Worldwide Healthcare Trust PLC
Unaudited Half Year Results for the six months ended
30 September 2021
This Announcement is not the Company’s Half Year Report & Accounts. It is an abridged version of the Company’s full Half Year Report & Accounts for the six months ended 30 September 2021. The full Half Year Report & Accounts, together with a copy of this announcement, will also shortly be available on the Company’s website: www.worldwidewh.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.
The Company's Half Year Report & Accounts for the six months ended 30 September 2021 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information please contact: Mark Pope, Frostrow Capital LLP 020 3008 4913.
Company Summary / Performance
| Six months to 30 September 2021 |
One year to 31 March 2021 |
||
| Net asset value per share (total return)* # | 0.4% | 30.0% | |
| Share price (total return)* # | (1.5%) | 27.4% | |
| Benchmark (total return)^ # | 13.0% | 16.0% | |
| 30 September 2021 |
31 March 2021 |
Six months change |
|
| Net asset value per share | 3,700.7p | 3,703.0p | (0.1%) |
| Share price | 3,625.0p | 3,695.0p | (1.9%) |
| Discount of share price to the net asset value per share* | 2.0% | 0.2% | |
| Leverage* | 14.7% | 7.6% | |
| Ongoing charges* | 0.8% | 0.9% | |
| Ongoing charges (including performance fees crystallised during the period)* | 1.3% | 0.9% |
# Source – Morningstar.
^ Benchmark – MSCI World Health Care Index on a net total return, sterling adjusted basis (see glossary)
* Alternative Performance Measure. Leverage calculated under the Commitment Method (see glossary)
Chairman’s Statement
Sir Martin Smith
Performance
Following a period of strong relative and absolute performance, the first six months of the current financial year have proved to be challenging for the Company. While the Company’s net asset value per share total return ended the period in positive territory (+0.4%), it significantly underperformed the Company’s Benchmark, the MSCI World Healthcare Index, measured on a net total return, sterling adjusted basis, which rose by 13.0%. Sterling depreciated by 2.3% against the U.S. dollar over the period; the U.S. dollar being the currency in which the majority of the Company’s investments are denominated. The Company’s share price total return of -1.5% fared less well and, as a result, the discount of the Company’s share price to the net asset value per share widened to 2.0% as at 30 September 2021 from 0.2% at the beginning of the period.
The principal reasons for this underperformance were the significant overweight positions in poorly performing Emerging Biotechnology* and China, a strategy that had previously served the Company well. These sectors were subject to significant volatility as investors rotated to larger stocks in more developed markets, which is why they were the largest contributors to the reported relative underperformance. In addition, absolute performance was affected by the political uncertainty arising from the incoming new Presidential administration in the U.S.
Looking at specific names in the portfolio, the largest contributions during the reporting period came from UK pharmaceutical and biotechnology company AstraZeneca, Indian multinational hospital chain company ApolloHospitals Enterprise and U.S. medical supplies company DexCom. The largest detractors from performance were Chinese pharmaceutical company Jiangsu Hengrui Medicine and U.S. biopharmaceutical companies Vor Biopharma and Haemonetics. Further information regarding the Company’s investments and performance can be found in the Review of Investments.
The Company had, on average, leverage of 10.9% during the period which contributed 0.04% to performance. As at the half year-end leverage stood at 14.7% compared to 7.6% at the beginning of the period. Our Portfolio Manager continues to adopt both a pragmatic and a tactical approach to the use of leverage.
The underperformance of the Benchmark in the period has resulted in a reversal of the performance fee provision of £18.9m, which now stands at zero. In accordance with the terms of the performance fee arrangements*, following an exceptional period of outperformance in the period to 30 June 2020, which was maintained to June 2021, a performance fee of £12.9m became payable as at 30 June 2021. Further details are provided in note 3.
* See Glossary.
As I have mentioned previously, the Company is able to invest up to 10% of the portfolio, at the time of acquisition, in unquoted securities. Our Portfolio Manager, through its extensive private equity research capability, has continued to identify opportunities which have been added to the portfolio. Exposure to unquoted equities accounted for 7.5% of the total portfolio at the half year-end, and these holdings made a positive contribution of 1.9% to the Company’s performance during the period under review.
Capital
The Board continues to monitor closely the relationship between the Company’s share price and the net asset value per share. As a result of continued investor demand, a total of 1,122,500 new shares were issued at a premium to the cum income net asset value per share during the half year, raising £41.7 million of new funds. Following the half year end to 16 November 2021, a further 75,000 new shares were issued at a premium to the cum income net asset value per share, raising £2.8 million of new funds. No shares were repurchased by the Company during the period under review and to 16 November 2021.
As mentioned at the Company’s year-end, the ongoing share issuance programme triggered the requirement for the Company to produce a prospectus which was published on 13 July 2021. The prospectus provides authority for the issuance of 20 million new shares. A copy of the prospectus can be found on the Company’s website at www.worldwidewh.com
Revenue and Dividends
The revenue return for the period was £9.0 million, compared to £5.6 million in the same period last year. This increase was due primarily due to a rise in portfolio income. The Board has declared an increased interim dividend of 7.0p per share, for the year to 31 March 2022 (2021: 6.5p), which will be payable on 11 January 2022 to shareholders on the register of members on 19 November 2021. The associated ex-dividend date is 18 November 2021.
I remind shareholders that it remains the Company’s policy to pay out dividends at least to the extent required to maintain investment trust status. These dividend payments are paid out of the Company’s net revenue for the year and, in accordance with investment trust rules, only a maximum of 15% of income can be retained by the Company in any financial year.
It is the Board’s continuing belief that the Company’s capital should be deployed rather than paid out as dividends to achieve a particular target yield.
Outlook
Our Portfolio Manager continues to believe that despite this disappointing half-year, the positive investment themes which underpin the healthcare sector remain intact and they will continue to focus on the selection of investments with strong prospects for capital growth. They further believe that innovation will continue to be the primary value driver for the healthcare sector. In addition, an expected increase in mergers and acquisitions activity, a relatively benign political environment in the U.S. and a return to favour of both emerging markets healthcare stocks and Emerging Biotechnology companies will lead to an improvement in the Company’s performance.