Neil Woodford and his right-hand man Craig Newman pocketed a £1.5m ($2m, €1.7m) payout in the months before his eponymous equity income fund shuttered and sparked the collapse of his funds empire.
Latest filings from Companies House show Woodford and his business partner helped themselves to one last interim dividend for the period covering April 2019 to March 2020 as their venture Woodford Investment Management swung to a loss and was forced to close.
The interim dividends were paid out to Woodford Capital, an unlimited company which counts Woodford and Newman as its sole directors. Woodford controls a 65% stake in the business, meaning he banked £975,000 of the total sum, while Woodford IM chief executive Newman bagged £525,000.
The dividends were declared in the two months to 31 May 2019, just before the Woodford Equity Income fund was suspended in June, after it was unable to cope with a wave of redemptions due to its rising portion of illiquid holdings.
The dividend payout for 2020 is far less than the £13.8m the pair split in 2019 and the eye-watering £36.5m of 2018.
Woodford IM reports losses
The full year 2020 accounts, set to be the boutique’s last, reveal Woodford‘s firm swung to a £6.2m loss for the 12-month period compared with a £16.3m profit in 2019.
Revenues plunged by nearly three quarters from £52.6m in 2019 to £14.5m as Woodford was booted off his Equity Income and Income Focus mandates by authorised corporate director (ACD) Link Fund Solutions and his Patient Capital trust in October 2019.
Headcount at the business had fallen by almost a third from 51 to 35 by the end of March 2020, with the investment team halving from eight to four people and the admin team shrinking from 36 to 22. The one exception was the distribution side which grew from seven to nine employees during the period.
As such, the sum spent on salaries and wages fell from £11.1m the year before to £7.3m.
Total administrative expenses dropped from £33.1m in 2019 to £21.8m. Around £641,000 was spent on “research and development”.
Back again
Despite the boutique announcing its wind-up in 2019, the directors’ report, signed by Newman, bizarrely states “we continue to invest in our future” and also references the launch of “new revenue generating activities” to return the company to profitability.
Woodford stunned the industry once again when he announced he was returning to investment with Newman at his side, this time launching a Jersey-based biotech venture called WCM Partners.
Alongside Newman, our sister publication Portfolio Adviser revealed that several former Woodford IM employees, including c-suite member Paul Green, relationship manager Kristian Penttila, and investment analyst Alex Staples would also return for the fallen manager’s comeback which caught the Financial Conduct Authority off guard.
It is unclear whether Woodford’s latest venture, which also involves Acacia Research, the US investor who bought a handful of healthcare stocks from his former Woodford Equity Income fund, will get off the ground.
Last month, the Jersey Financial Services Commission warned it will not let the disgraced manager use the island as a “back door” to skirt UK regulation.
Link, which recently admitted it was in the dark over Woodford’s ties with Acacia, has returned £2.54bn to investors trapped in Woodford’s former fund, now renamed LF Equity Income, since its wind-up commenced nearly a year and a half ago.
The ACD is at the centre of two legal challenges spearheaded by Harcus Parker and Leigh Day over the Woodford fiasco and is also being pursued alongside Hargreaves Lansdown by RGL Management.
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