Half-yearly Report
NEWS RELEASE
30 November 2010
London Stock Exchange Announcement
WORLDWIDE HEALTHCARE TRUST PLC
(Formerly Finsbury Worldwide Pharmaceutical Trust PLC)
Unaudited Interim Report for the six months ended 30 September 2010
COMPANY NAME
At the Company's Annual General Meeting, held on 15 July 2010, a Special
Resolution was passed to change the Company's name from Finsbury Worldwide
Pharmaceutical Trust PLC to Worldwide Healthcare Trust PLC.
INVESTMENT OBJECTIVE AND BENCHMARK
Worldwide Healthcare Trust PLC invests worldwide in a diversified portfolio of
shares in pharmaceutical, biotechnology and related companies in the
healthcare sector with the objective of achieving a high level of capital
growth.
Up until 30 September 2010, performance was measured against the
Datastream World Pharmaceutical & Biotechnology Index (total return, sterling
adjusted). Following shareholder approval, gained at the Annual General
Meeting held on 15 July 2010, the Company's benchmark was changed to the MSCI
World Health Care Index (total return, sterling adjusted). The Board agreed
with the Company's Investment Manager
that the new benchmark would be used for performance comparison purposes with
effect from 1 October 2010.
INVESTMENT POLICY
The Board seeks to manage the Company's risk by imposing various investment
limits and restrictions. The limits and restrictions remain unchanged from
those published in the annual report for the year ended
31 March 2010. A summary of the key limits and restrictions are as follows:
The Company will not invest more than 10% of its gross assets in other UK
listed investment companies (including listed investment trusts). It will not
invest more than 15% of the portfolio in any one individual stock at the time
of acquisition. 60% of the portfolio will normally be invested in larger
companies (i.e. with a market capitalisation of at least US$5bn). 20% of the
portfolio will normally be invested in smaller companies (i.e. with a market
capitalisation of less than US$5bn). Investment in unquoted securities will
not exceed 10% of the portfolio at the time of acquisition. Derivative (using
options) transactions can be used to mitigate risk or enhance capital returns
and exposure will be restricted to 5% of the portfolio.
The Company does not hedge its foreign currency exposure.
In accordance with the requirements of the UK Listing Authority, any material
change to the investment policy will only be made with the approval of
shareholders by ordinary resolution.
CAPITAL STRUCTURE
Shares
At 30 September 2010 the Company had in issue 43,385,916 shares of 25p each
(30 September 2009: 47,927,769, 31 March 2010: 44,336,756).
During the half year, a total of 1,637,733 shares were bought back by the
Company for treasury. This equates to 3.7% of the issued share capital as at
31 March 2010. On 27 July 2010, a total of 7,877,149 shares held in treasury
were cancelled. The Board has confirmed that any shares held in treasury will
be cancelled on or as soon as practicable following the Annual General Meeting
each year. At 30 September 2010, no shares were held in treasury. Since the
end of the half year a further 103,054 shares have been repurchased for
treasury and, as at 26 November 2010, the Company had 43,313,878 shares in
issue excluding those shares held in treasury.
Subscription Shares
During the half year, 686,893 subscription shares were converted
into ordinary shares, at an exercise price of 614p per share raising £4.2m.
Since the end of the half year a further 31,016 subscription shares were
converted into ordinary shares, at an exercise price of 638p per share raising
£0.2m. As at 26 November 2010, the Company had 8,274,398 subscription shares
in issue.
GEARING
The Company's gearing policy is that it may borrow up to the lower of £70m or
20% of the Company's net asset value. The Company's borrowing requirements are
met through the utilisation of a loan facility, repayable on demand, provided
by the Company's custodian, Goldman Sachs & Co. New York. At
30 September 2010, the Company had borrowed £38.5m under this facility,
equating to 11.6% of the Company's net assets.
CONTINUATION VOTE
The next continuation vote of the Company will be held at the
Annual General
Performance
Six months to One year to
30 September 31 March
2010 2010
Share price (total return)# -0.3% +28.7%
Net asset value per share (total +0.9% +25.9%
return)#
Benchmark index (total return)* -3.6% +24.6%
30 September 31 March Six months
2010 2010 % Change
Shareholders' funds £331.0m £346.2m -4.4
Net asset value per share - diluted
(dilution for subscription shares) 742.9p 752.7p -1.3
Share price 690.0p 701.5p -1.6
Discount of share price to diluted
net asset value per share 7.1% 6.8% -
Benchmark Index * 9,734.2 10,094.2 -3.6
Gearing ** 11.6% 10.4% -
Total expense ratio (excluding
performance fees) 1.0% 1.0% -
Total expense ratio (including
performance fees paid in the 1.1% 1.0 -
period)
# Source - Morningstar. Net asset value diluted for subscription shares and
treasury shares.
* Datastream World Pharmaceutical and Biotechnology Index, total return,
sterling adjusted. With effect from 1 October 2010 the Company's benchmark has
changed to MSCI World Health Care Index, (total return, sterling adjusted).
**Calculated using the Association of Investment Companies' definition (prior
charges as a percentage of net assets).
Chairman's Statement
Change of the Company's Name, Investment Policy and Benchmark
I am pleased to report that at the Company's Annual General Meeting, held on
15 July 2010, the necessary resolutions were passed to change the Company's
name, to amend its investment policy and also to change the Company's
benchmark from the Datastream World Pharmaceutical and Biotechnology Index
(measured in sterling terms on a total return basis) to the MSCI World Health
Care Index (measured in sterling terms on a total return basis). The Board has
agreed with your Investment Manager that there should be a period of
transition in order to allow them to realign the portfolio to reflect the new
investment policy and benchmark. Accordingly, it has been agreed that the new
benchmark will be used for performance comparison purposes with effect from 1
October 2010.
Performance
Following strong performance from markets and the Company during its last
financial year, the returns from global markets over the first half of the
current financial year were mixed. This was also reflected in the performance
of the healthcare sector with the Datastream World Pharmaceutical and
Biotechnology Index (measured in sterling terms on a total return basis)
falling by 3.6% during the period. By way of comparison, the MSCI World Health
Care Index (measured in sterling terms on a total return basis) fell by 5.6%
during the same period. This compares to the Company's net asset value total
return of +0.9% and a share price total return of -0.3%. The discount of the
Company's share price to the Company's diluted net asset value per share
widened slightly during the period to close at 7.1% compared to 6.8% six
months ago.
Our Investment Manager has begun repositioning the portfolio to reflect the
Company's amended investment policy and benchmark.
Capital
The Board regularly reviews its discount policy. The formal discount
management policy in place seeks to maintain the discount to the net asset
value per share at which the Company's shares are quoted on the London Stock
Exchange at no greater than 6% over the long-term, subject to adverse market
conditions. There can be no guarantee that the Board's discount policy will
always be successful or capable of being implemented. During the six months
under review the Company repurchased 1,637,733 shares for treasury at a total
cost of £10.9m (including expenses).
On 27 July 2010, a total of 7,877,149 shares held in treasury were cancelled.
The Board has confirmed that any shares held in treasury will be cancelled on
or as soon as practicable following the Annual General Meeting each year.
During the period and to the date of this report a total of 686,893
subscription shares were exercised at an exercise price of 614p per share
raising £4.2m of additional funds for the Company and a further 31,016
subscription shares were exercised at an exercise price of 638p per share
raising £0.2m. The next subscription date will be 31 January 2011 at a
subscription price of 638p per share.
Revenue and Dividends
The revenue return for the period was £2,196,000 (six months ended 30
September 2009: return of 1,175,000) and no interim dividend is declared (six
months ended 30 September 2009: nil).
Outlook
The prospect of healthcare reform in the U.S. had served as an overhang on the
healthcare sector generally and had led to underperformance of healthcare
stocks, including pharmaceuticals in late 2009 and early 2010. Whilst this
situation was clarified with the enacting of the healthcare reform bill in
March 2010, the significant gains made by the Republicans in the recent U.S.
mid-term elections have again created uncertainty as to the nature of the
reform.
On a global basis, healthcare spending is set to continue to rise into 2011,
and ageing populations, particularly in Western countries, will place
increasing pressure on available government healthcare spending. Patent expiry
continues to be an issue for the sector and the Company's portfolio has
already been positioned to account for this and also for further consolidation
in the sector.
Our focus remains on the selection of stocks with strong prospects for capital
enhancement and we continue to believe that the long term investor in our
sector will be well rewarded.
Martin Smith
Chairman
Interim Management Report
Risks and Uncertainties
A review of the half year, including reference to the risks and uncertainties
that existed during the period, and the outlook for the Company can be found
in the Chairman's Statement and the Review of Investments. The principal risks
faced by the Company fall into nine broad categories: objective and strategy;
level of discount/premium; market price and industry risk; liquidity risk;
portfolio performance and financial instruments; operational and regulatory;
credit risk; currency risk; and the risk associated with the Company's loan
facility. Information on each of these areas is given in the Busine3ss review
within the Annual report and accounts for the year ended 31 March 2010. In the
view of the Board these principal risks and uncertainties are applicable to
the remaining six months of the financial year as they were to the six months
under review.
Related Party Transactions
During the first six months of the current financial year, no transactions
with related parties have taken place which have affected the financial
position or the performance of the Company during the period.
Directors' Responsibilities
The Directors are responsible for preparing the interim report in accordance
with applicable law and regulations. The Directors confirm that to the best of
their knowledge the condensed set of financial statements within the interim
report, have been prepared in accordance with the Accounting Standards Board's
Statement `Half Yearly Financial Reports' and that the Chairman's Statement
and the Interim Management Report include a fair review of the information
required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules.
The interim report has not been reviewed by the Company's auditors.
The interim report was approved by the Board on 26 November and the above
responsibility statement was signed on its behalf by:
Martin Smith
Chairman
Review of Investments
Performance
For the period of 1 April to 30 September 2010, the broad markets
demonstrated a roller coaster of performance, with a steep sell off in May,
volatility in the summer months, before a significant, but only partial
recovery in September. Despite such volatility in the global equity markets,
the net result was only modestly negative, as the World Datastream Market
Index was down 1.6% in sterling terms on a total return basis during this
period. Moreover, healthcare stocks underperformed during the period; the
Datastream Pharmaceutical & Biotechnology Index, measured in sterling terms on
a total return basis, was down 3.6%.
The Company outperformed both the broader market and the healthcare
specific index, with a share price total return of -0.3% and a net asset value
total return of +0.9%. "Alpha", or excess risk-adjusted returns, from this
period stemmed from our strategy of being highly selective in large
capitalisation pharmaceutical stocks, maintaining an overweight position in
biotechnology stocks and adding exposure to several exciting niche growth
opportunities in areas such as specialty and generic pharmaceutical companies.
An example of such a niche opportunity is our investment in
Japanese generic drug companies. Our long-term expectation of secular growth
in this emerging generic drug market has been prescient as multiple government
initiatives continue to drive accelerating growth for generic drugs in Japan.
Sawai Pharmaceuticals based in Osaka, is one of three key investments in this
theme, and was the largest contributor to performance during this six month
period, largely due to better than expected sales and earnings which drove the
share price. The company's share price suffered in September, however, on
rumours of a takeover-bid for a branded manufacturer in Japan. We are cautious
on this strategic initiative but believe the likelihood of it coming to
fruition is low. Clarity on this issue should re-invigorate the shares. Also
in the top ten contributors for the period were Towa Pharmaceutical and
Nichi-iko Pharmaceutical, both Japanese generic drug manufactures benefitting
from the dramatic growth of generic drugs in that market.
In the large capitalisation pharmaceutical space, Novartis
continues its unparalleled success in research and development (R&D)
productivity with the recent approval of Gilenya, a novel oral therapy for the
treatment of multiple sclerosis. We believe that this therapy will create an
exciting new treatment option for this disease and represents one of the most
important product approvals for the pharmaceutical industry in some while. We
have also initiated a position in the originator of this compound, Mitsubishi
Tanabe Pharma. Overall, we believe the market underestimates the opportunity
offered by Gilenya to both Novartis and Mitsubishi Tanabe. The market
enthusiasm generated by this drug propelled Novartis' shares by more than 10%
during the period and thus was a top five contributor to performance. For now,
the stock remains a key holding.
Taking advantage of mergers and acquisition (M&A) activity in the
biotechnology sector is a long held strategy of the Company. This period was
exceptional for M&A, highlighted by the public offering by French drug maker,
Sanofi-Aventis for Genzyme Corporation. The offer of $69 per share represented
a 38% premium and was an all cash offer that totalled $18.5 billion. While a
deal has yet to be agreed, at the time of writing this report, we believe
there is a high probability that a transaction will occur at a higher price to
be negotiated. Genzyme was the second highest contributor to performance
during the period.
It is also worth noting the contribution of our structured finance
investments. Importantly, all of these investments have performed well to
date, with no "losers" yet seen in the portfolio.
The top two negative contributors during the period experienced
losses that were (in whole or in part) triggered by the actions of the U.S.
Food and Drug Administration (FDA). Roche, the Swiss pharmaceutical company,
suffered a setback when an FDA panel recommended a partial revocation of the
approval of the blockbuster cancer drug, Avastin, specifically for the
treatment of metastatic breast cancer (mBC). While the earnings impact will be
small (as Avastin would remain on the market for the treatment of other
cancers), the negative recommendation caught investors by surprise, causing
the stock to lose nearly $10 billion in market capitalisation, a steep over
reaction, in our view. The FDA may be taking an overly conservative view on
the data as the drug clearly benefits at least some patients with mBC. Adding
to the negative news for Roche was the unusual and unexpected FDA "refusal to
file" letter the company received for its novel next generation cancer
compound known as TDM-1. Filing will now be predicated on additional studies
that will not be complete until 2012. Finally, Roche also announced a pipeline
setback for their emerging diabetes franchise. The culmination of these events
resulted in the stock trading down more than 15% and thus claiming the
designation of the portfolio's top negative contributor in the period. Roche,
however, remains a core holding in the portfolio and we added to the position
after the declines.
Another disappointing holding during the period was the
biotechnology company InterMune. The FDA failed to approve the company's novel
treatment, Pirfenidone, for the treatment of a devastating and lethal disease
known as idiopathic pulmonary fibrosis. InterMune was the second largest
negative contributor to performance in the period. With a high likelihood for
a requirement of additional expensive and time-consuming clinical trials to be
conducted in order to garner U.S. approval, we exited the position.
Sector Developments
Clearly the largest development over the past six months has been
the rippling impact of the passage of the Patient Protection and Affordable
Care Act in the United States, which occurred in March 2010. We continue to
believe this legislation to be a net positive for the healthcare sector and in
particular the pharmaceutical industry. While near term earnings pressure
certainly occurred at the margin for most pharmaceutical companies, long term
the addition of 30 million new lives with healthcare insurance and drug
coverage will be a boon to the industry.
Importantly, this new law contains no provisions that will impose
price controls or install the federal government as a major buyer of drugs,
thus avoiding a worst case scenario for the healthcare industry. In fact, the
term "reform" as applied to this legislation is misleading. Rather, this new
law essentially expands the current federally-sponsored health insurance
programmes, simply allowing more individuals to qualify. While pharmaceutical
companies are required to help pay for this expansion through increased drug
rebates, it is expected to cost the industry only $8 billion per year over 10
years (or $80 billion of the nearly $1 trillion total price tag). Note that
U.S. pharmaceutical market reached over $300 billion in 2009. Thus, we believe
that over time, the additional lives under coverage and the commensurate
increase in drug consumption will more than offset any price or margin
pressure.
We think the defensive appeal of the sector has increased
significantly with the removal of this overhang (i.e. uncertainty surrounding
the timing and impact of healthcare reform) combined with growing concerns
about slowing consumer spending in many developed markets. Healthcare goods
and services are generally "non-discretionary" and should hold up relatively
well in an era of frugal consumer spending
Following on the political theme, the November 2010 mid-term
elections in the U.S. saw the Democrats suffer heavy losses with the
Republicans taking control of the House of Representatives and make
significant gains in the Senate. This result brings uncertainty to the
proposed healthcare reform as the Republicans have indicated that they would
wish to `repeal and replace' the healthcare reform law passed earlier in the
year. However, the polls suggest that, overall, the public wants the
healthcare reform to be amended rather than scrapped altogether. The outcome
is likely to remain unclear for some time.
Finally, heading towards the end of 2010 and early 2011, we view
the number of clinical trial related catalysts to be increasing. This growth
is an encouraging sign of accelerating R&D and new product development for the
sector. We will monitor carefully new clinical data flow in a plethora of
therapeutic categories, in particular cardiovascular, diabetes, rheumatology,
and oncology.
Strategy Review
An important change to highlight for our investors is that the
Company's investment mandate has been expanded recently to include all areas
of healthcare, including medical devices and healthcare services. This
expansion is an exciting opportunity for OrbiMed to utilise a broader range of
ideas and opportunities in pursuit of attractive returns for our investors. In
addition to seeking higher returns, we also believe a more diversified
portfolio will be less volatile. We had already begun repositioning the
portfolio by the 30 September reporting date, with the additions of initial
positions in Health Maintenance Organisations (so called "HMOs"), medical
devices, and healthcare services companies.
Valuation remains a compelling theme in the biotechnology and
pharmaceutical sectors. In both absolute and relative terms, valuations have
declined to historical lows after a nearly 10 year period of underperformance.
We believe this performance and valuation differential provides a significant
opportunity to earn near-term returns across a variety of companies.
Despite the "bargains' in large capitalisation pharmaceutical
companies, we continue to be selective in this sector although different
strategies may be employed. Contrarian value plays with high yields are an
option. Avoiding companies with extreme exposure to the looming 2012 generic
patent cliff is another. Ultimately, however, we favour companies with new
product flow and strong, late stage pipelines. Historically, companies
entering such a new product cycle often outperform the group. This is, after
all, an industry in which growth is driven by the launch of new drugs.
Large capitalisation biotechnology companies remain a key focus.
Growth in this sector is outpacing that of their pharmaceutical peers.
Additionally, while new product risk may be higher in biotechnology companies,
there is lower political and reimbursement risk. Finally, there are few patent
expiration issues.
Certainly we expect M&A in the sector to be robust and likely to
accelerate as we approach 2012. Why? Pharmaceutical companies continue to
prepare for the looming patent cliff and their urgency to solve the problem
will increase as these patent expirations become more imminent. New products
are the solution and acquiring them has proven easier than discovering them
for large companies. Depressed valuations in small and mid-capitalisation
biotechnology stocks create an opportunity for pharmaceutical companies to
make such acquisitions, so we expect M&A deal volumes to increase and remain
healthy. As such, we focus our investments in both high quality biotechnology
and specialty pharmaceutical companies that may also be attractive to large
potential acquirers.
Samuel D Isaly
OrbiMed Capital LLC
Investment Manager
Contribution by Investment - Excluding Options
Top and bottom five contributors to net asset value performance
over the six months to 30 September 2010
Contribution Contribution
per Share (p)*
for the six months
£'000
Top Five contributors
Sawai Pharmaceutical 2,752 6.3
Genzyme 2,539 5.8
NPS Pharmaceuticals 1,998 4.6
Endo Pharmaceuticals 1,764 4.1
Novartis 1,613 3.7
10,666 24.5
Bottom Five contributors
Roche (4,792) (11.0)
InterMune (2,646) (6.1)
Johnson & Johnson (2,283) (5.2)
Allos Therapeutics (1,844) (4.2)
Gilead Sciences (1,817) (4.2)
(13,382) (30.7)
*based on the weighted average number of the Company's shares in
issue during the six months ended 30 September 2010 (43,497,098)
Source: Frostrow Capital LLP
Portfolio
as at 30 September 2010
Fair value % of
Investment Portfolio Country £'000 investments
Novartis Switzerland 32,028 8.0
Pfizer USA 27,404 6.9
Johnson & Johnson USA 24,370 6.1
Merck USA 23,704 5.9
Roche Switzerland 21,695 5.4
Bristol-Myers Squibb USA 17,549 4.4
Mitsubishi Tanabe Pharma Japan 10,331 2.6
Amgen USA 9,617 2.4
Endo Pharmaceuticals # USA 9,079 2.3
GlaxoSmithKline UK 8,593 2.1
Top 10 investments 184,370 46.1
Sinopharm China 8,503 2.1
Sanofi-Aventis France 8,256 2.1
Incyte ^ USA 8,107 2.0
Genzyme USA 7,886 2.0
Abbott Laboratories USA 7,851 2.0
Hospira USA 7,806 1.9
Sawai Pharmaceutical Japan 7,691 1.9
Dendreon ~ USA 7,296 1.8
Nichi-Iko Pharmaceutical Japan 7,045 1.8
Vertex Milestone Monetization (unquoted, CPEC)+ USA 7,040 1.8
Top 20 Investments 261,851 65.5
Shionogi Japan 6,670 1.7
Allergan USA 6,599 1.6
Shire Ireland 6,577 1.6
Towa Pharmaceutical Japan 6,427 1.6
Elan - USA 6,361 1.6
Biomarin Pharmaceutical USA 6,309 1.6
Warner Chilcott USA 6,052 1.5
Vertex Pharmaceuticals = USA 5,609 1.4
Gilead Sciences USA 5,559 1.4
Illumina USA 5,085 1.3
Top 30 Investments 323,099 80.8
Celgene USA 5,045 1.3
Lonza Switzerland 4,908 1.2
VWR Funding 10.25% 15/07/2015 USA 4,420 1.1
Aetna USA 3,811 1.0
NPS Pharmaceuticals USA 3,727 0.9
United Health USA 3,676 0.9
Wellpoint USA 3,591 0.9
Cubist Pharmaceuticals USA 3,456 0.9
Volcano ** USA 3,441 0.9
Human Genome Science USA 3,399 0.9
Top 40 Investments 362,573 90.8
Seattle Genetics USA 3,353 0.8
Zimmer USA 3,320 0.8
Align Technology USA 3,289 0.8
Momenta Pharmaceuticals USA 3,243 0.8
Angiotech Pharmaceuticals FRN 01/12/2013 USA 3,236 0.8
Pharma 10 Cinacalcet Royalty 15.5% 30/03/2017 USA 3,219 0.8
Biogen Idec USA 3,027 0.8
Allos Therapeutics USA 2,726 0.7
Actelion Switzerland 2,574 0.6
Carefusion USA 2,046 0.5
Total 50 Investments 392,606 98.2
QHP Royalty 10.25% 15/03/2015 USA 1,923 0.5
Savient Pharmaceuticals USA 1,812 0.5
Perrigo USA 1,630 0.4
King Pharmaceuticals USA 631 0.2
Given Imaging USA 43 0.0
Total Equities 398,645 99.8
Options - (Put & Call) 994 0.2
Total Investments including options 399,639 100.0
# includes Endo Pharmceuticals 1.75% 15/04/2015 equating to 0.5% of investments.
^ includes Incyte 4.75% 01/10/2015 convertible bond equating to 1.6% of investments.
~ includes Dendreon 4.75% 15/06/2014 convertible bond equating to 0.6% of investments.
- includes Elan 8.75% 15/10/2016 equating to 0.6% of investments.
= includes Vertex Pharmaceutical 3.35% 01/10/2015 equating to 0.7% of investments.
** includes Volcano 2.875% 01/09/2015 equating to 0.3% of investments.
+ Convertible Preferred Equity Certificates (CPEC)
Income Statement
For the six months ended 30 September 2010
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 2010 30 September 2009 31 March 2010
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return Return Return Return
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains
on investments
held at fair - (3,790) (3,790) - 15,192 15,192 - 76,180 76,180
value through
profit or loss
Exchange
(losses)/gains
on currency - (40) (40) - 5,516 5,516 - 3,946 3,946
balances
Income from
investments held
at fair value
through profit 3,059 - 3,059 1,886 - 1,886 5,825 - 5,825
or loss (note 2)
Investment
management,
management and
performance fees
(note 3) (72) (3,264) (3,336) (60) (924) (984) (133) (5,025) (5,158)
Other expenses (304) - (304) (261) (219) (480) (506) - (506)
Net
return/(loss)
before finance 2,683 (7,094) (4,411) 1,565 19,565 21,130 5,186 75,101 80,287
charges and
taxation
Finance charges (4) (78) (82) (6) (121) (127) (11) (212) (223)
Net
return/(loss) 2,679 (7,172) (4,493) 1,559 19,444 21,003 5,175 74,889 80,064
before taxation
Taxation on
ordinary (483) 166 (317) (384) 168 (216) (965) 303 (662)
activities
Net
return/(loss) 2,196 (7,006) (4,810) 1,175 19,612 20,787 4,210 75,192 79,402
after taxation
Return/(loss)
per share - 5.0p (16.1)p (11.1)p 2.8p 46.0p 48.8p 9.5p 170.5p 180.0p
basic (note 4)
Return/(loss)
per share - 5.0p (16.1)p (11.1)p 2.8p 46.0p 48.8p 9.5p 170.5p 180.0p
diluted (note 4)
The "Total" column of this statement is the Income Statement of the Company.
The "Revenue" and "Capital" columns are supplementary to this and are prepared
under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Company has no recognised gains and losses other than those shown above
and therefore no separate statement of total recognised gains and losses have
been presented.
No operations were acquired or discontinued during the period.
Reconciliation of Movements in Shareholders' Funds
Ordinary Subscription Share Capital
(Unaudited) share share premium Capital redemption Revenue
Six months ended capital capital account reserve reserve reserve Total
30 September 2010 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2010 12,644 90 176,648 145,160 5,009 6,630 346,181
Net (loss)/return
from ordinary
activities after - - - (7,006) - 2,196 (4,810)
taxation
Dividend paid in
respect of year
ended 31 March - - - - - (3,653) (3,653)
2010
Subscription 172 (7) 4,045 7 - - 4,217
shares issued
Purchase of
Company's own
shares including (1,969) - - (10,906) 1,969 - (10,906)
expenses
At 30 September 10,847 83 180,693 127,255 6,978 5,173 331,029
2010
Ordinary Share Capital
(Unaudited) share premium Warrant Capital redemption Revenue
Six months ended capital account reserve reserve reserve reserve Total
30 September 2009 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 2009 11,105 117,706 7,417 118,709 3,678 4,402 263,017
Net return from
ordinary - - - 19,612 - 1,175 20,787
activities after
taxation
Dividends paid in
respect of year
ended 31 March - - - - - (1,982) (1,982)
2009
Proceeds from
warrant exercise 2,686 54,590 (7,417) - - - 49,859
Subscription 97 (97) - - - - -
shares issued
Purchase of
Company's own
shares including (1,331) - - (22,360) 1,331 - (22,360)
expenses
At 30 September 12,557 172,199 - 115,961 5,009 3,595 309,321
2009
Reconciliation of Movements in Shareholders' Funds (Continued)
(Audited) Ordinary Subscription Share Capital
Year ended share share premium Warrant Capital redemption Revenue
31 March 2010 capital capital account reserve reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 31 March 11,105 - 117,706 7,417 118,709 3,678 4,402 263,017
2009
Net return on
ordinary
activities - - - - 75,192 - 4,210 79,402
after taxation
Dividends paid
in respect of
year ended 31
March 2009 - - - - - - (1,982) (1,982)
Proceeds from
exercise of 2,686 - 47,174 - - - - 49,860
warrants
Transfer from
warrant
reserve
following - - 7,417 (7,417) - - - -
exercise of
warrants
Subscription - 97 - - (295) - - (198)
shares issued
less issue
costs
Subscription 184 (7) 4,351 - 7 - - 4,535
shares
exercised for
ordinary
shares
Purchase of
Company's own
shares
including (1,331) - - - (48,453) 1,331 - (48,453)
expenses
At 31 March 12,644 90 176,648 - 145,160 5,009 6,630 346,181
2010
Balance Sheet
As at 30 September 2010
(Unaudited) (Unaudited) (Audited)
30 September 30 September 31 March
2010 2009 2010
£'000 £'000 £'000
Fixed assets
Investments held at fair value through
profit or loss 398,645 331,117 383,599
Current assets
Debtors 1,251 793 1,757
Derivative - financial investments 994 1,315 628
2,245 2,108 2,385
Current liabilities
Creditors: amounts falling due within (31,320) (8,143) (3,741)
one year (38,541) (15,761) (36,062)
Bank overdraft
(69,861) (23,904) (39,803)
Net current liabilities (67,616) (21,796) (37,418)
Total net assets 331,029 309,321 346,181
Capital and reserves
Ordinary share capital 10,847 12,557 12,644
Subscription share capital 83 - 90
Share premium account 180,693 172,199 176,648
Capital reserve 127,255 115,961 145,160
Capital redemption reserve 6,978 5,009 5,009
Revenue reserve 5,173 3,595 6,630
Total shareholders' funds 331,029 309,321 346,181
Net asset value per share - basic (note 763.0p 645.4p 780.8p
5)
Net asset value per share - diluted 742.9p 640.1p 752.7p
(note 5)
Cash Flow Statement
For the six months ended 30 September 2010
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2010 2009 2010
£'000 £'000 £'000
Net cash inflow from operating 533 253 2,108
activities
Servicing of finance
Interest paid (82) (127) (223)
Taxation
Taxation recovered 182 169 93
Financial investment
Purchases of investments and (116,763) (151,327) (265,795)
derivatives
Sales of investments and derivatives 124,037 135,054 250,859
Net cash inflow/(outflow) from
financial investment 7,274 (16,273) (14,936)
Equity dividends paid (3,653) (1,982) (1,982)
Net cash inflow/(outflow) before 4,254 (17,960) (14,940)
financing
Financing
Proceeds from exercise of warrants - 49,860 49,860
Subscription share issue costs - - (198)
Purchase of own shares (10,910) (22,973) (49,061)
Subscription shares exercised for
ordinary shares 4,217 - 4,535
Net cash (outflow)/inflow from (6,693) 26,887 5,136
financing
(Decrease)/increase in cash in the (2,439) 8,927 (9,804)
period
Reconciliation of net cash flow
movements to net debt
(Decrease)/increase in cash as above (2,439) 8,927 (9,804)
Exchange movements (40) 5,516 3,946
Movement in net debt in the period (2,479) 14,443 (5,858)
Net debt at beginning of period
(36,062) (30,204) (30,204)
Net debt at period end (38,541) (15,761) (36,062)
Notes to the Financial Statements
1. Accounting Policies
The condensed financial statements have been prepared under the historical
cost convention, modified to include the valuation of investments at fair
value and in accordance with United Kingdom Generally Accepted Accounting
Practice and with the Statement of Recommended Practice `Financial Statements
of Investment Trust Companies and Venture Capital Trusts' dated January 2009.
All of the Company's operations are of a continuing nature.
The same accounting policies used for the year ended 31 March 2010 have been
applied.
2. Income
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2010 2009 2010
£'000 £'000 £'000
Investment income 2,407 1,517 5,763
Interest receivable 652 369 62
Total 3,059 1,886 5,825
3. Investment Management, Management and Performance Fees
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 September 30 September 31 March
2010 2009 2010
£'000 £'000 £'000
Investment management fee 1,044 868 1,924
Management fee 397 340 730
Performance fee charged in
the period/year* 1,895 (224) 2,759
Refund of VAT previously
paid on management fees - - (255)
Total 3,336 984 5,158
*In accordance with the performance fee arrangements described on page 18 of
the 2010 annual report, a performance fee of £4,654,000 was accrued at 30
September 2010.
In addition, during the period, £224,000 was paid which related to a
performance fee which crystallised and became payable at 31 Match 2010.
Notes to the Financial Statements (continued)
4. Return/(Loss) Per Share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended 30 ended 30 Year ended
September September 31 March 2010
2010 2009 £'000
£'000 £'000
The return/(loss) per share is
based on the following figures:
Revenue return 2,196 1,175 4,210
Capital (loss)/return (7,006) 19,612 75,192
Total (loss)/return (4,810) 20,787 79,402
Weighted average number of shares
in issue for the period/year - 43,497,098 42,611,585 44,122,846
basic
Revenue return per share 5.0p 2.8p 9.5p
Capital (loss)/return per share (16.1)p 46.0p 170.5p
Total (loss)/return per share (11.1)p 48.8p 180.0p
Weighted average number of shares
in issue for the period/year - 43,497,098 42,611,585 44,122,846
diluted
Revenue return per share *5.0p *2.8p *9.5p
Capital (loss)/return per share *(16.1)p *46.0p *170.5p
Total (loss)/return per share - *(11.1)p *48.8p *180.0p
diluted
* dilution not applicable
5. Net Asset Value Per Share
The net asset value per share is calculated on attributable assets at 30
September 2010 of £331,029,000 (30 September 2009: £309,321,000 and 31 March
2010: £346,181,000) and 43,385,916 being the number of shares in issue at 30
September 2010 (30 September 2009: 47,927,769 and 31 March 2010: 44,336,756).
The diluted net asset value per share assumes all outstanding subscription
shares were exercised at 638p per share resulting in assets attributable to
equity shareholders of £384,018,000 and on 51,691,330 shares (30 September
2009: assumed all outstanding subscription shares were exercised at 614p per
share resulting in assets attributable to equity shareholders of £369,069,000
and on 57,658,729 shares; March 2010: assumed all subscription shares were
exercised at 614p per share resulting in assets attributable to equity
shareholders of £401,394,000 and on 53,329,063 shares
6. Transaction Costs
Purchase transaction costs for the six months ended 30 September 2010 were
£319,000 (six months ended 30 September 2009: £237,000; year ended 31 March
2010: £467,000).
Sales transaction costs for the six months ended 30 September 2010 were
£229,000 (six months ended 30 September 2009: £214,000; year ended 31 March
2010: £372,000).
These costs comprise mainly commission.
Notes to the Financial Statements (continued)
7. Subscription Shares
During the period ended 30 September 2010 a total of 686,893 subscription
shares were exercised for a total consideration of £4,217,000. At the period
end the Company's share capital included 8,305,414 subscription shares, which
are currently exercisable at 638p per share.
8. Publication of Non Statutory Accounts
The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in sections 434-436 of the Companies
Act 2006. The financial information for the half years ended 30 September 2010
and 30 September 2009 has not been audited or reviewed by the auditors.
The information for the year ended 31 March 2010 has been extracted from the
latest published audited financial statements. The audited financial
statements for the year ended 31 March 2010 have been filed with the Registrar
of Companies. The report of the auditors on those accounts 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 section 498 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.
Alliance Trust Savings Limited
The Company's shares are available through savings plans (including investment
Dealing Accounts, ISAs and SIPPs) operated by Alliance Trust Savings Limited,
which facilitates both regular monthly investments and lump sum investments in
the Company's shares. Shareholders who would like information on the savings
plans should call Alliance Trust Savings Limited on 01382 573737 or log on to
www.alliancetrust.co.uk/alliancetrustsavings/ or email
contact@alliancetrust.co.uk. Calls to this number may be recorded for
monitoring purposes.
An Individual Savings Account (`ISA') is a tax efficient method of investment
for an individual which gives the opportunity to invest in the Company up to
£10,200 in the tax year 2010/2011 and in subsequent tax years when they
subscribe to a Stocks and Shares ISA.
The preceding two paragraphs have been issued and approved by Alliance Trust
Savings Limited. Alliance Trust Savings Limited of PO Box 164, 8 West
Marketgait, Dundee DD1 9YP is registered in Scotland with number SC98767.
Alliance Trust Savings Limited provides investment products and services and
is authorised and regulated by the Finance Services Authority. It does not
provide investment advice.
Capita Registrars - Share Dealing Service
A quick and easy share dealing service is available to existing shareholders
through the Company's Registrar, Capita Registrars, to either buy or sell
shares. An online and telephone dealing facility provides an easy to access
and simple to use service.
Type of trade Online Telephone
Share certificates 1% of the value of the deal 1.5% of the
value of the deal
(Minimum £20.00, max £75.00) (Minimum £25.00, max £102.50)
There is no need to pre-register and there are no complicated forms to fill
in. The online and telephone dealing service allows you to trade `real time'
at a known price which will be given to you at the time you give your
instruction.
To deal online or by telephone all you need is your surname, shareholder
reference number, full postcode and your date of birth. Your shareholder
reference number can be found on your latest statement or certificate where it
will appear as either a `folio number' or `investor code'. Please have the
appropriate documents to hand when you log on or call, as this information
will be needed before you can buy or sell shares.
For further information on this service please contact:
www.capitadeal.com (online dealing) or 0871 664 0445†(telephone dealing)
†Calls cost 10p per minute plus network extras and may be recorded for
training purposes. Lines are open from 8.30 a.m. to 4.30 p.m. Monday to
Friday.
The Share Dealing Service is provided by Capita IRG Trustees Limited which has
issued and approved the preceding paragraphs. Capita IRG Trustees Limited, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU is registered in England
and Wales with number 2729260. Capita IRG Trustees Limited is authorised and
regulated by the Financial Services Authority.
Risk Warnings
- Past performance is no guarantee of future performance.
- The value of your investment and any income from it may go down as well as
up and you may not get back the amount invested. This is because the share
price is determined by the changing conditions in the relevant stockmarkets in
which the Company invests and by the supply and demand for the Company's
shares.
- As the shares in an investment trust are traded on a stockmarket, the share
price will fluctuate in accordance with supply and demand and may not reflect
the underlying net asset value of the shares; where the share price is less
than the underlying value of the assets, the difference is known as the
`discount'. For these reasons, investors may not get back the original amount
invested.
- Although the Company's financial statements are denominated in sterling, it
may invest in stocks and shares that are denominated in currencies other than
sterling and to the extent they do so, they may be affected by movements in
exchange rates. As a result, the value of your investment may rise or fall
with movements in exchange rates.
- Investors should note that tax rates and reliefs may change at any time in
the future.
- The value of ISA tax advantages will depend on personal circumstances. The
favourable tax treatment of ISAs may not be maintained.
Company Information
Directors
John Sclater CVO, (Chairman)
Sven Borho
Paul Gaunt
Dr John Gordon
Peter Keen
Lord Waldegrave of North Hill
Company Registration Number
3376377 (Registered in England)
The Company is an investment company as defined under Section 833 of the
Companies Act 2006.
Registered Office
One Wood Street,
London EC2V 7WS
Website: www.biotechgt.com
Investment Manager
OrbiMed Capital LLC
767 Third Avenue, 30th Floor,
New York NY10017-2023 USA
Telephone: +1 212-739-6400
www.orbimed.com
Registered under the U.S. Securities Exchange Commission.
Manager, Administrator and Company Secretary
Frostrow Capital LLP
25 Southampton Buildings,
London WC2A 1AL
Telephone: 0203 008 4910
E-Mail: info@frostrow.com
Website: www.frostrow.com
Authorised and regulated by the Financial Services Authority.
If you have an enquiry about the Company or if you would like to receive a
copy of the Company's monthly fact sheet by e-mail, please contact Frostrow
Capital using the above e-mail address.
Custodian and Banker
Goldman Sachs & Co.
200 West Street, Third Floor
New York
NY10282
Auditors
Grant Thornton UK LLP
30 Finsbury Square,
London EC2P 2YU
Stockbrokers
Winterflood Investment Trusts
The Atrium Building,
Cannon Bridge, 25 Dowgate Hill,
London EC4R 2GA
Registrars
Capita Registrars
Northern House, Woodsome Park,
Fenay Bridge, Huddersfield,
West Yorkshire HD8 0LA
Telephone (in UK): 0871 664 0300â€
Telephone (from overseas): +44 208 639 3399
Facsimile: +44 (0) 1484 600911
E-Mail: ssd@capitaregistrars.com
Website: www.capitaregistrars.com
Please contact the Registrars if you have a query about a certificated holding
in the Company's shares.
†Calls cost 10p per minute plus network extras and may be recorded for
training purposes. Lines are open from 8.30 a.m.-5.30 p.m. Monday-Friday.
Share Price Listings
The price of your shares can be found in various publications including the
Financial Times, The Daily Telegraph, The Times, The Scotsman and The Herald.
The Company's net asset value per share is announced daily on the TrustNet
website at www.trustnet.com
Identification Codes
Shares:SEDOL:0038551
ISIN:GB0000385517
BLOOMBERG:BIOG LN
Epic: BIOG
Enquiries:
Mark Pope - Tel: 0203 008 4913
Frostrow Capital LLP
25 Southampton Buildings
London WC2A AL
30 November 2009
END
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