Financial year 2014 Annual Report and Financial Statements Contents Chairman’s Statement 02 Trustee’s Report 04 Vision and objects, mission, focus areas and 04 challenges Financial Review 05 Review of Past and Future Activities 09 Review of Investment Activities 15 Structure and Governance 26 Remuneration Report 32 Social Responsibility 34 Independent Auditors 36 Audit Committee Report 37 Independent Auditors’ Report 39 Consolidated Statement of Financial Activities 45 Consolidated Balance Sheet 46 Statement of Financial Activities of the Trust 47 Balance Sheet of the Trust 48 Consolidated Cash Flow Statement 49 Notes to the Financial Statements 50 Reference and Administrative Details 90 Chairman’s Statement The best research for better health Creating cultures for research who we are and what we do, and has at the frontiers of medicine helped us achieve an ever more and health integrated approach within. This was a challenging first year for The built environment is a huge our Director, Dr Jeremy Farrar. As a influence on the way we work. The clinician and a researcher with Francis Crick Institute, a partnership expertise across global health and between the Trust, the Medical infectious diseases, his skills were in Research Council, Cancer Research high demand, particularly when it UK and several of London’s became clear that the Ebola virus universities, opens next year. It, too, outbreak in West Africa this year was has been designed to encourage an epidemic of unprecedented interdisciplinary working. As well as proportion. At the same time, Jeremy enhancing research partnerships, the was listening carefully to the views of Crick will bring biomedical research We have streamlined the his new colleagues at the Wellcome together with clinical skills and many framework for our funding Trust and of the research community other scientific disciplines. The health schemes to ensure that they are – in the UK and around the world, in challenges we face today and in the clear, simple and accessible. academia and industry, Trust-funded future are sobering, but we can be scientists and others – and exploring optimistic that creative, innovative We are assisting Genomics with them potential ways in which we and exciting scientific research will England, the government’s could work together better across all help us rise to them. ambitious project to decipher of our activities. 100,000 complete genetic International perspectives sequences in the UK, by As a result, we have streamlined the investing £27 million in a new framework for our funding schemes to It is no surprise that many people genome sequencing hub. ensure that they are clear, simple and enjoy learning about the latest accessible. Jeremy has also introduced biomedical discoveries. We have seen We enjoyed a third successive some internal changes to improve this most recently in the success of year of strong returns, adding connections between different facets Mosaic, a new digital project from the £2.5 billion or 15.4% in the year. of the Trust’s work. For example, Trust. The quality science reporting it Clare Matterson moves from produces can be read freely online by overseeing our funding for medical anyone in the world, and reproduced, humanities research and public edited and translated by other engagement to become Director of publications. Topics in its first year Strategy, leading a new division that have so far included bipolar disorder, brings together policy, malaria drug resistance, urbanisation, communications, education, and rare blood donors, while stories evaluation and grants management. have been republished in the USA, Simon Chaplin, formerly Head of Australia, Norway and India, among Wellcome Library, takes over from other countries. Clare as Director of Culture and Society. Sir Henry Wellcome, the founder of the Trust, had business, research and I’m delighted that in making sure our personal interests across the globe. organisational structure remains Such an international scope remains a dynamic and fresh, new opportunities key part of our overall vision, and I are being created for the talented was delighted to welcome two people who work in our headquarters overseas scientists to the Board of on the Euston Road in London. The Governors this year. Bryan Grenfell is Gibbs Building itself has played an professor of ecology, evolution and important role in the Trust’s public affairs at Princeton University development since we moved in ten in the USA, and Tobias Bonhoeffer is years ago. It has been a vital public an eminent neurobiologist at the Max face, enabling people to understand Planck Institute in Germany. 02 | Wellcome Trust Annual Report 2014 Chairman’s Statement (continued) They bring a great breadth of assets. However it is noteworthy that across an incredible range of experience and expertise that the performance of our internally disciplines. I am particularly complements that of the other managed investments surpassed that enthusiastic about genetics and how Governors, as well as adding to our of those outsourced to external we are opening up new horizons for worldly perspective. My thanks to managers in public equities, private healthcare based on a deeper genetic Peter Smith, professor of tropical equity and property. As the breadth of understanding of disease and health. epidemiology at the London School of experience of our excellent The Trust played a significant role in Hygiene and Tropical Medicine, for Investment Team, led by Danny the Human Genome Project, and we his valued contributions to the Board Truell, has grown, they have been able are now assisting Genomics England, before his retirement this year. to seek out an increasingly diverse the government’s project to decipher range of assets in which to 100,000 complete genetic sequences, The Trust’s international agenda was invest. Directly held investments now by investing £27 million in a new championed in particular by our first account for 42% of the portfolio, up genome-sequencing hub. Director, Peter Williams, who died from 26% four years ago. One this summer aged 89. Peter was landmark transaction this year was the The Wellcome Trust Sanger Institute Director for more than 25 years, purchase of Farmcare from the Co- is the critical mass that underpins our overseeing the Trust’s transformation operative Group Ltd, which at a stroke genetic work. Having laid the from a rather small concern to the makes us the largest lowland arable groundwork, a growing knowledge of global charitable foundation it is farmer in the UK. the genetics of human disease and today. Under his direction, the Trust’s infectious pathogens is increasingly annual disbursements rose from £1 Long-termism is fundamental to the allowing us to look at new approaches million in 1959 to £75 million by thinking of the Wellcome Trust. In the for prevention and therapy. This has 1991, when he retired. He laid the investment portfolio, it enables the led the Trust to fruitful partnerships foundations for our work today and team to focus on business dynamics with the pharmaceutical industry as this financial year, the Trust’s spend and disregard short term mark to we seek routes to create innovative was £674 million thanks to the market volatility. In public and private applications using genetic sterling work of our Investments equity investments this enables us to information. team. be supportive, engaged shareholders encouraging management to build and Neuroscience is another focus that Investments preserve the licence to operate long continues to produce very exciting term franchises, rather than to worry research. The pharmaceutical sector’s With markets globally enjoying the about short term profitability. In struggle to capitalise on benefit of a strong tailwind provided property it means we can take a multi- neuroscientific findings in recent by Central Bank liquidity, we enjoyed decade, holistic approach to years is well known, but there remain a third successive year of strong management of assets within the areas of enormous unmet clinical need returns, adding £2.5 billion or 15.4% portfolio whether they be residential in mental health and neurological in the year to 30 September 2014. The housing, student accommodation, disease. This is where the Wellcome portfolio continues to benefit from the hotels or farmland. Trust can play a role, supporting the decisive move we took back into risk generation of new knowledge and assets in the aftermath of the financial Reinvestment risk remains an issue in partnering with industry to accelerate crisis. As in previous crises, volatility an environment where most asset medical advances. These are areas once again proved to be the friend of classes have seen strong returns over that, I’m sure, will have a significant long term investors, like the the past five years, and therefore our impact on medicine and the UK Wellcome Trust, by providing an expectations of future returns need to economy in the years to come. And, opportunity to acquire desirable assets be realistic. However, we are of course, all the research funded by at attractive prices. Our total return confident that the underlying cash the Wellcome Trust is intended to since the collapse of Lehman Brothers flows from the assets and businesses help understand, improve and protect in September 2008 is now over £9 in the portfolio are robust enough to our future health. billion, while returns over both 10 and enable us to continue to support our 20 years have averaged above 10% in mission through more