Revenue Return and Dividends
Ordinary dividend growth remains positive but has moderated reflecting the more subdued growth in corporate profits and a normalisation in payout ratios. There seems to be a return to the healthy practice of companies showing a strong commitment to growing dividends and rewarding shareholders. Since the recession, company managements have focused on reducing levels of debt and restructuring borrowing, while lower tax and interest costs have boosted free cash flow. With little demand for greater levels of capital expenditure to build or expand production the increasing cash flow is being used to boost dividends and improve payout ratios. Some companies are now finding that levels of cash on the balance sheet exceed borrowings and there is a growing trend towards special dividends.
Another factor that has helped to improve our revenue during the period is the increase in investment enabled by higher borrowings and currency movements. Over the period a lower level of Sterling against the US dollar has improved the translation of income from dollar-denominated assets. The Company's revenue generation shows a good degree of growth and underpins our intention to increase dividends to our shareholders for the 46th consecutive year. In January, I stated that we would pay a minimum of 13.86p for the full year, an increase of 4%. It is our intention to pay a second interim dividend of 3.465p per ordinary share on 30 August 2013.
