Woodford pockets £1m dividend ahead of fund collapse

Woodford pockets £1m dividend ahead of fund collapse

Fund manager Neil Woodford collected a dividend of just less than £1m for the year to the end of March 2020, during the period when the firm’s flagship Equity Income fund was suspended.

The accounts for Woodford Investment Management, out on Friday (April 16), showed the firm lost £6.2m during the year, having reported a profit of £16m for the previous year.

The dividend was paid in the first two months of the accounting period, that is, up to May 2019, and so before the asset management function of the business began to cease.

It is classed in the accounts as an interim dividend, with there being no final dividend paid for the year. 

The company’s flagship Equity Income fund was suspended in June 2019, and Woodford was fired as manager in October 2019, at which point the firm resigned from managing its other mandates, the Patient Capital Investment Trust and the Woodford Income Focus fund. 

Total dividends of £1.5m were paid to the company’s shareholders, Woodford and Craig Newman. Woodford owns 65 per cent of the shares, and the company’s chief executive Newman the other 35 per cent. 

During the year to March 2020, the firm spent £640,000 on research and development costs, with Newman saying this was part of a continuing “investment for the future”, as the company anticipated “the ability to launch new revenue generating activities”, to “return the business to profitability”, as the asset management business has been wound down. 

The company remains listed as active on Companies House.  

Despite the dividend payout, red ink dominates the accounts, with the business having negative cashflow of £1.7m, compared with positive cash of £19m the previous year. Cash reserves fell from £5.1m to a deficit of over £2m. 

Despite losing all of the capital it managed, Woodford Investment Management retained a small number of staff, in “operational roles”, and listed its address as a serviced office premises in London.  

The accounts were signed off by the directors on July 24, 2020, and since then the operations of the company have been substantially wound down, with only a handful of what are described as “operations people” remaining. 

In February 2021 a new company, Woodford Capital Management, was created with the same shareholders and it is this business which intends to operate in the Channel Islands.

Sources close to Woodford stated that the immediate intention was not to launch a fund. The principal business activity was advising Acacia Research Corporation, a US private equity firm which acquired some of the unquoted assets previously held in the Equity Income fund. 

Regulators in the Channel Islands expressed surprised at the news of Woodford’s intention to launch a new business in that jurisdiction, saying they had not been contacted by Woodford or Newman in relation to attaining the required permissions. 

For now, both the Woodford Investment Management business, which paid the £1.5m dividend, and the new Woodford Capital Management business, remain as operating and active companies.