Annual Financial Report

RNS Number : 8219S

Woodford Patient Capital Trust PLC

22 March 2016

 



22 March 2016

Woodford Patient Capital Trust plc

(the "Company")

Annual Report 

Woodford Patient Capital Trust PLC, announces the audited annual financial report for the period from incorporation (26 January 2015) to 31 December 2015. The Company's investment objective is to achieve long-term capital growth through investing in a portfolio consisting predominantly of UK Companies, both quoted and unquoted.

Key points:

•          Investment opportunities better, deeper and richer than initially thought

•          Portfolio fully invested

•          Trust's net asset value fell 2.6% to 97.38p

•          Ongoing charge 0.1%

•          Dividend of 0.16 pence per share proposed

•          Woodford investment team and network of experts expanded

•          Full portfolio available at woodfordfunds.com 

Susan Searle, Chair, Woodford Patient Capital Trust plc, says:

"Since dealings in the Company's shares commenced on the London Stock Exchange on 21 April 2015, Neil and his investment team have been busy building the portfolio, a process that was completed shortly before year end. As the Woodford team has constructed the portfolio, the opportunity set has emerged as deeper and richer than originally anticipated, further strengthening already high levels of confidence in the investment rationale."

Neil Woodford, Head of Investment, Woodford Investment Management LLP, says:

"We have invested in some incredible businesses with massively disruptive technologies and high-growth potential. Some of these businesses may take a long time to fulfil their potential but the stock market is not well-endowed with patience, particularly in volatile conditions.

"Periodically, this manifests itself in share price weakness, especially in businesses with no earnings or dividends and relatively limited market liquidity, but therein lies the opportunity for patient capital to exploit. The portfolio is in excellent shape and we continue to view the future with great confidence."

Chairman's statement

Welcome to the maiden set of annual results for Woodford Patient Capital Trust, covering the period from the Company's inception on 26 January 2015 to its 31 December 2015 year end.

The Board was delighted with the investment community's enthusiastic response to the launch of Woodford Patient Capital Trust last spring. As a result, the initial £200m public offering was increased as the concept of investing patient capital in early-stage and early-growth businesses captured investors' imagination. The resized share issue of £800 million was itself oversubscribed, which the Board viewed as a tremendous endorsement of the patient capital strategy.

The net asset value of Woodford Patient Capital Trust ended the period at 97.38p per share (cum income), slightly below the issue price of 100p per share. A detailed assessment of the portfolio's progress follows in the manager's review but performance since launch is broadly in line with the Board's expectations, given the long-term nature of this investment vehicle and the deterioration in market sentiment over the period.

Since dealings in the Company's shares commenced on the London Stock Exchange on 21 April 2015, Neil and his investment team have been busy building the portfolio, a process that was completed shortly before year end.

As the Woodford team has constructed the portfolio the opportunity set has emerged as deeper and richer than originally anticipated, further strengthening already high levels of confidence in the investment rationale. The team continues to identify what it believes is a significant volume of attractive investment opportunities for the Company, including new investment opportunities, from a variety of sources, as well as follow-on investments in existing portfolio companies.

Accordingly, in January, we announced we were looking at ways to raise additional capital. With the continuing uncertainty prevailing in markets, now is not an appropriate time to raise capital. The Board will, however, monitor the situation and advise shareholders of any developments.

In order to retain the Company's status as an investment trust, a resolution to declare a final dividend of 0.16 pence per share will be proposed at the Company's Annual General Meeting, which is due to take place on 9 May 2016. The dividend will be payable on 10 June 2016 to shareholders who appear on the shareholder register as at 20 May 2016.

The Board firmly believes in the strategy of investing in highly promising early stage opportunities with patient capital and is confident of the long-term prospects for the Company.

Susan Searle

Chairman

21 March 2016

Portfolio manager's review

Since April's launch, we have been actively building the Woodford Patient Capital Trust portfolio, a process which was completed just before year end. Initially, our activity was focused towards building exposure to the quoted element of the portfolio, with positions in the more liquid mid-to-large capitalisation companies completed quite quickly. Some of the less liquid positions took longer to build, but placings by the likes of allergy and asthma business Circassia in June, clinical-stage stem-cell research company ReNeuron in August and aquaculture technology business Benchmark in December allowed us to gain the exposure we had sought to these exciting young businesses, some of which can have limited liquidity in the secondary market.

At the Company's interim period end, the portfolio was more than 75% invested. Since then, our focus has been on building out the portfolio's unquoted exposure. At launch, we mentioned that we had a strong pipeline of opportunities under due diligence and many of these are now represented in the portfolio. The majority of these opportunities have been introduced to us through our network of trusted partners, such as Allied Minds, Arthurian Life Sciences, Imperial Innovations, IP Group and Malin.

These established 'evergreen' investors do much of the painstaking work that is required to nurture a nascent company through the very early stages of its life. Our long-standing relationship with them provides us with the opportunity to co-invest once those companies have started to prove themselves and need more capital to progress on the long journey towards fulfilling their long-term commercial potential. This often involves several funding rounds, allowing us to increase the amount of capital we deploy as the business de-risks.

Among the largest unquoted positions are Immunocore, a UK-based clinical-stage immuno-oncology business, gene sequencing company Oxford Nanopore and Proton Partners, which plans to introduce proton beam cancer therapy to the UK by 2017. We look forward to updating investors on the progress of these, and other, promising early-stage businesses in future reports.

Turning to performance, the Company's net asset value ended the year at 97.38p per share on a cum income basis, a slight decline on the issue price of 100p per share. Clearly, we would prefer to be reporting on a period of positive progress for the portfolio in net asset value terms, but it is still very early days for this long-term strategy and performance should be viewed in the context of the overall market environment since launch. The performance of the trust should not correlate closely to that of the broader UK stock market in the long-term, but the quoted element of the portfolio and, in particular, our large cap positions are exposed to the slings and arrows of market sentiment which, in the period under review, turned increasingly negative. From launch on 21 April 2015 to year end, the FTSE All Share Index declined by -7.5% in total return terms.

We would be concerned if the share price performance of our investee businesses had been prompted by disappointing operational progress. In most instances, in fact, the opposite is true - we have been very pleased by the fundamental performance of the vast majority of our holdings, many of which have actually exceeded our initial expectations.

There are, of course, one or two exceptions. It is the nature of investing in early-stage companies that not all of them will progress in the way that was envisaged when the investment was first committed. If problems are encountered, we do our best to help the company overcome them. RM2 International is a good example of a company that hit a bump in the road during the period under review. RM2 has a high performance composite pallet product which has the potential to significantly disrupt the global goods transportation industry. The company announced some very positive contract wins during the period but also needed to make minor modifications to the coating it applies to its pallets, resulting in delays to its production upswing. We participated in its September share placing and remain very confident that the company will arrive at a successful destination, albeit somewhat later than previously anticipated.

Northwest Biotherapeutics, meanwhile, was the largest negative contributor to performance. We were attracted to Northwest by its technology, which looks to harness the power of the body's immune system to fight cancer. It's a broad-based technology for a range of solid tumours and is being trialled in patients who have exhausted all other avenues of cancer treatment. Since we first invested, however, allegations of financial improprieties and regulatory failure have been published by at least one anonymous source. We have engaged with the board on this matter and in a public filing to the US Securities and Exchange Commission, we called for the appointment of an independent non-executive director and the convening of a special committee to investigate the allegations. Accordingly, the company has initiated an investigation and we await its findings.

More positively, our other US biotech holdings provided a strong positive contribution to performance. In particular, the portfolio's largest position, Prothena, which is developing immuno-therapies in central nervous system and chronic inflammatory disorders, performed very strongly. This is a business we have known for several years - it was originally spun out of Elan in 2012 and has since established a growing analytical following in the US biotechnology industry, supported by positive clinical data in its lead candidate, a potential treatment for AL amyloidosis. The company is also developing a treatment for Parkinson's disease in collaboration with Roche, which has reported highly encouraging, albeit early-stage, clinical data. Both assets have enormous commercial long-term potential and increasing awareness of the company's progress drove significant share price gains in 2015.

Elsewhere, our holding in Vernalis performed well, having received FDA approval for the first of its extended release cough cold products, Tuzistra, in April 2015, shortly after the position was purchased. Investors continue to significantly undervalue the potential of Vernalis' cough cold franchise, in our view. It has four further products in development, alongside a portfolio of central nervous system and oncology programmes currently in the clinic.

Meanwhile, Norwegian fingerprint imaging technology business Idex was rewarded for its continued operational progress. Several mobile phone manufacturers are evaluating the company's product capabilities and towards the end of the year, it announced that a tier-one mobile phone manufacturer had selected its technology for use in a new device, representing a landmark design win. We are increasingly confident that Idex can continue to convert these opportunities to build a meaningful position in the fast-growing fingerprint sensor industry, which represents a multi-billion dollar market opportunity.

With regard to unquoted holdings, most of them continue to be held at the original price we paid. It may take several years for these businesses (and indeed many of their quoted counterparts) to fully realise their potential but there have been a couple of early successes. Immunocore, the clinical-stage immuno-oncology company, saw an independent revaluation, reflecting the continued positive progress being made by the business. Its well-validated ImmTAC technology platform has already demonstrated proof of concept with good clinical data in melanoma patients and the company continues to make progress on multiple partnered programmes with major pharmaceutical companies.

Meanwhile, Stratified Medical was also upwardly revalued as a result of a further funding round. The company has already identified and out-licensed two potential targets for Alzheimer's disease and is now further developing its powerful algorithm-based technology platform towards 'self-learning'. We continue to see considerable long-term growth potential in Stratified Medical as it continues to develop and commercialise its very impressive intellectual property.

Looking ahead, 2016 is shaping up to be another challenging year for financial markets but we are tremendously excited about the long-term potential in the portfolio that we have built. The realisation of future long-term value will be determined by the fundamental progress made by the companies in which we have invested, not by market sentiment.

We have invested in some incredible businesses with massively disruptive technologies and high-growth potential. Some of these businesses may take a long time to fulfil their potential but the stock market is not well endowed with patience, particularly in volatile conditions. Periodically, this manifests itself in share price weakness, especially in businesses with no earnings or dividends and relatively limited market liquidity.

Share price weakness in listed early-stage businesses tends, therefore, to reflect this lack of patience from investors, rather than a lack of fundamental progress by the companies. Therein lies the opportunity for patient capital to exploit. The portfolio is in excellent shape and we continue to view the future with great confidence.

Neil Woodford

21 March 2016

BUSINESS REVIEW

Principal activity

The Company carries on business as an investment trust and its principal activity is investment in quoted and unquoted equities of companies incorporated or listed predominantly in the United Kingdom, with a view to achieving the Company's investment objective. Investment companies are a way for investors to make a single investment that gives a share in a much larger portfolio. A type of collective investment, they allow investors to spread risk and diversify in investment opportunities which may not otherwise be easily accessible to them. Find out more information via the following link: http://www.theaic.co.uk/ guide-to-investment-companies.

Strategy and investment policy

The Company's investment objective is to achieve long-term capital growth through investing in a portfolio consisting predominantly of UK companies, both quoted and unquoted.

The Company will aim to deliver a return in excess of 10% per annum over the longer term*.

* This is a target only, not a profit forecast, and there can be no assurance that it will be met.

The Company's portfolio is constructed on the basis of an assessment of the fundamental value of individual securities and is not structured on the basis of sector weightings. The Company's portfolio is diversified across a number of sectors and, while there are no specific limits placed on exposure to any one sector, the Company will at all times invest and manage the portfolio in a manner consistent with spreading investment risk.

The Company's investment policy is as follows:

Asset allocation and risk diversification

The Company will invest in a diversified portfolio consisting predominantly of UK companies, both quoted and unquoted.

The Company will invest in:

(i) Mid and large-capitalisation listed, mature companies.

(ii)  Early-growth companies, which are typically quoted although may be unquoted companies.

(iii) Early-stage companies, which are likely to include both quoted and unquoted companies.

To acknowledge the Company's evolving structure the Company's portfolio is generally expected to reflect the following asset allocation:

(i)   Between 15 and 30% invested in mid and large-capitalisation listed, mature companies.

(ii)  Between 15 and 30% invested in early-growth companies.

(iii) Between 40 and 70% invested in early-stage companies.

However, the actual portfolio composition at any one time will reflect the opportunities available to the portfolio manager, the performance of the underlying investee companies and the maturity of the portfolio.

The Company's portfolio is expected to consist of 50-100 holdings. The Company may become a significant shareholder in any of the underlying portfolio companies.

Investment restrictions

The Company is subject to the following investment restrictions:

(i)         Investment in unquoted companies will be limited to 60% of net asset value at the time of investment.

(ii)        Investment in non-UK Companies will be limited to 30% of net asset value at the time of investment.

(iii)       The Company's portfolio shall be invested in a minimum of 40 holdings.

(iv)       The Company shall not invest more than 10% of its net asset value at the time of investment in an investee company, save that the portfolio manager may make further investments into an investee company subject to an aggregate investment limit in any investee company of 15% of net asset value at the time of investment.

(v)        The Company may invest in other investment funds, including listed closed-ended investment funds, to gain investment exposure but such investment will be unleveraged and (other than in relation to investment in money market funds for the purposes of cash management) limited, in aggregate, to 10% of net asset value at the time of investment.

(vi)       The Company shall not have exposure of more than 10% of net asset value, at the time of investment, to any one issuer.

Borrowing

The Company does not intend to deploy long-term gearing but may employ gearing of up to 20% of net asset value, calculated at the time of borrowing, for the purpose of capital flexibility, including for investment purposes.

The Board oversees the level of gearing in the Company, and reviews the position with the portfolio manager on a regular basis. As at the year end the Company was not geared.

Hedging

The Company may use derivatives for the purposes of hedging any currency risk to which the Company may be subject but will not use derivatives for investment purposes. During the period under review the Company hedged its exposure to Euro currency denominated holdings in the portfolio using forward currency contracts. No other derivatives were employed during the period.

Cash management

While it is intended that the Company will be fully invested in normal market conditions, the Company may hold cash on deposit or invest on a temporary basis in a range of debt securities and cash equivalent instruments. There is no restriction on the amount of cash or cash equivalent instruments that the Company may hold and there may be times when it is appropriate for the Company to have a significant cash position instead of being fully or near fully invested. As at the year end the Company held 1.48% of its assets in cash.

Unquoted Securities Valuation Policy

The Company has amended its Unquoted Securities Valuation Policy to continue to provide an objective, consistent and transparent basis for estimating the fair value of unquoted equity securities in accordance with International Financial Reporting Standards as well as International Private Equity and Venture Capital Valuation Guidelines.

The Unquoted Securities Valuation Policy and the portfolio manager's valuation procedures are subject to review on a regular basis, and updated as appropriate, in line with industry best practice. In addition, the Portfolio Manager works with Duff & Phelps Ltd, an independent third-party valuation firm, to obtain assistance, advice, assurance, and documentation in relation to the ongoing valuation process.

The portfolio manager seeks to mitigate any conflicts of interest in the valuation process by clearly segregating responsibilities in order to ensure independence in the process. The portfolio manager considers it impractical to perform an in-depth valuation analysis for every unquoted investment on a daily basis (whether internally or with the assistance of an independent third party). Therefore, it is expected that an in-depth valuation of each investment will be performed independently by Duff & Phelps (i) at the time of initial investment, (ii) with a semi-annual frequency thereafter, and (iii) as required where the portfolio manager determines that a 'Triggering Event' has occurred.

A Triggering Event may include any of the following:

-    A subsequent round of financing (whether pro-rata or otherwise) by the relevant investee company.

-    A significant or material milestone achieved by the relevant investee company.

-    A secondary transaction involving the relevant investee company on which sufficient information is available.

-    A change in the makeup of the management of the relevant investee company.

-    A material change in the recent financial performance or expected future financial performance of the relevant investee company.

-    A material change in the market environment in which the relevant investee company operates; or

-    A significant movement in market indices or economic indicators.

Once a valuation review has been established, fair value will be assumed to be representative of fair value each Business Day until the next valuation review is performed by Duff & Phelps.

Once completed, the valuations are submitted to the Pricing Committee for review. The Pricing Committee comprises representatives from each of the portfolio manager, Capita Financial Managers Limited, acting as AIFM, and Duff & Phelps. Any specific considerations that arise are discussed with the portfolio manager's finance team and adjustments made to fair values if appropriate. Where the Pricing Committee considers such an adjustment to be material, the portfolio manager will inform the Board of the nature and reasons for the adjustment.

Business model

The management of the Company's assets and the Company's administration, has been outsourced to third-party service providers. The Board has oversight of the key elements of the Company's strategy, including the following:

-    The Company's level of gearing. The Company has a maximum limit of 20% of net  asset value at the time of borrowing as detailed in the Company's prospectus.

-    The Company's investment policy which determines the diversity of the Company's portfolio. The Board sets limits and restrictions with the aim of reducing risk and maximising returns.

-    The appointment, amendment or removal of the Company's third-party service providers.

-    An effective system of oversight over the Company's risk management and corporate governance.

-    Premium/discount control mechanism. The Board compares the Company's share price against its then prevailing net asset value.

In order to effectively undertake its duties the Board may seek expert legal advice. It also can call upon the advice of the company secretary. During the period under review the Board appointed Stephenson Harwood LLP to advise on the Company's Initial Public Offering prior to the Company's listing on 21 April 2015 and to provide ongoing legal services to the Company.

Future developments

The Company's future developments and outlook are discussed in more detail in the Chairman's statement and the manager's review.

Premium/Discount management

The Board closely monitors the premium or discount at which the Company's ordinary shares trade in relation to the Company's underlying net asset value and takes action accordingly. During the period under review the Company's ordinary shares traded predominantly at a premium to its underlying net asset value throughout the period. The Board is of the view that an increase of the Company's ordinary shares in issue provides benefits to shareholders including a reduction in the Company's administrative expenses on a per share basis and increased liquidity in the Company's shares. In order to satisfy natural demand in the market during the period the Board authorised the issue of 27 million shares by way of a tap issue.

The Board is seeking to renew its authority to issue ordinary shares at the forthcoming Annual General Meeting.

The Board believes that it is in shareholders' best interest to prevent the Company's shares trading at a discount to net asset value because shareholders will be unable to realise the full value of their investments.

As a means of controlling the discount at which the shares may, from time to time, trade, the Board has vested powers to buy back ordinary shares up to a maximum of 14.99% of the shares issued following the Initial Public Offering, which equates to 119.92 million shares. This authority will expire at the conclusion of the Company's first Annual General Meeting. As the Company's shares traded predominantly at a premium to net asset value throughout the period under review, no repurchases were authorised. At the forthcoming Annual General Meeting the Board is seeking to renew these powers.

The full text of the authority to buy back shares or issue shares can be found in the Notice of AGM.

Corporate and operational structure

Operational and portfolio management

The Company has outsourced its operations and portfolio management to various service providers as detailed below:

-    Capita Financial Managers Limited has been appointed as the Company's manager for the   purposes of the AIFMD.

-    Woodford Investment Management LLP has been appointed to act as the Company's portfolio manager.

-    Capita Company Secretarial Services Limited has been appointed to act as the Company's company secretary.

-    Northern Trust Global Services Limited has been appointed to act as the Company's investment accountant, administrator and depositary.

-    Duff & Phelps Limited has been appointed to value the Company's unquoted holdings.

-    Capita Registrars Limited has been appointed as the Company's registrar.

-    Winterflood Investment Trusts (a division of Winterflood Securities Limited) has been appointed to act as the Company's corporate broker and financial adviser.

-    Kinetic Partners, a Division of Duff & Phelps has been appointed to act as the Company's tax adviser.

In addition to the above, the Company has been provided with legal advice for the work undertaken in respect of the Initial Public Offering and in respect of various of its unquoted investments.

PRINCIPAL RISKS AND UNCERTAINTIES

The Board has carried out a robust assessment of its risks and controls during the period under review. In doing so it has established a robust process to identify and monitor the risks faced by the Company which has been in place since prior to the date at which the Company began trading (21 April 2015).The process involves the maintenance of a risk register, which identifies the risks facing the Company and assesses each risk on a scale, classifying the likelihood of the risk and the potential impact of each risk to the Company. This helps the Audit Committee and Board focus on any identified risk of particular concern and aids with the development of the Board's risk appetite. In developing the risk management process, the Board took into consideration the Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued by the Finance Reporting Council.

The Board has established controls to mitigate against risks faced by the Company, which are reviewed on a regular basis to ascertain the effectiveness of each control.

The Company's operations are undertaken by third party service providers. The third party service providers have established controls to mitigate against risks identified by the Board. The controls and operations of each service provider are subject to a detailed analysis of their operations, which includes testing their key systems to identify any weaknesses, by independent auditors on at least an annual basis. The findings of each review are detailed in Assurance Reports, copies of which are provided to the Audit Committee for their review, so that it can gain a greater understanding of the risk management processes and how they apply to the Company's business.

The principal risks and uncertainties faced by the Company in 2015 are set out below.

Operational

1.   Risk - The Company has no employees and the directors have been appointed on a non-executive basis. The Company is reliant upon the performance of third party service providers for its executive function. Failure of any of its third party service providers to perform in accordance with the terms of its appointment could have a material detrimental impact on the operation of the Company. Furthermore any of the Company's service providers could terminate their contract. The manager, the portfolio manager, the depositary, the company secretary and the administrator will be performing services which are integral to the operation of the Company. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment, together with a failure by the Company to enforce such terms, could have a materially detrimental impact on the operation of the Company.

Mitigation - The performance of the Company's service providers is monitored closely by the Board and its committees. 

2.   Risk - The departure of some or all of the portfolio manager's investment professionals could prevent the Company from achieving its investment objective. In particular, Neil Woodford is considered a key individual as the fund manager principally responsible for the management of the Company's assets. The past performance of the portfolio manager's investment professionals cannot be relied upon as an indication of the future performance of the Company.

Mitigation - The portfolio manager has developed a suitable succession planning programme which seeks to ease the impact that the loss of a key investment professional may have to the Company's performance. The Board has reached an agreement with the portfolio manager that any change in its key professionals will be notified to the Board at the earliest possible opportunity and the Board will be made aware of all efforts made to fill a vacancy. Furthermore, investment decisions are made by a team of professionals, mitigating the impact the loss of any key professional within the portfolio manager's organisation on the Company's performance.

3.   Risk - The shares may trade at a discount to net asset value whereby the shares can be traded on the open market at a price that is lower than the value of their underlying assets. Similarly the shares may trade at a premium to net asset value whereby the Company's shares can trade on the open market at a price that is higher than the value of their underlying assets, resulting in shareholders purchasing shares at a price that is higher than the value of the underlying assets.

Mitigation - The Board closely monitors the level of discount or premium at which the shares trade on the open market. When the shares trade at a discount the Board may seek to buy back shares in an effort to narrow the discount at which the shares are trading on the open market. When the shares trade at a premium the Board may issue shares in an attempt to reduce the premium at which the shares trade. As at 31 December 2015 the shares were trading at a premium to net asset value.

Investments

1.         Risk - There is no guarantee that the Company's investment objective will be achieved.

Mitigation: The Company's investment decisions are delegated to the Company's portfolio manager, Woodford Investment Management LLP. The Company's performance is closely monitored by the portfolio manager and the Board and reviewed in more detail at each Board meeting. Any mitigating action is taken as deemed appropriate by the portfolio manager, whilst remaining mindful not to compromise long-term growth for short-term gain.

2.         Risk - The Company may use borrowings for the purpose of capital flexibility, which may include seeking to enhance investment returns where the portfolio manager believes that it is in the interests of shareholders to do so. While the use of borrowings should enhance the total return of the Company 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 is falling, further reducing the total return of the Company. As a result, the use of borrowings by the Company may increase the volatility of the net asset value and could affect the ability of the Company to achieve its investment objective.

Mitigation - The Board sets the gearing parameters for the portfolio manager to utilise at its discretion with the aim of maximising shareholder return. The Board closely monitors the Company's level of gearing, if any. Furthermore, the Company is restricted to deploy no more than 20% of net asset value as gearing, limiting the damage gearing can have on the Company's net asset value in times of decline. As at the date of this report the Company does not have any gearing.

3.   Risk - The Company is expected to invest a significant proportion of its assets in early-stage companies and early-growth companies which, by their nature, may be smaller capitalisation companies. Such companies may not have the financial strength, diversity and resources of larger and more established companies and may find it more difficult to operate, especially in periods of low economic growth. The market in the shares of such companies may be less liquid and, as a consequence, their share prices may be more volatile than investments in larger companies.

Mitigation - The Company's portfolio is monitored closely by the Board and portfolio manager. The Company seeks to invest in a diversified portfolio across a wide range of companies and investment vehicles, including larger, well-established and fully-listed companies so as to mitigate against the risk posed by early-stage or early-growth companies. Furthermore, the Company has established a number of investment restrictions, in particular the Company may not invest more than 60% of its net asset value at the time of investment in unquoted companies.

4.   Risk - The Company is expected to invest a significant proportion of its assets in unquoted securities, which may be less liquid and more difficult to realise than publicly traded securities. Unquoted holdings are hard to value.

Mitigation - The Company was established with the aim of providing long-term growth. Any short-term liquidity problems with any of the Company's underlying holdings would be mitigated over time. The portfolio manager cannot invest more than 60% of its net asset value at the time of investment in unquoted companies in accordance with the Company's investment restrictions, hence restricting the Company's risk to unquoted holdings. The Company has appointed Duff & Phelps, an independent third-party valuation company, to assist in valuing the unquoted securities.

5.   Risk - The Company's ordinary shares are quoted in Sterling. The assets of the Company may be invested in securities which are denominated in currencies other than Sterling. Accordingly, the value of such assets may be affected favourably or unfavourably by fluctuations in currency rates. The Company is also subject to other financial risks including interest risk, other price risk, liquidity risk and credit risk.

Mitigation - The Company's portfolio manager and AIFM closely monitor the Company's exposure to foreign currency. To mitigate against any risk of loss of shareholder returns the portfolio manager seeks to invest across a range of jurisdictions and therefore dilute any risk exposure to any single jurisdiction. The Company has the ability to utilise derivative instruments when required to hedge against declines in the value of its portfolio as a result of changes in currency exchange rates although the success of any such hedging cannot be guaranteed..

6.   Risk - The effects of both normal market fluctuations and the ongoing effect of the recent global economic crisis may impact the Company's business, operating results or financial condition;

Mitigation - These are factors which are outside the Company's control and which may affect the volatility of underlying asset values and the liquidity and the value of the Company's portfolio. The Board adopted a number of investment restrictions which aim to diversify the Company's portfolio to mitigate against the risk of market turbulent conditions. The portfolio manager and Board closely monitor the Company's portfolio and any mitigating action is taken accordingly to respond to prevalent market conditions. Furthermore the Company may hold up to 10% of its assets in cash which may be utilised by the portfolio manager at its discretion to help protect the Company against the effect of any short-term turbulent market conditions. In addition the Company is likely to invest in unquoted holdings which are not subject to daily market fluctuations.

Regulations 

1.   Risk - Any change in the Company's tax status or in taxation legislation or practice generally could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders, or alter the post-tax returns to shareholders.

Mitigation - Part of the process that is undertaken when analysing each of the Company's investments involves an analysis of its tax status and the impact to the Company. In order to maintain its investment trust status the Company is required to comply with section 1158-9 of the Corporation Tax Act 2010 ('CTA'). A breach of CTA would result in the Company losing its investment trust status which would create a capital gains tax liability for the Company in respect of the Company's portfolio. Northern Trust Global Services Limited, as the Company's appointed administrator, monitors this, other than the Company's close company status, and reports to the Board if it becomes aware of any breach to CTA.  In order to monitor close company status, triggers have been set up with the Company's registrars who will notify the company secretary should more than 0.5% of the Company's shares change hands.

2.   Risk - The Company is subject to various legislation and regulations. Any breach of its legislative obligations could have a negative impact on the Company and impact any returns to its shareholders.

Mitigation - The Company's appointed company secretary and AIFM closely monitor the legislation and regulations to ensure that the Company complies with its statutory obligations. The AIFM and company secretary provide detailed reports summarising how the Company has complied with its statutory obligations at each Board meeting. Furthermore, the Board may, at its discretion, seek legal advice or the advice of the Company's appointed auditors to advise on any area of uncertainty or ambiguity. Other than as part of the Company's listing the Board did not seek the services of legal advisers or the auditor.

KEY PERFORMANCE INDICATORS ("KPIS")

Performance

Performance is measured against the Company's objective of 10% growth per year. During the period to 31 December 2015 the Company's net asset value declined by 1.5%. A more detailed explanation of the Company's performance can be found in the manager's review and chairman's statement above.

Performance against the Company's peers

The Company is positioned within the Association of Investment Companies (AIC) UK All Companies sector by most investment company broker analysts. The Board reviews the Company's performance against its peers at each board meeting. For the period 21 April 2015 to 31 December 2015 the Company's net asset value underperformed the average net asset value amongst its peers with a total return of -1.83% compared to the average net asset value return of 3.85% return amongst the Company's peers.

Share price premium/(discount) to net asset value per share

The Board closely monitors the Company's discount or premium to net asset value per share. Since the date the Company was admitted to the UK Official List (21 April 2015) to 31 December 2015 the Company issued a total of 27,000,000 ordinary shares in order to meet natural market demand. The Company's shares traded at an average premium of 8.46% to its net asset value (cum income) throughout the period under review. 

Ongoing charges

Woodford will not receive a fee for managing this investment trust, unless it delivers cumulative annual returns in excess of 10%.

The ongoing charges cover the general administrative and management costs associated with running the trust.

The Company calculates the ongoing charges ratio as a percentage of average shareholders' funds and using expenses, excluding finance costs, performance fees and taxation in accordance with AIC guidelines. This gives an indication as to the Company's expenses to its shareholders and potential investors. The Board monitors the Company's estimated ongoing charges against its peers at each board meeting to ensure that the Company remains competitive against its peers. It is not expected that the ongoing charges will exceed 0.2%, which compares favourably with the Company's peers who operate with an average ongoing charges level of 0.47%. As at 31 December 2015 the Company's ongoing charge was 0.1%.

Gearing

The Board reviews the Company's gearing against its peers at each board meeting. As at 31 December 2015 the Company had no gearing whilst the average level of gearing amongst its peers was 7.0%.

Portfolio diversification

At each board meeting the Board reviews the Company's portfolio to monitor the Company's exposure to various sectors, geographical areas, investment split between listed and unlisted equities and early-growth, early stage and mid-large companies to ensure there is sufficient diversification of the Company's portfolio.

Going concern

The financial statements have been prepared on a going concern basis. Having had regard to the Company's projected income and expenses, the directors consider that going concern is the appropriate basis as they have a reasonable expectation that, with in excess of £805 million of total assets, 64% of which is realisable, the Company has adequate resources to continue in operational existence for at least the next 12-month period. The directors shall continue to adopt the going concern basis of accounting in preparing the financial statements.

Viability statement

In accordance with Principle 21 of the Association of Investment Companies Code of Corporate Governance published in February 2015 (the 'AIC Code') and provision C.2.2 of the UK Corporate Governance Code, published by the Financial Reporting Council in September 2014 (the "Code"), the directors have assessed the prospects of the Company over the five year period to 31 December 2020. The Directors consider that a period of at least five years is required to assess the viability of an investment company that holds predominantly young unquoted or small to medium sized companies, as they believe this to be a reasonable period of time for such young companies to make meaningful progress on the journey towards fulfilling their long-term potential.

In its assessment of the viability of the Company, the directors have considered each of the Company's principal risks and uncertainties detailed above and in particular the impact of the total collapse of one or more of the Company's significant holdings. The Board has considered the Company's likely income and expenditure. The Board is particularly mindful that a significant proportion of the Company's portfolio comprises cash and equity assets traded on public markets (64% as at 31 December 2015), which are realisable and that can be sold to meet funding requirements if required.

The Board has given careful consideration to the Company's estimated annual expenditure on operating costs, the Company's risks and internal controls, the Company's asset allocation and diversification, portfolio risk, financial controls, the restrictions set to the Company's level of gearing. Following the Board's detailed analysis it has concluded that there is a reasonable expectation that the Company will be able to continue to operate and to meet its liabilities as they fall due over the five year period to 31 December 2020.

Post year end events

Save as otherwise disclosed, there have been no important events to disclose since the period end under review.

By order of the Board

Capita Company Secretarial Services Limited

Company secretary

21 March 2016

The full Annual Report contains the following statements regarding responsibility for the financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITY

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 financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

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 each financial year and of the loss of the Company for that period.

In preparing those financial statements, the directors are required to:

-    Present fairly the financial position, financial performance and cash flows of the Company.

-    Select suitable accounting policies in accordance with United Kingdom Generally Accepted Accounting Practice 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 that are reasonable and prudent.

-    State whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements.

-    Prepare the financial statements on the 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 disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. 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 directors are also responsible for preparing the strategic report, the directors' report, the directors' remuneration report, the corporate governance statement and the report of the Audit Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure and Transparency Rules. The directors have delegated responsibility to the manager for the maintenance and integrity of the Company's corporate and financial information included on Woodford Investment Management LLP's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors confirm that:

-    The financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company.

-    The strategic report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces .

-    The 2014 UK Corporate Governance Code requires directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advises on whether it considers that the Annual Report and Financial Statements fulfils these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee's report. As a result, the Board has concluded that the Annual Report for the period ended 31 December 2015, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

Signed on behalf of the Board of directors by:

Susan Searle

Chairman

21 March 2016

INCOME STATEMENT

From 26 January 2015 (date of incorporation) to 31 December 2015

Notes		Revenue £000	Capital     £000	Total £000
Losses on investments measured at		0	(17,587)	(17,587)
fair value through profit or loss
Income	2	2,374	0	2,374
Portfolio management fee	3	0	0	0
Other expenses	4	(816)	0	(816)
Return before finance costs & taxation		1,558	(17,587)	(16,029)
Finance costs	5	(20)	0	(20)
Return on ordinary activities before taxation		1,538	(17,587)	(16,049)
Taxation on ordinary activities	6	0	0	0
Return for the period		1,538	(17,587)	(16,049)
Return per ordinary share (pence)	17	0.25p	(2.88)p	(2.63)p

The total column of this statement is the profit and loss account of the company.

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

There is no other comprehensive income.

 

STATEMENT OF FINANCIAL POSITION

As at 31 December 2015
		31 December 2015
Fixed assets	Notes	£'000
Investments at fair value through profit or loss	6	796,929
Current assets
Debtors	7	326
Cash at bank		12,008
		12,334
Creditors - amounts falling due within one year
Creditors	8	(3,631)
Derivative financial instruments	9	(368)
		(3,999)
Net  current  assets		8,335
Total assets less current liabilities		805,264
Net assets		805,264
Capital and reserves
Share capital	10	8,270
Share premium	11	813,043
Capital reserve	12	(17,587)
Revenue reserve	13	1,538
Total shareholders' funds		805,264
NAV per share - ordinary shares (pence)	18	97.37p

The financial statements of Woodford Patient Capital Trust plc, company number 09405653, wereapproved by the Board and authorised for issue on 21 March 2016 and were signed on its behalf by:

Susan J Searle

Chairman

STATEMENT OF CHANGES IN EQUITY

			Share
		Share	Premium	Capital	Revenue
		capital	account	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000
Beginning of period		-	-	-	-	-
Total comprehensive income for the financial period		-	-	(17,587)	1,538	(16,049)
Issue of ordinary shares		8,270	822,190	-	-	830,460
Share issue costs		-	(9,147)	-	-	(9,147)
Balance at 31 December 2015		8,270	813,043	(17,587)	1,538	805,264

Distributable reserves comprise: the revenue reserve and capital reserve attributable to realised profits.

Share capital represents the nominal value of shares that have been issued. The share premium account includes any premiums received on issue of share capital. Any direct transaction costs associated with the issuing of shares are deducted from share premium.

All investments are held at fair value through profit or loss. When the Company revalues the investments still held during the period, any gains or losses arising are credited/charged to the capital reserve.

CASH FLOW STATEMENT

	31 December 2015
Cash flow from operating activities	£'000
Loss before finance costs and taxation	(16,029)
Adjustments for:
Movement in investments held at fair value through profit or loss	17,587
Fee paid for credit facility	(20)
Increase in trade and other debtors	(326)
Increase in trade creditors	550
Net cash generated from operating activities	1,762
Cash flows from investing activities
Purchases of investments	(820,489)
Proceeds from sales of investments	9,365
Net cash used in investing activities	(811,124)
Cash flows from financing activities
Issue of ordinary share capital	830,460
Share issue costs	(9,090)
Net cash from financing activities	821,370
Net increase in cash and cash equivalents	12,008
Cash and cash equivalents at the beginning of the period	-
Cash and cash equivalents at end of period	12,008

Notes

1. Accounting policies

The principal accounting policies followed by the Company are set out below:

(a)  Basis of accounting

The Company's financial statements have been prepared in compliance with FRS102 as it applies to the financial statements of the Company for the period ended 31 December 2015 and the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" (issued in November 2014). The financial statements have been prepared on the historical cost basis except for the modification to a fair value basis for certain financial instruments as specified in the accounting policies below.

The financial statements have been prepared on a going concern basis and on assumption that approvalas an investment trust will continue to be granted.

The financial statements have been presented in Sterling (£), which is also the functional currency

of the Company.

(b)  Investments

The Company has adopted the provisions of Sections 11 and 12 of FRS 102 for measuring and disclosing its financial instruments. All investments held by the Company are classified as "fair value through profit or loss", and are valued in accordance with the International Private Equity and Venture Capital Valuation (IPEVCV) guidelines, as updated in December 2012. This classification is followed as the Company's business is to invest in financial assets with a view to profiting from their total return in the form of capital growth and income.

For investments actively traded on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.

Unquoted investments are a significant accounting judgement which is stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines:

All investments are held at the price of a recent investment for an appropriate period where there is considered to have been no change in fair value. Where such a basis is no longer considered appropriate, the following factors will be considered:

(i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of a company, this value will be used.

(ii) In the absence of i), and depending upon both the subsequent trading performance and investment structure of an investee company, the valuation basis will usually move to an earnings multiple basis. The shares may be valued by applying a suitable price-earnings ratio to that company's historic, current or forecast post-tax earnings before interest and amortisation (the ratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Investment Adviser compared to the sector including, inter alia, a lack of marketability).

Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow or net asset valuation bases may be applied.

(c) Foreign currency

Transactions denominated in foreign currencies are translated into Sterling at actual exchange rates as at the date of the transaction. Assets and liabilities denominated in foreign currencies at the period end are reported at the rates of exchange prevailing 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 income statement as appropriate. Foreign exchange movements on investments are included in the Income Statement within gains on investments.

(d) Income

Investment income has been accounted for on an ex-dividend basis or when the Company's right to the income is established. Special dividends are credited to capital or revenue in the Income Statement, according to the circumstances surrounding the payment of the dividend. UK dividends are accounted for net of any tax credits. Overseas dividends are included gross of withholding tax. Interest receivable on deposits is accounted for on an accruals basis.

(e) Expenses

All expenses are accounted for on an accruals basis and are charged as follows:

- Any performance fee is allocated to capital

- Investment transactions costs are allocated to capital

- Other expenses are charged wholly to revenue

- Direct issue costs are deducted from the share premium account.

(f) Taxation

The charge for taxation is based upon the net revenue for the year. The tax charge is allocated to the revenue and capital accounts according to the marginal basis whereby revenue expenses are first matched against taxable income arising in the revenue account. Deferred taxation will be recognised as an asset or a liability if transactions have occurred at the reporting date that give rise to an obligation to pay more taxation in the future, or a right to pay less taxation in the future. An asset will only be recognised to the extent that it is probable to be recovered.

2. Income

Income from investments	Period ended
	31 December 2015
	£000
UK franked dividends	2,317
Other Income	57
Total	2,374

3.  Portfolio management fee

	Period ended
	31 December 2015
	£000
Performance fee accrual: 100% charged to capital	0
Total	0

The portfolio manager is entitled to receive a performance fee equal to 15% of any excess returns over a cumulative 10% per annum hurdle rate, subject to a high watermark. The performance fee is calculated on the following basis.

PF = ((A-B) x C) x 15 per cent.

Where:

- PF is the performance fee, if any, payable to the portfolio manager

- A is the adjusted NAV per ordinary share

- B is the higher of: (i) the high watermark NAV per ordinary share and (ii) the hurdle

- C is the time weighted average number of ordinary shares in issue since the last performance period in respect of which a performance fee was earned, or if no performance fee has yet been earned, admission

In the event that A-B is a negative number, it shall be taken to equal zero.

For these purposes:

"Performance period" means: (i) the period beginning on the date of Admission and ending on 31 December 2015 and (ii) each subsequent period corresponding to each accounting period of the Company.

"Adjusted NAV per ordinary share" means the Net Asset Value per ordinary share on the last business day of each performance period, adjusted by adding back any performance fee accrual in respect of such performance period.

"High watermark NAV per ordinary share" means the Net Asset Value per ordinary share as at the last business day of the performance period in respect of which a performance fee was last earned, adding back the effect of any performance fee paid in respect of such performance period (or, if no performance fee has yet been earned, the issue price).

"Hurdle" means the issue price increased, from admission, at a rate of 10% per annum, compounded annually as at the last business say of each performance period (pro-rated, in the case of the first performance period, from the date of admission).

The high watermark NAV per ordinary share and the hurdle will be adjusted to reflect the impact on the adjusted NAV per ordinary share from a capital return and / or dividend and / or distribution to shareholders at the time of such capital return and / or dividend and / or distribution, on a pence per ordinary share basis.

If at any time a potential adjustment event shall occur, the portfolio manager and the Company will discuss in good faith what adjustment would be appropriate for the purpose of calculation of the performance fee. Failing such agreement, the Company will instruct the Auditor, or other independent firm of accountants, to report to the Company and the portfolio manager regarding any adjustment which in the opinion of the auditor, or other independent firm of accountants, shall be appropriate to be made for the purpose of the calculation of the performance fee.

"Potential adjustment event" means, in relation to the Company, every issue by way of capitalisation of profits or reserves and every issue by way of rights or bonus and every consolidation or sub-division or reduction of capital or share premium or capital dividend or redemption of ordinary shares, or other reconstruction or adjustment relating to the share capital of the Company (or any shares, stock or securities derived therefrom or convertible thereinto) and also includes any other amalgamation or reconstruction affecting the share capital of the Company (or any shares, stock or securities derived therefrom or convertible thereinto).

4. Other Expenses

		Period ended
		31 December 2015
		£000
Secretarial services		50
Administration expenses		628
Auditor's  remuneration - audit services		40
	- half year review	10
Directors' fees		88
Total		816

Other fees paid to Grant Thornton of £30,000 in connection with the launch of the Company are included in the share issue costs charged to the share premium which are disclosed below.

5. Finance costs

	Period ended
	31 December 2015
	£000
Fee paid for credit facility	20

6. Taxation

(a) Analysis of charge in the period: 

	Period ended	Period ended	Period ended
	31   December	31 December	31 December
	2015	2015	2015
	Revenue	Capital	Total
	£000	£000	£000
Overseas tax	0	0	0
Total tax charge for the year (see note 6 (b))	0	0	0

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

The tax assessed for the year is lower than the standard rate of corporation tax in the UK for a large company of 20.19%. The differences are explained below:

	Period ended 31 December 2015 Revenue £000	Period ended 31 December 2015                      Capital                          £000	Period ended 31 December  2015            Total            £000
Total return before taxation	1,538	(17,587)	(16,049)
UK corporation tax at 20.19%	311	(3,551)	(3,240)
Effects of: Capital (gains)/losses not subject to corporation tax	0	3,551	3,551
UK dividends which are not taxable	(468)	0	(468)
Overseas tax suffered	0	0	0
Non-taxable overseas dividends	0	0	0
Movement in unutilized management expenses	157	0	157
Total tax charge	0	0	0

The Company is not liable to tax on capital gains due to its status as an investment trust. Due to the Company's status as an investment trust, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

After claiming relief against accrued income taxable on receipt, the Company has a deferred tax asset of approximately £140,191 relating to excess management expenses of £778,836. It is unlikely that the Company will generate sufficient taxable profits in the future to utilise these expenses and therefore no deferred tax asset in respect of these expenses has been recognised.

7.   Dividend

The dividend relating to the period ended 31 December 2015 which is the basis on which the requirements of Section 1159 of the Corporation Tax Act 2010 are considered is detailed below:

	Period ended	Period ended
	31 December 2015	31 December 2015
	pence per ordinary share	£000
Annual dividend - payable on 10 June 2016*	0.16p	1,323

*Not included as a liability in the period ended 31December 2015 accounts.

The annual dividend will be paid on 10 June 2016 to members on the register at the close of business on 20 May 2016. The shares will be marked ex-dividend on 19 May 2016.

8. Investments

For financial reporting purposes, fair value measurements are categorised into a fair value hierarchy based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurements in its entirety, which are described as follows:

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 (ie developed using market data) for the asset or liability, either directly or indirectly.

Level 3 - Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.

In preparing these financial the Company has early adopted 'Amendments to FRS102: Fair value hierarchy disclosed (March 2016)' published by the FRC.

	31 December 2015
	£'000
Level 1
Investments listed on a recognised investment exchange:	507,267
Level 3
Unquoted investments:	289,662
Total	796,929

(b) Movements

	Listed	Unquoted	Total 2015
	£'000	£'000	£'000
Book cost at beginning of period	-	-	-
Gains/(losses) on investments held at beginning of period	-	-	-
Valuation at beginning of period	-	-	-
Purchases at cost	548,038	275,843	823,881
Sales:
- proceeds	(9,365)	-	(9,365)
- losses on investment holdings sold in the period	(4,760)	-	(4,760)
Movements in (losses)/gains on investment holdings held at end of period	(26,646)	13,819	(12,827)
Valuation at end of period	507,267	289,662	796,929

	Total
	Period ended
	31 December 2015
	£'000
Comprising:
Book cost at end of period	809,756
Losses on investment holdings at period end	(12,827)
Valuation at end of period	796,929

Transaction costs on purchases for the period ended 31 December 2015 amounted to £763,000 and on sales for the year amounted to £8,000.

9. Debtors	31 December 2015 £000
Accrued income and prepayments	326

10. Creditors	31 December 2015
	£000
Amounts falling due within one year:	3,392
Purchases for future settlement	239
Other creditors	3,631

11. Derivative financial instruments

31 December 2015
	Current	Current	Net current
	assets	liabilities	assets/
			(liabilities)
	£'000	£'000	£'000
Forward foreign exchange contracts  - GBP/EUR	-	(368)	(368)
Total derivative financial instruments	-	(368)	(368)

12. Share capital

The table below details the issued share capital of the Company as at the date of the accounts:

	31 December 2015	31 December 2015
	No of Shares	£000
Allotted, issued & fully paid:
Ordinary shares of 1p	827,000,000	8,270
	827,000,000	8,270

For the period from 26 January 2015 to 31 December 2015

On incorporation, the issued share capital of the Company was £0.01 represented by one ordinary share, held by Woodford Investment Management LLP as subscriber to the Company's memorandum of association. The ordinary share was fully paid up.

To enable the Company to obtain a certificate of entitlement to conduct business and to borrow under Section 761 of the Act, on 13 February 2015, 50,000 redeemable shares were allotted to the portfolio manager. The redeemable shares were paid up as to one quarter of their nominal value and were redeemed immediately following Admission on 21 April 2015 out of the proceeds of the Issue.

On 21 April 2015, 799,999,999 ordinary shares of 1p each were issued to shareholders as part of the placing and offer for subscription in accordance with the Company's prospectus dated 24 February 2015.

On 23 February 2015 the Board was granted authority to issue up to 80,000,000 ordinary shares which equates to 10 per cent of the shares issued at placing on 21 April 2015. The directors are seeking to renew this authority which will expire at the forthcoming Annual General Meeting to be on held 9May 2016.

During the period under review a total of 27 million shares were issued. The price paid per share ranged from 108.40p to 116.90p and the total amounted to £30,460,000.

Share movement

The table below sets out the share movement since incorporation (26 January 2015) to 31 December 2015.

	Shares in issue at			Shares in
	the beginning of	Shares	Shares	issue at
	the period	issued	redeemed	31 December
				2015
Redeemable shares	0	50,000	50,000	0
Ordinary shares of 1p	1	826,999,999	0	827,000,000

13. Share premium	31 December 2015
	£000
Share premium arising on ordinary shares	822,190
Share issue costs	(9,147)
Closing balance	813,043

14. Capital reserve	31 December 2015
	£000
Losses on investments - held at fair value through profit or loss	(17,587)
Closing balance	(17,587)

15. Revenue reserve

	Period ended
	31 December 2015
	£000
Retained profit for the period	1,538
Closing balance	1,538

16. Financial commitments

At 31 December 2015 there were no commitments in respect of unpaid calls or underwriting.

17. Return per ordinary share

			December 2015
	Revenue	Capital	Total
Return per ordinary share	0.25p	(2.88)p	(2.63)p

Total return per ordinary share is based on the return on ordinary activities after taxation of £(16,049,000). This calculation is based on the weighted average of 610,349,412 ordinary shares in issue during the period.

18. Net asset value per share

Total shareholders' funds and the net asset value per share attributable to the ordinary shareholders at the period-end calculated in accordance with the Articles of Association were as follows:

		31 December 2015
	Net asset value	Net assets
	per share	available
	pence	£'000
Ordinary shares (827,000,000 shares in issue)	97.37	805,264

The net asset value per share is based on total shareholders' funds above, and on 827,000,000 ordinary shares in issue at the period end.

19.  Related party transactions

The directors' current level of remuneration is £27,000 per annum for each director, with the Chairman of the audit committee receiving an additional fee of £5,000 per annum. The Chairman's fee is £40,000 per annum.

Publication of non-statutory accounts

The financial information set out below does not constitute the Company's statutory accounts for the period ended 31 December 2015 but is derived from those accounts. Statutory accounts for the period ended 31 December 2015 will be delivered to the Registrar of Companies in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

This announcement was approved by the Board of Directors on 21 March 2016.

Annual Report and Financial Statements

Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, Woodford Patient Capital Trust plc, 1^st Floor, 40 Dukes Place, London EC3A 7NH. 

Annual General Meeting

The Annual General Meeting of the Company will be held at Saïd Business School, Park End Street, Oxford OX1 1HP on Monday, 9 May 2016 at 11.00 a.m.

National Storage Mechanisom

A copy of the Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm.

ENDS

The Annual Report will also be available on the Woodford Patient Capital Trust plc's section of Woodford Investment Management LLP's website at www.woodfordfunds.com.  Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.

For further information, please contact:

-ENDS-

For further information, contact:

Four Broadgate
Roland Cross / Katie Jordan / Gareth David
Telephone: [phone]
[e-mail]

Company Secretary  

Capita Company Secretarial Services Limited

40 Dukes Place

London EC3A 7NH

United Kingdom

About Woodford Patient Capital Trust (WPCT)

WPCT is the £800 million investment trust launched in April 2015 by Woodford Investment Management LLP (Woodford). The trust invests mainly in early-stage and early-growth companies but also has exposure to some blue-chip companies. Woodford is a fast-growing asset management company built on a founding philosophy of transparency and simplicity. Launched in May 2014, the company has more than £14bn assets under management. Further information can be found at  https://woodfordfunds.com/our-funds/wpct/report-accounts/

 

END

 

 

FR AKDDPKBKBDNB