Money manager Woodford and partner paid £13.8m before collapse

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
A screengrab taken from a YouTube video issued by Woodford Investment Management of Neil Woodford. Photo: PA
A screengrab taken from a YouTube video issued by Woodford Investment Management of Neil Woodford. Photo: PA

Money manager Neil Woodford and his business partner paid themselves £13.8m ($18.14m) in the year before their business collapsed, new filings show.

Woodford Investment Management paid out dividends worth £13.8m to shareholders in the 12 months to 31 March 2019, according to accounts filed with Companies House this week.

The payout was shared between Woodford and his business partner Craig Newman, who between them have shared dividends worth over £100m since they set up the business in 2014.

The dividends came despite a drop in profits and an exodus of investor funds in the year. Pre-tax profits fell by 52% to £18.3m in the period. Investors also pulled hundreds of millions from the company’s funds during the 12 months.

Just three months after the accounting period ended Woodford was forced to suspend its flagship £3.1bn fund. A rush of investor withdrawals left the company without enough cash to cover redemptions.

Management wrote in the accounts, which were prepared in July 2019, that the fund suspension was caused by underperformance and “sustained and negative press coverage”.

Woodford was ultimately sacked from managing the fund and forced to close his entire company in October.

READ MORE: Fallen stockpicker Neil Woodford closes business and quits funds

The implosion marked the culmination of a specular fall from grace for Woodford. He built a reputation as a star stockpicker during a career spanning over 25 years at Invesco Perpetual, before leaving in 2013 to set up a firm bearing his name. Assets in his flagship Equity Income Fund peaked at £10bn in 2017, but underperformance led to significant outflows over the last three years.

Woodford’s investment practices have also been heavily criticised by regulators and politicians. Catherine McKinnell, a member of parliament and at the time the interim chair of the Treasury Committee, said the collapse of Woodford’s company was “the end of a sorry state of affairs”. The Bank of England has proposed changes to fund liquidity rules in the wake of the saga.

Management flagged in the 2019 accounts that one of the key risks to Woodford Investment Management was “the impact that poor performance may have on the ability to attract and retain investors.” The company “performed in-line with expectations” during the period, directors wrote.

READ MORE: New fund rules could see investors take 'haircut' after Woodford crisis