The board of directors’ intention is for the H&M group to continue to provide shareholders with a good return while ensuring that growth and investments in the business can proceed with a continued strong financial position and freedom of action. Based on this, the board of directors has proposed a dividend policy stating that the ordinary dividend over time is to exceed 50 percent of profit after tax and additionally that identified surplus liquidity – taking into consideration the capital structure target and investment requirements – can be distributed to shareholders through an extra dividend or a buyback programme.
Proposed distribution of earnings
The funds at the disposal of the parent company are SEK 16,009 m. The board of directors is proposing to the annual general meeting 2023 that a dividend of SEK 6.50 per share is paid, totalling SEK 10,593 m, and that the remaining earnings of H & M Hennes & Mauritz AB of SEK 5,416 m are carried forward. The dividend will be paid in cash, split into two instalments. The first payment of SEK 3.25 will be made in May and the second payment of SEK 3.25 will be made in November. The board’s proposed record dates are 8 May 2023 and 10 November 2023. If the resolution is approved at the annual general meeting, the dividend is expected to be paid out on 11 May 2023 and 15 November 2023.
The board of directors will also ask the 2023 annual general meeting for authorisation allowing it to repurchase the company’s own B shares in the period up to the 2024 annual general meeting for a maximum of SEK 3 billion. The board of directors will wait to see how the company develops during the year and the authorisation will only be used provided that, just as to date, the expansion and investments are able to take place with continued freedom of action and taking into consideration the financial position and capital structure targets of the group and the parent company, as well as the requirements that the nature and extent of the business and its risks and development plans impose on the equity and liquidity of the group and the parent company.
The board’s assessment is that the proposed distribution of earnings is justifiable taking into consideration the good cash flow, continued strong financial position and ability to make future investments (capex). The proposal takes into consideration the financial position and continued freedom of action of the group and the parent company, the capital structure target and the requirements that the nature and extent of the business and its risks, expansion and development plans impose on the equity and liquidity of the group and the parent company.
The H&M group advocates a conservative leverage ratio, aiming for a strong capital structure with strong liquidity and financial flexibility. It is essential that, as in the past, expansion and investments can proceed with continued freedom of action. The capital structure is defined as net debt in relation to EBITDA. It should not exceed 1.0 x EBITDA over time. Net debt/EBITDA excluding IFRS 16 effects was -0.6 (-0.7) as at 30 November 2022.
IFRS 16 Leases, which is being applied from 1 December 2019, has substantial effects on the reporting of liabilities, assets and EBITDA. However, the H&M group will continue to define the capital structure exclusive of IFRS 16 effects. The company considers this to provide a clearer picture of the actual debt/equity ratio, and it is also the measure used in internal monitoring.