Morrisons to waive 2020/21 business rates relief in full

Bradford-headquartered supermarket chain, Morrisons, says it has committed to pay business rates for the coronavirus period in full.

The total amount to be paid will be £274m, of which £230m relates to 2020/21.

Due to the impact of the second lockdown and other tier restrictions, the business says it now expects direct COVID-19 costs to be around £270m, c.£40m more than its estimate at our 2020/21 interim results, and significantly higher than the £230m in-year business rates relief.

In addition to the direct COVID-19 costs, profit has been significantly impacted throughout the year by the extra costs of doing business during the pandemic, for example the widespread temporary closure of many of Morrisons’ cafes and market street counters.

The company’s update adds: “However, we have continued to manage our business well and achieved strong operating leverage.

“As a result, before the £230m business rates payment and recognising the busy Christmas and New Year trading period is still ahead of us, we are expecting 2020/21 underlying profit before tax and exceptionals to be in line with our expectations.

“Morrisons has a very strong balance sheet and underlying cash flow, supported by our freehold property portfolio and pension surplus.

“Reflecting this strong position and continuing to adhere to the principles of our capital allocation framework, we propose to pay a special dividend of 4p per share to shareholders.

“This relates to the previously deferred payment for H2 2019/20 – the period before COVID-19.”

David Potts, chief executive, said: “We are grateful for the Government’s swift action at the start of the pandemic which enabled the whole sector to face squarely into the challenges and disruption caused by COVID-19.

“Throughout this difficult period Morrisons has done its best work to look after our colleagues, our customers and key workers, to feed the nation, to protect both the vulnerable and our smaller suppliers and to play a full and leading role in meeting the enormous challenges that the COVID-19 pandemic brought.

“I’m exceptionally proud of the way that the whole business has responded.”