Neil Woodford’s business partner Craig Newman has slammed negative press surrounding Woodford Equity Income for amplifying problems at the fund house and contributing to its suspension in a note accompanying the investment boutique’s latest accounts.
Newman’s blame for the company’s woes comes as he and Woodford are revealed to have raked in £13.8m in the final full year before the Oxford fund house went into wind down. Over the same period, Woodford Equity Income investors lost 5.5% on their investment in the fund, while the FTSE All Share rose 6.4%, FE Fundinfo data shows.
The CEO’s comments, included in the company’s full year results to 31 March 2019, blamed “a period of sustained and negative press coverage” coupled with the fund’s underperformance for triggering an “intensified redemption profile” that ultimately resulted in the fund’s suspension.
“The decision was taken by Link and approved by its depository (Northern Trust) to protect investors and give time to reshape the portfolio into more liquid investments,” Newman said, in a note on “post balance sheet events” dated 24 July 2019. “In addition a number of mandates have been withdrawn.”
He added that measures had been taken to “reshape the business in light of the reduced revenue expectations” but predicted that Woodford IM would remain open for business debt free and without needing to raise capital from other sources.
Woodford and Newman rake in £14m
The full year results for 2019, set to be one of the company’s last before it closes for good, show interim dividends totalling £13.8m were paid out to Woodford Capital, an unlimited company which counts Woodford and right-hand man Newman as its only directors. Woodford controls a 65% stake in the separate business, bringing his share of the payout to £9.0m.
The full accounts published to Companies House on Tuesday differ from calculations published by the Financial Times last October which estimated the duo had raked in close to £20m in dividends in the last financial year as outflows from Woodford Equity Income fund intensified and the situation at Woodford Investment Management started to unravel.
The dividend payout for 2019 is considerably less than the pair received in 2018 when they took home £36.5m. Since setting up the investment boutique in 2014 Woodford and Newman have paid themselves close to £114m in dividends, 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 in a previous story.
Profits halve at Woodford IM
Profit before tax for the year came in at £18.4m, less than half of the £41.7m generated in 2018.
Accounts show the headcount at the firm rose from 45 to 51 staffers by the end of last March with the number of people working in investment management doubling from four to eight employees.
In total Woodford IM divvied out more in wages and salaries over 2019, shelling out £11.1m compared with £10.4m the year before.
Only a dozen or so employees are said to remain at the investment boutique which is close to winding down operations. Woodford IM officially relocated from its offices in a swanky Oxford business park to a virtual office near Russell Square in December.
The business imploded after authorised corporate director Link pulled the plug on Woodford Equity Income which had been suspended since early June after struggling to cope with outsized redemptions.
Woodford’s other mandates – Woodford Income Focus and Woodford Patient Capital trust – have been handed over to Aberdeen Standard Investments and Schroders respectively.
Woodford and Newman were reportedly last seen courting investors in China, prompting speculation the duo could be staging a comeback.
