Managers reiterate business support in coronavirus period

The money management industry reiterated its commitment to support British businesses as they deal with the coronavirus pandemic.

The support was expressed via a letter sent to the chairmen of all FTSE 350 companies by the Investment Association, the trade body for U.K. money managers and representing £7.7 trillion ($9.4 trillion) in assets under management. The IA's members own one-third of U.K. public limited companies.

The letter outlined money managers' views on a number of areas regarding British businesses and how they will support firms throughout the period of economic difficulties caused by the COVID-19 outbreak and spread.

Companies should maintain an open dialogue, in part to help shareholders and stakeholders support management teams and boards as they focus on the most business-critical issues affecting their long-term sustainable futures.

The annual general meeting season is also coming up, and money managers will support companies "by focusing on the most material issues facing businesses."

Regarding the payment of dividends, the Investment Association's letter said companies should take into account "the suitability and sustainability of a dividend payment in light of current uncertainties. Shareholders expect companies who do decide to suspend dividend payments to restart them as soon as it is prudent to do so." Executive pay should also continue to be aligned to company performance.

Finally, shareholders "will look to support companies seeking additional capital from their shareholders during this time of crisis."

"The response to the COVID-19 pandemic has caused real strain across the economy and so it is right that investors help steady the ship," Chris Cummings, CEO of the IA, said in a commentary accompanying the letter. "The measures announced today will help company boards focus on leading their business through the crisis, looking after their employees, suppliers and customers, in the knowledge that their investors expect them to take a long-term approach to running their business. Investment managers want to see the businesses they invest in do well in the months and years ahead."

The support came as new research showed U.K. revenues and profits were already in decline before the coronavirus pandemic hit.

Pre-tax profits were down 29.8% for the first quarter on a year-over-year basis, said technology firm Link Group. Over the quarter, revenues fell 2.4%, with the oil sector suffering the most.