Maiden annual report for Patient Capital Trust

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Mitchell Fraser-Jones 22 March 2016 Est. reading: 4 min read

This morning sees the release of the maiden set of annual report and accounts for Woodford Patient Capital Trust plc to the year ending 31 December 2015.

You can download the full report and accounts (PDF 3MB), including the chairman’s statement and Neil Woodford’s review of the year but here’s a few key points:

  • Range of investment opportunities better, deeper and richer than initially thought
  • Portfolio now fully invested
  • Trust’s net asset value fell 2.6% to 97.38p
  • Ongoing charge 0.1%
  • Board to propose a dividend of 0.16p per share
  • Woodford investment team and network of experts expanded

The proposed dividend may come as a surprise to some investors but it is necessary for the Company to distribute excess income if it wishes to retain its status as an investment trust. The annual report details a change to the investment policy, which gives the investment team more flexibility over the proportion of the portfolio that is invested in mid and large companies, and should make the prospect of future dividends less likely. The new investment policy on the portfolio’s maturity status allocation is as follows:

  • Between 15 and 30% invested in mid and large-capitalisation listed, mature companies
  • Between 15 and 30% invested in early-growth companies
  • Between 40 and 70% invested in early-stage companies

The report also includes an update on the consultation process about a potential further capital raising, which we announced in January. With the continuing uncertainty prevailing in markets, the board has decided that now is not an appropriate time to raise capital but will continue to monitor the situation. You can find the results of our private investor digital survey here.

Please also find below a short video update from Neil on the portfolio’s progress to date.

What are the risks?

  • Long-term outcomes are more binary – extremely attractive rewards for success but some businesses will inevitably fail to fulfil their potential and this may expose investors to the risk of capital losses
  • As it can take years for young businesses to fulfil their potential, this investment requires patience
  • The value of the trust as well as any income it pays will fluctuate which may partly be the result of exchange rate changes
  • The price of shares in the trust is determined by market supply and demand, and this may be different to the net asset value of the trust. This means the price may be volatile in response to changes in demand
  • The trust may invest in overseas securities and be exposed to currencies other than pound sterling – as a result, exchange rate movements may cause the sterling value of investments to decrease or increase
  • The trust may invest in unquoted securities, which may be less liquid and more difficult to value, because they are generally not publicly traded – the lack of an open market may also make it more difficult to establish fair value
  • Young businesses have a different risk profile to mature blue-chip companies – risks are much more stock-specific, which implies a lower correlation with equity markets and the wider economy

Important information

We do not give investment advice so you need to decide if an investment is suitable for you. If you are unsure whether to invest, you should contact a financial adviser. The trust currently intends to conduct its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the FCA’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the FCA’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust.

Woodford Investment Management Ltd is authorised and regulated by the Financial Conduct Authority (firm reference number 745433). Incorporated in England and Wales, company number 10118169. Registered address 9400 Garsington Road, Oxford OX4 2HN.

Woodford Patient Capital Trust plc is incorporated in England and Wales, company number 09405653. Registered as an investment company under section 833 of the Companies Act 2006. Registered address Beaufort House, 51 New North Road, Exeter, EX4 4EP.

© 2019 Woodford Investment Management Ltd.
All rights reserved.

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