Woodford profit boost does not factor in recent woes

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Woodford Investment Management recorded a profit of £41.7m last year but the firm’s latest results, for the year ended 31 March 2018, do not consider the star manager’s recent decline in assets under management and underperformance.

According to accounts filed with Companies House, the firm recorded £41.7m profit before tax and £33.7m after tax in the year ended 31 March 2018.

It is not possible to do an accurate year-on-year comparison because the firm restructured in September 2016 from an LLP to a limited company, meaning the accounts for the previous year, ending March 2017, represent just six months’ trading.

During that six-month period, the firm reported £22.9m before tax profit and £18.2m after tax profit.

The accounts also show that the firm paid £36.5m dividends during the year to the end of March 2018, compared with £12.7m for the previous six-month reporting period.

Change of structure 

The firm’s change from an LLP to a limited structure enables Woodford Ltd to invest excess balance sheet cash of the limited company into Woodford Capital.

Profits are transferred into Woodford Capital from Woodford Investment Management and the money is reinvested into the Woodford funds, such as Woodford Patient Capital Trust, used to make sizeable charity donations, as well as providing an income for the directors, Neil Woodford and chief executive Craig Newman, through the payment of dividends which are subject to UK income tax.

The results did not disclose how much of the dividend went to the firm’s two directors.

A spokesperson at Woodford IM said: “Profits are transferred into Woodford Capital to enable Woodford Investment to invest excess balance sheet cash of the limited company. The money is reinvested into the Woodford funds, such as Woodford Patient Capital Trust, used to make charitable donations, as well as providing an income for the directors.”

Time lag

Because the latest accounts are for the year ended 31 March 2018, it does not represent the current situation of Woodford Investment Management. The period from March 2018 to the current day has seen a reduction in AUM and in performance which likely impact profits in the current year’s accounts to 31 March 2019.

The firm said the average assets under management for the year ended 31 March 2018 stood at £15.94bn. It now stands at £10.4bn.

 

 

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