Neil Woodford and right-hand man Craig Newman raked in close to £20m in dividends in the last financial year as the situation at his eponymous investment boutique began to unravel and clients were abandoning the Woodford Equity Income fund in droves.
The estimate conducted by the Financial Times and confirmed by people familiar with the company’s accounts was based on an average fee of 0.5% on the £12bn of assets Woodford Investment Management had amassed by the end of the year to 31 March 2019.
The calculation also assumed that expenses and the tax rate for the firm were in line with the year before and that there were no additional large one-off items.
The news comes hot on the heels of the implosion of Woodford’s investment business after he was fired from Woodford Equity Income and resigned from his remaining funds, Woodford Patient Capital Trust and Woodford Income Focus.
Woodford and Newman reap rewards
Woodford and Woodford Investment Management chief executive Newman have been rewarded handsomely since setting up the firm in 2014. The pair have paid themselves approximately £100m in dividends between 2014 and 2018, filings from Companies House show.
In 2016 they restructured their business so that they could be paid in dividends and reduce their personal tax rate, the FT noted.
Profits are paid into a separate company Woodford Capital, which counts Woodford and Newman as its only directors, with Woodford owning 65% of the business.
Woodford Investment Management took home £41.7m in profits during the 2018 financial year when Woodford Equity Income lost investors 14%. A dividend of £36.5m was paid to Woodford Capital.
A person familiar with the matter told the FT Woodford and Newman have already paid their tax for the most recent financial year.
Woodford’s flagship fund was suspended on 3 June after Kent County Council, one of his largest institutional investors, tried to withdraw its £263m investment from the fund.
Since then he has continued to take fees on Woodford Equity Income, roping in £65,000 a day from the thousands of investors trapped in the fund.
Woodford had collected more than £8m in fees on the frozen fund by the time the authorised corporate director Link booted him from the mandate and began winding down the fund earlier this month.
Woodford Investment Management declined to comment.
The firm is expected to publish its final results for the 12 months to 31 March in late December or early January.
