Worldwide Healthcare Trust Plc outperforms benchmark in H1 results

Worldwide Healthcare Trust PLC (LON:WWH) has announced its unaudited half year results for the six months ended 30 September 2024.

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 2024. The full Half Year Report & Accounts, together with a copy of this announcement, will also shortly be available on the Company’s website: www.worldwidewh.com where up to date information on the Company, including daily NAV, share prices and fact sheets, can also be found.

Worldwide Healthcare Trust’s Half Year Report & Accounts for the six months ended 30 September 2024 has been submitted to the UK Listing Authority, and will shortly be available for inspection on the National Storage Mechanism (NSM): https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Performance

#  Source – Morningstar.

^  Benchmark – MSCI World Health Care Index on a net total return, sterling adjusted basis (see Glossary).

*  Alternative Performance Measure (See Glossary).

¹  Leverage calculated under the Commitment Method (see Glossary).

Statement from the Chair

“During the period, the Company’s net asset value per share total return of +0.6% and share price total return of +3.6% outperformed the Benchmark, which was flat.”

PERFORMANCE

Macroeconomic and geopolitical factors again buffeted global markets during the period under review. Positive factors for markets included the initiation of interest rate reductions in the U.S. as well as new stimulus measures in China. These were somewhat offset by concerns about a global economic slowdown and the knock-on impacts of interest rate increases in Japan. There were also unexpected events in the U.S. Presidential race, including the assassination attempt on former President Trump and the withdrawal from the race of the incumbent, President Biden.

Against this backdrop, during the period under review, the MSCI World and the FTSE All-Share Indices produced sterling based total returns of +2.8% and +6.1%, respectively. The Company’s Benchmark, the MSCI World Healthcare Index, measured on a net total return, sterling adjusted basis was flat during the period.

In comparison, the Company’s net asset value (NAV) per share total return was +0.6%, outperforming the Benchmark during the period and building on our outperformance in the previous financial year. The NAV performance was achieved despite the headwind of sterling strengthening against the U.S. dollar by +6.2%, the U.S. dollar being the currency in which the majority of the Company’s investments are denominated.

The Company’s share price total return was +3.6%, greater than its NAV total return, reflecting a narrowing of the discount of the Company’s share price to its NAV per share from 12.1% at the beginning of the half year to 9.6% at the end.

Looking at specific names in the portfolio, the largest contributions during the reporting period came from healthcare services company Tenet Healthcare and medical technology company Boston Scientific.

The principal detractors from performance were the large capitalisation biotechnology company Biogen, and healthcare equipment manufacturer Dexcom.

Further information regarding the Company’s investments and performance can be found in the Portfolio Manager’s Review.

The Company had, on average, leverage of 12.4% during the period, which added 0.5% to performance. As at the half year-end, leverage stood at 13.3%, compared to 10.8% at the beginning. Our Portfolio Manager continues to adopt both a pragmatic and a tactical approach to the use of leverage, which adds to performance in periods of rising portfolio share prices and has benefitted the Company over time.

Our Portfolio Manager, through its extensive private equity research capabilities, continues to review unquoted opportunities although, in the period under review, no new unquoted investments were made. The Company is able to invest up to 10% of the portfolio, at the time of acquisition, in unquoted securities. Exposure to unquoted equities accounted for 5.3% of the total portfolio at the half year-end, and these holdings made a negative contribution of 0.7% to the Company’s performance during the period under review.

PERFORMANCE FEE

No performance fee was accrued as at 30 September 2024 and no performance fee can become payable within the next year. The performance fee arrangements are described in detail in the Company’s Annual Report.

CAPITAL

Share price discounts continue to persist across the U.K. investment company sector. As at the period end, the average level of share price discount to NAV stood at 13.7%. (source: Winterflood Investment Trusts)

It is the Board’s policy to buy back our shares if the Company’s share price discount to the NAV per share exceeds 6% on an ongoing basis. Despite the Company’s share buybacks, the discount can remain greater than 6% for extended periods of time, depending on overall sentiment towards the Company, the sector and investment trusts generally. Nonetheless, buybacks enhance the NAV per share for remaining shareholders. In addition, the Board believes that regular buybacks help to narrow the discount and go some way to dampening discount volatility.

During the period under review, the Company repurchased a total of 28,230,376 shares for treasury at a cost of £99.8m and at an average discount of 9.6%. At the period end, there were 517,711,956 shares in issue (excluding the 83,953,244 shares held in treasury). Since the period end to 13 November 2024, a further 4,860,440 shares have been bought back for treasury, at a cost of £16.8m and at the time of writing, the share price discount stands at 10.5%.

DIVIDENDS

The Board has declared an unchanged interim dividend of 0.7p per share, for the year to 31 March 2025, which will be payable on 9 January 2025 to shareholders on the register of members on 29 November 2024. The associated ex-dividend date is 28 November 2024.

I remind shareholders that it remains the Company’s policy to pay out dividends at least to the extent required to maintain investment trust status. These dividend payments are paid out of the Company’s net revenue for the year and, in accordance with investment trust rules, a maximum of 15% of income can be retained by the Company in any financial year.

It is the Board’s continuing belief that it is in shareholders’ best interests to see the Company’s capital deployed in its investment portfolio rather than paid out as dividends to achieve a particular target yield.

COMPOSITION OF THE BOARD

I am delighted to confirm that, at the beginning of October, Sian Hansen and William Hemmings joined the Board. Sian is a non-executive Director of Pacific Assets Trust plc, and formerly the Chief Operating Officer at global strategic consultancy group CT Group as well as a non-executive Director of JP Morgan Multi-Asset Global Growth & Income plc. William was the former Head of Closed End Funds and Head of Investment Companies at abrdn PLC (formerly Aberdeen Asset Management PLC) and a Director and Deputy Chair of the Association of Investment Trust Companies. With their significant experience in the investment trust sector as well as portfolio management, financial, governance and geopolitical matters, Sian and William will be valuable additions to the Board and our future deliberations.

OUTLOOK

While macroeconomic and geopolitical conditions continue to be challenging, your Board believes that the fundamentals of the healthcare sector remain strong.

Our Portfolio Manager is positive about the outlook for the sector, a view driven in part by strong innovation cycles, elevated patient volumes and an ageing global demographic. They also believe that the current high level of merger and acquisition activity in the sector will continue, supported by attractive valuations, healthy balance sheets and an increasing need for larger pharmaceutical and biotechnology companies to address future patent expirations.

Finally, they also believe that the Republican victory in the U.S. election, having won both the Presidency and also control of Congress, will provide a positive backdrop for the healthcare sector, as it is not expected that legislation detrimental to the industry will be enacted.

Doug McCutcheon

Chair, Worldwide Healthcare Trust 

14 November 2024