Under the new guidelines, the Board would expect the dividend payment to be 40-60% of reported Net Profit After Tax, excluding any abnormal gains.
Previously, the Dividend Policy was 65-75% of adjusted Net Profit After Tax over a period of time. The new guidelines better reflect the annual performance and financial strength of the Co-operative.
An interim dividend will not be more than 40% of the forecast total dividend and no more than net earnings at half year.
In addition to the new payout percentage, two additional key principles will guide the Board when considering the payment of a dividend:
- A dividend should not require our Co-op to take on more debt; and,
- A dividend should not reduce our Co-op’s ability to service existing debt.
The distribution of any abnormal gains, such as an asset sale, will be considered separately.
The Board will apply these new guidelines at its discretion, alongside any factors it considers relevant.
Parameters and Guidelines
• Payout ratio of 40-60% of Reported NPAT, but excluding abnormal gains
• Distributions of any abnormal gains considered separately
No borrowing to pay dividends
• Dividend not to exceed 100% of Available Net Cash Flows
• Available Net Cash Flow defined as cash flows available to reduce debt, but excluding any material working capital changes considered highly likely to reverse in future periods
• Measured based on Debt to EBITDA ratio
• Dividend payment will not result in Debt to EBITDA ratio in current and forecast year exceeding level required to maintain ‘A’ band credit rating.