(Alliance News) - Woodford Patient Capital Trust PLC on Monday reported a sharp decline in net asset value over the first half, as the trust's investment manager continues to deal with the fallout from freezing the redemptions from its separate equity fund.
At June 30, Woodford Patient Capital said net asset value per share stood at 72.00 pence compared to 97.61p at December 31, representing a 26% decline.
Woodford Patient's net assets slipped 19% over the first six months of 2019, ending the half at GBP654.2 million compared to GBP807.2 million six months prior.
The trust has endured its "most challenging" period since listing in 2015, Chair Susan Searle said. Searle said the events surrounding the trust's portfolio manager, Neil Woodford, "have been disappointing for everyone associated with Woodford Patient".
The trust's investment manager, Woodford Investment, also manages open-ended funds LF Woodford Equity Income Fund and LF Woodford Income Focus Fund.
At the beginning of June, Neil Woodford took the decision to suspend withdrawals from his equity income fund due to "an increased level of redemptions", with the fund needing time to "reposition" its portfolio invested in unquoted and less liquid stocks into more liquid investments.
Since then, the investor has made numerous disposals of stakes in London-listed firms.
Portfolio Manager Neil Woodford said: "Shareholders have endured an extremely disappointing six-month period, for which I am very sorry. While shareholders can be forgiven for thinking there are no positives, I continue to believe that the majority of the businesses we have invested in are making good progress, in line with our pre-agreed milestones."
Woodford Patient said it "continues to evaluate" Woodford's role as portfolio manager and "remains in dialogue with other potential managers".
Searle added: "Protecting shareholders' interests as these difficult circumstances continue to play out remains the board's priority. We have already taken a number of decisive and proactive measures following the gating of the LF Woodford Equity Income Fund (WEIF) and remain focused on taking the necessary actions to support the future value of the company's portfolio."
Woodford Patient's NAV was hurt by the independent valuation of several unquoted holdings being reduced. The trust's unquoted portfolio is evaluated by Link Fund Solutions Ltd, which is also valuing Woodford Patient's top 20 holdings, as requested by the trust.
"There has been considerable external commentary around our valuations, which are conducted through a wholly independent process," said Searle.
As at September 26, Woodford Patient said its NAV stood at GBP591 million, a further 9.7% drop from the end of the first half.
Woodford added: "Some of the company's underperformance has been the product of events in several of the unquoted businesses within the portfolio. For example, within the unquoted element of the portfolio, Immunocore and Benevolent AI both had their carrying values reduced, driven by funding-round pricing.
"Elsewhere within the unquoted portfolio, the values of Precision Biopsy and Scifluor Life Sciences were written down significantly, as it became clear that the funding options that both businesses had been pursuing were unlikely to come to fruition."
Woodford noted the share price "weakness" of Autolus Therapeutics Ltd harming the trust's NAV.
Woodford continued: "Despite the disappointing performance of the portfolio as a whole, the underlying progress in our quoted investments including 4D Pharma, Evofem Biosciences and ReNeuron give me the confidence that our longer-term goals and return expectations for these companies are achievable."
"The journey to positive outcomes has been longer and more painful than investors would have liked, or anticipated, but the returns to be gained by delivering on the progress, I believe, will ultimately reward the patient investor," added Woodford.
Separately, Woodford Patient has also hired Raymond Abbott as an independent non-executive director. Abbott has "strong" experience with investment trust, Woodford Patient said.
He is the chair of Foresight 4 VCT PLC, Scottish Building Society and Integrated Environmental Solutions Ltd.
Woodford Patient noted Louise Makin will be stepping down from the board on October 1.
Shares in Woodford Patient ended Friday in London at 44.00 pence each. The trust started 2019 trading above 84.00p.
By Paul McGowan; paulmcgowan@alliancenews.com
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