). Lines are open
8.30 a.m. to 5.30 p.m. Monday to Friday. 17. If a member submits more
than one valid proxy appointment, the appointment received last before
the latest time for the receipt of proxies will take precedence. 18. In
order to revoke a proxy instruction, members will need to inform the
Company. Members should send a signed hard copy notice clearly stating
their intention to revoke a proxy appointment to Capita Registrars, PXS,
34 Beckenham Road, Beckenham, Kent BR3 4TU. In the case of a member
which is a company, the revocation notice must be executed under its
common seal or signed on its behalf by an officer of the company or an
attorney for the company. Any power of attorney or any other authority
under which the revocation notice is signed (or a duly certified copy of
such power of attorney) must be included with the revocation notice. If
a member attempts to revoke their proxy appointment but the revocation
is received after the time for receipt of proxy appointments then,
subject to paragraph 4, the proxy appointment will remain valid. 19. In
the case of a member which is a company, the revocation notice must be
executed under its common seal or signed on its behalf by an officer of
the company or an attorney for the company. Any power of attorney or any
other authority under which the revocation notice is signed (or a duly
certified copy of such power of attorney) must be included with the
revocation notice. If a member attempts to revoke their proxy
appointment but the revocation is received after the time for receipt of
proxy appointments (see above) then, subject to paragraph 4, the proxy
appointment will remain valid. Notice of Separate Meeting of
Subscription Shareholders Notice is hereby given that a separate general
meeting of holders of subscription shares of 1p each in the capital of
the Company (the "Subscription Shares") will be held at the
Carpenters' Hall, Throgmorton Avenue, London EC2W 2JJ on Wednesday,
17 July 2013 at 12.20 p.m. or as soon as the Annual General Meeting of
the Company convened for 12 noon on the same day has concluded or been
adjourned, and if this separate class meeting is adjourned due to a lack
of quorum notice is hereby given that any such adjourned meeting shall
be held on 29 July 2013 at 11.00 a.m. at 25 Southampton Buildings,
London WC2A 1AL, for the purpose of considering and, if though fit,
passing the following resolution, which will be proposed as a special
resolution namely: Adoption of New Articles of Association THAT the
meeting of the holders of Subscription Shares hereby sanctions and
consent to every alteration, modification, variation or abrogation of
the special rights, privileges and restrictions attaching to the
Subscription Shares to be effected by the passing and implementation of
the special resolution of the Company numbered 16 in the notice of the
Annual General Meeting of the Company contained in the annual report and
accounts of the Company dated 6 June 2013, a copy of which has been
initialled by the chairman of the meeting for the purpose of
identification and produced to the meeting. By order of the Board
                                                             Registered
Office:
                                                                One Wood
Street
                                                                London
EC2V 7WS Frostrow Capital LLP Company Secretary 6 June 2013 Notes 1.
Only holders of Subscription Shares are entitled to attend and vote at
the meeting. Holders of Ordinary Shares are not entitled to attend and
vote at the meeting unless they also hold Subscription Shares. A
Subscription Shareholder may appoint one or more proxies to exercise all
or any of the rights of the Subscription Shareholder to attend and speak
and vote in his place. A proxy need not be a member of the Company. A
Subscription Shareholder may appoint more than one proxy provided that
each proxy is appointed to exercise the rights attached to a different
share or shares held by that member. If a Subscription Shareholder
wishes to appoint more than one proxy and so requires additional proxy
forms, the shareholder should contact the Company's Registrars,
Capita Registrars. 2. A form of proxy is enclosed for use by
Subscription Shareholders. To be valid, the form of proxy and any power
of attorney or other authority (if any) under which it is signed (or a
notarially certified copy thereof) must be deposited with the
Company's Registrars, Capita Registrars or (by hand during normal
business hours only) to the same address not later than 12.20 a.m. on
Monday, 15 July 2013 or, if the meeting is adjourned, 48 hours before
the time of the adjourned meeting. Alternatively, a proxy may be
appointed online at www.investorcentre.co.uk/eproxy by that time.
Completion and return of a form of proxy (including online) will not
preclude a Subscription Shareholder from attending and voting at the
meeting if he or she wishes to do so. 3. The Company has specified that
only those Subscription Shareholders entered on the register of members
of the Company as at 5.30 p.m. on 15 July 2013 or, if the meeting is
adjourned, on the register of members 48 hours before the time of the
adjourned meeting shall be entitled to attend and vote at the meeting in
respect of the number of Subscription Shares registered in their name at
that time. Changes to the register of members after 5.30 p.m. on 15 July
2013 or, if the meeting is adjourned, after 48 hours before the time of
the adjourned meeting will be disregarded in determining the rights of
any person to attend and vote at the meeting or adjourned meeting (as
the case may be). 4. Any person receiving a copy of this Notice as a
person nominated by a member to enjoy information rights under section
146 Companies Act 2006 (a Nominated Person) should note that the
provisions in Notes 1 and 2 above concerning the appointment of a proxy
or proxies to attend the meeting in place of a member, do not apply to a
Nominated Person, as only shareholders have the right to appoint a
proxy. However, a Nominated Person may have a right under an agreement
between the Nominated Person and the member by whom he or she was
nominated to be appointed, or to have someone else appointed, as a proxy
for the meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he/she may have a right under
such an agreement to give instructions to the member as to the exercise
of voting rights at the meeting. 5. Terms used in this notice shall have
the same meaning as in the annual report and accounts for the year ended
31 March 2013 unless otherwise defined. 6. As at 6 June 2013 (the latest
practicable date before the printing of this document) the
Company's total subscription share capital consisted of 2,340,166
Subscription Shares of 1p each in the capital of the Company with voting
rights for this meeting. On a poll, each Subscription Shareholder shall
be entitled to one vote for every subscription share held by them. 7.
Subscription Shareholders have the right to ask questions at the meeting
in accordance with Section 319A of the Companies Act 2006. Glossary
Diluted Net Asset Value This is a method of calculating the net asset
value ("NAV") of a company that has issued, and has
outstanding, convertible loan stocks, warrants, subscription shares or
options. The calculation assumes that the holders have exercised their
right to convert or subscribe, thus increasing the number of shares
among which the assets are divided. Discount or Premium A description of
the difference between the share price and the net asset value per
share. The size of the discount or premium is calculated by subtracting
the share price from the net asset value per share and is usually
expressed as a percentage (%) of the net asset value per share. If the
share price is higher than the net asset value per share the result is a
premium. If the share price is lower than the net asset value per share,
the shares are trading at a discount. Gearing Calculated using the
Association of Investment Companies definition. Total assets, less
current liabilities (before deducting any prior charges) minus cash/cash
equivalents divided by Shareholders' funds, expressed as a
percentage. For years prior to 2013, the calculation was based on prior
charges as a percentage of average net assets. LIBOR-OIS Spread This is
the difference between LIBOR and the Overnight Indexed Swap (OIS) rates.
The spread between the two rates is considered to be a measurement of
health of the banking system. London Interbank Offered Rate (LIBOR) The
interest rate at which banks can borrow unsecured funds from other banks
in London wholesale money markets, as measured by daily surveys of the
British Bankers' Association. The published rate is a trimmed
average of the rates obtained in the survey. NAV per share (pence) The
value of the Company's assets, principally investments made in
other companies and cash being held, minus any liabilities. The NAV is
also described as 'shareholders' funds' per share. The
NAV is often expressed in pence per share after being divided by the
number of shares which have been issued. The NAV per share is unlikely
to be the same as the share price which is the price at which the
Company's shares can be bought or sold by an investor. The share
price is determined by the relationship between the demand and supply of
the shares. NAV Total Return The theoretical total return on
shareholders' funds per share, including the assumed [pounds
sterling]100 original investment at the beginning of the period
specified, reflecting the change in NAV assuming that dividends paid to
shareholders were reinvested at NAV at the time the shares were quoted
ex-dividend. A way of measuring investment management performance of
investment trusts which is not affected by movements in
discounts/premiums. Ongoing Charges Ongoing charges are calculated by
taking the Company's annualised ongoing charges, excluding
performance fees and exceptional items, and dividing by the average
month end net asset value of the Company over the year. The publishing
of ongoing charges information rather than a total expense ratio (TER)
is advocated by the Association of Investment Companies who believe that
using a single methodology to calculate ongoing charges will help reduce
inconsistencies and allow investors and advisers to compare investment
companies more easily with open-ended funds. Overnight Indexed Swap
(OIS) An interest rate swap that serves as a measure of investor
expectations of an average effective overnight rate over the term of the
swap. Rehypothecation The pledging to banks by securities brokers of the
assets in a customer's margin account used as collateral for a
loan. Total Assets Total assets less current liabilities before
deducting prior charges. Prior charges include all loans for investment
purposes. Treasury Shares Shares previously issued by a company that
have been bought back from shareholders to be held by the company for
potential sale or cancellation at a later date. Such shares are not
capable of being voted and carry no rights to dividends. Frostrow
Capital LLP Company Secretary 6 June 2013 0203 008 4913 www.frostrow.com
The Annual Report will be posted to shareholders on 10 June 2013 Further
copies may be obtained from Frostrow Capital LLP, the Company Secretary
at 25 Southampton Buildings, London WC2A 1AL. A copy of the Annual
Report will be submitted to the National Storage Mechanism and will
shortly be available for inspection at www.hemscott.com/nsm.do The
Annual Report is also available on the Company's website at
www.worldwidewh.com where up to date information on the Company,
including daily NAV, share prices and fact sheets, can also be found. 

End