Share Name Share Symbol Market Type Share ISIN Share Description
Worldwide Healthcare Trust Plc LSE:WWH London Ordinary Share GB0003385308 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  15.00 0.42% 3,545.00 3,545.00 3,555.00 3,565.00 3,530.00 3,560.00 92,437 16:35:21
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 16.5 26.9 131.8 2,135

Worldwide Healthcare Half-year Report

20/11/2020 9:55am

UK Regulatory (RNS & others)

20 November 2020 
                        Worldwide Healthcare Trust PLC 
             Unaudited Half Year Results for the six months ended 
                               30 September 2020 
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 2020. The full Half Year Report & Accounts, together 
with a copy of this announcement, will also shortly be available on the 
Company's website: 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 
2020 has been submitted to the UK Listing Authority, and will shortly be 
available for inspection on the National Storage Mechanism (NSM): https:// 
For further information please contact: Mark Pope, Frostrow Capital LLP 020 
3008 4913. 
Company Summary / Performance 
                                                               Six months to   One year to 
                                                                30 September      31 March 
                                                                        2020          2020 
Net asset value per share (total return)* #                            23.1%          6.5% 
Share price (total return)* #                                          22.1%          8.0% 
Benchmark (total return)^ #                                            15.3%          5.7% 
                                                  30 September      31 March    Six months 
                                                          2020          2020        change 
Net asset value per share                             3,514.6p      2,868.9p         22.5% 
Share price                                           3,545.0p      2,920.0p         21.4% 
Premium of share price to the net asset value             0.9%          1.8% 
per share* 
Leverage*                                                 3.5%         12.0% 
Ongoing charges*                                          0.9%          0.9% 
Ongoing charges (including performance fees               0.9%          0.9% 
crystallised during the period)* 
#      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 
The COVID-19 pandemic has had a significant impact on the world in health, 
economic and political terms and we are still far from clear on either the 
short or long-term economic and commercial effects of the crisis. The strength 
and resilience of healthcare stocks that first became evident in mid-March has 
continued during the first half of the Company's current financial year. The 
sector has also continued to benefit from improved sentiment as a number of 
biopharmaceutical companies have continued their development of treatments and 
vaccines for COVID-19. 
I am pleased to report both a very strong absolute return and a significant 
relative outperformance against the Benchmark in the first six months of the 
Company's financial year. The Company's net asset value total return was +23.1% 
and the share price total return was +22.1% over the period. This compares to a 
total return of +15.3% from the Company's Benchmark, the MSCI World Healthcare 
Index, measured on a net total return, sterling adjusted basis. 
This strong absolute performance was achieved despite sterling appreciating by 
4.1% 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 had, on average, leverage of 4.1% during the period which 
contributed 0.8% to performance. As at the half year-end leverage stood at 3.5% 
compared to 12.0% at the beginning of the period. Our Portfolio Manager 
continues to adopt both a pragmatic and a tactical approach to the use of 
It should also be noted that while all healthcare sub-sectors contributed 
positively to performance during the period, the main degree of outperformance 
relative to the Benchmark over the six months under review was primarily as a 
result of stock selection by our Portfolio Manager. Our overweight positions in 
both emerging biotechnology stocks and emerging markets have also served the 
portfolio well. It should be further noted that the portfolio provided positive 
returns both absolutely and relatively in five of the six months during the 
period under review. 
The strong outperformance generated over the last twelve months has resulted in 
a performance fee provision of GBP14.4m. In accordance with the terms of the 
performance fee arrangements, this provision will only be paid out at future 
quarter end dates if the outperformance is maintained for a 12-month period. 
Further details are provided in note 3 to the accounts. 
Looking at specific names in the portfolio, the largest contributions during 
the reporting period came from biopharmaceutical company Horizon Therapeutics, 
biotechnology company Mirati Therapeutics and diagnostic company Natera. The 
largest detractors from performance were medical insurance broker eHealth, 
biopharmaceutical company Theravance Biopharma and biotechnology company 
Biogen. Further information regarding the Company's investments and also the 
Company's performance can be found in the Review of Investments. 
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 a number of opportunities which have been added to the 
portfolio. Exposure to unquoted securities accounted for 2.8% of the total 
portfolio at the half year-end. 
Due to the situation created by the pandemic, I am also pleased to report that 
operationally, the Company has also continued to perform effectively, with the 
Company's service providers reporting positively in relation to the home 
working environment to which all have had to adapt. 
The Board continues to monitor closely the relationship between the Company's 
share price and the net asset value per share. I am pleased to report that the 
Company's share price has continued to trade at a premium to the net asset 
value per share. As a result, and also as a consequence of strong investor 
demand, a total of 5,585,500 new shares were issued at a premium to the cum 
income net asset value per share during the half year, raising GBP192.8 million 
of new funds. Following the half year end, to 19 November 2020, a further 
1,957,500 shares have been issued at a premium to the cum income net asset 
value per share raising GBP70.1 million of new funds. 
Revenue and Dividends 
The revenue return for the period was GBP5.6 million, compared to GBP6.5 million in 
the same period last year. The reduction in this figure is due primarily to a 
fall in the yield on the portfolio. The Board has declared an unchanged interim 
dividend of 6.5p per share, for the year to 31 March 2021, which will be 
payable on 11 January 2021 to shareholders on the register of members on 20 
November 2020. The associated ex-dividend date is 19 November 2020. 
Shareholders will be aware that the Board had intended last year to recommend a 
second dividend payment for the year as a final dividend to shareholders. 
However, in light of the ongoing response to the coronavirus pandemic, and in 
line with many other companies, the decision was taken to declare a second 
interim dividend, which enabled the dividend to be paid without the prior 
approval of shareholders at the Annual General Meeting. It is the Board's 
current intention that a final dividend for the year to 31 March 2021 will be 
proposed to shareholders at the Company's Annual General Meeting to be held in 
July 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 
The ongoing incidence of the COVID -19 pandemic will undoubtedly have both 
economic and political consequences that will be difficult to evaluate in the 
short term. The loosening of monetary policy around the world may also 
eventually have consequences for both inflation and interest rates in the 
Until recently, one of the principal investor concerns regarding the healthcare 
sector has been the outcome of the U.S. presidential election. In particular, 
investors were concerned that a Democratic sweep with former Vice President Joe 
Biden winning the presidency and the Democrats taking control of both houses of 
Congress could lead to aggressive drug pricing legislation that might affect 
future profitability. With the U.S. Senate expected to remain under Republican 
control this is considered to be the best outcome for healthcare and should 
allow investors to once again focus on the positive fundamentals of the sector. 
Our Portfolio Manager continues to believe that 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. 
Your Board firmly believes that long-term investors will be well rewarded. 
Finally, on a personal note may I offer my and my colleagues' best wishes to 
all of our shareholders as you navigate the current testing times, and in 
particular extend our sympathies to those of you who may have suffered from the 
impact of Covid-19. 
Sir Martin Smith 
20 November 2020 
Review of Investments 
The six-month period to September 30, 2020 was one of the most gripping times 
in modern history. The hallmark of the period was the global pandemic wrought 
by the SARS-Cov-2 virus. The highly infectious and lethal virus had infected 
approximately 35 million people worldwide by the end of September, with over a 
million people succumbing to COVID-19. The reaction by the global equity 
markets was stunning. With numerous geographies around the globe locking down 
their citizens to curtail the spread of the virus, fears of a global economic 
collapse sent equity markets tumbling in March, falling with a velocity never 
seen before. Whilst the shape of an overall economic recovery can be debated, 
the "V"-shape recovery of the equity markets cannot. 
From its zenith in February 2020, the MSCI World Index plummeted nearly 40% (in 
sterling terms) in less than 25 trading days as investor concerns reached panic 
levels. At the same time, market volatility spiked over 500%, to levels seen 
only during the economic crisis of 2008. However, the equity market rebound was 
as nearly as remarkable as the drop, with the MSCI World Index roaring back by 
almost 60% (in sterling terms) to almost fully recover in the six-month period. 
Meanwhile, the S&P 500 Index followed a similar path and recorded a new all- 
time high before the end of September. 
Several factors fuelled this recovery, including aggressive stimulus and policy 
efforts, vaccine and therapeutics optimism, and a faster than-expected 
bottoming and rebound in some economic data points. Overall, the MSCI World 
Index total return in the six-month period to 30 September 2020 was a robust 
+24.1% whilst the S&P 500 Index total return was +26.1% (both in sterling 
During the early days of this egregious global health crisis, healthcare stocks 
moved to the front and centre of public and investor attention, alike. As such, 
the MSCI World Healthcare Index fell less than 20% (in sterling terms) from its 
February 2020 high to its March 2020 low. 
The rebound in the following six-month period was a more sedate 15.3% (in 
sterling terms) when compared to the broader equity markets. Nevertheless, the 
Benchmark reached record highs in July 2020 before a modest selloff before the 
period end. 
For the six-month period, the Company posted a share price total return of 
+22.1% and a net asset value total return of +23.1%. This performance 
significantly outperformed the Benchmark total return of +15.3%. The Company's 
performance during the period was a culmination of many strategies - near-term 
focus during the early days of the pandemic and recognition of potential 
industry impacts from COVID-19 (both negative and positive), but mostly by 
staying the course to our long held strategy of focusing on the long-term, core 
fundamentals of the healthcare industry. 
Six Month Performance Comparison 
The Company maintains a pan-healthcare investment approach, with a deep analyst 
team that covers all key sub-sectors of the industry. For the reported period, 
that strategy reaped many rewards as all sub-sectors contributed to positive 
returns, including biotechnology (including both large capitalisation and 
emerging companies), pharmaceuticals, (including large capitalisation, 
specialty companies, and Japan-based companies), life science tools, health 
care services, medical devices, and emerging markets. For the six months ended 
30 September 2020, the largest sub-sector contribution came from emerging 
market and emerging biotechnology stocks, contributing over 6.0% and 5.0% of 
absolute and relative performance, respectively. Of note, the Company was also 
able to post positive absolute and relative returns in five out of the six 
months during this interim period. 
Our investment approach was tested during the start of the COVID-19 pandemic. 
We resisted the urge to join the panic selling that was understandably the 
hallmark of the equity markets in March 2020. Rather, we installed a "pandemic 
playbook" that included: 
 a. looking for the extreme share price dislocations, 
 b. re-focusing on our best ideas, 
 c. reducing name count when possible, 
 d. increasing the quality of the portfolio, and 
 e. selling some names that we expected to be more materially disrupted. 
    Finally, whilst healthcare was the obvious focus during the pandemic, our 
    focus was not to chase down all of the next cures, treatments, and vaccine 
This positioning was critical for the first leg of performance during the 
six-month period as the Company was able to record double-digit returns in each 
of April and May 2020, with material outperformance of the Benchmark at the 
same time. Eventually, we were able to pivot, and return to a "back to the 
basics" investment strategy, re-focusing on key healthcare drivers such as 
global demographics, secular demand, and booming innovation. This enabled the 
Company to add to returns, both in absolute and relative terms, to the end of 
Whilst many industry sectors were severely and adversely impacted by the 
burgeoning pandemic and subsequent lockdowns and quarantines, much of the 
healthcare industry was not operationally impaired, in particular, the large 
capitalisation stocks in the biopharmaceutical space: little to no supply chain 
issues, no manufacturing issues, and no demand issues. 
In fact, demand for prescription medicines significantly increased early in the 
pandemic, bolstering many companies' financials in the calendar year first 
quarter, boosting investor confidence for stable earnings, cash flows, and 
dividends for the year. 
Other sectors of healthcare and/or individual companies within the portfolio 
may have also benefitted from the pandemic. Intense media and investor focus on 
COVID-19 vaccines and clinical development of therapeutics created a tailwind 
and demand for biotechnology stocks. This was enhanced by investor demand for 
growth over value during the period. We also note that there was meaningful 
mergers and acquisitions (M&A) activity during the period as well, buoying the 
positive sentiment in biotechnology. 
A similar phenomenon occurred with our emerging market investments. Many of our 
portfolio companies had pipeline candidates or products related to COVID-19 
diagnosis or treatment, and their share prices reacted positively to the 
pandemic development during the reporting period. Our participation in multiple 
healthcare initial public offerings (IPO's) in Hong Kong also made significant 
contributions to performance, again both absolute and relative. 
In terms of gearing in the reported six-month period, we utilised multiple 
tactical approaches. First, after recording very strong performance in both 
absolute and relative terms through both April and May, we intentionally 
reduced exposure ahead of the summer months. In fact, gearing reached a 
multi-year low in June 2020 with a positive cash balance over 5.0% of net 
assets. The Company took some profits but also reduced risk through some 
uncertainty from both the pandemic and the looming U.S. Presidential election. 
As we moved past the summer and into the autumn season, global markets became 
more volatile and we tactically began to increase exposure through gearing, 
both into and out of the U.S. elections, rising to over 12% in early November. 
Major Contributors to Performance 
Despite the prominence of the coronavirus pandemic, and the extreme share price 
volatility of many healthcare stocks during the six-month period, the hallmark 
of the Company's outperformance was stock selection in companies with 
operational and/or executional excellence. We continued to focus on industry 
fundamentals, clinical catalysts, and growth as key share price drivers. 
Horizon Therapeutics, a biopharmaceutical company focused on rare diseases, is 
the prototypical example of our continued focus on fundamentals during the "fog 
of war". This stock was the top contributor in the six-month period as shares 
appreciated over 150%. This was driven by the phenomenal uptake of 
recently-launched Tepezza (teprotumumab), the first and only U.S. Food and Drug 
Administration (FDA) approved medicine for the treatment of thyroid eye disease 
(TED), a rare, debilitating, vision-threatening condition characterised by 
inflammation and tissue expansion behind the eye. Tepezza, which was launched 
in January 2020, has quickly become the treatment of choice for active, 
moderate-to-severe TED for a growing number of ophthalmology specialists. As a 
result, in August 2020, management significantly raised its 2020 full-year 
sales guidance for Tepezza to >U.S.$650 million, from initial expectations of 
just U.S.$30-40 million. This represents one of the best first year drug 
launches in pharmaceutical history. We expect Tepezza to become a 
mega-blockbuster product. 
Another key example of a company's execution driving share price performance is 
Mirati Therapeutics, a San Diego based biotechnology company developing 
targeted therapies for cancers. Mirati has become one the leaders in targeting 
genetic and immunological drivers of cancer. More specifically, their lead 
asset targets the "RAS" family of oncogenes, including the mutated form of 
"KRAS" which has been implicated in a number of solid tumours, including lung 
cancer. Clinical development has rapidly progressed and data disclosures have 
been prominent in 2020. Investors have taken notice of this innovation and the 
share price has more than doubled in the reported period. We believe Mirati 
will be one of the first companies to tap into this significant market of high 
unmet medical need. 
The clinical diagnostics space has been an obvious focus during the coronavirus 
pandemic. However, the focus on COVID-19 testing has perhaps obscured some 
novel innovation for traditional disease diagnostics. Natera, is a diagnostics 
company that is an industry leader in non-invasive prenatal testing (NIPT) and 
other genetic testing. The share price has more than doubled over the past six 
months as the company's core NIPT business demonstrated continued strong volume 
growth and received expanded clinical guidance. In August 2020, The American 
College of Obstetricians and Gynecologists (ACOG) issued a new set of 
guidelines, recommending that prenatal screenings be offered to all pregnant 
people regardless of age or risk factors. This guidance expands upon ACOG's 
prior guidance recommending NIPT screening to pregnant people aged 35 and older 
or those with known risk factors. Additionally, the company received final 
Local Coverage Determination (LCD) for use of the company's test to detect 
minimal residual disease (MRD) in colorectal cancer patients, and draft LCD for 
use of the test to detect MRD during immunotherapy response monitoring. 
However, perhaps most important, this draft LCD creates a unified pathway for 
coverage of its test Signatera across multiple solid tumour cancer types and 
indications where it is clinically validated with peer-reviewed evidence. 
China-based Burning Rock Biotech is the industry leader in providing 
individualised cancer treatment guidance through genomics based molecular 
diagnostics. The company provides testing services both at its central lab and 
through collaborations with hospitals. The company has been operating its 
central lab business since 2014. They are the market leader in China's 
next-generation sequencing (NGS) based cancer therapy. In 2016, the company 
became the first to offer NGS-based cancer genotyping services to hospitals. It 
has become the dominant market leader with c.80% market share in China. Given 
our bullish view, we participated in the company's U.S. initial-public-offering 
in June 2020. The share price surged on the first trading day given strong 
investor confidence in the company's leadership. Despite some subsequent share 
price volatility, the stock rebounded in September as the pandemic impact on 
routine testing subsided in China. 
Massachusetts- based, Alexion Pharmaceuticals, is a biopharmaceutical company 
specialising in the discovery and development of drugs used to treat rare 
haematology, nephrology, neurology and metabolic disorders. The company's lead 
product, Soliris (eculizumab), is a monoclonal antibody approved to treat 
paroxysmal nocturnal haemoglobinuria (PNH), atypical hemolytic uremic syndrome 
(aHUS), neuromyelitis optica (NMO), and myasthenia gravis (MG). The stock moved 
higher in August and September after underwhelming data from a competitor. 
Additionally during the period, Alexion announced plans for an investor day for 
later in 2020, which excited investors about the possibility of issuing 
long-term guidance. 
Trading in Takeda Pharmaeutical has been very dynamic in the calendar year 
2020. After exceptional execution and a series of "beat and raises" on 
quarterly earnings reports for the company in 2019, the stock was rewarded late 
in 2019 and early 2020, rising nearly 30% from the August low. We began 
trimming the position in both January 2020 and February 2020, to book some 
profits, manage the position size, and reduce risk into 2020 guidance. We 
bought back some stock during the March lows brought on by the pandemic, as the 
stock underperformed during that historic drawdown given the highly levered 
balance sheet and erratic investor fears over pending cash flows. The stock 
rebounded significantly in April and May and was the sixth best absolute and 
relative contributor in the first half of the Company's financial year. We 
trimmed the position in May 2020, again to book some profits, manage the 
position size, and reduce risk into 2021 guidance. 
Major Detractors from Performance 
Whilst any investment approach is to eschew investments with adverse share 
price performance, it is impossible to completely avoid such occurrences. With 
that said,we are pleased to report that the number of notable detractors in the 
period were materially less than contributors, both in number and magnitude. 
Specifically, six separate investments returned over 1.0% of positive 
contribution, including three that returned over 2.0%. This compares to only 
one investment that detracted over 1.0% and zero with greater than 2.0%. 
Additionally, 18 separate investments returned over 0.5% compared to only three 
stocks that detracted 0.5% or more from performance. All of the above being in 
absolute terms. 
The largest detractor in the reported period was eHealth, an insurance broker 
that specialises in enrolling individuals in Medicare Advantage insurance 
plans. The company is a market leader in the robust market trend from in-person 
broker assistance to sophisticated telephonic and digital enrolment. Notably, 
eHealth is the only broker that has significant online enrolment capability, a 
strong competitive advantage and future driver of significant operating 
The Medicare Advantage market is one of the best trends in healthcare coverage, 
as enrolment is growing in the high single digits as the U.S. population ages 
with commission rates also growing favourably. Historically, the company has 
invested aggressively to capitalise on these favourable trends via large 
increases in agent headcount and productivity. However, in the second quarter 
of 2020, management reported increased levels of Medicare Advantage plan churn 
compared to historic observations. The market reacted negatively to this news 
as churn is a key input to the lifetime value metric which the company uses to 
book revenue for plan sales. Management has since identified operational areas 
of improvement to address many of these concerns. 
Another detractor of import was California-based, Theravance Biopharma, a 
biopharmaceutical company specialising in the discovery and development of 
organ-selective medicines and leaders in respiratory medicines. The company 
offers Yupelri (revefenacin), a once-daily, nebulised long-acting muscarinic 
antagonist used for the treatment of chronic obstructive pulmonary disease 
(COPD). They also receive royalties from GSK's closed triple combination 
therapy, Trelegy (fluticasone, umeclidinium, & vilanterol), which is approved 
in both COPD and asthma. The company's pipeline is also innovative and includes 
a novel mechanism - JAK inhibition - for the treatment of both ulcerative 
colitis and asthma. However, the company's shares pulled back over the period 
due to increased concerns around respiratory drug launches during the COVID-19 
pandemic as well as delayed pipeline data readouts. Additionally, the company 
experience a setback when an FDA Advisory Committee voted against recommending 
approval for a label expansion for a mortality claim for Trelegy in September 
Biogen, is a global biotechnology company and a leader in the discovery, 
development, sales, and marketing of drugs used to treat neurology, oncology 
and immunology conditions. The company's main products include Tecfidera 
(dimethyl fumarate) for multiple sclerosis (MS) and Spinraza (nusinersen) for 
the treatment of spinal muscular atrophy (SMA). More interestingly, the company 
is also developing aducanumab, an investigational human monoclonal antibody 
studied for the treatment of Alzheimer's disease, which is currently under FDA 
review. The shares underperformed in the period after a federal West Virginia 
Court issued a negative decision against a key patent protecting Tecfidera 
against generic competition. Whilst an unfortunate catalyst, it was probably a 
necessary clearing event that will now allow investors to look forward to the 
potential approval on the company's key pipeline asset for the treatment of 
GoHealth is an insurance broker that specialises in enrolling individuals in 
Medicare Advantage insurance and is one of the market leaders in a robust 
market trend from in-person assistance to sophisticated telephonic enrolment 
and digital enrolment. Historically, the company has invested aggressively to 
capitalise on favourable trends in Medicare Advantage enrolment, including 
TeleCare, providing support and services to clients who have purchased and 
enrolled in Medicare plans with GoHealth. The Company participated in 
GoHealth's initial public offering in July 2020. However, the stock closed down 
in its first day of trading, amid a poorly executed deal and swirling concerns 
around insurance plan churn at eHealth. Moreover, lingering investor fears 
around market-wide increases in churn drove the share price down further and we 
exited the stock. 
Shenzhen Hepalink Pharmaceutical Group started as an active pharmaceutical 
ingredient (API) supplier of heparin to the global market. It became the 
world's largest supplier of APIs with over 40% revenue share in 2018. A 
critical company growth tactic has been the aggressive use of M&A, acquiring 
assets such as an upstream traceable supply of crude heparin, contract 
manufacturing, and enoxaparin. By 2019, Hepalink was the largest Chinese 
enoxaparin player in Europe, with a 17.8% share, and it had the second-largest 
share in China behind Sanofi. We participated in the company's dual-listing 
initial public offer on the Hong Kong exchange in July 2020. Whilst the share 
price reached a high in August 2020, after the U.S. government announced its 
intention to stockpile heparin as an essential pharmaceutical ingredient, the 
share price then sold off. This was in- line with the correction of other China 
healthcare stocks. 
Looking Ahead 
Without question, the COVID-19 pandemic will continue to influence all aspects 
of our lives: politics, the economy, education, and certainly public health. 
With this, we expect the healthcare industry's efforts to thwart the 
coronavirus will persist in both media coverage and investor psyche. Most 
importantly, we expect the cumulative efforts of the industry to prevail 
against this disease, and that a return to a modified normal is more likely 
sooner than later. We believe the positive sentiment around the collective 
industry efforts will continue to drive investor demand in healthcare stocks. 
The industry has responded to this crisis in unprecedented fashion, from 
collaborations with academic institutions, industry partnerships, and 
collaborations with government bodies around the world. "Operation Warp Speed" 
is the Trump administration's mandate to produce and deliver 300 million doses 
of safe and effective vaccines by January 2021. This is part of a broader 
strategy to accelerate the development, manufacturing, and distribution of 
COVID-19 vaccines, therapeutics, and diagnostics. 
Operation Warp Speed is leveraging the best, most talented, experts from across 
the federal government and private industry to develop safe and effective 
vaccines and therapeutics quickly without compromising safety. Progress to this 
end has been impressive to date and we expect news flow to accelerate into the 
year end and 2021. 
Unlocking the SARS-COV-2 Genome 
The genetic sequence of the novel coronavirus SARS-COV-2 was first made 
publicly available on 10 January 2020, within two weeks of initial reports of a 
cluster of severe respiratory infections in Wuhan, China. Within nine months 
the number of pre-clinical and now clinical vaccine programmes is well over 
200, with some of those in late stage clinical trials in hundreds of thousands 
of patients worldwide. Data read outs for many of these programmes are expected 
by year end or early next year including AstraZeneca/ Oxford, Sanofi/GSK, 
Moderna, and JNJ. Operation Warp Speed has coordinated with these companies in 
attempt to dramatically accelerate the vaccine development timelines and reduce 
time to market by over 80%. 
However, Pfizer and their partner, BioNTech, were the first companies to 
declare positive interim Phase III data for their mRNA-based COVID-19 vaccine 
candidate, known as BNT162b2. The much anticipated and highly scrutinized data 
was announced on 9 November 2020. The efficacy surprised on the upside, as the 
vaccine candidate was found to be more than 90% effective in preventing 
COVID-19 in participants without evidence of prior SARS-CoV-2 infection, in 
those receiving the two dose vaccine regimen versus those who received the 
placebo. Whilst further details were unavailable at the time of disclosure 
(such as sub-group analysis, durability data, and safety data beyond two months 
of follow-up), the efficacy of >90% far surpassed expectations significantly, 
for both investor and medical experts alike. Albert Bourla, the CEO of Pfizer, 
declared the announcement as the "largest medical breakthrough in the past 100 
years". This proclamation may be considered somewhat hyperbolic but considering 
the vast impact this pandemic has had on global society, it may be accurate. 
Regardless, it is this type of innovation that has been driving the industry 
for the past 5 years and we expect a positive "halo effect" across therapeutics 
stocks to continue. 
Operation Warp Speed: Vaccine Distribution Process 
In addition to vaccines, the biopharmaceutical industry has also been 
developing numerous other therapies to combat COVID-19 for both treatment and 
prophylaxis. These include anti-virals, anti-bodies, anti-inflammatories, and 
plasma-derived therapies. At the time of this publication, only one therapy had 
garnered FDA approval: Veklury (remdesivir) from Gilead. However, with over 
3,500 clinical trials under way, we expect this number to rise dramatically. 
Several companies have candidates in registrational trials that could announce 
data and pass through regulatory scrutiny by year end or early 2021, including 
Regeneron, Eli Lilly, Takeda, Alexion, and Merck. 
Healthcare Industry Response to COVID-19 
Much like vaccine developers and manufacturers, the diagnostics industry has 
rallied in unprecedented fashion to increase the availability and flexibility 
of solutions to support large-scale detection of COVID-19. Underscoring the 
efforts undertaken has been the incredible breadth of contributors, including 
incumbents like major diagnostics vendors and central lab service providers, as 
well as others with the technical know-how and resources to support further 
testing efforts like research-oriented PCR providers and genetic testing labs 
that have traditionally not participated in infectious disease testing. 
Investments in manufacturing and service capacity have led to an unprecedented 
level of testing, with YTD COVID-19 volumes over 100% higher than the 
normalised run-rate of flu testing in the U.S. alone. 
Beginning with the late January 2020 declaration of a Public Health Emergency, 
the FDA was given the latitude to grant diagnostics manufacturers and service 
providers Emergency Use Authorisations (EUAs) to expedite the process of 
bringing tests and capacity online. Since that time, the FDA has granted EUA to 
over 250 diagnostics tests, including greater than 180 molecular and 50 
serology tests in addition to 6 antigen tests, with a continued pipeline of 
tests awaiting EUA or planning to be submitted. Supported by the approvals have 
been a number of modalities, including high-throughput central lab 
environments, rapid point of care and even at-home sample collection that does 
not require the presence of a healthcare professional. On top of these actions 
undertaken at the FDA, the National Institutes of Health, with funds allocated 
from the CARES Act, has served as an important funding mechanism to advance 
innovation and capacity through its Rapid Acceleration of Diagnostics (RADx) 
programme, which has the stated goal of supporting accurate, fast, easy-to-use 
and widely accessible testing. 
NIH RADx Initiative for COVID-19 
Over the past four years, the FDA has never been more productive from the 
standpoint of new drug approvals. A trifecta of influences has created record 
breaking numbers of new (and generic) medicines being made available to the 
American public. The Trump administration has attempted to use the FDA to 
indirectly control drug pricing by increasing competition. Recent commissioner 
Scott Gottlieb, a Trump appointee, oversaw the initial efforts here that saw a 
record number of new and generic drug approvals in 2017 and 2018. An increased 
budget has also allowed the FDA to use newer technologies to aid in the review 
process. These efforts have continued into this year, with 40 new drug 
approvals as of 30 September 2020, on pace for the second highest number of 
approvals in a calendar year (behind 2018 but ahead of 2019). Overall, this has 
culminated in the most productive four-year period in the history of the FDA, 
with over 200 novel drugs approved during this span. 
FDA New Drug Approvals 
FDA productivity remains impressively high despite the pandemic, with many 
staffers required to work from home and other review personnel being heavily 
involved in COVID-19 related work. Whilst we have seen some disruption in 
clinical trial starts due to the pandemic, that seems to have been mostly a 
temporary situation during the initial height of the coronavirus breakout. 
Finally, we would note the timely drug approvals and the FDA's legal 
requirement to approve drugs, on or before their action dates, has mostly gone 
smoothly and we expect this to continue. One item of concern is the requirement 
of the FDA to inspect and approve manufacturing facilities in-person, ahead of 
a drug approval, may be partially compromised during the pandemic. 
M&A has been a common industry staple in healthcare for decades, especially in 
the therapeutics space, and a core part of the Company's investment strategy. 
The fragmented and heterogeneous nature of the industry, coupled with clinical 
and technological complexity, will continue to generate many business 
development deals. We observed a slowdown in M&A in calendar 2Q20 as companies 
were shifting focus to operations and employees in response to COVID-19. 
However, the management teams of many large capitalisation stocks assured 
investors that business development would continue their due diligence efforts 
despite the work from home environment and, in fact, that is exactly what we 
saw in calendar 3Q20, when a clear inflection point of biotechnology deals was 
observed. We expect an increased pace of M&A deals to continue this year end 
and into 2021. 
Now with the U.S. Presidential election behind us, we look for some respite 
from the political rhetoric and headline noise that healthcare investors have 
plodded through over the past 24 months. Despite the immediate lack of finality 
surrounding the results of the Senatorial races - and perhaps some legal 
wrangling from the Trump administration - the putative outcome of this election 
was effectively the "best case" scenario for healthcare stocks. Specifically, 
with the U.S. Senate now expected to remain under Republican control, the "Blue 
Sweep" outcome was ultimately avoided. Interestingly, whilst the U.S. House of 
Representatives is to remain under Democratic control, the party did lose a net 
of five seats to the Republicans. 
What do we expect from a Biden Administration? Mostly status-quo, especially 
given the failure of the Democratic party to sweep the election. First and 
foremost, the President-elect has a multitude of priorities during the first 
year of his presidency: the economy, the pandemic, additional stimulus, the 
supreme court, and so on. What will be his pandemic response? What is his 
immediate view of the economy? What additional stimulus will he push for, if 
any? What are his next steps with respect to the controversial replacement of 
U.S. Supreme Court Judge Ginsberg? None of this leaves much time to stump for 
major drug price reforms, not with the healthcare industry continuing to lead 
the charge against the COVID-19 pandemic. Second, with respect to healthcare, 
recall that President Biden has an important legacy to protect, that of 
President Obama and the Affordable Care Act (ACA a.k.a. "Obamacare"). This was 
passed into law in 2010, during the Obama administration's reign. 
Fundamentally, therefore, we do not expect the incoming administration to 
meaningfully alter or change the ACA, but rather add to it and expand it, such 
as lowering Medicare age of eligibility to 60 years of age from 65. We do not 
view this as a platform for radical change in the way which medicine is 
practiced, paid for, or administered in the U.S. 
Finally, our positive outlook for healthcare equities primarily revolves around 
the unprecedented level of innovation across the industry spectrum, from 
therapeutics to services, from devices to diagnostics. Certainly, technology 
has impacted many industries and healthcare is no exception. However, advances 
in genomics and biotechnology has pushed the therapeutics space to such 
frontiers that the number of disease states and treatable targets is at an 
all-time high. Meanwhile, novel platform technologies have enabled even more 
therapies to target diseases that were previously thought to be untreatable. 
The #1 Driver of Our Bullish Outlook for the Healthcare Sector 
In summary, the fundamentals underpinning healthcare equities remain strong. 
Technology and innovation have never been more prevalent across sub-sectors, 
but especially in therapeutics, medical devices, and life science tools 
companies. Emerging markets have made an important pivot and healthcare demand 
there is growing at record pace. The strong secular tailwind and positive 
trends in patient demographics, mean demand for healthcare will continue to 
rise across the globe. With overall valuations remaining reasonable and 
undemanding, the landscape for equity investing in the healthcare industry is a 
promising one. 
Sven H. Borho and Trevor M. Polischuk 
OrbiMed Capital LLC 
Portfolio Managers 
20 November 2020 
Principal Contributors to and Detractors from Net Asset Value Performance 
For the Six Months Ended 30 September 2020 
Top Five Contributors                                          Contribution    Contribution 
                                                                      GBP'000       per share 
Horizon Therapeutics                                                 46,989            82.6 
Mirati Therapeutics                                                  43,249            76.0 
Natera                                                               40,877            71.8 
Burning Rock Biotech                                                 18,563            32.6 
Alexion Pharmaceuticals                                              17,022            29.9 
                                                                    166,700           292.9 
Top Five Detractors 
Shenzhen Hepalink Pharmaceutical Group                              (5,524)           (9.7) 
Gohealth?                                                           (5,544)           (9.7) 
Biogen                                                              (9,977)          (17.5) 
Theravance Biopharma                                               (11,200)          (19.7) 
Ehealth                                                            (18,408)          (32.3) 
                                                                   (50,563)          (88.9) 
*      based on 56,922,562 shares being the weighted average number of shares 
in issue during the six months ended 30 September 2020. 
?      not held in the portfolio as at 30 September 2020. 
Source: Frostrow Capital LLP 
At 30 September 2020 
                                                   Country/     Market value         % of 
Investments                                        Region              GBP'000  investments 
Bristol-Myers Squibb                               USA               102,327          5.1 
Alexion Pharmaceuticals                            USA                98,244          4.9 
Merck                                              USA                96,241          4.8 
Mirati Therapeutics                                USA                83,307          4.1 
Horizon Therapeutics                               USA                81,862          4.0 
Takeda Pharmaceutical                              Japan              81,621          4.0 
Boston Scientific                                  USA                79,414          3.9 
Biogen                                             USA                76,769          3.8 
Novartis                                           Switzerland        73,474          3.6 
Vertex Pharmaceuticals                             USA                62,617          3.1 
Top 10 investments                                                   835,876         41.3 
Natera                                             USA                60,086          3.0 
Humana                                             USA                48,472          2.4 
Novo Nordisk*                                      Denmark            45,698          2.3 
Neurocrine Biosciences                             USA                40,801          2.0 
Burning Rock Biotech                               USA                40,530          2.0 
DexCom                                             USA                37,332          1.8 
Theravance Biopharma                               USA                35,979          1.8 
Intuitive Surgical                                 USA                35,360          1.7 
Shanghai Kindly Medical Instruments                China              34,699          1.7 
Stryker                                            USA                31,048          1.5 
Top 20 investments                                                 1,245,881         61.5 
Hansoh Pharmaceutical                              Hong Kong          30,718          1.5 
Edwards Lifesciences                               USA                30,017          1.5 
Centene                                            USA                29,138          1.4 
Turning Point Therapeutics                         USA                28,414          1.4 
Agios Pharmaceuticals                              USA                26,143          1.3 
Sarepta Therapeutics                               USA                23,474          1.1 
Iovance Biotherapeutics                            USA                22,476          1.1 
Aurinia Pharmaceuticals                            Canada             21,624          1.1 
Exelixis                                           USA                21,534          1.1 
eHealth                                            USA                21,469          1.1 
Top 30 investments                                                 1,500,888         74.1 
Thermo Fisher Scientific                           USA                20,706          1.0 
Acceleron Pharma                                   USA                20,590          1.0 
Change Healthcare                                  USA                20,172          1.0 
Progyny                                            USA                19,719          1.0 
AtriCure                                           USA                19,662          1.0 
Deciphera Pharmaceuticals                          USA                19,559          1.0 
Hygeia Healthcare Holdings                         China              19,254          0.9 
AbbVie                                             USA                17,712          0.9 
Alphamab Oncology                                  China              16,539          0.8 
Shenzhen Hepalink Pharmaceutical Group             China              16,340          0.8 
Top 40 investments                                                 1,691,141         83.5 
*      includes Novo Nordisk ADR equating to 0.9% of investments. 
                                                   Country/     Market value         % of 
Investments                                        Region              GBP'000  investments 
uniQure                                            Netherlands        15,708          0.8 
Jinxin Fertility Group                             China              15,631          0.8 
CanSino Biologics                                  China              15,319          0.8 
Sino Biopharmaceutical                             China              15,095          0.7 
CRISPR Therapeutics                                Switzerland        14,822          0.7 
Caris Science (unquoted)                           USA                14,725          0.7 
Adverum Biotechnologies                            USA                14,680          0.7 
Ascendis Pharma                                    Denmark            14,473          0.7 
Ruipeng Pet Group (unquoted)                       USA                12,763          0.6 
NanoString Technologies                            USA                12,306          0.6 
Top 50 investments                                                 1,836,663         90.6 
Akeso                                              China              12,099          0.6 
MeiraGTx                                           USA                12,036          0.6 
Acadia Healthcare                                  USA                11,762          0.6 
Prothena                                           Ireland            11,286          0.6 
Hangzhou Tigermed Consulting                       China              11,250          0.5 
Harpoon Therapeutics                               USA                10,705          0.5 
Passage-Bio                                        USA                10,283          0.5 
Athenex                                            USA                 8,405          0.4 
Danaher                                            USA                 7,860          0.4 
Teva Pharmaceutical Industries                     Israel              7,659          0.4 
Top 60 investments                                                 1,940,008         95.7 
Alcon                                              Switzerland         7,640          0.4 
Kangji Medical Holdings                            China               7,214          0.4 
Guardant Health                                    USA                 6,860          0.3 
Oak Street Health                                  USA                 6,710          0.3 
NanoString Technologies 2.625% 01/03/2025          USA                 5,565          0.3 
MabPlex International (unquoted)                   China               5,533          0.3 
Shanghai Bioheart Pharmaceutical (unquoted)        China               5,011          0.3 
Pharmaron Beijing                                  China               4,476          0.2 
EuroEyes International Eye Clinic                  Germany             4,459          0.2 
New Horizon Health (unquoted)                      USA                 3,998          0.2 
Top 70 investments                                                 1,997,474         98.6 
Alliance HealthCare Services FRN 11.33% 20/04/2024 USA                 3,326          0.2 
Erasca (unquoted)                                  USA                 3,094          0.2 
Outset Medical                                     USA                 2,806          0.1 
Wenzhou Kangning Hospital                          China               1,455          0.1 
Medical Depot Holdings FRN 12% 03/01/2024          USA                   672          0.0 
Peloton Therapeutics (DCC** - unquoted)            USA                   512          0.0 
Total equities and fixed interest investments                      2,009,339         99.2 
**     DCC = deferred contingent consideration. 
                                                   Country/     Market value         % of 
Investments                                        Region              GBP'000  investments 
OTC Equity Swaps - Financed 
Apollo Hospitals Enterprise                        India              24,823          1.2 
Aier Eye Hospital Group                            China              22,832          1.1 
Jiangsu Hengrui Medicine                           China              17,269          0.9 
Shandong Pharmaceutical Glass                      China               9,264          0.5 
Maccura Biotechnology                              China               2,354          0.1 
Caregen Co Ltd                                     South Korea            64          0.0 
Less: Gross exposure on financed swaps                              (59,786)        (3.0) 
Total OTC Swaps                                                       16,820          0.8 
Total investments including OTC Swaps                              2,026,159        100.0 
See note 1 for further details in relation to the OTC Swaps. 
                                                               Market value          % of 
Investments                                                           GBP'000   investments 
Quoted equities                                                   1,954,140          96.4 
Unquoted equities                                                    45,636           2.3 
Unquoted debt securities - variable rate                              9,563           0.5 
Equity swaps                                                         16,820           0.8 
Total of all investments                                          2,026,159         100.0 
Interim Management Report 
Principal Risks and Uncertainties 
The principal risks and uncertainties associated with the Company are set out 
on pages 29 to 32 of the Annual Report & Accounts for the year ended 31 March 
2020, which is published on the Company's website. Such risks and uncertainties 
are as applicable for the remaining six months of the Company's financial year 
as they have been for the period under review. The risks can be summarised 
under the following headings: Investment (including leverage risks); 
Operational (including financial, corporate governance, accounting, legal, 
cyber security and regulatory risks); and, Strategic (including shareholder 
relations and share price performance). 
The Board notes that equity markets experienced substantial volatility during 
the period due to uncertainties linked to the Covid-19 pandemic. The Directors 
have considered the impact of the continued uncertainty on the Company's 
financial position and, based on the information available to them at the date 
of this report, have concluded that no adjustments are required to the accounts 
as at 30 September 2020. The Board also recognises that the UK's exit from the 
European Union has introduced elements of political and economic uncertainty. 
Developments continue to be closely monitored by the Board. 
Related Party Transactions 
During the first six months of the current financial year no material 
transactions with related parties have taken place which have affected the 
financial position or the performance of the Company during the period. 
Going Concern 
The Directors believe, having considered the Company's investment objectives, 
risk management policies, capital management policies and procedures, nature of 
the portfolio and expenditure projections, that the Company has adequate 
resources, an appropriate financial structure and suitable management 
arrangements in place to continue in operational existence for the foreseeable 
future and, more specifically, that there are no material uncertainties 
relating to the Company that would prevent its ability to continue in such 
operational existence for at least twelve months from the date of the approval 
of this half yearly financial report. For these reasons, they consider there is 
reasonable evidence to continue to adopt the going concern basis in preparing 
the accounts. 
Directors' Responsibilities 
The Board of Directors confirms that, to the best of its knowledge: 
 i. the condensed set of financial statements contained within the Half Year 
    Report have been prepared in accordance with Financial Reporting Standard 
    104 (Interim Financial Reporting); and 
ii. the interim management report includes a true and fair review of the 
    information required by: 
 a. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an 
    indication of important events that have occurred during the first six 
    months of the financial year and their impact on the condensed set of 
    financial statements; and a description of the principal risks and 
    uncertainties for the remaining six months of the year; and 
 b. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related 
    party transactions that have taken place in the first six months of the 
    current financial year and that have materially affected the financial 
    position or performance of the entity during that period; and any changes 
    in the related party transactions described in the last annual report that 
    could do so. 
The Half Year Report has not been reviewed or audited by the Company's 
This Half Year Report contains certain forward-looking statements. These 
statements are made by the Directors in good faith based on the information 
available to them up to the date of this report and such statements should be 
treated with caution due to the inherent uncertainties, including both economic 
and business risk factors, underlying any such forward-looking information. 
For and on behalf of the Board 
Sir Martin Smith 
20 November 2020 
Income Statement 
For the six months ended 30 September 2020 
                                                  (Unaudited)               (Unaudited) 
                                             Six months ended          Six months ended 
                                            30 September 2020         30 September 2019 
                                    Revenue  Capital          Revenue  Capital 
                                     Return   Return    Total  Return   Return    Total 
                                      GBP'000    GBP'000    GBP'000   GBP'000    GBP'000    GBP'000 
Gains/(losses) gains on investments       -  382,487  382,487       - (39,853) (39,853) 
Foreign exchange losses                   -  (5,501)  (5,501)       -     (99)     (99) 
Income from investments (note 2)      7,785        -    7,785   8,108        -    8,108 
AIFM, portfolio management, and       (403) (22,106) (22,509)   (292)  (5,553)  (5,845) 
performance fees (note 3) 
Other expenses                        (750)        -    (750)   (471)        -    (471) 
Net return/(loss) before finance      6,632  354,880  361,512   7,345 (45,505) (38,160) 
charges and taxation 
Finance charges                        (14)    (259)    (273)    (32)    (610)    (642) 
Net return/(loss) before finance      6,618  354,621  361,239   7,313 (46,115) (38,802) 
Taxation                              (992)        -    (992)   (829)        7    (822) 
Net return/(loss) after taxation      5,626  354,621  360,247   6,484 (46,108) (39,624) 
Return/(loss) per share (note 4)       9.9p   623.0p   632.9p   12.2p  (87.0)p  (74.8)p 
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 
The Company has no recognised gains and losses other than those shown above and 
therefore no separate Statement of Total Comprehensive Income has been 
The accompanying notes are an integral part of these statements. 
Statement of Changes in Equity 
For the six months ended 30 September 2020 
                                                                (Unaudited)   (Unaudited) 
                                                                 Six months    Six months 
                                                                      ended         ended 
                                                               30 September  30 September 
                                                                       2020          2019 
                                                                      GBP'000         GBP'000 
Opening shareholders' funds                                       1,538,298     1,432,093 
Issue of new shares                                                 192,754        15,733 
Return/(loss) for the period                                        360,247      (39,624) 
Dividends paid - revenue                                           (10,512)      (10,568) 
Closing shareholders' funds                                       2,080,787     1,397,634 
Statement of Financial Position 
As at 30 September 2020 
                                                                (Unaudited)     (Audited) 
                                                               30 September      31 March 
                                                                       2020          2020 
                                                                      GBP'000         GBP'000 
Fixed assets 
Investments                                                       2,009,339     1,681,132 
Derivatives - OTC swaps                                              16,912         3,452 
                                                                  2,026,251     1,684,584 
Current assets 
Debtors                                                               8,865        14,630 
Cash and cash equivalents                                            66,806         3,810 
                                                                     75,671        18,440 
Current liabilities 
Creditors: amounts falling due within one year                     (21,043)     (158,560) 
Derivative - OTC Swaps                                                 (92)       (6,166) 
                                                                   (21,135)     (164,726) 
Net current assets/(liabilities)                                     54,536     (146,286) 
Total net assets                                                  2,080,787     1,538,298 
Capital and reserves 
Ordinary share capital                                               14,802        13,406 
Share premium account                                               609,799       418,441 
Capital reserve                                                   1,434,555     1,079,934 
Capital redemption reserve                                            8,221         8,221 
Revenue reserve                                                      13,410        18,296 
Total shareholders' funds                                         2,080,787     1,538,298 
Net asset value per share - (note 5)                               3,514.6p      2,868.9p 
Notes to the Financial Statements 
1. Accounting Policies 
The condensed Financial Statements for the six months to 30 September 2020 
comprise the statements together with the related notes below. They have been 
prepared in accordance with FRS 104 'Interim Financial Reporting', the AIC's 
Statement of Recommended Practice issued in October 2019 ('SORP') and using the 
same accounting policies as set out in the Company's Annual Report and 
Financial Statements at 31 March 2020. 
Going Concern 
After making enquiries, and having reviewed the Investments, Statement of 
Financial Position and projected income and expenditure for the next 12 months, 
the Directors have a reasonable expectation that the Company has adequate 
resources to continue in operation for the foreseeable future. The Directors 
have therefore adopted the going concern basis in preparing these condensed 
financial statements. 
Fair Value 
Under FRS 102 and FRS 104 investments have been classified using the following 
fair value hierarchy: 
Level 1 - Quoted market prices in active markets 
Level 2 - Prices of a recent transaction for identical instruments 
Level 3 - Valuation techniques that use: 
(i) observable market data; or 
(ii) non-observable data 
                                                       Level 1  Level 2  Level 3     Total 
AS OF 30 SEPTEMBER 2020                                  GBP'000    GBP'000    GBP'000     GBP'000 
Investments held at fair value through profit or     1,954,140        -   55,199 2,009,339 
Derivatives: OTC swaps (assets)                              -   16,912        -    16,912 
Derivatives: OTC swaps (liabilities)                         -     (92)        -      (92) 
Financial instruments measured at fair value         1,954,140   16,820   55,199 2,026,159 
                                                       Level 1  Level 2  Level 3     Total 
AS OF 31 MARCH 2020                                      GBP'000    GBP'000    GBP'000     GBP'000 
Investments held at fair value through profit or     1,653,701        -   27,431 1,681,132 
Derivatives: OTC swaps (assets)                              -    3,452        -     3,452 
Derivatives: OTC swaps (liabilities)                         -  (6,166)        -   (6,166) 
Financial instruments measured at fair value         1,653,701  (2,714)   27,431 1,678,418 
2. Income 
                                                                (Unaudited)   (Unaudited) 
                                                                 Six months    Six months 
                                                                      ended         ended 
                                                               30 September  30 September 
                                                                       2020          2019 
                                                                      GBP'000         GBP'000 
Investment income                                                     7,785         8,108 
Total                                                                 7,785         8,108 
3. AIFM, Portfolio Management and Performance Fees 
                                               (Unaudited)                   (Unaudited) 
                                          Six months ended              Six months ended 
                                         30 September 2020             30 September 2019 
                                Revenue   Capital    Total  Revenue  Capital       Total 
                                  GBP'000     GBP'000    GBP'000    GBP'000    GBP'000       GBP'000 
AIFM fee                             74     1,398    1,472       62    1,180       1,242 
Portfolio management fee            329     6,261    6,590      230    4,373       4,603 
Performance fee charge for the        -    14,447   14,447        -        -           - 
                                    403    22,106   22,509      292    5,553       5,845 
During the six months ended 30 September 2020, due to significant 
outperformance against the Benchmark in the June 2020 quarter partially offset 
by underperformance in the September quarter, a charge of GBP14,447,000 occurred 
(six months ended 30 September 2019: GBPnil). No performance fees were paid in 
the period (six months ended 30 September 2019: GBPnil). 
As at 30 September 2020 total performance fees of GBP14,447,000 were accrued (31 
March 2020: GBPnil). This provision, relating to the cumulative outperformance 
generated to 30 September 2020, will only become payable at future performance 
fee calculation dates in the event that the 30 September 2020 outperformance is 
The maximum amount that could become payable by 30 September 2021 is GBP 
25,054,000. This would only be payable in full if the September 2020 quarter's 
underperformance is reversed and the outperformance achieved as at 30 June 2020 
is re-attained. If the level of outperformance as at 30 September 2020 is 
maintained to 30 September 2021 the accrual of GBP14,447,000 would become 
See glossary for further information 
4. Return/(Loss) Per Share 
                                                               (Unaudited)   (Unaudited) 
                                                                Six months    Six months 
                                                                     ended         ended 
                                                              30 September  30 September 
                                                                      2020          2019 
                                                                     GBP'000         GBP'000 
The return per share is based on the following figures: 
Revenue return                                                       5,626         6,484 
Capital return/(loss)                                              354,621      (46,108) 
Total return/(loss)                                                360,247      (39,624) 
Weighted average number of shares in issue for the period       56,922,562    52,981,480 
Revenue return per share                                              9.9p         12.2p 
Capital return/(loss) per share                                     623.0p       (87.0)p 
Total return/(loss) per share                                       632.9p       (74.8)p 
The calculation of the total, revenue and capital returns per ordinary share is 
carried out in accordance with IAS 33, "Earnings per Share (as adopted in the 
5. Net Asset Value Per Share 
The net asset value per share is based on the assets attributable to equity 
shareholders of GBP2,080,787,000 
(31 March 2020: GBP1,538,298,000) and on the number of shares in issue at the 
period end of 59,204,778 
(31 March 2020: 53,619,278). 
6. Transaction Costs 
Purchase transaction costs for the six months ended 30 September 2020 were GBP 
831,000 (six months ended 30 September 2019: GBP736,000). 
Sales transaction costs for the six months ended 30 September 2020 were GBP 
473,000 (six months ended 30 September 2019: GBP325,000). 
These costs comprise mainly commission. 
7. Principal Risks and Uncertainties 
The principal risks facing the Company are listed in the Interim Management 
Report. An explanation of these risks and how they are managed is contained in 
the Strategic Report and note 16 of the Company's Annual Report & Accounts for 
the year ended 31 March 2020. 
8. Comparative Information 
The condensed financial statements contained in this half year report do not 
constitute statutory accounts as defined in section 434 of the Companies Act 
2006. The financial information for the half years ended 30 September 2020 and 
30 September 2019 has not been audited or reviewed by the Company's auditor. 
The information for the year ended 31 March 2020 has been extracted from the 
latest published audited financial statements of the Company. Those financial 
statements have been filed with the Registrar of Companies. The report of the 
auditor on those financial statements was unqualified, did not include a 
reference to any matters to which the auditors drew attention by way of 
emphasis without qualifying the report, and did not contain statements under 
either section 498 (2) or 498 (3) of the Companies Act 2006. 
Earnings for the first six months should not be taken as a guide to the results 
for the full year. 
Glossary of Terms and Alternative Performance Measures ('APMs') 
Alternative Investment Fund Managers Directive (AIFMD) 
Agreed by the European Parliament and the Council of the European Union and 
transported into UK legislation, the AIFMD classifies certain investment 
vehicles, including investment companies, as Alternative Investment Funds 
(AIFs) and requires them to appoint an Alternative Investment Fund Manager 
(AIFM) and depositary to manage and oversee the operations of the investment 
vehicle. The Board of the Company retains responsibility for strategy, 
operations and compliance and the Directors retain a fiduciary duty to 
The performance of the Company is measured against the MSCI World Health Care 
Index on a net total return, sterling adjusted basis. 
The net total return is calculated by reinvesting dividends after the deduction 
of withholding taxes. 
Discount or Premium (APM) 
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 
Equity Swaps 
An equity swap is an agreement in which one party (counterparty) transfers the 
total return of an underlying equity position to the other party (swap holder) 
in exchange for a one-off payment at a set date. Total return includes dividend 
income and gains or losses from market movements. The exposure of the holder is 
the market value of the underlying equity position. 
Your Company uses two types of equity swap: 
·      funded, where payment is made on acquisition. They are equivalent to 
holding the underlying equity position with the exception of additional 
counterparty risk and not possessing voting rights in the underlying; and, 
·      financed, where payment is made on maturity. As there is no initial 
outlay, financed swaps increase economic exposure by the value of the 
underlying equity position with no initial increase in the investments value - 
there is therefore embedded leverage within a financed swap due to the deferral 
of payment to maturity. 
Leverage (APM) 
Leverage is defined in the AIFMD as any method by which the AIFM increases the 
exposure of an AIF. In addition to the gearing limit the Company also has to 
comply with the AIFMD leverage requirements. For these purposes the Board has 
set a maximum leverage limit of 140% for both methods. This limit is expressed 
as a % with 100% representing no leverage or gearing in the Company. There are 
two methods of calculating leverage as follows: 
The Gross Method is calculated as total exposure divided by Shareholders' 
Funds. Total exposure is calculated as net assets, less cash and cash 
equivalents, adding back cash borrowing plus derivatives converted into the 
equivalent position in their underlying assets. 
The Commitment Method is calculated as total exposure divided by Shareholders 
Funds. In this instance total exposure is calculated as net assets, less cash 
and cash equivalents, adding back cash borrowing plus derivatives converted 
into the equivalent position in their underlying assets, adjusted for netting 
and hedging arrangements. 
See the definition of Options and Equity Swaps for more details on how exposure 
through derivatives is calculated. 
                                                               As at               As at 
                                                   30 September 2020       31 March 2020 
                                                      Fair Exposure*      Fair Exposure* 
                                                     Value               Value 
                                                     GBP'000     GBP'000     GBP'000     GBP'000 
Investments                                      2,009,339 2,009,339 1,681,132 1,681,132 
OTC equity swaps                                    16,820    76,606   (2,714)    41,569 
Non-sterling cash                                   66,806    66,806     3,810     3,810 
                                                 2,092,965 2,152,751 1,682,228 1,726,511 
Shareholders' funds                                        2,080,787           1,538,298 
Leverage %                                                      3.5%               12.0% 
*      Calculated in accordance with AIFMD requirements using the Commitment 
MSCI World Health Care Index 
The MSCI information (relating to the Benchmark) may only be used for your 
internal use, may not be reproduced or redisseminated in any form and may not 
be used as a basis for or a component of any financial instruments or products 
or indices. None of the MSCI information is intended to constitute investment 
advice or a recommendation to make (or refrain from making) any kind of 
investment decision and may not be relied on as such. Historical data and 
analysis should not be taken as an indication or guarantee of any future 
performance analysis, forecast or prediction. The MSCI information is provided 
on an "as is" basis and the user of this information assumes the entire risk of 
any use made of this information. MSCI, each of its affiliates and each other 
person involved in or related to compiling, computing or creating any MSCI 
information (collectively, the "MSCI Parties") expressly disclaims all 
warranties (including, without limitation, any warranties of originality, 
accuracy, completeness, timeliness, non-infringement, merchantability and 
fitness for a particular purpose) with respect to this information. Without 
limiting any of the foregoing, in no event shall any MSCI Party have any 
liability for any direct, indirect, special, incidental, punitive, 
consequential (including, without limitation lost profits) or any other 
damages. ( 
Nav Total Return (APM) 
The theoretical total return on shareholders' funds per share, 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. 
                                                             Six months to   One year to 
                                                              30 September      31 March 
                                                                      2020          2020 
Opening NAV                                                       2,868.9p       2,722.2 
Increase in NAV                                                     645.7p         146.7 
Closing NAV                                                       3,514.6p       2,868.9 
% Change in NAV                                                      22.5%          5.4% 
Impact of reinvested dividends                                        0.6%          1.1% 
NAV Total Return                                                     23.1%          6.5% 
Ongoing Charges (APM) 
Ongoing charges are calculated by taking the Company's annualised ongoing 
charges, excluding finance costs, taxation, performance fees and exceptional 
items, and expressing them as a percentage of the average daily net asset value 
of the Company over the year. 
                                                             Six months to   One year to 
                                                              30 September      31 March 
                                                                      2020          2020 
                                                                     GBP'000         GBP'000 
AIFM & Portfolio Management fees                                     8,062        12,312 
Other Expenses                                                         750           931 
Total Ongoing Charges                                                8,812        13,243 
Performance fees paid/crystallised                                       -             - 
Total                                                                8,812        13,243 
Average net assets                                               1,951,135     1,497,219 
Ongoing Charges (annualised)                                          0.9%          0.9% 
Ongoing Charges (annualised, including performance fees paid          0.9%          0.9% 
or crystallised during the period) 
Performance Fee 
Dependent on the level of long-term outperformance of the Company, a 
performance fee can be become payable. The performance fee is calculated by 
reference to the amount by which the Company's net asset value ('NAV') 
performance has outperformed 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. Provision is also made within the daily NAV per share 
calculation as required and in accordance with generally accepted accounting 
standards. The performance fee amounts to 15.0% of any outperformance over the 
Benchmark (see page 39 of the Company's Annual Report & Accounts for the year 
ended 31 March 2020 for further information). 
In order to ensure that only sustained outperformance is rewarded, at each 
quarterly calculation date any performance fee payable is based on the lower 
 i. The cumulative outperformance of the investment portfolio over the 
    Benchmark as at the quarter end date; and 
ii. The cumulative outperformance of the investment portfolio over the 
    Benchmark as at the corresponding quarter end date in the previous year. 
The effect of this is that outperformance has to be maintained for a 
twelve-month period before the related fee is paid. 
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. 
Share Price Total Return (APM) 
Return to the investor on mid-market prices assuming that all dividends paid 
were reinvested. 
                                                             Six months to   One year to 
                                                              30 September      31 March 
                                                                      2020          2020 
Opening share price                                               2,920.0p       2,730.0 
Increase in share price                                             625.0p         190.0 
Closing share price                                               3,545.0p       2,920.0 
% Change in share price                                              21.4%          7.0% 
Impact of reinvested dividends                                        0.7%          1.0% 
Share price Total Return                                             22.1%          8.0% 
For and on behalf of 
Frostrow Capital LLP, Secretary 
20 November 2020 
- ENDS - 

(END) Dow Jones Newswires

November 20, 2020 04:55 ET (09:55 GMT)

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