Downing Planned Exit VCT 5 plc (in liquidation) 10 Lower Grosvenor Place London SW1W 0EN Tel: Fax:

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1 Downing Planned Exit VCT 5 plc (in liquidation) 10 Lower Grosvenor Place London SW1W 0EN Tel: Fax: March 2014 Dear Shareholder Downing Planned Exit VCT 5 plc Report to Shareholders from the Supervisory Committee and Manager I present an update of developments in respect of progress that has been made in seeking realisations from the Company s remaining investments and the return of the proceeds to Shareholders. This report is being sent to Shareholders along with the Liquidator s Progress Report, which is the formal report from the Liquidator to Shareholders covering the second year since the Company was put into Members voluntary liquidation. Shareholders are reminded that this is a solvent liquidation which has been undertaken primarily to reduce running costs and ease the restrictions of the VCT regulations during the Company s final investment realisation stage. As you may recall, the Company still holds two main investments: Heyford Contracting (South) Limited Heyford built two commercial office developments: North Gate in Banbury, Oxfordshire and Uppingham Gate in Uppingham, Rutland. The company has five unsold units across the two developments. The market for these type of properties remains very slow, although there is news that the sale of one unit is progressing and is expected to complete shortly. In light of the current target selling prices for the units, the Board has reviewed the carrying value of the investment and has decided it is appropriate to adjust the valuation down by 290,000 to 900,000. This is decrease is equivalent to 1.3p per share in terms of Net Asset Value per share ( NAV ). The current plan is to continue to market the units at the target selling prices on the basis that there are now some prospects of at least a small improvement in the market. However, in view of the uncertainty of how long it will take to achieve sales of the units at full value, the Manager is also undertaking some research into whether an exit or partial exit from the investment could be engineered if the target selling prices were reduced. If the exercise produces results which the Supervisory Committee believes may be of interest to some Shareholders, the Committee and Manager will work with the Liquidator to explore methods by which some form of offer could be made to Shareholders. Coast Constructors Limited/Aminghurst Limited Coast has undertaken a contract to build a residential apartment and boutique hotel complex, at Gara Rock, near Salcombe in Devon, a site owned by Aminghurst. The original project suffered some major issues which resulted in cost overruns, significant delays and removal of the original management team and, ultimately, required further funding from third parties. Registered in England No: Registered Office: as above

2 With a revised funding plan in place, all of the apartments and cottages have now been completed, and the shared facilities opened with a view to selling them during Last year a planning condition that had hampered past sales efforts was successfully lifted and marketing has now commenced ahead of the key selling season. Despite these positive developments, it is unlikely that any funds will flow back to the VCT until most of the remaining apartments and the hotel have been sold. With the peak selling season being spring and summer the Manager is hopeful that over the next six to nine months we may be getting close to completing this task. With a significant level of debt now ranking ahead of the Company s investment, the returns that the Company ultimately receives are heavily dependent on the selling prices achieved. There is a possibility that the Company s investment may be worthless. Conversely there is the possibility of returns above the current valuation of 43,000. Other investments Vermont Developments Limited This company owns development land in Salford. During the last year there have been some significant discussions with a third party developer regarding developing the site into student accommodation. Unfortunately, the developer now appears to be facing funding problems and prospects for that deal to proceed now seem unlikely. The investment is valued at the most recent third party valuation of the land, being 50,000, which is substantially below original cost. Future Films Production Services Limited The Company was previously holding a small remaining piece of this investment at nil. After some negotiations with the company, the Manager secured further proceeds of 5,000 to exit completely from the investment. Balance sheet An unaudited balance sheet as at 31 December 2013, and the previous reported balance sheet at 31 August 2013, is included in Appendix 1. As at 31 December 2013, the unaudited net asset value per share stood at 5.3p per share. Total dividends paid to date have been 77.0p per share. Total return (net asset value plus dividends paid to date) stands at 82.3p per share, compared to the original cost, net of income tax relief, of 60p per share. Although the realisation of these final investments is taking some time, running costs of the Company are now at a minimal level and so Shareholders funds are not being excessively eroded by costs. Downing, the Manager, continues to provide a running cost cap to the Company at 3% of net assets. In practice this now means that the Manager takes no fees and is likely be contributing to the other costs of the Company shortly. Outlook The path towards the exit from the remaining investments remains slow but there are now signs of some headway being made. It remains difficult to forecast when the Company might be in a position to make a further or final distribution and what the quantum of the any distribution will be. If the work on Heyford Contracting (South) yields results which suggests a prompt exit could be achieved at a reduced valuation, the Manager will investigate means by which this could be offered to Shareholders that might wish to take that route. Naturally, full details will be sent to all Shareholders if any such scheme comes to fruition. Yours faithfully Hugh Gillespie Chairman

3 Appendix 1 Unaudited Balance Sheet Original 31 Dec 31 August Cost Fixed assets venture capital investments Heyford Contracting (South) Limited 1, ,190 Vermont Developments Limited Aminghurst Limited 992 Coast Contractors Limited 2, , ,283 Current assets Debtors Bank Current liabilities Creditors falling due within one year (40) (65) Net current assets Long term liabilities (21) (21) Net assets 1,119 2,070 Pence per share Pence per share Net asset value per share Dividends paid to date Total return

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