The restructuring group Hilco took a £25m dividend payment from the DIY chain Homebase in 2020 despite accepting at least £10.6m in government aid.
The company, which bought Homebase for £1 in 2018 from its Australian owner, Wesfarmers, said it had accepted business rates relief for the Homebase chain on top of £10.6m in furlough payments and grants for the Bathstore chain, which was forced to close for many weeks under government high street lockdowns.
The total amount of government assistance booked by Homebase has previously been estimated at up to £40m.
The group operates about 150 DIY stores after closing 15 in 2020 and also owns 15 Bathstore outlets and two Decorate by Homebase stores, which are smaller high street versions of its DIY chain.
The government support payouts came as the chain rang up a ££48m pretax profit in the year to 27 December 2020, from a ££8.2m loss a year before. Its highest paid director, thought to be the chief executive, Damian McGloughlin, also received a 14% pay rise to £1.42m. The change in fortunes came despite a 3.2% fall in sales to £839.2m, according to accounts filed at Companies House.
Hilco UK, founded by the accountant Paul McGowan, who still chairs the business, is known as the group that bought the entertainment retailer HMV out of administration in 2013 before it later fell back into administration in 2018. The company also owns the British pottery Denby.
Homebase said in its accounts that the government funding “was used to help offset the significant impact and losses from the temporary closure of all Homebase stores during the peak trading period and longer closures of Bathstore stores, Decorate by Homebase stores and kitchen and bathroom showrooms.”
It added that the government support also “offset incremental costs due the pandemic” including protective equipment for staff and other health & safety measures as well as the multimillion-pound write-off of live plants due to store closures. It said the plants had been donated to charities and good causes.
Homebase’s decision to hold on to government support, including business rate relief, contrasts sharply with other large retailers.
Kingfisher, the owner of Homebase’s rival B&Q, pledged to repay the £130m it received in business rates relief in December 2020 after benefiting from a boom in DIY trade during the Covid pandemic. The business also handed back at least £23m in furlough payments.
The shift to working and studying at home, as well as more entertaining at home, particularly outdoors, prompted many to alter their houses and flats to suit the new way of living. Boredom during lockdowns also enticed younger people to learn DIY skills to improve their homes.
Other retailers, including all the large supermarkets, have also returned almost £2bn in business rates relief and furlough payments.
Hilco declined to comment and Homebase did not respond to a request for comment.
Source: Thanks msn.com