UK companies restore dividends after taking cash

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British companies have handed the government nearly £ 400million as they choose to cover the costs of their workers on leave during the pandemic, according to data from a Financial Times freedom of information request.

But an FT analysis found that some FTSE groups have continued to pay or reinstate dividends after using the government’s wage protection system, raising new questions about how businesses affected by Covid have used taxpayer support. .

Officials at HM Revenue & Customs have said £ 382million Coronavirus Job Retention Program (CJRS) grants have been recorded as returned until November 3.

That figure consists of £ 198million in refunds, according to FOI’s request, and £ 184million in adjustments to existing claims.

Homebuilders Redrow, Barratt, and Taylor Wimpey, along with other companies including Games Workshop, Bunzl, and Bodycote, returned money they hadn’t used or decided to cover employee costs by leave using their own funds.

HMRC said, “We welcome employers who have returned CJRS grants to HMRC because they no longer need them, or realized they made mistakes and followed the advice to correct things.

But the FT can reveal that a number of UK-listed companies have decided to resume paying dividends or, in some cases, have pledged to pay their annual payout while taking time off.

These include Telecom Plus and the construction group CRH, which pay dividends for the period covered by the holiday program, and carrier Wincanton, which will resume dividends in January.

UDG Healthcare has said it will reimburse the leave fee in its next round of results on November 24 after being contacted by the FT, and will also provide a dividend update for the full year.

Science Group, an Aim-listed R&D consultancy, and FTSE 250 construction group Hill & Smith have also used the leave program and pledged to pay dividends. Neither company responded to requests for comment.

Many companies have canceled shareholder payments, cut executive pay and laid off employees during the spring lockdown as they sought to build up cash reserves. About £ 36 billion in dividends have since been canceled, according to brokers Peel Hunt.

However, many companies found that their businesses were not as badly affected as initially feared, leading almost all to reinstate executive compensation and some to resume dividend payments.

Many have also repaid some of the money taken from government coronavirus support programs. Advisers said this reflected an improving economic outlook next year, but also a desire to start getting back to normal without risking scrutiny of taking government money.

Retailers such as J Sainsbury have been criticized for paying large dividends after receiving trade tariff relief during the pandemic. On Thursday, B&M, the discount retailer, said it would reimburse the holidays, but not the tariff relief, despite paying shareholders a special dividend of £ 250million.

Richard Buxton, a well-known investor in UK stocks and a fund manager at Jupiter, said he supports companies that restart dividends if they are in a position to do so. But he added that a key question was whether companies were trying to make up for missed dividends without repaying government support.

“It would be harder to justify picking up dividends and making good missed dividends if you didn’t repay the paid vacation,” he said.

Telecom Plus said that, in accordance with government guidelines for listed companies, “we paid dividends at the end of fiscal year 20 because we were able to do so responsibly. In doing so, we have ensured that shareholders who depend on dividends [eg pensioners] would retain this important source of income ”.

He said the government’s leave program had been used “to financially support the limited number of employees we have laid off.”

Wincanton has said he will pay an interim dividend in January 2021 of around £ 3million, but will not pay back the suspended final dividend of around £ 10million, which was due to be paid in July. The company said it intended to repay deferred pension contributions and deferred value-added tax outstanding, ahead of schedule.

“Wincanton used CJRS during the period up to the end of September to avoid layoffs in areas of the business that have seen their revenues drop by as much as 80 percent; according to the company’s estimates, these actions have saved at least 1,000 jobs. Wincanton no longer uses the leave program. ”

CRH, which employs around 10,000 people in the UK, paid a dividend for its 2019 results at the April annual meeting and kept its 2020 half-yearly dividend at the 2019 level, paid in September. The company’s UK operations accounted for around 6 percent of the group’s profits, with two-thirds of the profits coming from the United States.

Additional reporting by Attracta Mooney

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