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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bellevue Healthcare Trust Plc | LSE:BBH | London | Ordinary Share | GB00BZCNLL95 | RED ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -5.00 | -3.41% | 141.60 | 141.60 | 142.00 | 145.60 | 140.40 | 144.60 | 2,104,704 | 16:23:25 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | -107.16M | -121.04M | -0.2617 | -5.41 | 655.03M |
From May 2019 to May 2024
TIDMBBH
RNS Number : 3610U
BB Healthcare Trust PLC
11 July 2018
BB HEALTHCARE TRUST PLC
LEGAL ENTITY IDENTIFIER ('LEI'): 213800HQ3J3H9YF2UI82
HALF YEARLY FINANCIAL REPORT
For the six months ended 31 May 2018
Investment objective
The investment objective of the Company is to provide Shareholders with capital growth and income over the long term, through investment in listed or quoted global healthcare companies. The Company's specific return objectives are: (i) to beat the total return of the MSCI World Healthcare Index (in sterling) on a rolling 3 year period (the index total return including dividends reinvested on a net basis); and (ii) to seek to generate a double-digit total shareholder return per annum over a rolling 3 year period.
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Financial information
As at 31 May
2018
Net asset value ("NAV") per Ordinary Share (cum income) 122.09p
Ordinary Share price 121.50p
Ordinary Share price discount to NAV(1) 0.5%
------------------------------------------------------------------ ----------------
Performance summary
% change(2,3)
Share price total return per Ordinary Share(1) +4.0%
NAV total return per Ordinary Share(1) +7.5%
MSCI World Healthcare Index (GBP) +1.7%
------------------------------------------------------------------ ----------------
(1) Alternative Performance Measures ('APMs')
(2) Total returns in sterling for the six months
to 31 May 2018, including dividends reinvested
(3) Source: Bloomberg
Alternative performance measures ('APMs')
The financial information and performance summary data highlighted in
the above footnote are considered to represent APMs of the Company. Definitions
of these APMs together with how these measures have been calculated can
be found below.
CHAIRMAN'S STATEMENT
I am pleased to present BB Healthcare Trust's Half-yearly Report for the 2018 Financial Year. It has been another period of positive progress, both in terms of the investment performance and continued growth through further share issuance, with a further 12.4 million Ordinary Shares issued since the end of the prior financial year. At the time of writing, the Company's market capitalisation is in excess of GBP355 million.
Performance
In the period under review from 1 December 2017 to 31 May 2018, the Company's share price and net asset value ("NAV") have recorded total returns in sterling terms of 4.0% and 7.5% respectively. In comparison, the MSCI World Healthcare Index (GBP) delivered a total return of 1.7%. In the period since inception to 31 May 2018, the Company's share price and NAV have delivered total returns in sterling terms of 25.3% and 26.0% respectively. In comparison, the MSCI World Healthcare Index (GBP) delivered a total return of 16.4%.
In contrast to the prior year, the Company's share price has shown a greater level of volatility versus the evolution of the NAV. The premium has averaged only 1.0% during the period under review, and has traded at an average discount of 0.5% since the end of March 2018. This has not only negatively impacted the total return for Shareholders, but has also hampered our ability to grow the Company through share issuance, which can only take place when the shares are trading at a premium to NAV. The Board continues to believe that further share issuance benefits all investors, through improved liquidity and a potential lower total expense ratio.
The Ordinary Shares are subject to an annual redemption option at the discretion of the Board, offering a robust form of discount control.
Key market developments
The first half of 2018 has seen a continuation of the volatile macro-political environment that characterised the prior year, making a difficult climate for equity investors, that has seen indices make little progress. Moreover, the healthcare sector has again been caught up in US polemics. In a divided country, common cause can be found in attacking the drug industry and health insurance companies, which are widely disliked by mistrustful voters. With mid-term electioneering in full swing, sentiment is unlikely to improve markedly in the near-term. In such a context, allied to the fading earnings power of the large pharmaceutical companies that account for almost half the benchmark value in the quoted sector, it is not a surprise that healthcare underperformed the MSCI World Index by 1.6% during the period.
As the Brexit debacle rolls on, one should also highlight the extent to which sterling impacted the progression of the NAV. The Company has averaged more than 90% exposure to dollar-denominated assets since inception, creating a significant translational currency exposure in terms of the reported NAV, with a peak-to-trough move in the dollar of almost 8% during the period in review.
In spite of the sector's lacklustre performance over the period, we remain very optimistic regarding the investment return opportunity in healthcare. Indices reflect history and incumbency, whereas the future belongs to those whose innovations will improve the quality and efficiency of healthcare delivery.
As society struggles to meet the growing needs of an ageing population, never has the need for improved services been so pressing. Our strategy focuses on companies helping to deliver that more efficient future.
Dividend
As announced in December 2017, the target dividend for the 2018 financial year is 4.0p per Ordinary Share. The Directors are pleased to declare an interim dividend for the Company of 2.0p per Ordinary Share, payable on 24 August 2018, to Shareholders on the register as at 27 July 2018. The dividend will be funded mainly from the Company's capital reserves.
Gearing
The Company previously agreed a GBP30 million two-year multi-currency revolving bank facility with Scotiabank. As at 31 May 2018, the aggregate amount drawn down from the facility was just below this GBP30 million limit, representing a gearing ratio of 9.0% (versus 3.9% at the end of November 2017). The facility has a commitment increase option and this was exercised in June 2018, raising the maximum facility amount to GBP40 million. The Board and the Portfolio Manager continue to believe that a high single digit gearing level is appropriate in current market conditions.
Outlook
Whilst the clamorous electioneering will continue in the US for some months yet, the lack of substantive proposals argues for the status quo, and the second half of the year should see a pivot back toward stock-specific fundamentals. As noted above, we are in the foothills of an unprecedented period of change for our industry that offers multitudinous new opportunities for investors. All the while, valuations look undemanding in a number of healthcare sub-sectors and the need for healthcare products and services will continue to grow into the foreseeable future.
Professor Justin Stebbing
11 July 2018
PORTFOLIO MANAGER'S REPORT
Macro environment
During the first half of our financial year from 1 December 2017 to 31 May 2018, a number of macro-political themes emanating from the United States ("US") again dominated sentiment toward healthcare stocks. December 2017 saw a painful 'growth into value' transition, followed in January 2018 by a biotechnology rally spurred by hopes of tax reform fuelled Mergers & Acquisitions ("M&A"). This saw the NASDAQ Biotechnology Index up 11% before the month was out. It subsequently fell nearly 15% by April 2018, as it became clear that the uncertain environment was dissuading management teams from committing to widespread deal making.
Biotechnology looks well set to remain the axis of drug innovation and has gradually clawed its way back into positive territory for the year. In addition to the M&A induced volatility, drug stocks and the wider drug supply chain have been whipsawed by the twin spectres of Trump-driven pricing reform and Amazon-induced obsolescence.
As we noted in our February 2018 factsheet, you will struggle to find more fervent believers than us in the general notion that healthcare is an inefficient industry ripe for technology-led disruption. The recent PillPack acquisition not withstanding, we do not see the low margin, capital-intensive world of wholesale drug supply as the obvious target. Equally, we are acutely aware of the realpolitik that developed world healthcare spending growth is out of control and must be brought to heel. Our investment decisions consider this likely future reality, and we eschew companies where we feel that a robust economic case for the product or service on offer is lacking.
Drug prices in the US are undoubtedly part of the healthcare cost problem, albeit a small one. Until the ("US") has a leadership focused on the wider causes of spending growth, we think that the cost trend will continue to rise unabated. Although they are still evolving, we do not believe that the US Administration's current proposals represent a material change to the status quo. Despite this, there is a mid-term election for the politicians to win and a sell-side craving the volatility that drives share trading activity, so we have little hope that the noise around these false prophets of doom will die down in the short-term.
As was the case last year, Brexit anxieties have compounded the underlying volatility in our NAV progression with significant currency unpredictability. It is not obvious to us that the probability of a Brexit conclusion that is supportive of low friction trade and continued UK economic growth has become nearer but, at one stage during the period under review, sterling had appreciated nearly 7.7% against the US dollar. Overall, sterling has declined 0.7% since the end of our previous financial year and has appreciated more than 5.3% since the Company's inception.
Despite these multi-faceted challenges, we are pleased that the share price and the NAV have continued to develop positively and that we have materially outperformed our reference index over the first half of our financial year.
Discreet performance drivers
We use the MSCI World Healthcare Index ("the Index") in sterling as our reference index. Its parent index is the MSCI World Index. In sterling terms, the MSCI World Healthcare Index underperformed the broader MSCI World Index by around 1.6% in the six months to the end of May 2018, rising 0.8% (-0.8% in dollars), versus 2.4% (+0.8% in dollars). Healthcare performance for the six months ended 31 May 2018 by sub-sector is summarised in the table below; Generics, Dental, Diagnostics and Animal Health have been the notable positive performers, with the branded drug companies (Biotechnology, Conglomerates and Pharma) and Distributors the laggards, as discussed above.
Performance by Sub-sector breakdown
USD GBP
-----
Biotechnology -7.7% -6.2%
Conglomerate -8.0% -6.5%
Dental 17.1% 19.0%
Diagnostics 15.7% 17.6%
Distributors -4.3% -2.7%
Facilities 11.9% 13.7%
Generics 23.0% 25.0%
Healthcare IT -3.3% -1.7%
Managed Care 0.9% 2.5%
Medical Technology 6.6% 8.4%
Other Healthcare/Animal Health 15.8% 17.7%
Pharmaceuticals -2.2% -0.6%
Services 5.5% 7.2%
Specialty Pharmaceuticals 4.7% 6.4%
Tools 6.3% 8.0%
------------------------------- ----- -----
Source: Bloomberg and Bellevue Asset Management (1 December 2017 to 31 May 2018).
Portfolio performance and evolution
During the period, the Company's NAV total return was 7.5%, compared to a total return in sterling terms of 1.7% for the Index. Our strategy thus materially outperformed the Index. The Company's share price total return was 4.0%, the under-performance versus the NAV arising from the share price premium to NAV as at 30 November 2017 moving to a small discount at the end of May 2018. The corresponding total return for the MSCI World Index was 2.5%, so we also delivered an above-market total return, despite the underperformance of healthcare against the MSCI World index and the Company's share price premium to NAV moving to a discount. The Company also paid a final dividend of 1.75p per Ordinary Share at the end of March 2018.
The top three positions in terms of a positive contribution to the development of the NAV (and their local currency share price performance) have been Align Technology (Dental, +27%), Dexcom (Healthcare Technology, +51%) and Teladoc (Healthcare IT, +37%). The three most significant detractors have been Esperion (Specialty Pharma, -37%), Celgene (Biotechnology, -22%) and Incyte (Biotechnology, -31%). All three of the latter investments were impacted by specific developmental setbacks relating to important pipeline products, although one can always debate the extent to which the market has reacted appropriately to a singular event.
In terms of our sub-sector allocations, the most notable trend over the first six months of the Company's financial year was a shift away from therapeutics (Pharma, Specialty Pharma and Biotechnology) and toward Healthcare IT and Healthcare Technology. Our combined exposure to therapeutics declined from 35.0% at the end of November 2017 to 28.6% by the end of May 2018. Conversely, exposure to Healthcare Technology and Healthcare IT rose from 5.9% to 13.4%
There were 27 companies in the portfolio at the end of November 2017. This rose to 30 by February 2018, but declined to 28 towards the end of the period. Our gross exposure rose from GBP312 million to GBP360 million through a combination of capital gains, share issuance and increased borrowings (the leverage ratio rose from 4.0% to 8.4% over the first half), offset by the payment of the GBP4.7 million dividend in March 2018. We continue to actively trade around our positions into news flow events and financial reporting, in order to manage short-term risk/return within our anticipated holding periods.
Outlook for the second half of the year and beyond
Healthcare provision is an emotive subject. Let us be honest, we will all need to use it at some point and access to these services is considered a basic human right in most of the developed world. Thus, the broad notion that the system in whatever country one inhabits is no longer fit for purpose or under intolerable strain is an unpalatable one, and calling for wholesale change has never been a sure-fire vote winner for politicians.
Nonetheless, change is coming and that represents a significant opportunity for both investors and society in the wider context. The Company was incepted recognising that such a prospect was finally upon us. One can of course talk ebulliently at any time about all manner of exciting innovations to come, and generally find an audience willing to listen, being as we are all so emotionally invested in the notion that scientific progress and human ingenuity can save us from suffering. This is not the same as making money, and alpha is generated by focusing on the ideas whose time has now come.
Whilst there have been a number of shorter-term headwinds since we began, our focus remains on the longer term outlook and those companies which we believe can improve care at an acceptable cost. As we move into the fourth quarter and the US mid-term election result becomes known, fundamentals should again come to the fore of the debate. Objectively, there are few things as certain as rising demand for healthcare, and we hope to ride the synchronous waves of innovation and demographic change for many years to come.
Paul Major, Brett Darke and Daniel Koller
Bellevue Asset Management
11 July 2018
PORTFOLIO TOP TEN HOLDINGS % of net As at 31 May 2018 asset value ---------------------------------------------- ------------ Align Technology 9.6 Anthem 7.0 Illumina 6.4 Teladoc 6.2 Dexcom 5.6 Shire 5.4 Intuitive Surgical 5.0 Celgene 4.7 AmerisourceBergen 4.6 Lonza 4.3 Top ten holdings 58.8 ---------------------------------------------- ------------ Other net assets 41.2 ---------------------------------------------- ------------ Total 100.0 ---------------------------------------------- ------------ SUB SECTOR BREAKDOWN % ---------------------------------------------- ------------ Medical Technology 19.5 Biotechnology 15.4 Managed Care 9.7 Dental 8.9 Specialty Pharmaceuticals 8.6 Diagnostics 7.7 Health Technology 7.7 Healthcare IT 5.7 Pharmaceuticals 5.0 Distributors 4.2 Services 4.0 Other Healthcare 3.6 ---------------------------------------------- ------------ Total 100.0 ---------------------------------------------- ------------ Source: Bellevue Asset Management, 31.05.18.
INTERIM MANAGEMENT REPORT
The Directors are required to provide an Interim Management Report in accordance with the UK Listing Authority's Disclosure Guidance and Transparency Rules ('DTR'). The Directors consider that the Chairman's Statement and the Portfolio Manager's Report of this Half-yearly Report, the following statement on related party transactions and the Statement of Directors' Responsibilities below, together constitute the Interim Management Report for the Company for the six months ended 31 May 2018. The principal risks and uncertainties to the Company are detailed in the Company's Annual Report for the period ended 30 November 2017. The principal risks and uncertainties facing the Company remain unchanged from those disclosed in the Annual Report for the period ended 30 November 2017. The outlook for the Company for the remaining six months of the year ending 30 November 2018 is discussed in the Chairman's Statement and the Portfolio Manager's Report.
Related party transactions
Details of the amounts paid to the Company's Portfolio Manager and the Directors during the period are detailed in note 12 of the notes to the financial statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES FOR THE HALF-YEARLY REPORT
The Directors confirm to the best of their knowledge that:
-- The condensed set of interim financial statements contained within the Half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting.
-- The interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's DTR.
Justin Stebbing
Chairman
11 July 2018
CONDENSED UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 MAY 2018
Period from 7 October Period from 7 October
Six months ended 2016 to 31 May 2016 to 30 November
31 May 2018 2017 2017^
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Gains on investments - 25,056 25,056 - 18,000 18,000 - 33,960 33,960
(Losses)/gains
on currency
movements - (590) (590) - 17 17 - 522 522
Net investment
gains - 24,466 24,466 - 18,017 18,017 - 34,482 34,482
Income 963 - 963 956 - 956 1,919 - 1,919
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Total income 963 24,466 25,429 956 18,017 18,973 1,919 34,482 36,401
Portfolio management
fees (288) (1,154) (1,442) (167) (667) (834) (417) (1,668) (2,085)
Other expenses (406) - (406) (326) - (326) (791) - (791)
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Profit before
finance costs
and taxation 269 23,312 23,581 463 17,350 17,813 711 32,814 33,525
Finance costs (67) (270) (337) (11) (45) (56) (43) (170) (213)
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Operating profit
before taxation 202 23,042 23,244 452 17,305 17,757 668 32,644 33,312
Taxation (108) - (108) (127) - (127) (272) - (272)
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Profit for the
period 94 23,042 23,136 325 17,305 17,630 396 32,644 33,040
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
Return per Ordinary
Share 0.04p 8.68p 8.72p 0.20p 10.75p 10.95p 0.21p 17.42p 17.63p
--------------------- -------- -------- ---------- --------- ---------- -------- -------- -------- --------
^ Audited
There is no other comprehensive income and therefore the 'Profit for
the period' is the total comprehensive income for the period.
The total column of the above statement is the statement of comprehensive
income of the Company. The supplementary revenue and capital columns,
including the earnings per Ordinary Share, are prepared under guidance
from the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The notes form an integral part of these financial statements.
CONDENSED UNAUDITED STATEMENT OF FINANCIAL
POSITION
AS AT 31 MAY 2018
31 May 31 May 30 Nov
2018 2017 2017^
GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair value
through profit or loss 360,035 197,707 312,238
------------------------------------------------- ---------------- ------------ ---------
Current assets
Cash and cash equivalents 4,512 904 842
Sales for future settlement 832 - -
Income receivable 223 221 228
------------------------------------------------- ---------------- ------------ ---------
5,567 1,125 1,070
------------------------------------------------- ---------------- ------------ ---------
Total assets 365,602 198,832 313,308
------------------------------------------------- ---------------- ------------ ---------
Current liabilities
Bank loans payable 29,720 7,948 12,786
Purchases for future settlement 3,279 - 484
Other payables 547 215 425
Management Shares - 13 -
------------------------------------------------- ---------------- ------------ ---------
Total liabilities 33,546 8,176 13,695
------------------------------------------------- ---------------- ------------ ---------
Net assets 332,056 190,656 299,613
------------------------------------------------- ---------------- ------------ ---------
Equity
Share capital 2,733 1,730 2,609
Share premium account 134,767 24,884 120,934
Special distributable reserve 138,705 146,412 143,355
Capital reserve 55,686 17,305 32,644
Revenue reserve 165 325 71
------------------------------------------------- ---------------- ------------ ---------
Total equity 332,056 190,656 299,613
------------------------------------------------- ---------------- ------------ ---------
Net asset value per Ordinary Share 122.09p 110.21p 115.43p
------------------------------------------------- ---------------- ------------ ---------
^ Audited
CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED
31 MAY 2018
Share Special
Share premium distributable Capital Revenue
Capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance as at 1 December
2017 2,609 120,934 143,355 32,644 71 299,613
Profit for the period - - - 23,042 94 23,136
Issue of Ordinary Shares 124 13,984 - - - 14,108
Share issue costs - (151) - - - (151)
Dividend paid - - (4,650) - - (4,650)
--------------------------------- ---------- ------------ ---------------- --------- ---------- ----------
Closing balance as at 31
May 2018 2,733 134,767 138,705 55,686 165 332,056
--------------------------------- ---------- ------------ ---------------- --------- ---------- ----------
FOR THE PERIOD FROM INCORPORATION ON 7 OCTOBER 2016 TO 31 MAY 2017
Share Special
Share premium distributable Capital Revenue
Capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance as at 7
October
2016 - - - - - -
Profit for the period - - - 17,305 325 17,630
Transfer to special
distributable
reserve - (146,412) 146,412 - - -
Issue of Ordinary Shares 1,730 173,661 - - - 175,391
Share issue costs - (2,365) - - - (2,365)
--------------------------------- ---------- ------------ ---------------- --------- ---------- ----------
Closing balance as at 31
May 2017 1,730 24,884 146,412 17,305 325 190,656
--------------------------------- ---------- ------------ ---------------- --------- ---------- ----------
FOR THE PERIOD FROM INCORPORATION ON 7 OCTOBER 2016 TO 30
NOVEMBER 2017 (Audited)
Share Special
Share premium distributable Capital Revenue
Capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening balance as at 7
October
2016 - - - - - -
Profit for the period - - - 32,644 396 33,040
Transfer to special
distributable
reserve - (146,412) 146,412 - - -
Issue of Ordinary Shares 2,596 271,014 - - - 273,610
Issue of Management Shares 13 - - - - 13
Share issue costs - (3,668) - - - (3,668)
Dividend paid - - (3,057) - (325) (3,382)
--------------------------------- ---------- ------------ ---------------- --------- ---------- ----------
Closing balance as at 30
November 2017 2,609 120,934 143,355 32,644 71 299,613
------
CONDENSED UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 31
MAY 2018
Period
from 7
Six months October Period from
ended 2016 to 7 October
31 May 31 May 2016 to 30
2018 2017 November 2017^
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Income* 969 735 1,690
Management expenses (1,889) (978) (2,520)
Purchase of investments** (114,042) (203,942) (371,220)
Sale of investments** 93,251 24,235 93,426
Foreign exchange (losses)/gains (590) 17 (204)
Taxation (108) (127) (272)
Net cash flow used in operating
activities (22,409) (180,060) (279,100)
-------------------------------- ------ ----------------- ---------------- ----------------
Cash flows from financing
activities
Bank loans drawn 16,934 7,948 13,512
Finance costs paid (162) (10) (130)
Dividend paid (4,650) - (3,382)
Proceeds from issue of shares 14,108 175,391 273,610
Share issue costs (151) (2,365) (3,668)
Net cash flow from financing
activities 26,079 180,964 279,942
-------------------------------- ------ ----------------- ---------------- ----------------
Increase in cash and cash
equivalents 3,670 904 842
-------------------------------- ------ ----------------- ---------------- ----------------
Cash and cash equivalents at
start of period 842 - -
-------------------------------- ------ ----------------- ---------------- ----------------
Cash and cash equivalents at
end of period 4,512 904 842
^ Audited
* Cash inflow from dividends for the financial period was GBP961,000
(30 November 2017: GBP1,688,000).
** Sales proceeds and purchases costs have been classified as
components of cash flows from operating activities as investing
activities form part of the Company's operations.
NOTES TO THE FINANCIAL STATEMENTS
1. Reporting entity
BB Healthcare Trust plc is a closed-ended investment company, registered
in England and Wales on 7 October 2016. The Company's registered office
is Mermaid House, 2 Puddle Dock, London EC4V 3DB. Business operations
commenced on 2 December 2016 when the Company's Ordinary Shares were admitted
to trading on the London Stock Exchange. The condensed interim financial
statements of the Company are presented for the six months to 31 May 2018.
The Company invests in a concentrated portfolio of listed or quoted equities
in the global healthcare industry. The Company may also invest in American
Depositary Receipts (ADRs), or convertible instruments issued by such
companies and may invest in, or underwrite, future equity issues by such
companies. The Company may utilise contracts for differences for investment
purposes in certain jurisdictions where taxation or other issues in those
jurisdictions may render direct investment in listed or quoted equities
less effective.
2. Basis of preparation and accounting policies
Statement of compliance
The condensed interim financial statements have been prepared in accordance
with IAS 34 Interim Financial Reporting and the Disclosure Guidance and
Transparency Rules ('DTRs') of the UK's Financial Conduct Authority. They
do not include all of the information required for full annual financial
statements and should be read in conjunction with the financial statements
of the Company as at and for the period ended 30 November 2017. The financial
statements of the Company as at and for the period ended 30 November 2017
were prepared in accordance with International Financial Reporting Standards
('IFRS') as issued by the International Accounting Standards Board ('IASB').
The accounting policies used by the Company are the same as those applied
by the Company in its financial statements as at and for the period ended
30 November 2017. The financial information for the period from incorporation
on 7 October 2016 to 30 November 2017 in the condensed interim financial
statements has been extracted from the audited Annual Report and Accounts
for that period.
When presentational guidance set out in the Statement of Recommended Practice
('SORP') for Investment Companies issued by the Association of Investment
Companies ('the AIC') in November 2014 and updated in February 2018 is
consistent with the requirements of 'IFRS', the Directors have sought
to prepare the financial statements on a basis compliant with the recommendations
of the SORP.
Going concern
The Directors have adopted the going concern basis in preparing the financial
statements.
The Directors have a reasonable expectation that the Company has adequate
operational resources to continue in operational existence for at least
twelve months from the date of approval of these financial statements.
Use of estimates and judgements
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. There have
been no estimates, judgements or assumptions, which have had a significant
impact on the financial statements for the period.
Functional and presentation currency
The financial statements are presented in sterling, which is the Company's
functional currency. The Company's investments are denominated in multiple
currencies. However, the Company's shares are issued in sterling and the
majority of its investors are UK based. In addition all expenses are paid
in GBP as are dividends. All financial information presented in sterling
have been rounded to the nearest thousand pounds.
Investments
Upon initial recognition investments are held by the Company "at fair
value through profit or loss". They are accounted for on the date they
are traded and are included initially at fair value which is taken to
be their cost. Subsequently quoted investments are valued at fair value
which is the bid market price, or if bid price is unavailable, last traded
price on the relevant exchange. Unquoted investments are valued at fair
value by the Board which is established with regard to the International
Private Equity and Venture Capital Valuation Guidelines by using, where
appropriate, latest dealing prices, valuations from reliable sources and
other relevant factors. The Company currently holds no unquoted investments.
Changes in the fair value of investments held at fair value through profit
or loss and gains or losses on disposal are included in the capital column
of the Statement of Comprehensive Income within "gains on investments".
Investments are derecognised on the trade date of their disposal, which
is the point where the Company transfers substantially all the risks and
rewards of the ownership of the financial asset. Gains or losses are recognised
in the capital column of the Statement of Comprehensive Income.
New standards and interpretations effective in the current financial period
In the opinion of the Directors, there are no new standards that became
effective during the period that had a material impact on the financial
statements. At the date of approval of these condensed interim financial
statements, the following standard, which has not been applied in these
financial statements, was in issue:
IFRS 9, 'Financial instruments', effective for annual periods beginning
on or after 1 January 2018, specifies how an entity should classify and
measure financial assets and liabilities, including some hybrid contracts.
The standard improves and simplifies the approach for classification and
measurement of financial assets compared with the requirements of IAS
39. Most of the requirements in IAS 39 for classification and measurement
of financial liabilities were carried forward unchanged. The standard
applies a consistent approach to classifying financial assets and replaces
the numerous categories of financial assets in IAS 39, each of which had
its own classification criteria.
The Board is currently considering the impact of the above standard. Based
on its assessment, the standard is not expected to have a material impact
on the Company's financial statements. The Company's portfolio of investments
are held at fair value through profit or loss and, in accordance with
IFRS 9, will continue to be classified as such based on the assessment
so far.
3. Investment held at fair value through profit or loss
Financial instruments
Under IFRS 13 'Fair Value Measurement', an entity is required to classify
investments using a fair value hierarchy that reflects the significance
of the inputs used in making the measurement decision.
The following shows the analysis of financial assets recognised at fair
value based on:
Level 1
The unadjusted quoted price in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Inputs other than quoted prices included within Level 1 that are observable
(i.e. developed using market data) for the asset or liability, either directly
or indirectly.
Level 3
Inputs are unobservable (i.e. for which market data is unavailable) for
the asset or liability.
The classification of the Company's investments held at fair value is detailed
in the table below:
As at 31 May 2018 As at 31 May 2017
Level Level Level Level Level Level
1 2 3 Total 1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Investments at fair value
through profit and loss
- Quoted in UK 17,901 - - 17,901 12,271 - - 12,271
- Quoted overseas 342,134 - - 342,134 185,436 - - 185,436
--------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Closing valuation 360,035 - - 360,035 197,707 - - 197,707
--------------------------- -------- -------- -------- -------- -------- -------- -------- --------
As at 30 November 2017
Level Level Level
1 2 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Investments at fair value
through profit and loss
- Quoted in UK 15,984 - - 15,984
- Quoted overseas 296,254 - - 296,254
--------------------------- -------- -------- -------- --------
Closing valuation 312,238 - - 312,238
--------------------------- -------- -------- -------- --------
There were no transfers between levels during the six months ended 31 May
2018 (31 May 2017 and 30 November 2017: nil).
Financial instruments - risk profile
The principal risks relating to financial instruments held by the Company remain the same as at the Company's last financial period ended 30 November 2017.
4. Income
Period Period Period to
to 31 to 31 30 November
May 2018 May 2017 2017
GBP'000 GBP'000 GBP'000
Income from investments
Overseas dividends 848 826 1,778
UK dividends 108 130 139
Other income 7 - 2
Total income 963 956 1,919
------------------------- ---------- ---------- -------------
5. Bank loans and finance costs
The Company agreed a multi-currency revolving credit facility with
Scotiabank (Ireland) Designated Activity Company on 23 February 2017.
During the period, under the terms of the facility, the Company could
draw down up to an aggregate of GBP30 million. The facility has a commitment
increase option and this was exercised in June, raising the maximum
facility amount to GBP40 million. The facility expires on 22 February
2019.
As at 31 May 2018, the Company's aggregate loans outstanding was GBP29,720,000
(comprising GBP6,700,000 and $30,600,000 - equivalent of GBP23,020,000).
Period to 31 May 2018 Period to 31 May 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loan interest 64 258 322 9 36 45
Other finance costs 3 12 15 2 9 11
--------------------------------------------- -------- ----------- -------------- --------- ---------- ---------
Total finance costs 67 270 337 11 45 56
--------------------------------------------- -------- ----------- -------------- --------- ---------- ---------
Period to 30 November
2017
Revenue Capital Total
GBP'000 GBP'000 GBP'000
Loan interest 37 150 187
Other finance costs 6 20 26
--------------------------------------------- -------- ----------- --------------
Total finance costs 43 170 213
--------------------------------------------- -------- ----------- --------------
6. Taxation
Period to 31 May Period to 31 May
2018 2017
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Withholding tax expense 108 - 108 127 - 127
Total tax charge for
the period 108 - 108 127 - 127
------------------------- -------- -------- --------------- ---------- -------- ---------------
Period to 30 November 2017
Revenue Capital Total
GBP'000 GBP'000 GBP'000
------------------------- -------- -------- --------
Withholding tax expense 272 - 272
------------------------- -------- -------- --------
Total tax charge for
the period 272 - 272
------------------------- -------- -------- --------
7. Return per
share
Return per share is based on the weighted average number of Ordinary Shares
in issue during the six months ended 31 May 2018 of 265,481,854 (31 May
2017: 161,030,037 and 30 November 2017: 187,377,682).
Period to 31 May Period to 31 May Period to 30 November
2018 2017 2017
Revenue Capital Total Revenue Capital Total Revenue Capital Total
------------------ --------- --------- ------- --------- --------- ------- ------------ ----------- -------
Profit for the
period
(GBP'000) 94 23,042 23,136 325 17,305 17,630 396 32,644 33,040
------------------ --------- --------- ------- --------- --------- ------- ------------ ----------- -------
Return per
Ordinary
Share 0.04p 8.68p 8.72p 0.20p 10.75p 10.95p 0.21p 17.42p 17.63p
------------------ --------- --------- ------- --------- --------- ------- ------------ ----------- -------
8. Share capital
As at 31 May 2018 As at 31 May 2017
Number Number
of shares GBP'000 of shares GBP'000
Allotted, issued and fully paid:
Redeemable Ordinary Shares of 1p each
('Ordinary Shares') 271,979,768 2,720 172,991,767 1,730
Management Shares of GBP1 each 50,001 13 50,001 13
---------------------------------------- ------------------- -------- ---------------- ----------
Total 272,029,769 2,733 173,041,768 1,743
---------------------------------------- ------------------- -------- ---------------- ----------
As at 30 November
2017
Number of
shares GBP'000
Allotted, issued and fully paid:
Redeemable Ordinary Shares of 1p each
('Ordinary Shares') 259,569,268 2,596
Management Shares of GBP1 each 50,001 13
---------------------------------------- ------------------- --------
Total 259,619,269 2,609
---------------------------------------- ------------------- --------
The Company has 50,001 Management Shares of GBP1 each in issue of
which GBP12,501 is fully paid up.
Share Movement
During the period to 31 May 2018, 12,410,500 Ordinary Shares (31 May 2017:
172,991,767 and 30 November 2017: 259,569,268) were issued raising aggregate
proceeds of GBP14,108,666 (31 May 2017: GBP175,391,000 and 30 November
2017: GBP273,610,000).
Since 31 May 2018, a further 2,147,794 Ordinary Shares have been issued
raising aggregate proceeds of GBP2,719,000.
9. Net assets per Ordinary Share
Net assets per Ordinary Share as at 31 May 2018 is based on GBP332,056,000
of net assets of the Company attributable to the 271,979,768 Ordinary
Shares in issue (excluding treasury shares) as at 31 May 2018. GBP12,500
of net assets as at 31 May 2018 was attributable to the Management Shares.
10. Dividend
During the six months ended 31 May 2018, the Company paid a dividend of
1.75p per Ordinary Share in respect of the year ended 30 November 2017.
The Directors have declared an interim dividend for the six month period
ended 31 May 2018 of 2.0p per Ordinary Share. The dividend will have an
ex-dividend date of 26 July 2018 and will be paid on 24 August 2018 to
Shareholders on the register at 27 July 2018. The dividend will be funded
from the Company's distributable reserves as per note 11.
11. Distributable reserves
The Company's distributable reserves consist of the special distributable
reserve, capital reserve and revenue reserve.
The Company can use its distributable reserves to fund dividends, redemptions
of Ordinary Shares and share buy backs.
12. Related party transactions
Fees payable to the Portfolio Manager are shown in the Statement of Comprehensive
Income. As at 31 May 2018, the fee outstanding to the Portfolio Manager
was GBP251,000.
Since commencement of operations on 2 December 2016 fees have been payable
at an annual rate of GBP27,500, with an additional fee of GBP12,500 to
the Chairman, GBP5,000 to the Chair of the Audit Committee and GBP2,500
to the Chair of the Management Engagement Committee. Net fees payable
to the Directors, other than the US resident Director, Siddhartha Mukherjee,
are settled in Ordinary Shares quarterly, using the prevailing market
price per share at the relevant quarter end.
The Directors had the following shareholdings in the Company, all of
which are beneficially owned.
As at 30 November
As at 31 May 2018 2017
------------------------------------ ------------------------ -----------------------
Professor Justin Stebbing 23,399 14,833
Josephine Dixon 44,057 37,318
Randeep Grewal 43,062 36,418
Paul Southgate 41,455 35,567
Siddhartha Mukherjee 25,000 25,000
------------------------------------ ------------------------ -----------------------
13. Subsequent events
There are no subsequent events after the period end other than those
disclosed in this report.
14. Status of this report
These interim financial statements are not the Company's statutory accounts
for the purposes of section 434 of the Companies Act 2006. They are unaudited.
The unaudited Half-yearly financial report will be made available to
the public at the registered office of the Company. The report will also
be available in electronic format on the Company's website, http://www.bbhealthcaretrust.com.
These interim financial statements have been prepared in accordance with
the requirements of section 838 of the Companies Act 2006 and constitute
interim accounts for the purpose of justifying the payment of an interim
dividend for the year ending 30 November 2018.
The Half-yearly financial report was approved by the Board of Directors
on 11 July 2018.
ALTERNATIVE PERFORMANCE MEASURES ('APMs')
Discount The amount, expressed as a percentage, by which the
share price is less that the Net Asset Value per Ordinary
Share.
As at 31 May 2018
(Unaudited)
------------------------ -------------- -------
NAV per Ordinary Share
(pence) a 122.09
Share price (pence) b 121.5
------------------------ -------------- -------
Discount (b÷a)-1 0.5%
------------------------ -------------- -------
Gearing A way to magnify income and capital returns, but which
can also magnify losses. A bank loan is a common method
of gearing.
As at 31 May 2018 (Unaudited)
------------------------------- ------------ ---------
Total assets less cash / cash
equivalents (GBP'000) a 361,776
Loan (GBP'000) b (29,720)
------------------------------- ------------ ---------
Net assets (GBP'000) c=a-b 332,056
------------------------------- ------------ ---------
Gearing a÷c-1 9.0%
------------------------------- ------------ ---------
--------------------------------------------------------------------------
Leverage An alternative word for "Gearing" (see gearing for
calculations).
Under AIFMD, leverage is any method by which the exposure
of an AIF is increased through borrowing of cash or
securities or leverage embedded in derivative positions.
Under AIFMD, leverage is broadly similar to gearing,
but is expressed as a ratio between the assets (excluding
borrowings) and the net assets (after taking account
of borrowing). Under the gross method, exposure represents
the sum of the Company's positions after deduction
of cash balances, without taking account of any hedging
or netting arrangements. Under the commitment method,
exposure is calculated without the deduction of cash
balances and after certain hedging and netting positions
are offset against each other.
--------------------------------------------------------------------------
Ongoing charges A measure, expressed as a percentage of average net
assets, of the regular, recurring annual costs of running
an investment company.
Six months ended 31 May 2018
(Unaudited)
------------------------------- ---------- --------
Average NAV (GBP'000) a 297,453
Annualised expenses (GBP'000) b 3,706
------------------------------- ---------- --------
Ongoing charges b÷a 1.25%
------------------------------- ---------- --------
Note: The ongoing charges as per the latest audited
annual report for the period ended 30 November 2017
was 1.37%
--------------------------------------------------------------------------
Premium The amount, expressed as a percentage, by which the
share price is more than the Net Asset Value per share.
There is no calculation of premium shown as the shares
were trading at a discount of 0.5% at the period end.
--------------------------------------------------------------------------
Total return A measure of performance that includes both income
and capital returns. This takes into account capital
gains and reinvestment of dividends paid out by the
Company into the Ordinary Shares of the Company on
the ex-dividend date.
Six months ended 31 May 2018 Share price NAV
(Unaudited)
-------------------------------- -------------- ------------ --------
Opening at 1 December 2017
(pence) a 118.75 115.43
Closing at 31 May 2018 (pence) b 121.50 122.09
Dividend adjustment factor c 1.01646 1.01636
Adjusted closing (d = b x c) d 123.50 124.09
-------------------------------- -------------- ------------ --------
Total return (d÷a)-1 4.0% 7.5%
-------------------------------- -------------- ------------ --------
--------------------------------------------------------------------------
GLOSSARY
American Depositary A negotiable certificate issued by a U.S. bank representing
Receipt or "ADR" a specified number of shares in a foreign stock traded
on a U.S. exchange.
AIC Association of Investment Companies
--------------------------------------------------------------
Alternative Investment An investment vehicle under AIFMD. Under AIFMD (see
Fund or "AIF" below) the Company is classified as an AIF.
--------------------------------------------------------------
Alternative Investment A European Union directive which came into force on
Fund Managers Directive 22 July 2013 and has been implemented in the UK.
or "AIFMD"
--------------------------------------------------------------
Annual General Meeting A meeting held once a year which shareholders can attend
or "AGM" and where they can vote on resolutions to be put forward
at the meeting and ask directors questions about the
company in which they are invested.
--------------------------------------------------------------
Custodian An entity that is appointed to safeguard a company's
assets.
--------------------------------------------------------------
Depositary Certain AIFs must appoint depositaries under the requirements
of AIFMD. A depositary's duties include, inter alia,
safekeeping of the Company's assets and cash monitoring.
Under AIFMD the depositary is appointed under a strict
liability regime.
--------------------------------------------------------------
Dividend Income receivable from an investment in shares.
--------------------------------------------------------------
Ex-dividend date The date from which you are not entitled to receive
a dividend which has been declared and is due to be
paid to shareholders.
--------------------------------------------------------------
Financial Conduct The independent body that regulates the financial services
Authority or "FCA" industry in the UK.
--------------------------------------------------------------
Gross assets The Company's total assets adjusted for any leverage
amount (outstanding bank loan).
--------------------------------------------------------------
Index A basket of stocks which is considered to replicate
a particular stock market or sector.
--------------------------------------------------------------
Investment company A company formed to invest in a diversified portfolio
of assets.
--------------------------------------------------------------
Investment Trust An investment company which is based in the UK and which
meets certain tax conditions which enables it to be
exempt from UK corporation tax on its capital gains.
The Company is an investment trust.
--------------------------------------------------------------
Large Cap A company with a market capitalisation above $10 billion.
--------------------------------------------------------------
Liquidity The extent to which investments can be traded at short
notice
--------------------------------------------------------------
Management Shares Non-redeemable preference shares of GBP1.00 each in
the capital of the Company.
--------------------------------------------------------------
Mega Cap A company with a market capitalisation above $50 billion.
--------------------------------------------------------------
Net assets An investment company's assets less its liabilities.
--------------------------------------------------------------
Net asset value (NAV) Net assets divided by the number of Ordinary Shares
per Ordinary Share in issue (excluding any Shares held in treasury).
--------------------------------------------------------------
Net fees The fees after estimated tax and other relevant charges
have been deducted.
--------------------------------------------------------------
Ordinary Shares The Company's redeemable Ordinary Shares of 1p each.
--------------------------------------------------------------
Portfolio A collection of different investments held in order
to deliver returns to shareholders and to spread risk.
--------------------------------------------------------------
Share buyback A purchase of a company's own shares. Shares can either
be bought back for cancellation or held in treasury.
--------------------------------------------------------------
Share price The price of a share as determined by a relevant stock
market.
--------------------------------------------------------------
Small Cap A company with a market capitalisation less than $2
billion.
--------------------------------------------------------------
Treasury Shares A company's own shares which are available to be sold
by a company to raise funds.
--------------------------------------------------------------
Volatility A measure of how much a share moves up and down in price
over a period of time.
--------------------------------------------------------------
DIRECTORS, MANAGER AND ADVISERS
Directors Portfolio Manager
Professor Justin Stebbing
(Chairman) Bellevue Asset Management AG
Josephine Dixon Seestrasse 16
Randeep Grewal CH-8700 Kusnacht / Zurich
Siddhartha Mukherjee Switzerland
Paul Southgate
Broker Investment Adviser
Peel Hunt LLP Bellevue Advisors Limited
Moor House 32 London Bridge Street
120 London Wall London SE1 9SG
London EC2Y 5ET
Depositary Secretary & Administrator
PraxisIFM Fund Services (UK)
CACEIS Bank, UK Branch Limited
Broadwalk House Mermaid House
5 Appold Street 2 Puddle Dock
London EC2A 2DA London EC4V 3DB
Registrar Auditor
Link Asset Services Ernst & Young LLP
The Registry 25 Churchill Place
34 Beckenham Road Canary Wharf
Beckenham London E14 5EY
Kent BR3 4TU
AIFM
Mirabella Financial Services
Legal Adviser LLP
Stephenson Harwood LLP 130 Jermyn Street
1 Finsbury Circus London
London EC2M 7SH SW1Y 4UR
Registered Office*
Mermaid House
2 Puddle Dock
London EC4V 3DB
*Registered in England and Wales No. 10415235
Enquiries:
Anthony Lee/Ciara McKillop 020 7653 9690
PraxisIFM Fund Services (UK) Limited
The Half-yearly financial report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM
END
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END
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