Hilco took £25m in dividends from Homebase despite £10.6m in UK Covid aid

The restructuring group Hilco took a £25 million (€30 million) dividend payment from the DIY chain Homebase in 2020 despite accepting at least £10.6 million in UK 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 £10.6 million in furlough payments and grants for the Bathstore chain, which was forced to close for many weeks under UK government lockdowns.

The total amount of UK government assistance booked by Homebase has previously been estimated at up to £40 million.

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.

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The UK government support payouts came as the chain rang up a £48 million pretax profit in the year to 27th December, 2020, from a £8.2 million loss a year before. Its highest paid director, thought to be the chief executive, Damian McGloughlin, also received a 14 per cent pay rise to £1.42 million. The change in fortunes came despite a 3.2 per cent fall in sales to £839.2 million, according to accounts filed at the UK 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.

Its best-known Irish involvement was in Xtra-Vision, the now defunct video rental chain.

Homebase said in its accounts that the UK 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”.

Contrasts

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 £130 million 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 £23 million in furlough payments.

Other retailers, including all the large supermarkets, have also returned almost £2 billion in business rates relief and furlough payments.

Hilco declined to comment and Homebase did not respond to a request for comment.