Shareholder investment and returns
In 2007 we committed to financial management based on four key principles:
- we will maintain a strong investment grade balance sheet;
- operational control of our stores is fundamental to us;
- we are a prudent organisation and we structure our finances accordingly; and
- our defined benefit pension schemes' assets and liabilities are effectively part of our balance sheet, and will be managed as such.
We have maintained these principles. Our credit rating, assessed by Moody's, is A3, one of the strongest retail ratings in the world. Our property portfolio is 87% freehold, and our pension schemes are well funded.
Alongside this balance sheet strength, we have been determined to deliver value for shareholders. Over the period since our new policy was established, the dividend has more than doubled, with dividend cover remaining strong at 2.4 times.
We will continue to adopt the same prudent approach to our financial strategy, balancing the need to invest for future business growth and deliver shareholder returns. The Group has a very strong balance sheet which is securely financed with a number of long dated bonds and a new £1.2bn revolving credit facility available at competitive rates until 2016. These available facilities and our anticipated organic cash generation can comfortably fund our capital programme over the coming three years, estimated to be £3.0bn. Additionally, we intend to enhance shareholder returns through:
- a three year commitment to double-digit annual dividend growth;
- a rebalancing of the split between our interim and final dividend payments, to be c30:70 in future; and
- a two year equity retirement programme of £500m per annum, to commence immediately through the purchase of shares in the market, followed by their cancellation.