Final Results

RNS Number : 9172R

Bellevue Healthcare Trust PLC

06 March 2023

Bellevue Healthcare Trust plc

LEGAL ENTITY IDENTIFIER ('LEI'): 213800HQ3J3H9YF2UI82

Annual Report and Accounts
for the year ended 30 November 2022

INVESTMENT OBJECTIVE

The investment objective of Bellevue Healthcare Trust plc ("the Company") is to provide Shareholders with capital growth and income over the long term, through investment in listed or quoted global healthcare companies. The Company's specific return objectives are: (i) to beat the total return of the MSCI World Healthcare Index (in sterling) on a rolling 3 year period (the index total return including dividends reinvested on a net basis); and (ii) to seek to generate a double-digit total Shareholder return per annum over a rolling 3 year period.

FINANCIAL INFORMATION

	As at 30 November	As at 30 November
	2022	2021
Net asset value ("NAV") per Ordinary Share (cum income)	171.16p	184.91p
Ordinary Share price	158.20p	186.20p
Ordinary Share price (discount)/premium to NAV ¹	(7.6)%	0.7%
Ongoing charges ratio ("OCR") ¹	1.04%	1.08%

PERFORMANCE SUMMARY

	% change²	% change³
	30 November 2022	30 November 2021
Share price total return per Ordinary Share ^1,4	-11.9%	+11.4%
NAV total return per Ordinary Share ^1,4	-4.1%	+10.3%
MSCI World Healthcare Index total return (GBP) ⁴	+14.1%	+16.3%

¹ These are Alternative Performance Measures.

² Total returns in sterling terms for the year ended 30 November 2022.

³ Total returns in sterling terms for the year ended 30 November 2021.

⁴ Including dividends reinvested in the year.

Source: Bloomberg.

ALTERNATIVE PERFORMANCE MEASURES ("APMs")

The financial information and performance summary data highlighted in the footnote to the above tables represent APMs of the Company. In addition to these APMs other performance measures have been used by the Company to assess its performance; these can be found in the key performance indicators section of the Annual Report. Definitions of these APMs together with how these measures have been calculated can be found in the Annual Report.

Chairman's Statement

Dear Shareholders

This is the sixth annual report of your Company. And this is the first one in what has hopefully become the post-Covid era (outside of China).

Whilst not everything has yet returned to pre-pandemic norms, I remain satisfied that both as a Board and a Company we have continued to operate effectively alongside our service providers. Our Managers also report that pandemic-era disruptions are no longer an issue.

PERFORMANCE

Over the financial year, the Company's total NAV return (i.e. including reinvestment of dividends) was -4.1%. In contrast the MSCI World Healthcare total return Index produced a positive total return of 14.1%, representing an underperformance of 18.2% over the year.

The returns are summarised in the following table:

Cumulative & annualised performance

	Cumulative						Annualised
						Since				Since
	1 Year	2 Years	3 Years	4 Years	5 Years	inception	1 Year	3 Years	5 Years	inception
Share Price	-11.9%	-1.8%	20.3%	28.6%	56.4%	88.5%	-11.9%	6.3%	9.4%	11.1%
NAV (inc.dividend reinvested)	-4.1%	5.8%	31.8%	40.5%	74.2%	104.2%	-4.1%	9.6%	11.7%	12.6%
MSCI World Healthcare Index (GBP)	14.1%	32.2%	45.8%	57.5%	85.9%	112.8%	14.1%	13.4%	13.2%	13.4%

This is the second annual report where I have to acknowledge underperformance of the Company against the index and the first where the absolute total return was negative. As per last year, I will refer readers to the longer term track record. However, this is not to minimise any potential concerns that investors may have; I will seek to address those below.

Nevertheless, some of my comments from last year's statement bear repeating in what has remained a challenging macro environment for active equity managers: "Short term variations should never change an investment process"; the "Investment Manager remains true to its investment process" and "continues to focus on bottom-up fundamental analysis to drive stock selection predicated on superior long-term returns."

BOARD COMPOSITION AND EVALUATION

The Board remains unchanged from last year. Though we have no immediate plans for recruiting new Board members, succession planning and maintaining competencies and skills is paramount and considered regularly by the Board. The current Board composition complies with the recommendations of the Hampton-Alexander and Parker reviews.

Per the AIC Code's recommendations, the Board undertakes an annual evaluation of its performance and that of its committees and individual Directors. This year an internal review process was undertaken and the results were positive. The next external review will take place within the next 12 months.

FEES AND CHARGES

The Board undertook its annual review of fees and ongoing charges. Our OCR improved to 1.04% (2021: 1.08%) as the Manager absorbed the Company's marketing costs within the existing management fee. However, there are a number of fixed costs in our cost base, thus reduction in AUM (discussed below) may adversely impact OCR.

PORTFOLIO POSITIONING

The portfolio remains US centric, with particular exposure to the Small/Mid Cap end of the market capitalisation spectrum. The Investment Mandate has few constraints beyond liquidity (at both the portfolio and individual company level), giving the Investment Manager free reign to pursue a 'best ideas' approach and optimise the risk/return potential of the Company's concentrated investment portfolio over the long term, in line with the Company's stated investment objectives.

Our active share versus the comparator Index at the end of November 2022 was 95.9% and has averaged 93.4% since inception. Such a highly active strategy will inevitably result in a return profile that does not correlate to that comparator in the short-to-medium term, for better and for worse.

For more detailed stock and sub-sector commentary I refer readers to the Investment Manager's report in the following pages and also the monthly factsheets, which remain the best resource for timely updates on the portfolio and the healthcare sector's performance.

The portfolio's substantial exposure to American companies leaves the Company exposed to moves in exchange rates. We do not hedge currency risk, albeit we match the borrowing currency to the assets held. The 2022 financial year saw significant sterling volatility.

Some readers may wonder why we do not hedge this currency exposure. Having run currency hedged portfolios myself, I can attest to the complexities of its execution. For a portfolio with a long-term focus, we remain of the view hedging adds complexity, distraction and operational risk without sufficient offsetting benefit. That having been said, the Board regularly reviews its position on this topic with the Investment Manager.

GEARING

The Company has access to a multi-currency revolving credit facility ("RCF") with The Bank of Nova Scotia, that allows it to borrow up to USD $280million. The facility is 'committed' through to December 2024; i.e. the Investment Manager has guaranteed access to this borrowing (within limits agreed by the Board) should it see attractive opportunities. As of 30 November 2022, the Company's leverage ratio (under the "gross method") was 4.0% and our aim is to run a mid-single digit average over the long run (the average gearing since inception is 2.8%).

RESPONSIBLE INVESTING

Both the Company and the Appointed Manager, Bellevue Asset Management are committed to Environmental, Social & Governance issues ("ESG") being an important part of the decision making process. More details around this topic can be found in the Report.

SHARE CAPITAL AND ISSUANCE

The Company's issued share capital was 586,783,083 Ordinary Shares as of 30 November 2022 (30 November 2021: 558,910,904).

In the first half year to 31 May 2022, the Company issued 27,872,179 new Ordinary Shares. Thereafter, share issuance was not possible because the shares were trading at a discount to NAV. During the year ended 30 November 2022, the Company's average discount was 1.6%. In November we received redemption notices for 30.6 million shares, more than offsetting the issuance during the year.

At the AGM, we will be seeking authority to issue c. 55m new Ordinary Shares to meet potential investor demand and to fulfil the scrip dividend commitment. Any new tap issuance can only be done at a premium to NAV and continued issuance will only be possible if the Company's shares again trade at a premium to NAV.

BUYBACK AUTHORITY

The Company has authority to buyback 86,904,879 Ordinary Shares (14.99% of the shares outstanding at the last AGM on 22 April 2022). The buyback is managed on an arm's-length basis by our broker, under a framework set by the Board. This may change depending on market circumstances and regulatory requirements; however, it is always undertaken at a discount to NAV and is thus accretive to shareholders. At the forthcoming AGM, we will be seeking to renew the buyback authority.

PERFORMANCE, REDEMPTIONS AND BUYBACKS

The Company holds a concentrated portfolio of focused, high growth healthcare companies and eschews the highly diversified leviathans that dominate the comparator Index (the combined market value of the top 10 companies in the 142 stock MSCI World Healthcare Index is greater than the combined value of the 121 "smallest" companies within it).

Generally speaking, the valuations ascribed to such companies can be more sensitive to interest rates, assumed growth rates and market sentiment than larger, more pedestrian companies. Short term, however the biggest driver of stock prices is not theoretical valuation, but the balance between buy and sell orders (as the investment manager highlighted in the interim report).

Where does this demand originate? A lot of asset allocators have historically followed variants of the '60:40' portfolio model - i.e. 60% equities and 40% bonds, particularly in the US. Calendar 2022 was one of the few years on record where both equities and fixed income fell. Inevitably such a situation leads to 'de-risking', where investors hoard cash and allocate more conservatively in terms of what securities they hold. This often means a pivot from smaller to larger companies (and more 'index hugging').

Combine the above with central banks moving to a tighter monetary policy, and governments reversing pandemic largesse, and we have market conditions where liquidity is less abundant than it was. In such an environment, selling pressure on smaller companies leads to disproportionate moves and reconfirms Benjamin Graham's adage that 'In the short run, the market is a voting machine, but in the long run, it is a weighing machine'. Graham also described the market as a 'manic-depressive' which, in the depths of despondency, offers the intelligent investor attractive opportunities at discounted prices.

The first consequence of all of the previously described market dynamic is that our portfolio, more exposed to innovation and growth and so concurrently more exposed to smaller companies, did less well than the wider market or our comparator index.

A second, perhaps less than surprising, consequence is that a combination of reweighting by asset allocators, and relative underperformance led to some investors availing themselves of the opportunity to redeem shares via the annual redemption option. The redemptions represented 5.2% of the outstanding share capital at the time. For a variety of reasons, some investors did not take up the redemption opportunity, and chose to sell in the market instead. This 'selling pressure' led to our shares trading at a larger discount, which in turn triggered the buyback programme.

The objective of a buyback is to provide some blunting of extreme market moves when there is a mismatch of buying and selling. As we only execute buybacks at a discount, the procedure is accretive to shareholders. We hope that the New Year will bring improved performance that in turn will attract buyers and contribute to a narrowing of the discount and ultimately share price appreciation.

DIVIDEND

The Company targets an annual dividend of 3.5% of preceding year-end NAV, paid out in two equal instalments. The Company paid out a final dividend of 3.015p in respect of the year 2021, in April 2022 and an interim dividend of 3.235p in respect of the financial year 2022 in September 2022.

The Board has proposed a final dividend of 3.235p per Ordinary Share in respect of the financial year 2022 and, if approved at the forthcoming Annual General Meeting, this will be paid to Shareholders in May 2023.

For the financial year 2023, the Board is proposing a total dividend of 5.990p per Ordinary Share, composed of interim and final dividends of 2.995p per Ordinary Share, to be paid in August 2023 and April 2024 respectively, subject to shareholder approval. This will be the first year that the Company's dividend pay-out will be reduced, reflecting the lower year-end NAV.

The Company introduced a scrip dividend alternative in 2019, allowing Shareholders to elect for their cash dividend to be automatically subscribed on their behalf for new Ordinary Shares. Certificated Shareholders who have already joined the scheme through the Registrar's website need take no further action to continue with it. Certificated Shareholders who wish to elect for the scrip dividend alternative for the first time can do so online or by contacting the Company's registrar. Further details can be found in the Annual Report. Uncertificated Shareholders can make an election via the CREST system.

Uptake of the scrip dividend has not been as high as we had hoped and has declined in recent years, which appears due to a number of insurmountable technical issues relating to the administration of nominee accounts. The Board is monitoring the cost-effectiveness of the scrip programme; but the proposal this year will be for it to continue.

ANNUAL GENERAL MEETING & SHAREHOLDER COMMUNICATION

The next AGM will be on 28 April 2023. Last year, we eschewed a formal presentation in favour of a very interesting and engaging Q&A session between investors and the investment management team. We plan to do the same again this year and hope to see more investors participate, and that the discussion is similarly engaging.

We recognise it is not possible for everyone to attend an AGM hence may I remind readers that we have a dedicated email address for investors to submit any enquiries or feedback they might have: shareholder _ questions@bellevuehealthcaretrust.com. I encourage you to make use of this facility. In the meantime, we will continue to post content from the Investment Manager onto the Company's website to keep you informed of the Company's progress.

On behalf of the Board, may I wish you both a prosperous and healthy year ahead and thank you for your continued support of Bellevue Healthcare Trust Plc.

Randeep Grewal

Chairman of the Board of Directors

3 March 2023

Investment Manager's Report

PERFORMANCE SUMMARY - MACRO THOUGHTS

Bellevue Healthcare Trust plc is now more than six years old. In historical terms, this is a mere snippet of time, but our epoch has included more than its fair share of macroeconomic and geo‑political turmoil.

We saw the end of the greatest bull market run in US stock market history (US S&P500 rose 671% from Mar 09 - Dec 21) amidst the return of positive real interest rates and double-digit inflation. The multi-decade trend of supply chain globalisation and offshoring looks to have gone into reverse; the fashionable mantra of "just in time" lean inventory is now "just in case" working capital investment.

Britain has endured four prime ministers in this six year period, compared to one in the prior six years. America has seen a reality TV star ascend to the most powerful political position in the world; after losing it he appears to have tried to foment an insurrection in a fit of pique (a trick recently copied in Brazil). Congress remains fractious, infested with in-fighting and division. Any meaningful legislative progress looks very unlikely over the next two years.

We have lived through a global pandemic that is estimated to have cost more than 20m lives and counting, and that triggered an economic tsunami which continues to reverberate to this day.

We have another war in Eastern Europe (although you could argue this started in 2014 rather than 2021, and Russia's irredentist tendencies have been on display since 2004's intervention in Georgia). North Korea and Iran have joined the ranks of unfriendly states with apparent offensive nuclear capabilities. Democracy has receded across the world, notably in Asia and Latin America and autocrats are notably on the ascendency.

Figure 1 FY2022 Total Return Data - Key Broad Indices

Human casualties aside, all of these geopolitical and economic uncertainties raise the perceived "risk premium" and elevate market volatility, which was already rising due to human disintermediation (in the 15 years from 2003-2018, the proportion of shares traded algorithmically rose from ~15% to ~75%). It is perhaps no surprise that stock markets have become less predictable in recent years.

As we noted in last year's Annual Report, 2021 was a very challenging period for active investment managers as market sentiment vacillated from pricing in a lockdown "stay at home" dynamic to "the great re-opening". As we have now witnessed via the unwind in the share prices of many technology companies, the "stay at home" winners were hugely over-bought and the "great re-opening" has been more of a whimper than a bang amidst persistent inflation and pressure on the consumer discretionary wallet.

If one were to scan the platitudinous prognostications of Wall Street's panjandrums as we exited 2021, most people got most things wrong (and we do not seek to exclude ourselves here). Seldom has a high active share been so unhelpful. Within this, we have seen a persistent and fundamentally unjustifiable size factor bias that leaves small cap indices much cheaper relative to historical norms than the rest of the market.

Over the financial year in review, most broad regional and global indices were down in dollar terms (Figure 1 below) and, on a calendar year basis, this was one of the worst annual performances in decades. Value outperformed growth and GDP forecasts were cut almost in half.

Most of the negative performance from equity indices came from de-rating. Indeed, the resilience of corporate earnings (and margins) in the face of declining consumer sentiment, broad inflation, a doubling of interest rates and markedly higher energy costs has been one of the most surprising things about the year overall.

Hindsight is informative and irritating in equal measure. We can look back and muse "If only we had done XYZ instead of ABC", but of course we did not know then what we know now, so one must be careful when retrospectively assessing the usefulness of various alternative approaches.

As we will discuss in more detail later, the most notable thing for us about fiscal 2022 was how little the investment portfolio changed. Why was this the case? Simply put, the answer is that very little has changed in the world of healthcare, unlike most other aspects of society; it is a complex industry with long development cycles but also a simple demand driver. The more people there are, especially older people, the more demand there is for healthcare services. This demographic multiplier will not change in the foreseeable future and that is a large part of the reason why we saw no need to significantly alter the investment portfolio.

PERFORMANCE SUMMARY - HEALTHCARE HIGHLIGHTS

It is a truism that investors abhor uncertainty and the healthcare sector's classical defensive attributes were much favoured by generalists during the year and, in general, the duller the better. Managed Care (US health insurers) and Mega-Cap Pharmaceuticals, especially the US ones, were the preferred hiding place. As a consequence, healthcare outperformed the wider market by 15% in sterling terms over the course of FY2022.

As we discussed in detail in the 2022 interim report, the overwhelming dynamic within the healthcare sector over the past 18 or so months has been a size factor bias favouring larger, liquid names as well as preference for much more defensive characteristics (and also away from growth and more toward value), leading the US S&P Pharmaceutical and Managed Care sub-sector indices to make new highs in Q4 2022, whilst the wider S&P 500 Healthcare Index peaked in April 2022.

Figure 2 below illustrates the contribution of the overall positive healthcare sector performance by sub-sector. One could describe this as a tabulation of tediousness, since the four best-performing subsectors also equates to a list of the most predictable (and thus dull) sub-sectors within healthcare. The same top four also includes three of the most liquid and highest weighted sectors in the MSCI World Healthcare Index, our preferred comparator.

Nothing could more succinctly encapsulate the power of the "safety trade" during the period in review. Put another way, it seems reasonable to conclude that the majority of generalist ownership of healthcare was indeed a place to park some cash during a period of wider macro-economic and geopolitical uncertainty.

Figure 2 FY2022 MSCI World Healthcare Index sub-sector performance data

	Weighting	Performance (USD)	Performance (GBP)
Distributors	1.0%	56.2%	73.5%
Managed Care	9.6%	29.7%	44.0%
Diversified Therapeutics	32.7%	15.9%	28.8%
Conglomerate	11.6%	4.3%	15.9%
Focused Therapeutics	8.0%	3.3%	14.7%
Facilities	1.3%	-2.6%	8.2%
Generics	0.4%	-10.4%	-0.4%
Healthcare Technology	1.1%	-12.0%	-2.2%
Tools	9.5%	-16.1%	-6.8%
Med-Tech	15.2%	-17.8%	-8.7%
Healthcare IT	1.5%	-29.2%	-22.9%
Other HC	1.6%	-31.0%	-24.2%
Diagnostics	2.4%	-33.9%	-28.8%
Services	3.3%	-35.5%	-28.8%
Dental	0.9%	-61.2%	-57.0%
Index performance (ex. Dividends)		1.5%	12.7%

Figure 3 below illustrates the impact of these trends on the dispersion of US dollar returns between various healthcare indices by composition and by geography. The US S&P500 Healthcare Index has the highest weighting toward Mega-Cap Pharma, Distributors and Managed Care. Conversely, the European Index has little exposure to Distributors and zero to Managed Care and fared less well. Finally, one can see the US Nasdaq Biotech Index, which is where most of the innovation (and thus growth) claimed by the Mega-Cap Pharma companies actually originates, fared poorest of all.

It is worth noting also that most of the European companies within the Stoxx 600 and many of the non-US companies in the MSCI World Healthcare will have benefitted earnings-wise from the strengthening of the dollar.

Figure 3 FY2022 Total Return Data - Key Healthcare Indices

To summarise: in what is generally a stable sector from a regulatory perspective, with very visible long-term demand growth drivers, the macro demand picture seldom changes quickly. As a consequence, stock-picking wins out over sub-sector allocations and the best long-term strategy has been to own the true innovators or the stocks where any future success has been fully discounted by the market for some reason or otherwise where one can get comfortable that this is the wrong conclusion. However, these approaches did not work well in 2022 and few active managers were able to beat the index. Generally speaking, the more tilted you were toward innovation and growth, the worse the performance.

The important question for any healthcare investor is whether or not this dynamic represents a 'new normal' (after all, it has persisted for some fifteen months) or is simply an aberration. As noted previously, such things can only really be determined in hindsight, when one looks back at a situation after it has changed or reverted to historical norms.

Ahead of any obvious inflection, one can only really ponder the question as to whether or not a revised dynamic would be appropriate. We all know the cost of equity has risen due to higher risk free rates. However, as we discussed in the May 2022 factsheet, the market's multiple compression went far beyond anything that could be justified by the application of a higher discount rate; the reverse discount rates implied by share prices between different sub-sectors and also between companies in the same sub-sectors suggest that the multiple compression was rather arbitrary and even capricious.

Has the regulatory or payor landscape changed in a way that merits lower valuations/higher risk premia on top of that risk-free rate increase? The simple answer is no. What about funding for non‑commercial and non-profitable entities? The oft-touted biotech funding crisis (i.e. the risk that companies will not be able to raise money to continue operations) is a canard. Bad companies (of which the post-COVID IPO and SPAC boom created many) struggle and deservedly so. The good ones do not.

During 2022, we actually had quite a low level of exposure to companies that we expected would need or want to raise money on a 1-2 year view (six of 37 owned during the period), and five companies actually raised money through additional equity issuance during the year, but that low exposure still didn't help performance-wise.

In conclusion, 2022 feels like an aberration to us and we continue to expect our investors to be handsomely rewarded for their patience in the fullness of time. To paraphrase (and misquote) Hemingway, these sorts of things happen slowly at first and then very quickly, so you need to stick to your knitting rather than try to rotate into these things when the timing feels right. The cream rises to the top eventually, even if the milk is sour.

PERFORMANCE SUMMARY - BELLEVUE HEALTHCARE TRUST

It bears repeating that the stated investment strategy leads to a portfolio with certain inherent characteristics: dollar dominance, mid-cap focus and low benchmark correlation and it must be obvious from the comments in the previous section that such factor characteristics have been negatively correlated with wider market performance over the past year and 2022 again saw an underperformance versus our key comparator index, the MSCI World Healthcare Index (Figure 4).

Figure 4 Bellevue Healthcare Trust - FY2022 Financial Performance Summary

Total Return (GBP)	Fiscal year 2022	Rolling 3 Year	Rolling 3 Year (annual eq.)	Since Inception (1-12-16)
Company Share Price	-11.9%	+20.3%	+6.3%	+88.5%
Company NAV	-4.1%	+31.8%	+9.6%	+104.2%
MSCI World Healthcare Index	+14.1%	+45.8%	+13.4%	+112.8
Relative to MSCI World Healthcare Index
Company Share Price	-26.0%	-25.5%	-7.1%	-24.3%
Company NAV	-18.2%	-14.0%	-3.8%	-8.6%
Performance of other comparator indices
MSCI World Total Return Index	-1.0%	+34.6%	+10.4%	+86.1%
FTSE All Share Total Return Index	+2.8%	+12.2%	+3.9%	+39.5%

Source: Bloomberg. All performance figures are calculated as total return with dividends being reinvested in the relevant security, calculated in GBP and with the relevant period ending on 30 November 2022.

The poor investment return performance in late FY2021 and FY2022 has taken us behind the benchmark for our performance since inception when measured to the end of FY2022. When considering the total shareholder return, the emergence of a discount rating on the Company's share price during the year has compounded the negative performance. The shares flirted with a discount rating at some point during every month of 2022 but the discount became entrenched in late June.

Thereafter, the discount mainly hovered around the 3-5% level until late November when we saw a material seller emerge, pressuring the shares through the end of November 2022 to January 2023, sending the discount to 7.6% at the end of the fiscal year and 9% at the end of the calendar year, compared to a premium of 0.7% and 0.8% respectively for the same points in 2021. The performance since inception has recovered materially during the first three months of FY2023. However, the discount persists, in line with our sector peers.

It is of little consolation to us that, since the inception of the company, the Bellevue Healthcare Trust remains the best performing UK-listed healthcare-oriented Investment Trust ¹ ; we have very little interest in what other people are doing; our focus is on making money for our investors and our aim to deliver material outperformance over the longer-term.

1 Source: Bloomberg. All performance figures are calculated from the inception date of the Trust (1 December 2016) as total return with dividends being reinvested in the relevant security, calculated in GBP and with the relevant period ending on last practicable date before publication (17 January 2023). The UK Healthcare peer group consists of Worldwide Healthcare Trust, Polar Capital Global Healthcare Trust, Biotech Growth Trust, Syncona and International Biotech Trust.

Figure 5 Total Return (NAV) since inception of Bellevue Healthcare Trust vs. UK listed comparables

PORTFOLIO SUMMARY

During fiscal 2022, the Company held positions in 37 companies (compared to 40 in FY2021) and we began the year with 31 positions and ended the year with 29 (i.e. four additions and six exits). As noted previously, this was a more consistent portfolio than in 2021; where we saw 19 changes over the year, versus 10 during FY2022.

The portfolio constituents as of November 2022 were unchanged since June 2022. Two of the six additions during the year were reinvestments in companies that had been in the portfolio previously (Intuitive Surgical and Pacific Biosciences). Of the six exits, only one was due to M&A, whereas four were M&A-related in FY2021.

Of the remaining five exits, two were due to the companies reaching our fair values and us seeing insufficient further upside to justify continued ownership and the remainder were cases where the investment thesis failed or the company changed its strategic direction in a manner that we did not find compelling.

The evolution of the portfolio at a sub-sector level is illustrated in Figure 6 below. Investors can find commentary on the month-by-month evolution of the sub-sector exposure in the monthly factsheets. The table illustrates a few broad trends that were driven by a combination of relative performance and valuation (generally speaking, we exited outperforming sectors to rotate into those with a more compelling risk/reward profile). This is exemplified by the evolution of our holdings in diversified Therapeutics, Managed Care and Healthcare IT. On the opposite side, we have re-entered the Dental market and increased our exposure to Services, Med-Tech and Diagnostics on the re-emergence of compelling valuation opportunities.

Figure 6 Portfolio sub-sector evolution

Subsector Allocation as of	November 2021	May 2022	November 2022	Change (year-on-year, bp)
Conglomerates	0.0%	0.0%	0.0%	n/a
Dental	0.0%	0.7%	1.2%	+122bp
Diagnostics	9.5%	11.9%	10.5%	+101bp
Distributors	0.0%	0.0%	0.0%	n/a
Diversified Therapeutics	10.9%	8.1%	6.4%	-454bp
Facilities	0.0%	0.0%	0.0%	n/a
Focused Therapeutics	28.7%	24.5%	24.3%	-434bp
Generics	0.0%	0.0%	0.0%	n/a
Healthcare IT	8.2%	4.9%	5.4%	-279bp
Healthcare Technology	4.3%	3.5%	3.9%	-41bp
Managed Care	14.7%	9.8%	7.0%	-774bp
Medical Technology	10.0%	15.2%	19.3%	+932bp
Services	11.5%	15.8%	15.3%	+387bp
Tools	2.1%	5.6%	6.5%	+440bp
Other Healthcare	0.1%	0.0%	0.2%	n/a
Total	100.0%	100.0%	100.0%

With regard to the portfolio breakdown by market capitalisation and geography, the previous comments regarding a rotation from outperforming sectors toward those with more compelling valuations and growth prospects are similarly reflected in a slight downward drift in the median market capitalisation. We had around 600bp less exposure to Mega-Cap companies, with around 300bp more in both the Small-Cap and Mid-Cap categories.

Figure 7 Market capitalisation breakdown

The Company's portfolio liquidity parameters are unchanged. The portfolio remained highly liquid; we estimate 90% of the portfolio could be liquidated within eight days at a participation rate of 20%. The strong geographical bias to the United States continued, although exposure to Europe and Rest of World has risen mainly because valuations in China came under significant pressure due to COVID‑19 disruptions, lowering the relative contribution of this region.

Geographical breakdown (operational HQ)

Our top five and bottom five contributors to the evolution of the NAV are summarised in Figure 8 below, along with their share price development in sterling over the fiscal year (which does not necessarily correspond to their performance for the Company, since the size and duration of our holdings may vary over the year). We would note that none of the top performers were M&A targets, which is a contrast to 2021, when the top three performers were all acquired during the year.

Figure 8 FY2022 Top and Bottom performers

	Top 5 Performers
Company	Sub-sector	Performance (GBP)
Jazz Pharmaceuticals	Diversified Therapeutics	+45.4%
Sarepta Pharmaceuticals	Focused Therapeutics	+68.8%
Vertex Pharmaceuticals	Focused Therapeutics	+88.0%
United Healthcare	Managed Care	+37.0%
Elevance Health	Managed Care	+45.7%

	Bottom 5 Performers
Company	Sub-sector	Performance (GBP)
Insmed	Focused Therapeutics	-25.4%
Hutchmed	Focused Therapeutics	-60.2%
Accolade	Healthcare IT	-61.8%
Tandem Diabetes Care	Healthcare Technology	-63.4%
CareDx	Diagnostics	-66.7%

Insmed and Accolade were in the bottom five performers in 2021, as were Vertex and Jazz; nothing really changed for either of these latter companies during the year. Both Vertex and Jazz delivered on their pipeline as expected and were re-rated by the market and we sit on substantial positive IRRs over our ownership period (2.3 and 6.1 years respectively). To our minds, this serves to highlight the fickle nature of market sentiment and the costs and opportunities that are created by it. We do not hold on to "losing" stocks out of belligerence or intellectual arrogance, but because sometimes the market is too short-term or just plain wrong: there would be no opportunities to outperform the market if this were not the case.

Insmed seemingly panicked into what we consider to be an ill-judged multi-faceted financing round. However, the business has continued to hit its marks and so we have elected to remain substantial owners of what we consider to be a very undervalued asset. Tandem Diabetes Care confused the market with comments on the outlook in Q3 22 that raised some justifiable concerns with respect to management's visibility over the business. However, its new product cycle is strong and it trades at a depressed valuation both relative to peers, its own history and on an absolute basis.

Hutchmed suffered a regulatory setback (based on FDA protocol revisions rather than a drug not working) and has been caught up in the wider China-COVID negative sentiment and concerns over potential US de-listing due to a US-China spat over audit data that was resolved in December 2022.

Accolade supplies benefit navigation software to help employees optimise their use of available healthcare benefits. Sentiment toward the company turned negative due to perceived concerns about the impact of such "premium" services and wider employment trends in the event of a US recession and the loss of the company's first 'cornerstone' customer, compounded by cautious guidance. This has all proven to be misplaced; the business outlook remains very robust and we remain committed long-term holders of a company that has demonstrated it adds tangible value to its clients with respect to optimising its clients' employee healthcare provision.

Full investment portfolio as of 30 November 2022

	Company	Sub-sector classification	% Portfolio
1	SAREPTA THERAPEUTICS	Focused Therapeutics	6.8
2	JAZZ PHARMACEUTICALS	Diversified Therapeutics	6.4
3	AXONICS	Med-Tech	5.9
4	OPTION CARE HEALTH	Services	5.8
5	CHARLES RIVER	Services	5.7
6	INSMED	Focused Therapeutics	4.9
7	APELLIS PHARMACEUTICALS	Focused Therapeutics	4.4
8	SILK ROAD MEDICAL	Med-Tech	4.3
9	UNITEDHEALTH GROUP	Managed Care	4.0
10	TANDEM DIABETES CARE	Health Tech	3.9
Total Top 10			52.1
11	AMEDISYS	Services	3.9
12	EXACT SCIENCES	Diagnostics	3.8
13	BIO-RAD LABORATORIES	Tools	3.6
14	EVOLENT HEALTH	Healthcare IT	3.4
15	VERTEX PHARMACEUTICALS	Focused Therapeutics	3.1
16	CAREDX	Diagnostics	3.1
17	ELEVANCE HEALTH	Managed Care	3.0
18	INTUITIVE SURGICAL	Med-Tech	3.0
19	OUTSET MEDICAL	Med-Tech	2.9
20	PACIFIC BIOSCIENCES	Tools	2.8
21	AXSOME THERAPEUTICS	Focused Therapeutics	2.6
22	ATRICURE	Med-Tech	2.3
23	ACCOLADE	Healthcare IT	2.0
24	ADAPTIVE BIOTECHNOLOGIES	Diagnostics	1.9
25	HUTCHMED	Focused Therapeutics	1.9
26	CASTLE BIOSCIENCES	Diagnostics	1.7
27	STRAUMANN HOLDINGS	Dental	1.2
28	VENUS MEDTECH	Med-Tech	0.9
29	AURINIA PHARMACEUTICALS	Focused Therapeutics	0.8
Total portfolio			100.0
Gross exposure			£1,043.3 million
Net value of assets			£1,004.3 million

Recent trading and outlook

In these fast moving and macro-oriented times, we continue to recommend that investors rely upon the detailed and discursive monthly factsheets for an up-to-date view on the outlook. These can be found on the Company's website ² .

As noted previously, we are pleased to report that the Company's performance in the three months to the end of February 2023 has been positive on a relative and absolute basis.

Paul Major and Brett Darke

Bellevue Asset Management (UK) Ltd

3 March 2023

² www.bellevuehealthcaretrust.com/uk-en/private/portfolio-strategy/performance-and-portfolio/bellevue-healthcare-trust-lse-gbp

Investment Policy, Results and Key Performance Indicators

INVESTMENT POLICY

The Company invests in a concentrated portfolio of listed or quoted equities in the global healthcare industry. The Company may also invest in ADRs, or convertible instruments issued by such companies and may invest in, or underwrite, future equity issues by such companies. The Company may utilise contracts for differences for investment purposes in certain jurisdictions where taxation or other issues in those jurisdictions may render direct investment in listed or quoted equities less effective. Any use of derivatives for investment purposes is made on the basis of the same principles of risk spreading and diversification that apply to the Company's direct investments, as described below, and such use is not expected in the normal course to form a material part of the Gross Assets.

The investable universe for the Company is the global healthcare industry including companies within industries such as pharmaceuticals, biotechnology, medical devices and equipment, healthcare insurers and facility operators, information technology (where the product or service supports, supplies or services the delivery of healthcare), drug retail, consumer healthcare and distribution.

No single holding will represent more than 10 per cent. of Gross Assets at the time of investment and, when fully invested, the portfolio will have no more than 35 holdings. The Company will typically seek to maintain a high degree of liquidity in its portfolio holdings (such that 90 per cent of the portfolio may be liquidated in a reasonable number of trading days) and as a consequence of the concentrated approach, it is unlikely that a position will be taken in a company unless a minimum holding of 1.0 per cent. of Gross Assets at the time of investment can be achieved within an acceptable level of liquidity.

There are no restrictions on the constituents of the Company's portfolio by index benchmark, geography, market capitalisation or healthcare industry sub-sector. Whilst the MSCI World Healthcare Index (in sterling) will be used to measure the performance of the Company, the Company does not seek to replicate the index in constructing its portfolio. The portfolio may, therefore, diverge substantially from the constituents of this index (and, indeed, it is expected to do so). However, the portfolio is expected to be well diversified in terms of industry sub-sector exposures. Given the nature of the wider healthcare industry and the geographic location of the investable universe, it is expected that the portfolio will have a majority of its exposure to stocks with their primary listing in the United States and with a significant exposure to the US dollar in terms of their revenues and profits. Although the base currency of the Company is sterling which creates a potential currency exposure, this will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.

The Company will not invest in any companies which are, at the time of investment, unquoted or untraded companies and has no intention of investing in other investment funds.

BORROWING POLICY

The Company may deploy borrowing to enhance long-term capital growth. Gearing will be deployed flexibly up to 20 per cent. of the Net Asset Value, at the time of borrowing, although the Portfolio Manager expects that gearing will, over the longer term, average between 5 and 10 per cent. of Net Asset Value. In the event that the 20 per cent. limit is breached as a result of market movements, and the Board considers that borrowing should be reduced, the Portfolio Manager shall be permitted to realise investments in an orderly manner so as not to prejudice shareholders.

No material change will be made to the investment policy without the approval of shareholders by ordinary resolution.

DIVIDEND POLICY

The Company will set a target dividend each financial year equal to 3.5% of Net Asset Value as at the last day of the Company's preceding financial year. The target dividend will be announced at the start of each financial year. This is a target only and not a profit forecast and there can be no assurance that it will be met.

Dividends will be financed through a combination of available net income in each financial year and other reserves. It is currently expected that most of the total annual dividend will be financed from other reserves. In order to increase the distributable reserves available to facilitate the payment of dividends, the Company cancelled the amount of £146,412,136 standing to the credit of its share premium account immediately following first admission of its Ordinary Shares to trading on the London Stock Exchange in order to create a special distributable reserve. The Company may, at the discretion of the Board, pay all or part of any future dividends out of this special distributable reserve, taking into account the Company's investment objective.

The Company intends to pay dividends on a semi-annual basis, by way of two equal dividends, with dividends declared in July and February/March and paid in August and March/ April in each year.

In accordance with regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations 2011, the Company will not (except to the extent permitted by those regulations) retain more than 15 per cent. of its income (as calculated for UK tax purposes) in respect of an accounting period.

RESULTS AND DIVIDEND

The Company's revenue return after tax for the year amounted to a loss of £1,655,000 (2021: profit of £357,000). The Company's capital return after tax for the year amounted to a loss of £36,769,000 (2021: profit of £86,893,000). Therefore, the total return after tax for the Company was a loss of £41,424,000 (2021: profit of £87,250,000).

The Company targeted a total dividend for the year ended 30 November 2022 of 6.47p per Ordinary Share.

· Interim dividend of 3.235p paid on 2 September 2022

· Final dividend of 3.235p to be paid on 5 May 2023 (to Shareholders on the register at the close of business on 17 March 2023), subject to Shareholder approval at the 2023 AGM.

TARGET TOTAL DIVIDEND FOR THE YEAR ENDING 30 NOVEMBER 2023

As announced by the Company on 21 December 2022, for the financial year ending 30 November 2023, the target total dividend will be 5.99p per Ordinary Share, this being 3.5% of the audited net asset value per Ordinary Share of 171.16p (including current financial year revenue items) as at 30 November 2022. The Board intends to declare an interim dividend of 2.995p per Ordinary Share, being half of the target total dividend for the financial year ending 30 November 2023, in July 2023 and intends to pay this dividend in August/September 2023. The Board intends to propose a final dividend of 2.995p per Ordinary Share for the financial year ending 30 November 2023, in February/March 2024 and intends to pay this dividend in March/April 2024. At the Company's AGM in March 2022, a resolution was passed allowing Shareholders the right to elect to receive their entitlement to the interim dividend in new Ordinary Shares instead of cash in respect of the whole or part of any dividend. The resolution was passed with 99.96% of the proxy votes cast (including discretionary votes) being in favour of the resolution. Shareholders can elect to receive their entitlement to the interim dividend in new Ordinary Shares instead of cash in respect of the whole or part of any dividend.

	Interim dividend	Final dividend	Total dividend
Dividends paid/payable
Year ended 30 November 2021	3.015p	3.015p	6.03p
Year ended 30 November 2022	3.235p	3.235p	6.47p
Target dividend*
Year ending 30 November 2023	2.995p	2.995p	5.99p

* This is a target and should not be taken to imply a profit forecast.

KEY PERFORMANCE INDICATORS ("KPIs")

The Board measures the Company's success in attaining its investment objective by reference to the following KPIs:

(i) To beat the total return of the MSCI World Healthcare Index (in Sterling) on a rolling three year period

The NAV total return from 1 December 2019 to 30 November 2022 was 31.8%. The total return of the MSCI World Healthcare Index (in sterling terms) over the same period was 45.8%.

The Investment Manager's report incorporates a review of the highlights during the financial year ended 30 November 2022. The Investment Manager's report gives details on investments made during the year and how performance has been achieved.

(ii) To seek to generate a double-digit total Shareholder return per annum over a rolling three year period

The NAV total returns from 1 December 2019 to 30 November 2022 was 31.8.

(iii) To meet its target total dividend in each financial year

The Company targeted a total dividend of 6.47p per Ordinary Share for the year ended 30 November 2022. The Company paid an interim dividend of 3.235p per Ordinary Share in September 2022 and proposes a final dividend in respect of the year to 30 November 2022 of 3.235p per Ordinary Share.

(iv) Discount/premium to NAV

The discount/premium relative to the NAV per Ordinary Share represented by the share price is monitored by the Board. The share price closed at a 7.6% discount to the NAV as at 30 November 2022 (2021: 0.7% premium).

(v) Maintenance of reasonable level of ongoing charges

The Board monitors the Company's operating costs. Based on the Company's average net assets during the year ended 30 November 2022 the Company's ongoing charges figure calculated in accordance with the Association of Investment Companies ("AIC") methodology was 1.04% (2021: 1.08%).

Risk and Risk Management

PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES

The Board is responsible for the management of risks faced by the Company and delegates this role to the Audit and Risk Committee (the "Committee"). The Committee carries out, at least annually, a robust assessment of principal and emerging risks and uncertainties and monitors the risks on an ongoing basis. The Committee has a dynamic risk assessment programme in place to help identify key risks in the business and oversee the effectiveness of internal controls and processes, providing a visual reflection of the Company's identified principal and emerging risks. The Committee considers both the impact and the probability of each risk occurring and ensures appropriate controls are in place to reduce risk to an acceptable level.

During the year under review the Committee was particularly concerned with the increase in geopolitical risk following the outbreak of war in the Ukraine. The subsequent rise in global energy prices, inflation and rising interest rates worldwide have led to a more uncertain investment environment. The Committee continues to review the processes in place to mitigate risk; and to ensure that these are appropriate and proportionate in the current market environment.

The principal and emerging risks, together with a summary of the processes and internal controls used to manage and mitigate risks where possible are outlined below.

(I) MARKET RISKS

Economic conditions

Changes in general economic and market conditions including, for example, impact of pandemics on global economies and national responses to ameliorate such challenges, interest rates, rates of inflation, industry conditions, competition, political events and trends, tax laws, national and international conflicts and other factors could substantially and adversely affect the Company's prospects and thereby the performance of its Ordinary Shares.

Healthcare companies

The Company invests in global healthcare equities. There are many factors that could adversely affect the performance of investee companies. The healthcare sector may be affected by government regulations and government healthcare programs, increases or decreases in the cost of medical products and services and product liability claims, among other factors. Many healthcare companies are heavily dependent on patent protection, and while this is a manageable risk, the expiration of a company's patent may adversely affect that company's profitability. Healthcare companies are subject to competitive forces that may result in price discounting and may be thinly capitalised and susceptible to product obsolescence. The market prices for securities of companies in the healthcare sector may be highly volatile.

Sectoral diversification

The Company has no limits on the amount it may invest in the healthcare sector and is not subject to any sub-sector investment restrictions. Although the portfolio is expected to be well diversified in terms of industry sub-sector exposures, the Company may have significant exposure to portfolio companies from certain sub-sectors from time-to-time. Greater concentration of investments in any one sub-sector may result in greater volatility in the value of the Company's investments and consequently its NAV and may materially and adversely affect the performance of the Company and returns to Shareholders.

The impact on the portfolio from Brexit and other geopolitical changes, including the trade war between the US and China and the war in Ukraine are monitored and discussed regularly at Board meetings. While it is difficult to quantify the impact of such changes, it is not anticipated that they will fundamentally affect the business of the Company or make the Company's investment case any less desirable.

Management of risks

The Directors acknowledge that market risk is inherent in the investment process. The Company invests in the healthcare sector and has a concentrated high conviction portfolio. It has a well-defined investment policy that states that no single holding will represent more than 10 per cent. of gross assets at the time of investment and, when fully invested, the portfolio will have no more than 35 holdings.

The Investment Manager also has a well-defined investment objective and process which is regularly and rigorously reviewed by the independent Board of Directors and performance is reviewed at quarterly Board meetings. The Investment Manager is experienced and employs its expertise in selecting the stocks in which the Company invests.

The Board closely monitors the Company's share price relative to NAV and the Company's discount / premium relative to their peer group, and recognises the importance that investors attach to the ordinary shares not trading at a significant discount or premium to the prevailing NAV. Should the Company's shares trade at a significant discount to the prevailing NAV, the Board has a discount management programme that will be considered, to determine whether the Company should purchase its own ordinary shares, pursuant to the general authority renewed at each AGM. Conversely, the Board will issue new Ordinary Shares should the shares trade at a premium to their prevailing NAV, pursuant to the general authority renewed at each AGM. Extensive marketing is carried out by the Company's Investment Manager, Broker and a specialist PR company. An investment research consultant is engaged to provide independent research for retail shareholders.

In addition to regular market updates from the Investment Manager and reports at Board meetings, the Board convenes more often as required.

(II) FINANCIAL RISKS

The Company's investment activities expose it to a variety of financial risks which include liquidity, currency, leverage, interest rate and credit risks.

The Company invests in equities, with equities subject to strong price fluctuations and specifically healthcare equities, which can be subject to sudden substantial price movements owing to market, sector or company factors. There is therefore a risk that the Company's holdings may not be able to be realised at reasonable prices in a reasonable timeframe. Although the Company's performance is measured in sterling, a high proportion of the Company's assets may be either denominated in other currencies or be in investments with currency exposure. The Company pays interest on its borrowings and as such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates. The Company may take a leverage, which may lead to higher price movements compared to the underlying market.

The increasing levels of inflation worldwide and the rising interest rates has contributed to investment risk.

Further details on financial risks can be found in note 19 to the financial statements.

Management of risks

The Company will typically seek to maintain a high degree of liquidity in its portfolio holdings. The Company's Investment Manager monitors these financial risks to the Company's portfolio on a continuous basis. Prevailing interest rates are taken into account when deciding on borrowings.

Further details on the management of financial risks can be found in note 19 to the financial statements.

(III) CORPORATE GOVERNANCE AND INTERNAL CONTROL RISKS

The Board has contractually delegated to service providers the management of the investment portfolio, the custodial services (which include the safeguarding of the assets), the registration services, and the accounting and company secretarial requirements. The service providers are outlined in the Directors' Report.

The main risk areas arising from the above contracts relate to allocation of the Company's assets by the Investment Manager, and the professional execution of their duties of performance of administrative, registration and custodial services. These could lead to various consequences including the loss of the Company's assets, inadequate returns to Shareholders and loss of investment trust status. Cyber security risks could lead to breaches of confidentiality, loss of data records and inability to make investment decisions.

Management of risks

The Board has appointed experienced service providers. Each of the contracts were entered into after full and proper consideration of the quality and cost of services offered, including the financial control systems in operation in so far as they relate to the affairs of the Company.

All of the above services are subject to ongoing oversight of the Board and the performance of the principal service providers is reviewed on a regular basis.

All key service providers produce annual internal control reports for review by the Audit and Risk Committee. These reviews include consideration of their business continuity plans and the associated cyber security risks. The Company's key service providers report on cyber risk mitigation and management on a quarterly basis. This includes confirmation of business continuity capability in the event of a cyber-attack and each service provider is reminded of their duty to disclose any cyber security breaches to the Company Secretary at least annually. Penetration testing is carried out by the Investment Manager and key service providers at least annually.

(IV) REGULATORY RISKS

Breaches of Section 1158 of the Corporation Tax Act could result in loss of investment trust status. Loss of investment trust status would lead to the Company being subject to tax on any gains on the disposal of its investments. Breaches of the FCA's rules applicable to listed entities could result in financial penalties or suspension of trading of the Company's shares on the London Stock Exchange. Breaches of the Companies Act 2006, The Alternative Investment Fund Managers' Directive, accounting standards, the Listing Rules, Disclosure Guidance and Transparency Rules, and Prospectus Rules could result in financial penalties or legal proceedings against the Company or its Directors.

Management of risks

The Company has contracted out relevant services to appropriately qualified professionals. The Investment Manager, Depositary and Administrator provide regular reports to the Audit and Risk Committee on their monitoring programmes. The Investment Manager monitors investment positions and the Investment Manager and Administrator monitor the level of forecast income and expenditure. Major regulatory change could impose disproportionate compliance burdens on the Company. In such circumstances representations would be made to seek to ensure that the special circumstances of investment trusts are recognised.

(V) KEY PERSON RISK

The Company depends on the diligence, skill and judgement of the Investment Manager's investment professionals and the information and ideas they generate during the normal course of their activities. The Company's future success depends on the continued service of key personnel. The departure of any of these individuals without adequate replacement may have a material adverse effect on the Company's business prospects and results of operations.

Management of risks

The strength and depth of investment management team provides comfort that there is not over-reliance on one person with alternative investment managers available to act if needed. The Board meets regularly with other members of the wider team employed by the Investment Manager.

(VI) BUSINESS INTERRUPTION

Failure in services provided by key service providers, meaning information is not processed correctly or in a timely manner, resulting in regulatory investigation or financial loss, failure of trade settlement, or potential loss of investment trust status.

The failure or breach of information security could potentially lead to breaches of confidentiality, data records being compromised and the inability to make investment decisions. The failure or breach of physical security could lead to damage or loss of equipment, with consequential negative results.

Management of risks

Each service provider has comprehensive business continuity policies and procedures in place which facilitate continued operation of the business in the event of a service disruption or a major disruption event. Breaches of any nature are reported to the Board.

The Committee receives the Administrator's report on internal controls and the reports by other key third-party providers are reviewed by the Investment Manager and Company Secretary on behalf of the Committee. The Depositary reports on custody matters, including the continued safe custody of the Company's assets.

Cyber security risks are considered and continually monitored by the Investment Manager as these threats evolve and become increasingly sophisticated. The integrity of the Company's information security is closely monitored by the Board, with each of the key service providers providing a regular report through its internal audit function which covers information technology security and provides comfort to the Board that appropriate safeguards are in place. All physical locations have security in place and all third-party service providers have disaster recovery plans.

(VII) GEOPOLITICAL RISK

The Russian invasion of Ukraine and the subsequent impact on global economies and international relations combined with increasing levels of inflation worldwide and the potential for rising interest rates has raised investment risk. The extent and impact of military action, resulting sanctions and further market disruptions is difficult to predict which increases uncertainty and challenges confidence in financial markets. This could lead to a recession if the conflict were to move towards a broader regional or global conflict.

Management of risks

The Board has considered the impact of the continued uncertainty on the Company's investment objectives, portfolio and stakeholders and, continues to monitor the situation closely to both assess and mitigate any impact. The Company does not have any direct or indirect exposure to investments in Ukraine or Russia. There are also no direct business relationships with counterparties from these countries.

(VIII) ESG AND CLIMATE CHANGE RISK

The financial risks from climate change are typically classified as physical or transitional risks. Physical risks are those arising from specific weather events and transitional risks are those arising from the changes to regulations, such as the move to net-zero carbon. The Company could suffer potential reputational damage from non-compliance with regulations or incorrect disclosures or as a result of increased investor demand for products which promote ESG investments.

Management of risks

The portfolio is well diversified to mitigate against physical risks. Changes in climate change focused regulation, governing both the Company and investee companies, will create some uncertainty. In comparison to the broader economy, the portfolio has a relatively low carbon footprint and the Investment Manager's parent company is currently deploying a CO ₂ reduction strategy. This strategy encompasses measures such as an independent audit of its CO ₂ footprint according to ISO14064-1 and GHG protocols, implementation of corporate CO ₂ reduction and offsetting of excess emissions with high ‑ quality climate projects. Bellevue Group is targeting a reduction in CO ₂ emissions per FTE of at least 30% by 2030. Moreover, the Bellevue Group was certified as carbon neutral by Swiss Climate in late 2021.

The Board encourages the Investment Manager to consider ESG factors when selecting and retaining investments and this has been a major topic of discussion in the past year. The Investment Manager's formal ESG guidelines cover areas such as compliance with global norms (UN Global Compact, Guiding Principles for Business and Human Rights, ILO standards), value-based exclusions, controversies, climate change factors and active ownership (management engagement, voting policies, etc.).

The Company's ESG statement is updated annually and is available on the AIC website and in the report. Investment trusts are currently exempt from Task Force on Climate-Related Financial Disclosures ("TCFD"), but the Board will continue to monitor the situation.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare accounts for each financial year. Under that law the Directors have elected to prepare the financial statements under UK adopted International Accounting Standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of the year and of the net return for the year. In preparing these accounts, the Directors are required to:

· select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information

· make judgements and estimates which are reasonable and prudent;

· state whether UK adopted International Accounting Standards have been followed, subject to any material departures disclosed and explained in the accounts; and

· prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and which disclose with reasonable accuracy at any time the financial position of the Company. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The accounts are published on the Company's website at www.bellevuehealthcaretrust.com, which is maintained by the Company's Investment Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of these websites and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the accounts since being initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

DIRECTORS' CONFIRMATION STATEMENT

The Directors each confirm to the best of their knowledge that:

· the accounts, prepared in accordance with UK adopted International Accounting Standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

· this Annual Report includes a fair review of the development and performance of the business and position of the Company, together with a description of the principal risks and uncertainties that it faces.

Having taken advice from the Audit and Risk Committee, the Directors consider that the Annual Report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy. For and on behalf of the Board.

Randeep Grewal

Chairman

3 March 2023

Statement of Comprehensive Income

for the year ended 30 November 2022

		Year ended 30 November 2022			Year ended 30 November 2021
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	4	-	(19,980)	(19,980)	-	98,796	98,796
Losses on currency movements		-	(9,839)	(9,839)	-	(3,805)	(3,805)
Net investment (losses)/gains		-	(29,819)	(29, 819)	-	94,991	94,991
Income	5	2,186	-	2,186	4,265	-	4,265
Total income		2,186	(29,819)	(27,633)	4,265	94,991	99,256
Investment management fees	6	(1,877)	(7,510)	(9,387)	(1,923)	(7,691)	(9,614)
Other expenses	7	(1,069)	-	(1,069)	(1,224)	-	(1,224)
(Loss)/profit before finance costs and taxation		(760)	(37,329)	(38,089)	1,118	87,300	88,418
Finance costs	8	(610)	(2,440)	(3,050)	(102)	(407)	(509)
Operating (loss)/profit before taxation		(1,370)	(39,769)	(41,139)	1,016	86,893	87,909
Taxation	9	(285)	-	(285)	(659)	-	(659)
(Loss)/profit for the year		(1,655)	(39,769)	(41,424)	357	86,893	87,250
Return per Ordinary Share	10	(0.28)p	(6.84)p	(7.12)p	0.07p	16.44p	16.51p

There is no other comprehensive income and therefore the '(Loss)/profit for the year' is the total comprehensive income for the year.

The total column of the above statement is the statement of comprehensive income of the Company. The supplementary revenue and capital columns, including the earnings per Ordinary Shares, are prepared under guidance from the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

The notes form and integral part of these financial statements.

Statement of Financial Position

as at 30 November 2022

		30 November 2022	30 November 2021
	Note	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	4	1,043,349	1,083,590
Current assets
Cash and cash equivalents		46,368	27,994
Sales for future settlement		855	-
Other receivables	11	392	167
		47,615	28,161
Total assets		1,090,964	1,111,751
Current liabilities
Purchases for future settlement		(1,395)	(9,326)
Bank loans payable	12	(83,731)	(67,850)
Other payables	13	(1,512)	(1,108)
Total liabilities		(86,638)	(78,284)
Net assets		1,004,326	1,033,467
Equity
Share capital	14	5,881	5,602
Share premium account		617,371	568,910
Special distributable reserve		28,347	64,392
Capital reserve		354,017	393,786
Revenue reserve		(1,290)	777
Total equity		1,004,326	1,033,467
Net asset value per Ordinary Share	16	171.16p	184.91p

Approved by the Board of Directors on and authorised for issue on 3 March 2023 and signed on their behalf by:

Randeep Grewal

Chairman

Registered in England and Wales with registered number 10415235.

The notes form and integral part of these financial statements.

Statement of Changes in Equity

for the year ended 30 November 2022

			Share	Special
		Share	premium	distributable	Capital	Revenue
		Capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at 01 December 2021		5,602	568,910	64,804	393,786	365	1,033,467
Loss for the year		-	-	-	(39,769)	(1,655)	(41,424)
Issue of Ordinary Shares	14	279	48,887	-	-	-	49,166
Ordinary Share issue costs		-	(426)	-	-	-	(426)
Dividend paid	15	-	-	(36,457)	-		(36,457)
Closing balance as at 30 November 2022		5,881	617,371	28,347	354,017	(1,290)	1,004,326

for the year ended 30 November 2021

			Share	Special
		Share	premium	distributable	Capital	Revenue
		Capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Opening balance as at 01 December 2020		4,900	437,213	93,676	306,893	420	843,102
Prior year dividends reallocation		-	-	412	-	(412)	-
Profit for the year		-	-	-	86,893	357	87,250
Issue of Ordinary Shares	14	702	132,562	-	-	-	133,264
Ordinary Share issue costs		-	(865)	-	-	-	(865)
Dividend paid	15	-	-	(29,284)	-	-	(29,284)
Closing balance as at 30 November 2021		5,602	568,910	64,804	393,786	365	1,033,467

The Company's distributable reserves consist of the special distributable reserve, capital reserve attributable to realised profit and revenue reserve.

The Company can use its distributable reserves to fund dividends, redemptions of Ordinary Shares and share buy backs.

Statement of Cash Flows

for the year ending 30 November 2022

	Year ended	Year ended
	30 November 2022	30 November 2021
	£'000	£'000
Operating activities Cash flows
Income*	2,186	4,425
Management expenses	(10,794)	(10,649)
Taxation	(285)	(659)
Net cash flow used in operating activities	(8,893)	(6,883)
Investing activities Cash flows
Purchase of investments	(599,039)	(864,728)
Sale of investments	610,527	640,120
Net cash flow from/(used in) investing activities	11,488	(224,608)
Financing activities Cash flows
Bank loans drawn	45,174	65,663
Bank loans repaid	(44,885)	-
Finance costs paid	(2,546)	(465)
Dividend paid	(36,457)	(29,284)
Proceeds from issue of Ordinary Shares	49,166	133,264
Ordinary Share issue costs	(426)	(865)
Net cash flow from financing activities	10,026	168,313
Increase/(decrease) in cash and cash equivalents	12,621	(63,178)
Cash and cash equivalents at start of year	27,994	92,789
Effect of foreign currency movements	5,753	(1,617)
Cash and cash equivalents at end of year	46,368	27,994

* Cash inflow from dividends for the financial year was £1,618,000 (2021: £3,764,000). Bank deposits interest income received during the year was £283,000 (2021: £nil).

The table below shows the movement in borrowings during the year.

	Year ended	Year ended
	30 November 2022	30 November 2021
	£'000	£'000
Opening balance	67,850	-
Repayment of bank loans	(44,885)	-
Proceeds from bank loans drawn	45,174	65,663
Foreign exchange movements	15,592	2,187
Closing balance	83,731	67,850

The notes form and integral part of these financial statements.

Notes to the Financial Statements

1. REPORTING ENTITY

Bellevue Healthcare Trust plc, formerly BB Healthcare Trust plc, is a closed-ended investment company, registered in England and Wales on 7 October 2016. The Company's registered office is 6th Floor, 125 London Wall, London, EC2Y 5AS. Business operations commenced on 2 December 2016 when the Company's Ordinary Shares were admitted to trading on the London Stock Exchange. The financial statements of the Company are presented for the year from 1 December 2021 to 30 November 2022.

The Company invests in a concentrated portfolio of listed or quoted equities in the global healthcare industry. The Company may also invest in American Depositary Receipts (ADRs), or convertible instruments issued by such companies and may invest in, or underwrite, future equity issues by such companies. The Company may utilise contracts for differences for investment purposes in certain jurisdictions where taxation or other issues in those jurisdictions may render direct investment in listed or quoted equities less effective.

2. BASIS OF PREPARATION

Statement of compliance

These financial statements have been prepared in accordance with UK adopted International Accounting Standards.

In preparing these financial statements the directors have considered the impact of climate change as a risk and have concluded that there was no further impact of climate change to be taken into account. In line with IAS investments are valued at fair value, which for the Company is quoted bid prices for investments in active markets at the Statement of Financial Position date and therefore reflect market participants' view of climate change risk on the investments we hold.

When presentational guidance set out in the Statement of Recommended Practice ('SORP') for Investment Companies issued by the Association of Investment Companies ('the AIC') in July 2022 is consistent with the requirements of UK adopted International Accounting Standards, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Going concern

The Directors have adopted the going concern basis in preparing the financial statements.

In forming this opinion, the directors have considered the adequacy of the Company's operational resources, liquidity of the investment portfolio, debt covenants and any potential impact of the ongoing COVID-19 pandemic as well as the war in Ukraine may have on the going concern and viability of the Company. In making their assessment, the Directors have reviewed income and expense projections and the liquidity of the investment portfolio, and considered the mitigation measures which key service providers, including the Investment Manager, have in place to maintain operational resilience.

The Company's ability to continue as a going concern for the period assessed by the Directors, being the period to 30 November 2024 which is at least 18 months from the date the financial statements were authorised for issue.

Significant accounting estimates, judgements and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future periods affected. Except for the Company's investment in the Alder contingent variable right (CVR), there have been no estimates, judgements or assumptions, which have had a significant impact on the financial statements for the year. The Company had no holdings in the CVR as at the year end.

Basis of measurement

The financial statements have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss, which are measured at fair value.

Functional and presentation currency

The financial statements are presented in sterling, which is the Company's functional currency. The Company's investments are denominated in multiple currencies. However, the Company's shares are issued in sterling and the majority of its investors are UK based. In addition, all expenses are paid in GBP as are dividends. All financial information presented in sterling have been rounded to the nearest thousand pounds.

3. ACCOUNTING POLICIES

(a) Investments

Upon initial recognition investments are classified by the Company "at fair value through profit or loss". They are accounted for on the date they are traded and are included initially at fair value which is taken to be their cost. Subsequently, quoted investments are valued at fair value, which is the bid market price, or if bid price is unavailable, the last traded price on the relevant exchange. Unquoted investments are valued at fair value by the Board which is established with regard to the International Private Equity and Venture Capital Valuation Guidelines by using, where appropriate, latest dealing prices, valuations from reliable sources and other relevant factors.

Changes in the fair value of investments held at fair value through profit or loss and gains or losses on disposal are included in the capital column of the Statement of Comprehensive Income within "(Losses)/gains on investments".

Investments are derecognised on the trade date of their disposal, which is the point where the Company transfers substantially all the risks and rewards of the ownership of the financial asset.

(b) Foreign currency

Transactions denominated in foreign currencies are translated into sterling at actual exchange rates as at the date of the transaction. Monetary assets and liabilities, and non-monetary assets held at fair value denominated in foreign currencies are translated into sterling using London closing foreign exchange rates at the year end. Any gain or loss arising from a change in exchange rates subsequent to the date of the transaction is included as an exchange gain or loss to capital or revenue in the Statement of Comprehensive Income as appropriate. Foreign exchange movements on investments are included in the Statement of Comprehensive Income within Gains/Losses on Investments.

Dividend income from shares is recognised on ex-dividend dates. Overseas income is grossed up at the appropriate rate of tax.

Special dividends are assessed on their individual merits and may be credited to the Statement of Comprehensive Income as a capital item if considered to be closely linked to reconstructions of the investee company or other capital transactions. All other investment income is credited to the Statement of Comprehensive Income as a revenue item. Interest receivable is accrued on a time apportionment basis.

(d) Reserves

Capital reserves

Profits achieved in cash by selling investments and changes in fair value arising upon the revaluation of investments that remain in the portfolio are all charged to the capital column of the Statement of Comprehensive Income and allocated to the capital reserve.

Special distributable reserve

Following admission of the Company's Ordinary Shares to trading on the London Stock Exchange, the Directors applied to the Court to cancel the share premium account at the time to create a special distributable reserve which may be treated as distributable reserves and out of which tender offers and share buybacks may be funded. This reserve may also be used to fund dividend payments.

The Company's distributable reserves consist of the special distributable reserve, capital reserve attributable to realised profit and revenue reserve.

Share premium

The share premium account arose from the net proceeds of sale of new shares. The excess of the issue price of a share over its nominal value.

Revenue reserves

The revenue reserve reflects all income and expenditure recognised in the revenue column of the income statement and is distributable by way of dividends.

(e) Expenses

All expenses are accounted for on an accruals basis. Expenses directly related to the acquisition or disposal of an investment (transaction costs) are taken to the income statement as a capital item.

Expenses are recognised through the Statement of Comprehensive Income as revenue items except as follows:

Investment management fees

In accordance with the Company's stated policy and the Directors expectation of the split of future returns, 80% of investment management fees are charged as a capital item in the Statement of Comprehensive Income.

Finance costs

Finance costs include interest payable and direct loan costs. In accordance with Directors' expectation of the split of future returns, 80% of finance costs are charged as capital items in the Statement of Comprehensive Income. Loan arrangement costs are amortised over the term of the loan.

(f) Cash and cash equivalents

Cash comprises cash at hand and on-demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash, are subject to insignificant risks of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

(g) Taxation

Irrecoverable taxation on dividends is recognised on an accrual basis in the Statement of Comprehensive Income.

Deferred taxation

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains in UK.

(h) Financial liabilities

Bank loans and overdrafts are classified as financial liabilities at amortised cost. They are initially recorded at the proceeds received, net of direct issue costs, and subsequently recorded at amortised cost using the effective interest method.

(i) Adoption of new IFRS standards

New standards, interpretations and amendments adopted from 1 January 2022

A number of new standards, amendments to standards are effective for the annual periods beginning after 1 January 2022. None of these have a significant effect on the measurement of the amounts recognised in the financial statements of the Company.

New standards and amendments issued but not yet effective

The relevant new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. These standards are not expected to have a material impact on the entity in future reporting periods and on foreseeable future transactions.

Amendments to IAS 1: Classification of Liabilities as Current or Non-current

In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

Definition of Accounting Estimates - Amendments to IAS 8

In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of 'accounting estimates'. The amendments are effective for annual reporting periods beginning on or after 1 January 2023.

Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2

In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements. The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023.

(j) Equity shares

The Company has treated the Ordinary Shares and Management Shares as equity in accordance with IAS 32 Financial Instruments: Presentation, which classifies financial instruments into financial assets, financial liabilities and equity instruments. Both share classes have an entitlement to the residual interest in the assets of the Company after deducting liabilities, suffice that the Management Shares have no participation in any surplus beyond their paid up capital. The Management Shares are not redeemable, but the Ordinary Shares are subject to an annual redemption option at the discretion of the Directors. Redemption requests are matched with buyers in the market or cancelled by the Company. Ordinary Shares participate in dividends and any other profits of the Company.

Segmental reporting

The Board has considered the requirements of IFRS 8 - "Operating Segments". The Company has entered into an Investment Management Agreement with the Investment Manager under which the Investment Manager is responsible for the management of the Company's investment portfolio, subject to the overall supervision of the Board of Directors. Accordingly, the Board is deemed to be the "Chief Operating Decision Maker" of the Company.

The Directors are of the opinion that the Company is engaged in a single segment of business being that of an investment trust, as disclosed in note 1.

4. INVESTMENT HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

As at	30 November 2022 £'000	30 November 2021 £'000
Investments held at fair value through profit or loss
- Quoted overseas	1,043,349	1,083,590
Closing valuation	1,043,349	1,083,590

(b) Movements in valuation

	£'000	£'000
Opening valuation	1,083,590	753,375
Opening unrealised losses/(gains)	7,839	(59,570)
Opening book cost	1,091,429	693,805
Additions, at cost	590,922	869,203
Disposals, at cost	(507,626)	(471,579)
Closing book cost	1,174,725	1,091,429
Revaluation of investments	(131,376)	(7,839)
Closing valuation	1,043,349	1,083,590

In respect of the investments sold during the year, they have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

Transaction costs on investment purchases for the year ended 30 November 2022 amounted to £186,000 (30 November 2021: £299,000) and on investment sales for the financial year to 30 November 2022 amounted to £198,000 (30 November 2021: £201,000). The above transaction costs are calculated in line with the AIC SORP.

	£'000	£'000
Realised gains on disposal of investments	103,557	166,205
Movement in unrealised losses on investments held	(123,537)	(67,409)
Total (losses)/gains on investments	(19,980)	98,796

Under IFRS 13 'Fair Value Measurement', an entity is required to classify investments using a fair value hierarchy that reflects the significance of the inputs used in making the measurement decision.

The following shows the analysis of financial assets recognised at fair value based on:

Level 1

The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

Level 2

Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

Level 3

Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

The classification of the Company's investments held at fair value is detailed in the table below:

	30 November 2022
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments at fair value through profit and loss - Quoted	1,043,349	-	-	1,043,349

	30 November 2021
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Investments at fair value through profit and loss - Quoted	1,082,991	-	599	1,083,590

The Company had no Level 3 investment as at the year ended 30 November 2022. The level 3 investment for 2021 comprises a contingent variable right ("CVR") received as a partial consideration when the Company's investment in Alder Biopharmaceuticals was acquired by Lundbeck in 2019, which offered to buy the holdings in Alder Biopharmaceuticals for a cash bid of $18 and $2 cash contingent value rights.

The movement in the Level 3 unquoted investments during the year is shown below:

	30 November 2022	30 November 2021
	£'000	£'000
Opening balance	599	595
Foreign exchange gains	66	4
Proceeds on disposal	(1,305)	-
Realised gains on disposal	640	-
Closing balance	-	599

There were no transfers between levels during the year ended 30 November 2022 (2021: nil).

Fair values of financial assets and financial liabilities

All financial assets and liabilities are recognised in the financial statements at fair value, with the exception of short-term assets and liabilities, which are held at nominal value that approximates to fair value, and loans that are initially recognised at the fair value of the consideration received, less directly attributable costs, and subsequently recognised at amortised cost. The carrying value of the loans approximates to the fair value of the loans.

5. INCOME

	Year ended	Year ended
	30 November 2022	30 November 2021
	£'000	£'000
Income from investments
Overseas dividends	1,903	4,265
Bank interest on deposits	283	-
Total income	2,186	4,265

6. PORTFOLIO MANAGEMENT FEE

		2022			2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Management fee	1,877	7,510	9,387	1,923	7,691	9,614

The Company's Investment Manager is Bellevue Asset Management (UK) Ltd (the 'Investment Manager'). The Investment Manager is entitled to receive a management fee payable monthly in arrears and calculated at the rate of one-twelfth of 0.95% per calendar month of market capitalisation. Market capitalisation means the average of the mid-market prices for an Ordinary Share, as derived from the daily official list of the London Stock Exchange on each business day in the relevant calendar month multiplied by the number of Ordinary Shares, in issue on the last business day of the relevant calendar month excluding any Ordinary Shares held in treasury.

There is no performance fee payable to the Investment Manager.

7. OTHER EXPENSES

	2022	2021
	£'000	£'000
Administration & secretarial fees	257	250
Auditor's remuneration - statutory audit	50	45
Broker fees	4	48
Consultancy fees	26	66
Custody services	203	230
Directors' fees	231	188
Printing	28	18
Public relations	2	48
Registrar fees	72	81
Marketing fees	-	46
Other expenses	196	204
Total	1,069	1,224

8. FINANCE COSTS

	Year ended 30 November 2022
	Revenue	Capital	Total
	£'000	£'000	£'000
Loan interest	597	2,389	2,986
Other finance costs	13	51	64
Total	610	2,440	3,050

	Year ended 30 November 2021
	Revenue	Capital	Total
	£'000	£'000	£'000
Loan interest	98	391	489
Other finance costs	4	16	20
Total	102	407	509

9. TAXATION

(a) Analysis of charge:

		2022			2021
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Withholding tax expense	285	-	285	659	-	659
Total tax charge for the year	285	-	285	659	-	659

(b) Factors affecting the tax charge for the year:

The effective UK corporation tax rate for the year is 19% (2021: 19%). The tax charge differs from the charge resulting from applying the standard rate of UK corporation tax for an investment trust company. The differences are explained below:

	2022	2021
	Total	Total
	£'000	£'000
Operating (loss)/profit before taxation	(41,139)	87,909
UK Corporation tax at 19% (2021: 19%)	(7,816)	16,703
Effects of:
Losses/(gains) on investments not taxable	5,666	(18,048)
Overseas dividends not taxable	(362)	(810)
Withholding tax expense	285	659
Unutilised excess expenses	2,512	2,155
Total tax charge	285	659

The Company is not liable to tax on capital gains due to its status as an investment trust. The Company has an unrecognised deferred tax asset of £11,190,000 (2021: £6,806,000) based on the prospective UK corporation tax rate of 25%. This asset has accumulated because deductible expenses exceeded taxable income for the year ended 30 November 2022. No asset has been recognised in the accounts because, given the composition of the Company's portfolio, it is not likely that this asset will be utilised in the foreseeable future.

10. RETURN PER SHARE

Return per share is based on the weighted average number of Ordinary Shares in issue during the year ended 30 November 2022 of 581,357,335 (30 November 2021: 509,593,031). Management Shares do not participate in the profits of the Company, hence they are not included in the calculation below.

	As at 30 November 2022
	Revenue	Capital	Total
Loss for the year (£'000)	(1,655)	(39,769)	(41,424)
Losses per Ordinary Share (basic & diluted)	(0.28)p	(6.84)p	(7.12)p

	Year ended 30 November 2021
	Revenue	Capital	Total
Profit for the period (£'000)	357	86,893	87,250
Return per Ordinary Share (basic & diluted)	0.07p	16.44p	16.51p

11. OTHER RECEIVABLES

	As at	As at
	30 November 2022	30 November 2021
	£'000	£'000
Prepayments	124	52
VAT recoverable	231	79
Recoverable tax on dividend	37	36
Total	392	167

12. BANK LOANS

The Company has a multi-currency revolving credit facility RCF with The Bank of Nova Scotia, London Branch. On 16 June 2022, the Company renewed and amended its RCF. Under the terms of the amended RCF, the Company may draw down loans up to an aggregate value of USD 280 million. The increased facility will expire in December 2024.

As at 30 November 2022, the aggregate of loans draw down was £83,731,000 (2021: £67,850,000).

The table below shows the breakdown of the loans.

As at 30 November 2022

	Local	GBP	Interest rate
	currency	equivalent	per annum
Currency of loans	amount	£'000	(%)	Maturity date
USD loan	$20,000,000	16,746	3.8	28 Dec. 2022
USD loan	$20,000,000	16,746	2.26	27 Jan. 2023
USD loan	$20,000,000	16,746	2.26	27 Mar. 2023
USD loan	$20,000,000	16,746	2.26	30 May. 2023
USD loan	$20,000,000	16,747	2.26	27 Jul. 2023
Total loans in GBP		83,731

As at 30 November 2021

	Local	GBP	Interest rate
	currency	equivalent	per annum
Currency of loans	amount	£'000	(%)	Maturity date
USD loan	$55,000,000	41,464	1.03088	31 Jan. 2022
USD loan	$35,000,000	26,386	1.32060	31 Jan. 2022
Total loans in GBP		67,850

A commitment fee is calculated at 0.35 per cent per annum, if the unutilised amount equals or exceeds 50 per cent of the total commitment; or 0.45 per cent per annum if the unutilised amount is less than 50 per cent of the total commitment.

In the opinion of the Directors, the fair value of the bank loans is not materially different to their amortised costs.

13. OTHER PAYABLES

	As at	As at
	30 November 2022	30 November 2021
	£'000	£'000
Loan interest payable	528	44
Accrued expenses	984	1,048
Broker commission payable - Alvarium	-	16
Total	1,512	1,108

14. SHARE CAPITAL

	As at 30 November 2022		As at 30 November 2021
	No. of shares	£'000	No. of shares	£'000
Allotted, issued and fully paid:
Redeemable Ordinary Shares of 1p each ('Ordinary Shares')	586,783,083	5,868	558,910,904	5,589
Management Shares of £1 each	50,001	13	50,001	13
Total	586,833,084	5,881	558,960,905	5,602

Share Movement

27,872,179 Ordinary Shares were issued during the year to 30 November 2022 (30 November 2021: 70,191,215) with aggregate proceeds of £49,167,000 (30 November 2021: £133,264,000). As at 30 November 2022, the total number of Ordinary Shares in issue is 586,783,083 (30 November 2021: 558,960,905) with a total share capital value of £5,881,000 (30 November 2021: 5,602,000).

Since 30 November 2022 no further shares were issued, however as at 1 March 2023, 5,730,528 Ordinary Shares were bought back into treasury through the Company's share buyback programme and 30,577,550 Ordinary Shares were redeemed and cancelled by the Company, in line with the Company's annual redemption facility.

The redemption point is the last business day of November and redemption price is announced the following day. The Company announced on 1 December 2022 that 30,577,550 Ordinary Shares would be redeemed, with Shareholders receiving a Redemption Price of 164.34 pence per share.

15. DIVIDEND

	Year ended 30 November 2022				Year ended 30 November 2021
	Pence per	Special	Revenue		Pence per	Special	Revenue
	Ordinary	reserve	reserve	Total	Ordinary	reserve	reserve	Total
	Share	£'000	£'000	£'000	Share	£'000	£'000	£'000
Final dividend - 2020		-	-	-	2.500p	12,476	412	12,888
Interim dividend - 2021		-	-	-	3.015p	16,396	-	16,396
Final dividend - 2021	3.015p	17,480	-	17,480	-	-	-	-
Interim dividend - 2022	3.235p	18,977	-	18,977	-	-	-	-
Total	6.250p	36,457	-	36,457	5.515p	28,872	412	29,284

The dividend relating to the year ending 30 November 2022, which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:

	Year ended 30 November 2022				Year ended 30 November 2021
	Pence per	Special	Revenue		Pence per	Special	Revenue
	Ordinary	reserve	reserve	Total	Ordinary	reserve	reserve	Total
	Share	£'000	£'000	£'000	Share	£'000	£'000	£'000
Interim dividend - paid	3.235p	18,977	-	18,977	3.015p	16,369	-	16,369
Final dividend - payable/paid	3.235p	17,803	-	17,803	3.015p	17,480	-	17,480
Total	6.470p	36,780	-	36,780	6.030p	33,849	-	33,849

The Directors recommend the payment of a final dividend for the year of 3.235p per share. Subject to approval at the Company's Annual General Meeting, the dividend will have an ex-dividend date of 16 March 2023 and will be paid on 5 May 2023 to shareholders on the register at 17 March 2023. The dividend will be funded from the Company's distributable reserves as per the table above.

16. NET ASSETS PER ORDINARY SHARE

Net assets per Ordinary Share as at 30 November 2022 is based on £1,004,326,000 of net assets of the Company attributable to the 586,783,083 Ordinary Shares in issue as at 30 November 2022. £12,500 of net assets as at 30 November 2022 is attributable to the Management Shares as they are a quarter paid up.

17. RELATED PARTY TRANSACTIONS

Fees payable to the Investment Manager are shown in the Statement of Comprehensive Income. As at 30 November 2022, the fee outstanding to the Investment Manager was £744,000 (2021: 858,000).

Directors' fees paid during the year are disclosed within the Directors Remuneration Report. Fees payable as at 30 November 2022 were £37,667 (2021: £35,185). The Directors' fees and shareholdings are disclosed in the Directors' Remuneration Implementation Report and in note 7 to the financial statements.

18. POST BALANCE SHEET EVENTS

On 1 December 2023, the Company announced that 30,577,550 Ordinary Shares would be redeemed, with Shareholders receiving a Redemption Price of 164.34 pence per share.

On 13 February 2023, Alvarium Securities Limited ceased to be the Company's joint broker, with J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove) retained as the Company's sole corporate broker.

19. FINANCIAL INSTRUMENTS AND CAPITAL DISCLOSURE

(i) Market risks

The Company is subject to a number of market risks in relation to economic conditions and healthcare companies. Further details on these risks and the management of these risks are included in the Directors' report.

The Company's financial assets and liabilities at 30 November 2022 comprised:

		2022			2021
	Interest	Non-interest		Interest	Non-interest
	bearing	bearing	Total	bearing	bearing	Total
Investments	£'000	£'000	£'000	£'000	£'000	£'000
Swiss franc	-	12,269	12,269	-	-	-
Hong Kong	-	9,724	9,724	-	19,866	19,866
US dollar	-	1,021,356	1,021,356	-	1,063,724	1,063,724
Total investment	-	1,043,349	1,043,349	-	1,083,590	1,083,590
Cash at bank	46,368	-	46,368	27,994	-	27,994
Short term receivables	-	1,247	1,247	-	167	167
Bank loans payable-US dollar	(83,731)	-	(83,731)	(67,850)	-	(67,850)
Short term payables	-	(2,907)	(2,907)	-	(10,434)	(10,434)
Total	(37,363)	(1,660)	(39,023)	(39,856)	(10,267)	(50,123)

Market price risk sensitivity

The effect on the portfolio of a 10.0% increase or decrease in market prices would have resulted in an increase or decrease of £104,335,000 (2021: £108,359,000) in the investments held at fair value through profit or loss at the period end, which is equivalent to 10.4% (2021: 10.1%) in the net assets attributable to equity holders. This analysis assumes that all other variables remain constant.

(ii) Liquidity risks

Liquidity risk is the risk that the Company will not be able to meet its obligations when due. There is a risk that the Company's holdings may not be able to be realised at reasonable prices in a reasonable timeframe.

Financial liabilities by maturity at the year-end are shown below:

	30 November	30 November
	2022	2021
	£'000	£'000
Within one month-purchases due for settlement and other payables	(2,907)	(10,434)
Between one and three months - Bank loans payable	(83,731)	(67,850)
Total	(86,638)	(78,284)

Management of liquidity risks

The Company will typically seek to maintain a high degree of liquidity in its portfolio holdings (such that a position could typically be exited within 1 to 5 trading days, with minimal price impact) and as a consequence of the concentrated approach, it is unlikely that a position will be taken in an investee company unless a minimum holding of 1.0 per cent of the Company's assets at the time of investment can be achieved within an acceptable level of liquidity.

The Company's Portfolio Manager monitors the liquidity of the Company's portfolio on a regular basis. See note 12 for the maturity profiles of the loans. Other payables are typically settled within a month.

(iii) Currency risks

Although the Company's performance is measured in sterling, a high proportion of the Company's assets may be either denominated in other currencies or be in investments with currency exposure.

Currency sensitivity

The below table shows the strengthening/(weakening) of sterling against the local currencies over the financial year for the Company's financial assets and liabilities held at 30 November 2022.

	30 November	30 November
	2022	2021
	% change	% change
Swiss franc	(7.0%)	0.9%
Hong Kong Dollar	(9.8%)	-
US dollar	(10.2%)	(0.2%)

Foreign currency risk profile

	30 November 2022			30 November 2021
			Total			Total
	Investment	Net monetary	currency	Investment	Net monetary	currency
	exposure	exposure	exposure	exposure	exposure	exposure
	£'000	£'000	£'000	£'000	£'000	£'000
Swiss franc	12,269	-	12,269	-	-	-
Hong Kong Dollar	9,724	-	9,724	19,866	-	19,866
US dollar	1,021,356	35,637	1,056,993	1,063,724	18,686	1,082,410
Total	1,043,349	35,637	1,078,986	1,083,590	18,686	1,102,276

Based on the financial assets and liabilities at 30 November 2022 and all other things being equal, if sterling had weakened against the local currencies by 10%, the impact on the Company's net assets at 30 November 2022 would have been as follows:

	30 November	30 November
	2022	2021
	£'000	£'000
Swiss franc	1,227	-
Hong Kong Dollar	972	1,987
US dollar	105,699	108,241

Management of currency risks

The Company's Investment Manager monitors the currency risk of the Company's portfolio on a regular basis. Foreign currency exposure is regularly reported to the Board by the Investment Manager.

Currency risk will not be hedged using any sort of foreign currency transactions, forward transactions or derivative instruments.

(iv) Leverage risks

The Company may use borrowings to seek to enhance investment returns. While the use of borrowings should enhance the total return on the Ordinary Shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the return on the Company's underlying assets is rising at a lower rate than the cost of borrowing or falling, further reducing the total return on the Ordinary Shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value per Ordinary Share.

Any reduction in the value of the Company's investments may lead to a correspondingly greater percentage reduction in its Net Asset Value (which is likely to adversely affect the price of an Ordinary Share). Any reduction in the number of Ordinary Shares in issue (for example, as a result of buy backs or redemptions) will, in the absence of a corresponding reduction in borrowings, result in an increase in the Company's level of gearing.

To the extent that a fall in the value of the Company's investments causes gearing to rise to a level that is not consistent with the Company's gearing policy or borrowing limits, the Company may have to sell investments in order to reduce borrowings, which may give rise to a significant loss of value compared to the book value of the investments, as well as a reduction in income from investments.

The Company will pay interest on its borrowings. As such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates.

As at the year end, the Company's gearing ratio was 4.0% (2021:4.9%), based on the drawn down loans as a percentage of gross asset value.

As at the year end, the Company did not hold any derivative instruments.

Management of leverage risks

Gearing will be deployed flexibly up to 20 per cent of the Net Asset Value, at the time of borrowing, although the Investment Manager expects that gearing will, over the longer term, average between 5 and 10 per cent of the Net Asset Value. In the event the 20 per cent limit is breached as a result of market movements, and the Board considers that borrowing should be reduced, the Portfolio Manager shall be permitted to realise investments in an orderly manner so as not to prejudice Shareholders.

Further details of the Company's bank loans is disclosed in note 12.

(v) Interest rate risks

The Company pays interest on its borrowings. As such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates.

Management of interest rate risks

Prevailing interest rates are taken into account when deciding on borrowings.

The Company had bank loans denominated in GBP and USD in place during the year. The loan interest is based on a variable rate. Based on the loans outstanding at the year end a change of 1.00% (2021: 0.25%) in interest rates would increase/ (decrease) annual profit or loss by the amounts shown below. 1.00% was used for 2022 given the volatility in rates during 2022. The analysis assumes that all other variables remain constant:

	Loans at	Profit or loss	Profit or loss	Loans at	Profit or loss	Profit or loss
	30 November	1.00%	1.00%	30 November	0.25%	0.25%
	2022	decrease	increase	2021	decrease	increase
	£'000	£'000	£'000	£'000	£'000	£'000
USD loan	83,731	837	(837)	67,850	170	(170)
Total	83,731	837	(837)	67,850	170	(170)

vi) Credit risks

Cash and other assets that are required to be held in custody will be held by the depositary or its sub‑custodians. Where the Company utilises derivative instruments, it is likely to take a credit risk with regard to the parties with whom it trades and may also bear the risk of settlement default.

Management of credit risks

The Company has appointed CACEIS Bank as its depositary. The Standard & Poor's credit rating of CACEIS is A+ (2021: A+). The credit rating of CACEIS was reviewed at the time of appointment and is reviewed on a regular basis by the Investment Manager and/or the Board.

The Portfolio Manager monitors the Company's exposure to its counterparties on a regular basis and trades in equities are performed on a delivery versus payment basis.

The Company's assets are segregated from those of the Depositary or any of its sub-custodians.

At 30 November 2022, the Depository held £1,043,349,000 (2021: £1,083,590,000) in respect of quoted investments and £46,368,000 (2021: £27,994,000) in respect of cash on behalf of the Company.

(vii) Capital management policies and procedures

The Company considers its capital to consist of its share capital of Ordinary Shares of 1p each, Management Shares of £1 each, and reserves totalling £1,004,326,000 (2021: £1,033,467,000) and bank loans payable £83,731,000 (2021: £67,850,000).

The Company has a redemption facility through which Shareholders will be entitled to request the redemption of all or part of their holding of Ordinary Shares on an annual basis. The redemption point for the Ordinary Shares was 30 November 2022 and will be annual thereafter. The Redemption facility is entirely at the discretion of the Directors.

The Investment Manager and the Company's broker monitor the demand for the Company's shares and the Directors review the position at Board meetings.

The Company's policy on borrowings is detailed in the Director's Report.

Use of distributable reserves is disclosed in the footnote on the Statement of changes in equity.

The Company regularly monitors, and has complied, with the externally imposed capital requirements arising from the borrowing facility.

Other Information

Alternative Performance Measures

DISCOUNT

The amount, expressed as a percentage, by which the share price is less than the Net Asset Value per Ordinary Share.

As at 30 November 2022		£'000
NAV per Ordinary Share (pence)	a	171.16
Share price (pence)	b	158.20
Discount	(b÷a)-1	-7.6%

The Company's average discount for the year ended 30 November 2022 was 1.6%.

GEARING

A way to magnify income and capital returns, but which can also magnify losses. A bank loan is a common method of gearing.

As at 30 November 2022		£'000
Total assets less cash/cash equivalents	a	1,044,596
Net assets	b	1,004,326
Gearing (net)*	(a÷b)-1	4.0%

LEVERAGE

An alternative word for "Gearing".

(See gearing for calculations).

Under AIFMD, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions.

Under AIFMD, leverage is broadly similar to gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other.

ONGOING CHARGES

A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running an investment company.

Year ended 30 November 2022 (Audited)		£
Average NAV	a	1,005,507,648
Annualised expenses	b	10,453,000
Ongoing charges	(b÷a)	1.04%

A measure of performance that includes both income and capital returns. This takes into account capital gains and reinvestment of dividends paid out by the Company into the Ordinary Shares of the Company on the ex-dividend date.

Year ended 30 November 2022 (Audited)		Share price	NAV
Opening at 1 December 2021 (pence)	a	186.20	184.91
Closing at 30 November 2022 (pence)	b	158.20	171.16
Price movement (b÷a)-1	c	-15.0%	-7.4%
Dividend reinvestment	d	3.1%	3.3%
Total return	(c+d)	-11.9%	-4.1%

n/a = not applicable.

FINANCIAL INFORMATION

This announcement does not constitute the Company's statutory accounts. The financial information is derived from the statutory accounts, which will be delivered to the registrar of companies and will be put forward for approval at the Company's Annual General Meeting. The auditors have reported on the accounts for the year ended 30 November 2021 and the year ended 30 November 2022, their reports were unqualified and did not include a statement under Section 498(2) or (3) of the Companies Act 2006.

The Annual Report for the year ended 30 November 2022 was approved on 3 March 2023.

The report will be available in electronic format on the Company's website:

https://www.bellevuehealthcaretrust.com

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

This announcement contains regulated information under the Disclosure Guidance and Transparency Rules of the FCA.

ANNUAL GENERAL MEETING

The Annual General Meeting will be held on 28 April 2023 at 12 noon at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH, United Kingdom

For further information contact:

Apex Listed Companies Services (UK) Limited

6th Floor, 125 London Wall

Barbican

London

EC2Y 5AS

Tel: 020 3327 9720

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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