Dividends and Share Repurchases
The Board has recommended a 5 percent increase in the second interim dividend to $1.95 (123.6 pence, 13.21 SEK) to be paid on 19 March 2012. This brings the full year dividend to $2.80 (175.5 pence, 18.54 SEK), an increase of 10 percent.
This dividend increase is consistent with the progressive dividend policy the Board adopted and announced in conjunction with the Full Year 2009 results, by which the Board intends to maintain or grow the dividend each year. In adopting this policy, the Board recognised that some earnings fluctuations are to be expected as the Company's revenue base transitions through this period of exclusivity losses and new product launches. The Board's view is that the annual dividend will not just reflect the financial performance of a single year taken in isolation, but reflect its view of the earnings prospects for the Group over the entirety of the investment cycle. As a result, dividend cover may vary during the period, but with the target of an average dividend cover of 2 times (ie, a payout ratio of 50 percent), based on reported earnings (before restructuring costs).
In setting the distribution policy and the overall financial strategy, the Board's aim is to continue to strike a balance between the interests of the business, our financial creditors and our shareholders. After providing for business investment, funding the progressive dividend policy and meeting our debt service obligations, the Board will keep under review the opportunity to return cash in excess of these requirements to shareholders through periodic share repurchases.
The Company completed net share repurchases of $5,606 million in 2011, augmenting the share repurchase programme with proceeds from the sale of Astra Tech. The Group re-purchased 127.4 million shares for a total of $6,015 million, whilst 10.7 million shares were issued in consideration of share option exercises for a total of $409 million. The total number of shares in issue at 31 December 2011 was 1,292 million.
Subject to market conditions and business needs, the Board has announced that the Company intends to complete net share repurchases in the amount of $4.5 billion during 2012.
