Fulton Hogan keeps $33m of wage subsidy despite profit
Engineering and civil construction giant Fulton Hogan will retain about $33.3 million received from the wage subsidy scheme, despite recording a bumper $211m net profit for the year to June 2020.
The privately-owned company said it wished to maintain a conservative financial position amid global and local uncertainties.
The strong result — up 27.7 per cent on the previous year — allowed the Christchurch firm to pay out $83.78m in total dividends to its shareholders for the 2020 financial year.
Major shareholders include the company’s founding families, the Fultons and Johnstones, whose net worth was estimated at $450m and $315m respectively in 2019.
Fulton Hogan, which is involved in a mix of private and public construction projects, including major road maintenance and government infrastructure contracts, released its financial statements on Friday.
Its balance sheet showed total assets of $3.16 billion at June 30, 2020, and net equity of $1.2b. Total borrowings at that date were $774.8m while employee entitlements, mostly due in the following 12 months, totalled $149m. Net debt declined to $400.7m at balance date. Total revenue for the year was flat at $4.6b.
Fulton Hogan initially received $34.3m in wage subsides to cover 4883 staff as the country went into Covid-19 alert level 4 lockdown in late March. The Ministry of Social Development’s employer search tool shows the current figure at $33.315m.
“At the end of September, following a full reconciliation we made a partial reimbursement to MSD,” a
Fulton Hogan spokesperson told the Herald when asked if the company intended paying back any of the taxpayer money. “Our intention is to retain the remaining wage subsidy in line with the objective and criteria of the scheme.”
The comments come as some companies come under public pressure to return wage support payments after posting increasing profits. Retailer Briscoe Group last month announced it was returning $11.5m as sales rebounded after lockdowns.
Briscoe had earlier reported a $28mhalf-year profit and announced a $20.3m dividend payout.
Fulton Hogan is facing different challenges from Covid-19 and said in its annual report it needed to maintain a conservative financial position due to an uncertain outlook both here and overseas.
Given the uncertain outlook, the board decided to declare a reduced final dividend of 33c a share — down from 36c last year— taking the annual dividend to 57c compared to 60c in 2019.
“After a strong first-half financial performance across most of our business, the subsequent impact of Covid-19 caused significant business interruption in the second half of the year, in particular in New Zealand,” managing director Cos Bruyn said.
“The abrupt and severe curtailment of works during the six-week, Covid-19 alert level 4 lockdown saw over 70 per cent of the company’s 4500 New Zealand-based employees unable to work.
“This situation was actively managed, with directors, and New Zealand-based executives and other employees taking a 20 per cent cut in remuneration, and special leave provisions put in place for employees.”