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Dunelm founding family in line for £100mln windfall

Published: 11:54 08 Sep 2021 BST

Dunelm Group PLC -
Pictured, Sir Will Adderley, Dunelm's largest shareholder with almost 45% of the company's shares

The prospects of a fairly hefty special dividend had investors snapping up shares in the soft furnishings group Dunelm (LON:DNLM), which were up 12.5% just after midday.

The news provided a double boost for the Adderley family, which still owns just over 50% of the business.

The 65p windfall payment, plus the regular divi of 35p means deputy chairman Sir Will, son of founders Bill and Jean, will pick up just under £91mln before taxes based on his 44.68% Dunelm shareholding.

Jean, the next biggest holder on the register with 5.94% (according to the company’s investor relations website), is in line for £12mln before the HM Revenue and Customs takes its slug.

Today’s rise in the share price means that the family’s investment in the group is worth just shy of £1.5bn.

Dunelm was founded in 1979 by Bill and Jean on a stall on Leicester market.

In the past four decades, it has grown to be a retail park staple with revenues to match.

In the year to June 26, total sales climbed 26% to £1.3bn with profit before tax up 45% to £157mln. Net cash at period-end was £128mln.

It will be interesting to see whether there will be a rush of special dividends of the kind proposed by Dunelm ahead of a rise in tax on company cash distributions as part of the government’s new social care levy.

Analysts suspect Boris Johnson and Rishi Sunak’s plan, which was largely overshadowed by an election pledge volte face on National Insurance, may see a change in corporate behaviour.

They are betting that UK companies may be more inclined to distribute excess cash via stock repurchases (as is increasingly the case in the US, particularly among the tech firms), rather than handing out dividend cheques.

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